Global hotel companies tweak brands for South America

Before saturating markets with their brands, companies must first adapt them to fit the local market, sources said during SAHIC.

HotelNewsNow – 25/09/2013 – By Jason Q. Freed, News Editor

From left: Osvaldo Librizzi, Starwood Hotels; Craig Smith, Marriott International; Joel Eisemann, InterContinental Hotels Group; and Graciana Garcia Iribarne, Vice President SAHIC, discuss adapting their brand to fit the South American market
From left: Osvaldo Librizzi, Starwood Hotels; Craig Smith, Marriott International; Joel Eisemann, InterContinental Hotels Group; and moderator Graciana Garcia Iribarne, Vice President SAHIC, discuss adapting their brand to fit the South American market

BOGOTA, Colombia—While global hotel brands eye South America as an untapped region for rapid growth, putting the right products in the right locations is critical, according to hoteliers at the South American Hotel Investment Conference.

Finding the secondary and tertiary markets where midscale and economy brands make sense is the top priority for InterContinental Hotels Group, said Joel Eisemann, chief development officer of the Americas region. “That’s the opportunity today,” he said.

Marriott International has similar plans for its Fairfield Inns & Suites brand in South America, but first the company must adapt the brand to fit the local market.

“We have to make sure, with Fairfield, that we’re spending energy making sure the product is relevant,” said Craig Smith, Marriott’s president of the Latin America and Caribbean regions.

Smith said South American hoteliers, particular Brazilians, are proud of the hotels they build and want them to jive well with the local community. “And they should be,” he said. “They want a lobby that’s reflective of the local environment.”

Outside of the hotel’s design, many of the other hotel experiences must be localized, Smith said. There are “tremendous opportunities through e-commerce and social media” to do so. For example, websites such as Marriott.com must be relevant and in the local language.

“Not only in language but worded correctly to fit the locale,” he said.

Smith said localizing a global brand is more important today in South America than it ever was because these hotels are catering to more domestic travelers than in the past.

“When I first got (to Latin America) it was 80% gringos coming from up north,” he said. “Now we have to make sure you’re not selling from north to south but from within South America as well.”

Targeting a new traveler
The challenge of catering to a new clientele is something that global brands are facing in South America for the first time. Osvaldo Librizzi, co-president of the Americas region for Starwood Hotels & Resorts Worldwide, said all global companies are “making it important to get in touch with new clientele.”

“A great transformation is taking place,” he said. “We’re placing emphasis on the digital side of things and personalized services to come closer to the client. Perhaps in the past we didn’t make the investment in technology we should have.”

Librizzi pointed to the creation of the W brand—of which one is under construction in Bogota—and the subsequent spinoff of the Aloft brand.

“We think that’s looking toward the future,” he said. “This generation is the one that’s going to set the trend in the hotel business at the hotel level.”

Distribution challenges also are working their way into South America today.

Smith described the emergence of online channels as “water pipes.”

“Hotels used to have two big pipes—direct sales and local sales people on the ground,” he said. “Now you have seven or eight. Some of the pipes are getting smaller; the direct sales pipe is getting smaller.”

“That’s an advantage that the brand companies have,” Eisemann added. “The investment into the infrastructure is a barrier to entry. That really results in brand companies having an advantage to some extent.”

Librizzi and Smith agreed social media is playing an important role in the South American hotel landscape.

It’s like advertising and guest comments all rolled into one,” Smith said, “and you need to have someone who is able to manage that.”

Another byproduct of new consumers is the evolution of the luxury segment. While some hoteliers at SAHIC downplayed the relevance of luxury in South America, Librizzi of Starwood said luxury exist but in a different form.

“We have young people who have been lucky enough to earn a lot of money and come to the hotel in jeans and want informal service,” he said. “They don’t want a butler who’s going to hang their jacket up and cook breakfast in their room. So this means you have to adapt luxury to meet this traveler.”

However, Eisemann said it’s difficult to justify the investment cost of building luxury hotels today. “There will always be that market,” he said.

Smith said it used to be that as guests went down in star level the hotel experience used to be “less cool.” Now the customer is demanding even the three-star hotels look hip,” he said.

Providing a high-speed Internet connection is more important than any single design element, panelists agreed. However, “the infrastructure in Latin America makes it tough in some locations,” Smith said.

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