Latin American Hospitality Overcomes Challenges with Hotel Technology

Hotel technology helps Latin American hospitality rebound following turbulence.

Latin American hospitality and tourism have experienced a bit of turbulence in recent years, with both highs and lows marking the industry’s performance. Hospitality investors largely express optimism in regard to this region, though.

“We are in a moment where there is a slowdown of the economy in the region and in the world, but the region is not like in the past, where a slowdown appeared and the region went into crisis. There is a slowdown now, but it’s not a crisis,” said Arturo Rosa, president and founder of the South American Hotel & Tourism Investment Conference (SAHIC).

Other challenges faced by the Latin American hospitality industry include high inflation, currency devaluation, and a rate of supply that has outpaced demand. In 2015, South America had 400 hotels in its pipeline.

Different countries have fared differently in this environment.

For instance, the 2014 FIFA World Cup and the upcoming 2016 Olympic Games have impacted Brazilian hotels and lodging businesses tremendously and led to a surge in the influx of travelers.

Attendance to the World Cup exceeded expectations by 67 percent, resulting in over a million total visitors to Brazil in 2014. São Paulo and Rio de Janeiro welcomed the bulk of the 1.5 million tourists to the country, as these cities were the main locations for the event. The average daily rate (ADR) for hotels in Rio de Janeiro in 2014 increased by 5.7 percent and led to an increase of 1.4 percent in ADR, while São Paulo experienced a slightly smaller increase in ADR of 1.9 percent and increase in RevPAR of 2.6 percent.

“Like it or not, the sharing economy is here, but the secret sauce of any hotel experience is what we can bring to the guest.”

Total international tourist arrivals to Brazil are expected to more than double by 2024 to 14.2 million, and increases are expected in both corporate and leisure travel to the country.

Another current development impacting Latin America that had the global hospitality industry buzzing was the reduction of travel restrictions between the U.S. and Cuba. Cuba is already one of the leading Latin American islands for travel and tourism, and hospitality brands and investors have shown enthusiasm to enter its stage.

Starwood Hotels & Resorts becomes the first U.S. hotel brand approved to operate in Cuba in about 60 years and plans to brand three hotels in 2016. The cruise industry is also capitalizing, with a Carnival cruise line beginning trips to Cuba.

The tourism and hospitality industry in Mexico is currently flourishing, and the country has steadily dominated as one of the top 15 destinations visited by global travelers. Overall, there has been a 10-percent increase in occupancy rates over four years.

SAHIC’s Rosa says that the Andean region, including Bolivia, Colombia, Ecuador, and Peru, is one of the most attractive throughout Latin America to hospitality industry investors and hoteliers.

Colombia stands out in South America, experiencing economic growth of 4.6 percent. However, the recent devaluation of the Colombian currency, which also occurred in other areas of this region such as Brazil, Argentina, and Venezuela, has led to a decrease of 8.5 percent in ADR and the country has also seen a decline in occupancy of 2 percent.

Still, hotel brands see Latin America as a region ripe with opportunity.

Carlson Hospitality CEO David Berg called Latin America a « very important focus » for the brand. Starwood Hotels & Resorts, Wyndham Hotel Group, Hilton Worldwide and Accor Hotels also expect to grow their portfolio of hotels in Latin America.

As international brands establish more of a presence in Latin America, they will bring with them more sophisticated hotel technology, which has been a major focus of hospitality brands looking to be more competitive on the modern global landscape. The introduction of hotel mobile apps by many brands and the use of guestroom technology have been adopted as ways to engage and satisfy guests, whose expectations have rapidly changed when it comes to the definition of the hotel experience.

Currently, 155.9 million individuals in Latin America are plugged into their mobile devices and as the number of mobile users increases, hospitality technology must keep up to accommodate the use of mobile technology by travelers.

Hotels in Latin America are already beginning to embrace hotel technology as a way to compete on the global scene. Brazil’s Unique Garden Hotel & Spa is one example of a hotel that has expanded its guest technology to improve guest service and engagement. Capitalizing on the gains of tablet usage, the São Paulo resort took advantage of the strength of the tablet market in Latin America by installing touchscreen tablets in hotel guest rooms.

Another hotel in Latin America that has upgraded its guest technology is Rancho Santana in Nicaragua. The seaside luxury resort introduced both a mobile hotel app and in-room tablets to improve guest engagement.

Rancho Santana General Manager Chris Currey said, “Rancho Santana’s in-room tablets and mobile application are a fun and efficient way to communicate with our guests beyond the face to face time they receive from our Concierge team…The in-room tablets are also a great way to reach our more passive guests who may not be inclined to visit the Concierge for all their questions, as well as first-time guests who haven’t come to realize just how much there is to see and do at the ranch.”

“They allow us to elevate the guest experience by making a lasting impression whether they are perusing the tablet with the guest in person, giving guests access to more information in the room, and even continuing to engage them once they’ve gone home and settled back into their routine.”

Embracing hotel technology is just one of the many ways the Latin American hospitality industry can combat some of the many challenges facing the region.

Jorge Giannattasio, senior vice president and chief of Latin America operations for Starwood Hotels & Resorts, said improvements to the guest experience are the best way for the hospitality industry to compete, particularly with Airbnb. “We are seeing large hotel companies like ours…enhancing the overall guest experience. That is where we are very different [from Airbnb].”

David Berg, CEO of Carlson Hospitality Group, said the challenges to Latin American hospitality and competition from disruptors like Airbnb are actually beneficial to the industry overall by inspiring hoteliers to “up our game.”

Berg said, “Like it or not, the sharing economy is here, but the secret sauce of any hotel experience is what we can bring to the guest.”