Mexico is the most developed hospitality market in Latin America and is poised for continued growth

There is no doubt that investment interest and opportunity in Latin America, particularly, Mexico is strengthening as investors aim to increase their purchase activity alongside a stable risk approach. Latin American investors remain actively engaged in real estate, as 75% intend to be net buyers in 2018, a 55% acquisition increase from the previous year. According to Forbes Mexico, countries showing strong performance are Mexico, Brazil, Colombia, Chile, Panama, and Peru. Mexico represents the second largest economy in Latin America, benefitting from a strategic location adjacent to the United States, its largest trading partner. This has helped the nation weather the economic downturn better than its Latin American counterparts. The nation´s economic outlook for the following years, despite being more conservative than last year, is still promising, even with slower projected growth as a result of the potentially negative consequences of the Trump Administration’s trade policies with the country. The revised projection is influenced by austerity measures implemented in the country given low oil revenues, the peso’s depreciation, a global economic slowdown and as aforementioned, the uncertainty surrounding trade policies with the U.S. While safety and security have become less of a concern in the last few years, security issues continue to challenge the country’s perception and place a damper on the economy. Despite security concerns, the tourism industry continues to play a vital role in Mexico’s overall economy and in 2016, the country ranked 9th among the 10 most visited countries in the world, according to the UNWTO Barometer.

Mexico is the most developed hospitality market in Latin America and is poised for continued growth in 2018 with favorable exchange rates that boost international arrivals, an increase in new-build hotels, overall healthy demand and strong revenue per available room growth, and $38 billion in projected foreign direct investment. The emergence of domestic investment vehicles (e.g., FIBRAs and CKDs) targeting the hotel sector is increasing liquidity in the market, thereby driving investment in the hotel sector. Furthermore, the effect of the recent devaluation of the peso, combined with a moderate inflation rate, has translated into very attractive operating margins in some of the main hotel markets with dollarized rates such as, Cancun, Los Cabos, and Mexico City, attracting the attention of both local and international investors. The real estate sector is the second largest contributor to the Gross Domestic Product (GDP), accounting for 15 % of the total and generating more than 15 billion jobs directly and indirectly.

Waldorf Astoria Cancun

Boasting a population of over 20 million in the greater metropolitan area, Mexico City is among the ten largest cities in the world and the most populous metropolitan area in Latin America. During 2016, and for the first time in history, Mexico City´s International Airport received more than 20 million foreign and domestic arrivals. The capital is one of the largest urban economies in the world. Investors are increasingly drawn to investment opportunities as they arise in Mexico City given its status as an established gateway market. Business districts such as Reforma, Polanco and Santa Fe are seeing a surge in high-rise construction such as office buildings, hotels, and mixed-use developments. Mexico City is transforming into a vibrant cultural destination, with neighborhoods such as the historic city center, trendy and art-filled Roma, Condesa and Coyoacan, and upscale Polanco generating leisure demand during the weekend, which should bode well for the city-wide hotel occupancy.

One of SB Architects’ first projects in Mexico City, The Bosques Golf Club

As of 2015, there was a total pipeline of 170 hospitality projects in Mexico for a total of 27,700 rooms—70 projects under construction, 53 due to start in the next 12 months and 47 in the early planning stage. This represented an overall increase of 21% in projects and 31% regarding rooms. This is the continuation of a steady trend from 2013. In 2016, Mexico had 30,334 rooms online with a 67.5% occupancy rate, and a total pipeline of 1,520 additional anticipated rooms delivered between 2017 and 2019. Regarding chain scale, 21 of these projects are in the luxury category, eight are upper-upscale, 32 upscale, 50 upper-midscale and 26 midscale, with 11 in the economy category and 22 unbranded. We anticipate seeing more independent hotels converting into branded properties in addition to more hotels becoming all-inclusive. As a result of a constrained supply pipeline, developers are increasingly turning to mixed-use real estate to allocate the land costs across different uses.

A national and international tourism destination, Los Cabos is known for its exquisite gastronomy, beautiful scenery, and white-sand beaches. St. Regis Hotels & Resorts, part of Marriott International, announced last April that it would amplify its presence in Mexico with the signing of a 120-room hotel and 60 residences in Los Cabos. Expected to open in early 2021, The St. Regis Los Cabos will be located in Quivira, an exclusive residential community where the Pacific Ocean meets the Sea of Cortez. The hotel will be part of the 1,850-acre master-planned luxury Quivira community located on the Pacific West Coast that offers a private beach club, village center, nature reserves, and over 20 miles of scenic walking and biking trails. The hotel will include 120 guestrooms, all of which will feature oceans views and the brand’s legendary St. Regis Butler Service. The hotel will feature three signature dining venues including a specialty restaurant; beachfront grill with all-day dining; and an inspired al fresco poolside restaurant with fresh small plates and crafted cocktails. Guests can also look forward to recreational facilities such as a fitness and wellness center, swimming pools, saltwater lagoon, luxury cabanas, and a destination Spa for resort guests and locals alike. The resort will boast meeting and event spaces providing the ideal setting for corporate gatherings, retreats, and weddings. The venues will offer state-of-the-art technology and refined catering services all set to take advantage of the Los Cabos coastline.

Hilton has a thriving future in Mexico, with 25 current projects in the country. Of these, SB Architects is designing three projects—Waldorf Astoria and Hilton in Cancun and a Conrad in Punta de Mita-Sayulita. The luxury Waldorf Astoria Cancun and the Hilton Cancun resort is set to open in 2021 and will offer guests a taste of Mexican culture fused with the brand’s uncompromising sophistication and flagship hospitality. Set to deliver a truly unforgettable experience for guests, the Waldorf Astoria Cancun will feature 150 exceptionally appointed guest rooms and suites, with waterfront or mangrove-facing terraces and private balconies. The property will boast the signature Waldorf Astoria spa, integrating Mexican healing traditions with native ingredients for indulgent treatments, in addition to state-of-the-art fitness facilities, two plunge pools, and two exquisite dining experiences. For an unforgettable taste of Mexico, guests will also have the opportunity to enjoy the locally sourced Yucatecan cuisine that will be offered at additional dining experiences throughout the property.

Hilton Cancun

A one-of-a-kind beachfront escape, the neighboring all-inclusive Hilton Cancun resort property will feature 600 stylish guest rooms offering stunning panoramic views. The Hilton resort will welcome guests to relax on the beach, lounge at the swimming pool complex, and experience curated adventures in local art, gastronomy and culture. The hotel will also tempt palates with six all-inclusive unique culinary experiences. Expansive meetings and events space across both hotels will be available to accommodate everything from small gatherings to large weddings.

Conrad Hotels and Resorts is getting a second property in Mexico. The luxury hotel company announced that it will redesign and reopen the former La Tranquila Resort in Punta de Mita, Mexico as the brand new Conrad Playa Mita in winter 2019. “We are incredibly excited to be working with Hilton on this spectacular project in the growing Riviera Nayarit, and believe that the Conrad brand reflects the vision for the future of Mexico,” said Emilio Perez. The design will make use of Punta de Mita’s tropical scenery and every single guestroom and suite will feature unobstructed views of the ocean just steps away. The new Conrad will also feature a Greg Norman signature 18-hole golf course, tennis courts, pool and spa and a wide array of dining options. In the surrounding area, Riviera Nayarit is known for amazing natural and adventure travel activities, such as surfing, paddle boarding, scuba diving, whale watching, horseback riding, mountain biking, zip lining and hiking through the Sierra Madre Mountains.

Conrad Playa Mita

Paris-based Sofitel Hotels & Resorts has been in Mexico for several years, focusing on upscale and luxury developments, especially Los Cabos and Riviera Maya. A worldwide symbol of French elegance in luxurious hospitality, the brand offers beauty, quality, and excellence to the most versatile and demanding clients. The contemporary hotels and resorts of the Sofitel brand are located in top cities known for their global relevance such as Paris, London, New York, Shanghai and Beijing, or nestled away in the middle of picturesque landscapes of emblematic destinations, like Morocco, Egypt, Each Sofitel hotel offers an authentic experience of the French “art de vivre” in complete and perfect harmony with the local culture.

In October, Hyatt Hotels Corporation announced the expansion of their brand with two new luxury hotel developments in Los Cabos and Mexico City, Mexico. SB Architects’ Park Hyatt Los Cabos marks the debut of the Park Hyatt brand in Mexico. “We are excited to work on this forward-thinking development. Park Hyatt are masters of detail, and we expect Park Hyatt Los Cabos will deliver understated elegance, intuitive refinement and a journey of rare and intimate experiences for the discerning global traveler who has an appreciation for world-class design,” says Scott Lee, President of SB Architects. This resort invites travelers to unlock unique and enriching moments as they find themselves surrounded by contemporary luxury and artistry at its best from original artworks to the finest in culinary expression. Park Hyatt Los Cabos will be located on a 26-acre site within Cabo del Sol, a master-planned golf resort community that stretches along two miles of pristine beach in Los Cabos, Baja California Sur. Expected to open in late 2020, the hotel will feature 162 guestrooms and 28 Park Hyatt Residences that will serve guests with truly personalized service and a profound reverence for luxury accommodations in a spectacular setting.

The Fairmont Heritage Place, Mayakoba

In 2016, Fairmont Hotels & Resorts announced the opening of Fairmont Heritage Place, Mayakoba. This marks the completion of the first phase of the project and includes the debut of six of 30 planned private residence club homes, which are located in a master-planned resort community. The new private residence club has three-bedroom units with terraces (measuring 3,875 square feet) and four-bedroom units with private terraces and rooftop garden access (measuring 6,544 square feet). The design is meant to emulate the locale’s natural surroundings and uses materials such as locally sourced stone, traditional wood and green living walls in living and public spaces. All residences have private plunge pools, en-suite bathrooms, full kitchens and open concept dining and living areas. Located within the Mayakoba resort development, the residences are set away from the beach to protect the coastal mangroves, home to many indigenous species of fish, birds and mammals. Owners have access to golf on Mayakoba’s 18-hole El Camaleón championship course, host of the only PGA TOUR event in Latin America and home to personalized instruction programs of the Jim McLean Golf School. Dining and spa privileges are also included at all of the hotels within the larger Mayakoba resort development, including the Fairmont Mayakoba.