Mexico City Welcomes W

Currently under construction, the 239-room W Hotel in Mexico City will be the first outpost of the boutique chain to open in North America outside of the United States when it debuts next year. Yet, for the Mexico City lodging industry, the anticipated arrival of this trendy Starwood Hotels & Resorts Worldwide brand has a larger significance: It's evidence that despite a current downturn in occupancies and room revenues, the city remains of interest to global hotel companies, which see it as a viable business travel destination for the long term.

The W, in fact, joins Sheraton Hotels & Resorts, another Starwood unit, and Fiesta Americana Hotels in either opening new properties in the Mexican capital in recent months or having properties under construction. In addition, hotel operator Sol Melia Hotels & Resorts has undertaken a major renovation of its existing Mexico City properties, by upgrading its flagship hotel from upscale to deluxe status.

Fueling much of the expansion is the growing number of American business travelers visiting Mexico City as a result of the trade agreements first forged between the United States and Mexico in the 1990s. As more U.S. companies established a presence in Mexico, opening local offices and manufacturing plants, the amount of business travel increased proportionately.

"Business travel remains very important to Mexico City, with 40 percent of U.S. visitors coming here for business," said Luis Trujillo, director of planning and evaluation for the city's Secretary of Tourism. "Therefore, the city continues to update and expand all that it can offer to business travelers in terms of hotels, as well as convention centers and other meeting space."

Trujillo said Mexico City experienced a significant drop in international travelers in the last quarter of 2001. "But occupancy rates for national travelers rose during the period, as many Mexican business travelers chose to stay close to home, so this helped improve the performance overall," he said.

Given that W is best known among U.S. business travelers, this market segment constitutes a larger percentage of guests expected at the W than come to the city overall. "We expect up to 70 percent of our business guests to be from the United States," said Norberto De Sousa, Starwood area managing director for central Mexico. "Of the remainder, 25 percent are expected to come from within Mexico and the remaining 5 percent from Europe and Canada."

De Sousa said that the reputation the brand has achieved in the United States since its launch three years ago should make American business travelers curious to experience its Mexican variant.

The hotel, a new build, is located in the fashionable Polanco district, which is known for its nightlife. "It'll have all the W's brand standards, such as its own exciting bar and restaurant, but with a Mexican flavor," Starwood's De Sousa said. "In the local community, there's already much speculation that what's coming is something 'wow.' "

While the W will have 7,700 square feet of meeting space, Starwood intends large-scale conferences coming to Mexico City to consider the 457-room Sheraton Centro Historico Hotel, scheduled to open in the third quarter of this year. The location is the downtown historical district near the cathedral and main square known as the zocalo. "The convention facilities are designed for up to 5,000 people, so we should be able to accommodate most of the international congresses coming into the city," De Sousa said.

Fiesta Americana, which is part of Grupo Posadas, last year opened in the city both a deluxe-class Grand hotel and a full-service Fiesta Inn, a brand specifically directed to business travelers. Fiesta Americana's strategy is to view the sprawling city as a series of submarkets and provide coverage in all those where frequent business travelers need lodging. The newly opened Fiesta Americana Grand, for example, overlooks the centrally located Chapultepec Park, while the Fiesta Inn Periferico Sur is located in the city's southern district. To reinforce the business travel connection, both properties provide business centers, voicemail and computer connections.

Despite the economic downturn Spain-based Sol Melia is moving forward with already-approved renovation plans and the expectation that their new facilities will give the hotel a competitive edge once the market rebounds.

In re-branding its 489-room Melia Mexico Reforma Hotel as a Gran Melia, Sol Melia created three executive level floors, which come with a higher level of service and amenities more appropriate for the senior-level business traveler. "The hotel has been a very strong performer for us and with the renovations now complete we expect that record of success to continue," said Emanuel Schreibmaier, executive vice president of sales and marketing for Sol Melia's Americas division.

Sol Melia estimated the cost of the renovation to be $12 million. This degree of investment doesn't surprise Trujillo, the government minister. "In the current economic climate, it's more important than ever to update hotels," he said. "Mexico City, like many international destinations, is changing quickly, and the hotels here must renovate and change with the times if they're going to continue to attract the international business traveler."