Experiences and services drive luxury hotel rates in Mexico
MEXICO CITY — Leisure travelers pay high average daily rates across Mexico, and hoteliers say luxury properties in particular are seeing consistently high rates as occupancy continues to grow.
“Rates will stay high for a long time because we provide good service,” said Alberto Remirez, CEO of Hamak Hotels. “In the United States, you pay high fares and there is no one to help with luggage or provide room service. So people come to Mexico. They pay a high rate but they go home happy. If we continue to deliver a great product that delivers the experience people are looking for, you can keep up.
Hamak Hotels operates seven luxury boutique hotels in Mexico and Colombia, with a pipeline of 25 hotels.
The experiential element of luxury hotels and resorts in Mexico has been a big driver of hoteliers’ ability to command high rates during the pandemic. The fact that so many of the country’s ultra-luxury properties are on beaches was another contributing factor.
“Pre-pandemic Mexican resorts were getting maybe $700 [rates in U.S. dollars], and these days many cost $1,200 a night,” said Abraham Metta, general manager of GIM Desarrollos, a Mexican developer of mixed-use residential developments and luxury hotels. “And they were no less luxurious when they were $700 a night. People who want to spend money, who want more of the outdoors and do remote work, have made this segment one of the biggest.
Remirez and Metta spoke on a panel on Luxury Hospitality Trends at the Mexico Hotel & Tourism Investment Conference presented by HVS.
Affluent travelers from the United States have continued to make Mexican resorts a top vacation destination, and that hasn’t slowed down much during the pandemic, the speakers said.
March’s year-to-date average daily rate for luxury hotels in Mexico rose 22% from the same period in 2021 and 48% from the same period in 2019, according to data from STR, CoStar’s data analytics company.
With luxury rates remaining high and occupancy still below 2019 levels – despite having doubled year-to-date compared to the same period last year – Luxury hoteliers in Mexico say there’s plenty of runway.
“We must take into account that the number of millionaires and billionaires in the world has increased dramatically. There are a lot more people discovering luxury now,” Metta said.
Francis Muuls, chief operating officer of Mexico-based asset management firm RLH Properties, said Mexico’s geography is an asset to many wealthy luxury travelers, who are increasingly taking advantage of resort deals. relatively young luxury goods from Mexico.
“A customer who comes to Riviera Maya will come every year with his family and will spend 20,000 [Mexican pesos] per night,” he said. “We may think it’s a lot of money, but they pay and are happy with it because they feel they got the service they deserve.
Nicholas Martínez, vice president of development in Mexico, Central America and the Caribbean for Accor, reminded the audience that the luxury market in Mexico is further deepened by the idea that it can be prioritized.
“Luxury is a broad concept and Mexico has incredible depth; we have luxury properties at $700, $1,400 and more [in U.S. dollars],” he said. “Not everything will be ultra luxury. There is an opportunity for many of us.
Speakers highlighted the value of adding residences to luxury hotel projects in Mexico, again driven largely by US buyers.
Remirez said Hamak Hotels’ many hotel developments will include residences because the developers all want them.
“People have realized that stress, work and COVID have made us all reprioritize,” he said. “All hotel projects that have the possibility of residences – that have the land and so on – should do them.”
Muuls said the residences have been part of RLH Properties’ portfolio for years. The company’s Rosewood and Fairmont hotels in Mayakoba have residences, as do the One&Only and Rosewood properties the company manages in Mandarina, Riviera Nayarit.
“This business is complementary to the hotel,” he said. “And that creates a new category of rooms. At Christmas, a family can come and want seven rooms, and we can offer them a house. This is another alternative that is selling well. There is a lot of demand and people appreciate this type of product.
Martínez said the branded residences are part of almost all of Accor’s luxury products in Mexico because they can be “sold and transformed very quickly”, and the demand for the product is huge.
“Remote work has accelerated during the pandemic. Flexible millionaires could have an office in Silicon Valley and travel to Los Cabos and continue to work,” he said.
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