Interview: IHG Latin America/Mexico VP Gerardo Murray

Las Vegas - Latin America's hotel construction pipeline in 2013 reached its highest level in about five years, and InterContinental Hotels Group is behind only Accor in terms of properties in development in the region, according to a Lodging Econometrics report issued this year. IHG vice president of strategic marketing services for Mexico, Latin America and the Caribbean Gerardo Murray spoke with Business Travel News lodging editor Michael B. Baker at the company's Americas Investors & Leadership Conference here in late October. The edited transcript that follows includes discussion about IHG's growth in the region, the role of managed corporate travel and how distribution strategies differ in Latin America compared with other regions.

What areas are you focusing on in the region?

Holiday Inn is a great brand to feed those countries and emerging markets. We have another almost 50 hotels coming up within the 22 countries. Out of those almost 50 hotels, 70 percent lay under Holiday Inn and Holiday Inn Express. A big, strong pipeline is coming up in Mexico: 32 hotels. Mexico City is a big market and big destination, but we find important, attractive places to build new hotels because [Mexico has] programs that incentivize investments from the mining industry and aerospace engineering, from Canada and Europe, coming into the region. Brazil is an important area. Colombia is an important and emerging market, and we have a few projects coming up. We have the InterContinental in Cartagena coming up next year.

Does Brazil remain fairly underdeveloped in terms of hotels acceptable for corporate travelers?

It's pretty much what we see, and that's why rates are a little higher. It can be perceived as expensive, but it's because we have a lack of supply versus demand.

What sort of corporate travel growth are you seeing in Colombia?

There's a lot more pharmaceutical, and we have the steel industry going into Bogotá and all those areas. The government is strategic enough to put incentives in place to attract the investment from companies around the world.

Are your hotels seeing more business from managed travel programs?

We work very close with [the Global Business Travel Association], and any of those companies that are a part of GBTA, their requests for proposals ask for international chains and such specifications as security. On those managed travel companies, Mexico is very strong, and so are Colombia, Costa Rica, Panama, Brazil and Chile. Most of them are international firms. An example is Bimbo, a big bakery company, a Mexican company growing within Latin America. All of their managed travel goes within a process, and that's where we work with them. We work with the negotiations not only for the rate but the services attached to it, [including] security.

Does this mean the hotels are seeing more bookings from corporate self-booking tools?

You've been seeing it grow for the last three years. A lot was done within the company or self-booking. Now, we're depending a lot more on business travel agencies, and we see that path moving quicker than any other one. Three big titans in the region—Carlson, American Express and BCD—have 85 percent of the market. The booking pace has been elevated. It used to be two or three days in advance, and now it has moved up to seven days because of company policies, so we have a lot more corporate travelers than leisure travelers, with the exception of the Caribbean. There are a lot more negotiated rates. Web is increasing, and self-booking within the companies, that's a path that has been growing in the region. Our [global distribution system] channel contribution has been growing steadily. Online travel agencies are growing, but not on the path that others are doing. As a difference from the United States and Canada, where voice [reservations] have dropped, in Latin America it has been very steady or growing because we look on the Internet and then we abandon and go back to the central reservation office. It's a path that is not going away. We keep seeing it increasing, at least consistent within all the Latin or Spanish-speaking countries. Brazil is a little different.

What about mobile?

It's growing a lot. That's the one-day booking, the last-minute booking. IHG has developed applications in Spanish and Portuguese. IPhones and such are growing, but we still go with the BlackBerrys; that's the biggest part of the market.

How well are IHG's brands known in Latin America?

Holiday Inn is very well-recognized. Out of the 205 hotels that we have [in the region], 75 percent of our catalogue lies under the brands of Holiday Inn, Holiday Inn Express or Holiday Inn Resorts. We have a great legacy with InterContinental. They're in key markets for us: Mexico City, Guadalajara, São Paulo, San José (Costa Rica), Panama and Buenos Aires. The service is very consistent within the region. With Crowne Plaza, we have 30 properties in the region. We're working with the other brands to get them where we are, because we're just building them. We have four Staybridges, and we just incorporated Hotel Indigo. They are doing very well in San José and Veracruz [in Mexico].

What opportunities do extended stay hotels represent for the region?

We have three Staybridge Suites in Mexico and one in Brazil. They outperform the system and do 10 to 15 points of occupancy above the other brands, because it's a unique product and is not located everywhere. There's one in Panama being built and another three being built in Mexico. They go to the markets that need them. Aerospace engineering is one of them, and we are very successful in Querétaro [in Mexico], followed by Monterrey, [which has] brewing companies.