Hotel distribution trends in Latin America

Understanding different perspectives among global target markets is a challenging mission, which may take years to implement successfully.

Our goal in this series of articles is to have an open conversation with some of our Business Development experts at HyperGuest about the main challenges different markets are facing nowadays in the #Hospitality industry.

Discussion of this kind can help to have a better understanding of the Distribution evolution, from the traditional channels to #Distribution 2.0, and learn more deeply about the vision and trend in the different markets.

?Cinthia Gawianski - CEO CM Reservas, LATAM Market Exclusive representative of HyperGuest for Latin America.

+20 years working in the Tourism industry, focusing on the LATAM field. Cinthia is the Founder and CEO of CM Reservas, a company that offers technological solutions for hotels: Channel Manager, Booking Engine, Web check in, etc.

The aim of this article is to show the ways that most #hotels in #latinamerica work, the common problems they share, as well as the differences between each market. Discussions of this kind can help understand which are the key factors in order to optimize time management and available tools so as to achieve better sales results.

Latin America has it all. It has a large number of hotels of all kinds, including all international chains. It is a market in constant growth, renewal, and update. In the big cities and main developed tourist destinations, hotels have already understood that the technological adaptation of these times (even more post-pandemic) is the key to selling more and better. In small cities, this concept is being progressively installed and they will eventually adapt, as is the case with all the changes that the hotel industry has gone through.

Q: Cinthia, can you give us an introduction to? the Hospitality industry in LATAM, and share some analytics from the past two years?

Hotels in Latin America, as in the rest of the world, live a constant need to adapt to new ways of working and marketing. New destinations now have the great opportunity to find their niche for travelers, presenting themselves as destinations with important cultural, gastronomic, artistic and social attractions. Therefore,? hotels must learn how to be a part of the social and cultural life of these destinations, become a meeting point for locals and be aware of all the experiences that these destinations offer.

Latin America has a wide cultural and tourist offer that is very attractive for foreigners. The most visited places are: Cancun, Cartagena, Punta Cana, Rio de Janeiro, among others. However, during 2021 international travel only recovered 4%, according to the World Tourism Organization (UNWTO), a very low level than expected.? This year, on the other hand, the figures are encouraging since tourist activity started with great momentum in 2022.

Within the reactivation, the Premium segment stands out in the global event. And although international flight reservations for this segment worldwide from April to June 2022 are 27% lower than those for the same period in 2019, in economy class the figure is -47%.

According to the most recent reports, revenues from the travel and tourism market will increase by more than 60% in Latin America and the Caribbean during 2022. In Colombia and Chile, the tourism sector is expected to exceed US$2 billion by the end of the year. Argentina's forecast shows that revenues will grow 76% compared to the previous year, generating almost US$3.7 billion. In Brazil, the travel and tourism sector is forecast to top $8 billion this year, based on hotel bookings, which are nearly double those of 2021. In Peru, tourism receipts are forecast to reach US$1.2 billion.

The lowest figures are presented in Bolivia with US$390 million, and in Costa Rica with US$220 million. However, they show great growth in profits from this sector compared to 2021.

Q: Can you point out some changes from the recent years that have changed the Travel industry?

Nowadays guests are going to demand extreme customization and unique experiences when they travel, so there is an opportunity for traditional concierges to further align their role with that of a specialized travel agent.

Also, the ability to work from home or anywhere other than the office is going to profoundly and permanently change the way we travel. The new policies adopted by many companies about working from home mean that many executives can travel at any time, as long as they meet their objectives and goals.

This phenomenon is called "Workation" and consists of travelers extending their stays in a destination for a longer time with the aim of combining remote work and pleasure at the same time. Countries like Argentina and Mexico are the ones that generate the most search interest in Latin America.

Q: What characteristics will be essential for a hotel in any segment to be able to adapt to this trend?

Agility, modernization, automation and…connectivity!

Q: What are the top destinations and the type of properties/target?

Latin America, as we know, has a wide range of possibilities.

Business tourism: Argentina (Buenos Aires), Chile (Santiago), Colombia (Colombia), Mexico (DF), Brazil (Sao Paulo), Peru (Lima) and Panama (Panama). In the capital cities of each country we find from 2-star hotels to boutiques and large 5-star hotels with convention centers.

Beach tourism: Brazil, Mexico, Colombia, Uruguay, Panama, Costa Rica, Guatemala, Nicaragua, Honduras, Venezuela. Along the extensive coasts of the Atlantic and Pacific Oceans, the chosen ones range from small inns to large All-Inclusive Resorts.

Ecotourism, cultural and conventional tourism: Argentina, Brazil, Chile, Uruguay, Peru, Colombia, Costa Rica, Mexico, Guatemala, Nicaragua, Honduras, Venezuela, Ecuador. In this group we find a large number of boutique, eco-friendly, mountain, and historic hotels.

However, in LATAM we can find very different realities:

Tech adoption

If 2020 has taught us anything it is that we need to be adaptable: Technology is one way in which hotels can respond to the new circumstances and tool up for the coming recovery.

But in LATAM we can find so many different realities. Let me show you some cases:?

• Argentina: The main cities have high access to technology. These hotels can distribute rates and available rooms through a channel manager. But if we move away from the main cities, the situation is totally different. Medium and small hotels are completely unaware of the importance of having a system to manage their business. For this reason, they find themselves forced to sell through OTAS like Booking, Despegar and others. They pay high commissions in order to have better exposure on their websites, although just to cover the B2C market.

But what about B2B?

• Paraguay: There is a lot of work to do. Only a few important hotels that belong to international chains have their own technology. The rest only sell through Facebook, Instagram or in a better case, through OTAS. Almost none of them have a website. Something hard to imagine in current days.?
• Chile: It was one of the last countries from LATAM to open the borders after the Pandemic. Until today you can find some hotels that work as health residences.

Q: How many hotels are there in the main countries?

Brazil - 31.299 // Colombia - 27.500 // Mexico 25.000 // Peru - 21.702 // Argentina - 16.127 // Chile . 8.039 // Venezuela – 4.411 // Guatemala - 4,061 // Costa Rica - 3.748 // Ecuador - 3.639 // Honduras - 1.300 // Nicaragua - 1.175 // Bolivia? -1.453 // Panama - 788? // Uruguay – 412

Q: What are the most relevant Brands operating in these destinations?

Sheraton, Accor, NH Hotels Group, IHG InterContinentalHotels Group, Wyndham, Hilton, Marriott,Palladium Hotel Group, Riu Hotels & Resorts and Meliá Hotels International. These last three, exclusively in beach destinations.

Q: And what about the specific commercial work of hotels?

Revenue management (dynamic) vs static rates

“Revenue management is the practice of maximizing a company's revenues while selling the same amount of products or services”.

This is one of the most widely accepted definitions of Revenue Management. Hotels need to innovate and I am not just talking about increasing rates during high seasons or low availability.

Companies must measure a number of variables. Many hoteliers prioritize the availability, forgetting that the goal is to increase revenue, not fill rooms.A hotel has a set number of rooms available and they have fixed costs to apply whether they are full or not. There are cases when higher occupancy doesn’t mean a more significant gain. They have to understand how to get a fuller picture.

Q: How can HyperGuest assist the hotels to work more efficiently and effectively?

With HyperGuest the hotels can manage different rates for the B2B market and they decide who they want to sell and what rate they want to put it on. Because HyperGuest was thought to manage different rates, a hotel can use dynamic rates and static rates as well. Hotels can choose which rate is for whom.???

Argentina is an example of a place with both rates. Most of the hotels have two types of rates, dynamic, for everyone, and statics, which is only for local B2B agencies. They usually don’t manage them through a channel manager, only for email and sending their stop sales manually.?

Q: What is the culture and attitude of hoteliers about B2B distribution and the concept of HyperGuest??

1) The hoteliers want to avoid the disparity of rates. That is their biggest fear: This problem is usually solved when we explain to them the concept of HyperGuest and the idea to directly connect supply and demand.

2) There are some hotels that don’t have any interest in the B2B market: They usually only work with OTAS and they have a closed point of view. Those cases are more difficult to manage, and it usually depends on the decision of the person in charge.

3) Talking about Argentina, some hotels do not agree on payment methods. They prefer to manage all through VCC. But it only happens only in some cases, it’s not something seen daily.??

4) Some hotels want to have a personal treatment with the Demands. So, they aren’t sure how to manage a big number of travel providers via HyperGuest: We usually explain to them that they can block travel providers they don’t want to work with, and work with the same commercial policies they usually use and others. We show that HyperGuest isn’t an OTA, it is a tool.

Q: And in the case of Travel Providers?

This falls into two categories, but I'll mention the most relevant one. The travel providers who have access to the technology and usually use it. They see HyperGuest as an innovative solution and they believe in the real growth possibilities that the company has. They show interest in working together and they feel heard and part of the process.

Conclusion

Many thanks to Cinthia Gawianski for participating in the interview with us! This article is the first out of a series of articles that will review the distribution challenges in different markets around the world.

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