Prohotel - Management & Marketing

Mexico is the hottest development spot in Latin America, and the luxury sector is at its epicenter. Watch for more small, luxury lifestyle hotels like Prohotel Management’s Ikal del Mar on the Riviera Maya, which commands rate in excess of US$400 a night.

There is a new pulse in Latin America. It can be measured by the ultra-luxury Four Seasons in Costa Rica, the cool W in Mexico City, the half-dozen hip boutiques in São Paulo, and the ripple of branded, mid-tier/limited service hotels in Mexico and Brazil. It can be felt in proposals to launch new investment vehicles such as real estate investment trusts (REITs), to create tax incentives and to generate more tourism—with lures from gaming to new airports. But will it be enough to convince the hotel industry that Latin America has finally turned the corner?

Projects will be smaller—120 villas for Mandarin Oriental and 128 all-suite villas for the Rosewood-managed Laguna Kai—more luxurious and more private. And, they will be expensive, like Houston-based Prohotel International Management’s Ikal del Mar (with rates over US$400 a night) and its new concept “beach house” on the Riviera Maya. “Developers used to think bigger is better,” says Samir Saab, Prohotel’s president. “Now, even the chains are realizing that smaller niche products have higher yields. But most have yet to understand that there is a big difference between a chain hotel and a lifestyle hotel, and that is why some are failing.”

Saab predicts a high-end movement toward eco-friendly concepts that closely integrate design and architecture with the natural setting. “Big concrete blocks are not attractive to anyone,” Saab says. True, but not everyone wants a complete retreat, a fact which is driving development for segmented upscale brands such as Spain’s Riu Hotels & Resorts. “Last year’s numbers convinced us Mexico is a destination we can count on, now and in the future. Given our high occupancy, we are looking at new resorts in destinations our clients demand,” says CEO Luis Riu, whose Palace brand will debut in Cabo San Lucas late this year.