Many parts of the Latin America and Caribbean (LAC) market have witnessed economic slowdowns through 2023. Despite that, the forecast for travel in 2024 and 2025 looks encouraging, a recent study has revealed. This may have a positive impact on development costs in some markets.
According to the latest LAC Hotels Monitor by Whitebridge Hospitality, in collaboration with Rider Levett Bucknall and HotStats, performance levels in the region were mixed, from a high of +45% growth in GOPPAR in Santiago to a low of -22% in Los Cabos. The highest ADR growth (in US$) was achieved by Cayman Islands (+16%) and the highest occupancy level was seen in Aruba (76.8%).
Trend trackers in the region said there was considerable growth expectations in September 2023, with the Dominican Republic leading (with +54% in international arrivals and +39% in groups expected in Q4 2023, compared to the same period in 2019) and the U.S. and Canadian demand dominating flight bookings. In contrast, traffic to Cancun had been showing signs of declining. In 2023, the Dominican Republic was the first country in the Caribbean to welcome 10 million visitors in a single year, with the growth trajectory continuing this year.
While there were some deals in the past 12 months, due to lack of transparency, the Whitebridge Monitor could report only a few. There has been a continued pace of developmental activity across the region, owing to some refurbishments, extensions and new build projects.
PERFORMANCE TRENDS
In terms of occupancy and pricing power, the Caribbean was one of the top markets in both metrics on the rolling 12 months for 2024 and 2023 as well as achieving continuous growth.
With double-digit RevPAR increases in Rio Janeiro, Sao Paulo, Miraflores and Santiago, city centers in South America have been witnessing rise in the top line.
The revival of the top line in South America has helped in improving profitability, with Miraflores and Santiago recording the highest increases in GOPPAR.
While occupancy has been growing or stabilizing in Central America, declining ADR has resulted in decreases in RevPAR and GOPPAR.
CONSTRUCTION COSTS
The past year saw LAC witnessing a massive economic slowdown. However, economic growth forecasts for 2024 and 2025 look promising, translating through to the construction sector. While there will be less volatility, inflation forecasts have also been revised downwards.
Across many countries in the market, significant construction sectors were in infrastructure and hotels, which might add pressure on the labor market, especially in the U.S. islands.
Fluctuating exchange rates is affected to affect costs compared to a common currency.
NOTABLE DEALS
- Holiday Inn Club Vacations’ acquisition of four Royal Resorts hotels in Mexico.
- Acquisition of Marriott Vallarta Resort & Spa in Puerto Vallarta, Mexico by Aloijica of Mexico.
- Acquisition of a luxury resort in the region for $14 million by MC Hotel Group, the company behind Marbella Club, Spain.
- Acquisitions of Hyatt Place and Hyatt House in San Juan, Puerto Rico by JRK Property Holdings.
HOTEL CONSTRUCTION PIPELINE
Hotel construction has seen a healthy growth across Latin America in the first quarter, according to latest data by Lodging Econometrics (LE), with total construction pipeline up 11% in projects and 12% in rooms YOY to stand at 604 projects and 100,990 rooms.
The upscale segment saw notable growth in the first quarter, with 129 projects/18,314 rooms, followed by the luxury chain scale, which touched record project counts of 106 projects with 22,051 rooms. The upper upscale chain scale saw a slight dip from its peak in Q4 2023 to stand at 103 projects/21,403 rooms.
Latin America countries with the highest number of projects in the pipeline were:
- Mexico: 226 projects/35,691 rooms
- Brazil: 91 projects/13,670 rooms
- The Dominican Republic: 51 projects/13,118 rooms
Cities in Latin America with largest construction pipelines were:
- Mexico City: 21 projects/2,353 rooms
- Georgetown, Guyana: 13 projects/1,689 rooms
- Lima, Peru: 12 projects/1,914 rooms.
- Riviera Maya, Mexico: 12 projects accounting/1,421 rooms
- Sao Paulo, Brazil: 11 projects/2,438 rooms
Q1 2024 saw 20 new hotels totaling 3,330 rooms opening across Latin America. There was significant increase in new project announcements, with 23 additional project announcements in the pipeline at Q1 2024 compared to Q1 2023.
Through the rest of the year, 81 new hotels with 15,051 rooms are expected to open by the end of this year, according to LE analysts. Looking ahead, new hotel openings will see a marginal surge in 2025 with 108 new hotels/18,744 rooms forecast to open.
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