At Wyndham Hotel Group’s first Latin American regional conference held this week in Panama, presenters highlighted how the growing middle class is propelling hotel development.
Wyndham Hotel Group, a subsidiary of Wyndham Worldwide, is prioritizing expansion in Latin America via franchise and management deals. So far the primarily franchising company says it is taking a “crawl, walk, run” approach with management.
To find out more about Wyndham’s Latin American plans, HOTELS spoke with Daniel del Olmo, senior vice president and managing director, Wyndham Hotel Group Latin America, at the conference.
HOTELS: Where is Wyndham looking to manage in Latin America?
Daniel del Olmo: We are currently managing our first hotel in Latin America, the 92-room Tryp Panama Central. We opened that in August of this year. This is giving us a great first-time experience in how to operate in Latin America. Today we have 8,000 rooms in the pipeline of 34,000 guestrooms for this region, and of that one in five deals are for us to manage. Primarily our Tryp and Wyndham Hotels and Resorts brands will be used for management deals.
Investors in this region are 95% high-net worth individuals, not institutional investors. These include wealthy families and small investment groups, and we are starting to see many from outside the industry interested in developing hotels. We carefully review every deal, and we have arrangements with management companies in each country.
HOTELS: Is Wyndham still primarily targeting Brazil and Mexico, followed by Colombia and Peru, for expansion?
Del Olmo: Yes, we have been given a mandate to become number one or number two in those markets.
HOTELS: Which brands is Wyndham prioritizing for development in Latin America?
Del Olmo: Wyndham Hotels and Resorts for primary cities and resorts, Tryp in city centers and up-and-coming neighborhood destinations, Ramada as our solid midscale brand in key markets and in the economy space, Howard Johnson and Super 8.
HOTELS: What are the biggest challenges of expanding in Latin America?
Del Olmo: The biggest challenge of expanding the management portfolio is every country requires a different approach, in terms of synergies. It’s not a one-size-fits-all approach.
Since we have not been in the management game here before, we are taking a “crawl, walk, run” approach. That’s why we chose Panama. We thought we could learn the hard lessons there.
In terms of overall expansion, I think the big challenge is lack of knowledge of the hospitality business — you have a lot of investors that don’t know the market.
Secondly, the construction and permitting environment in each market, and then within each city, is still very complex. It takes an army-and-a-half to mobilize getting one property done because of the complexities of all the permits one has to get.