During Signature’s Owner’s Meeting in San Francisco last week, the head of the hotel program, Ignacio Maza, sat down with TMR to talk about where travelers are headed, the impact of a growing all-inclusive market, the prospects for Cuba, and the Starwood and Marriott merger.
Do you think the Starwood-Marriott merger will have any direct effect on the individual consultant?
Maza: My senses are there will be a period of status quo, and then gradually you will start to see the integration of things like the loyalty program and operations and perhaps even rebranding of some hotels as Marriott and Starwood start to achieve an optimal way of operating.
For example, Starwood has a brand called Tribute where they have individual hotels that are independent. Marriott has the exact same thing, it's called Autograph. So does it make sense in a new merged organization to have both Autograph and Tribute happening simultaneously or does it make sense to combine the two?
As a consumer, it is going to be invisible because if you check into this hotel six or nine months from now, you're not going to notice that this hotel is different or that quality has suffered. I never thought a year ago that this was going to happen but we're living in times that are changing and change is happening at a very rapid rate and we just have to embrace the change and figure it out and make the best of it.
What big trends are owners and consultants seeing in hotel bookings this year?
Maza: Obviously, we have a very unusual year because we have a convergence of a number of things. First, we have an election, which gets people very distracted. Number two, we have a number of terrorist incidents that have happened in Europe. Number three, we've had gyrations with the stock market. We've had a 10% drop in the beginning of the year and that's spooked some people in prime booking time and then of course the market has come back up. So, it's been an interesting year.
In terms of destinations that are booking well, I would say the U.S. is doing very well this year and a lot of people are traveling in North America. The coasts, anything west, the National Parks—Utah, Arizona, Colorado, places like that. There's also great interest in Chicago, New York, Washington, Boston, San Francisco, L.A. That continues to grow.
I think Canada has had a good year, also. Because of the relationship between the Canadian dollar and the U.S. dollar that is a lot more favorable to the Americans.
Mexico has continued to perform well, especially the sun destinations—Riviera Maya, San Lucas, Puerto Vallarata—as well as Mexico City, that is becoming a great tourist destination in its own right.
In Europe, what has done well is what I call the periphery. If you look at a map of Europe, the areas that are doing well are Spain and Portugal, Ireland, Scotland, Scandinavia and Eastern Europe.
How has the increased interest in all-inclusives changed the hotel world?
Maza: All-inclusive is a big trend in travel and I think this is one of the reasons why places like Mexico and the Dominican Republic have been so incredibly successful, because they have so many all-inclusives and because that product has evolved.
A few years ago, the all-inclusive was very basic, the food was very standard or substandard, it was essentially one step up from Cafeteria meals prepared in masses and buffet lines. But the all-inclusives have really evolved. You have products like Grand Velas in Mexico that has two properties and to be three with the third in Cabo San Lucas; we're talking about a five-star experience with seven or eight dining venues.
I have had lunches at these properties and it is every bit as good as a restaurant in a five-star hotel. Of course, the price point has also risen, but more value is offered and a better quality product is offered.
The rooms that used to be offered were 300 or 400 hundred square feet and now the starting room size at the new Grand Velas in Cabo San Lucas is going to be 1,000 square feet. And then it goes up from there. So, the price has gone up but so has the quality, so the consumer has a great deal of choice in terms of the inclusive.
What about Cuba? How has its opening changed the landscape?
Maza: There is a lot of development in the pipeline. In Cuba, you have Starwood that is already renovating two hotels that are going to become part of the Luxury Collection. Sheraton has already opened Four Points by converting an existing hotel to the American brand.
You are seeing other brands coming into Cuba, taking over old buildings and converting them into hotels but unfortunately it's going to take a while for all this product to be rolled out. The demand is right this second, so right now demand for good rooms in Havana exceeds the supply, which is what's driving rates.
When I went to Cuba three years ago, you could get a room at the Saratoga, which in my humble opinion is the best hotel in Havana, for about $300 and that same room is now $800 a night.
Hotels are turning away business and in some cases they're overbooked. Cuba has a big, big challenge in rolling out the capacity to meet the demand of American travelers. If the embargo were to go away and the floodgates were to open, heaven help us because I don't how they're really going to find a home for all those people. Right now, the demand exceeds the supply.