Andrew Cohan, Managing Director at Horwath HTL in Miami, USA, was contacted by Stephanie Ricca, of Hotel News Now, to answer questions for her latest article: Latin America offers challenging but rewarding markets.
Latin America is a diverse mix of markets and geographies. What areas in particular were winners, hotel performance-wise, in 2016, and which presented the most challenges? Will that change in 2017?
“The most challenging of the larger markets was Brazil, due to economic, political and health concerns. Fortunately, the Summer Olympics were executed with no major infrastructure or hotel mishaps, and the growth in Rio’s hotel inventory leading up to the events should take some time to fully absorb. Argentina will be a market to watch in 2017 as the Macri government has worked to eliminate the obstacles to foreign investment that kept the country from enjoying growth in recent years as did its neighbors. Already, Viceroy and SLS Hotels (projects) have been announced, and many global brands and investors are now testing the waters and considering new deals.”
What regions will the industry see the most supply come online in 2017, and in which chain scales? What are the biggest concerns and opportunities surrounding this supply outlook?
“Colombia, especially Cartagena and Bogota, is witnessing the completion of many hotels that have been in the development pipeline for the past 30 months or so, especially at the upper-upscale and luxury tiers. We have seen increasing interest in mixed-use resort plans for the Caribbean coastline between Cartagena and Barranquilla. Our opinion is that this area may develop best by targeting the national tourism and second home market, as the Caribbean has many pristine beach areas with more convenient airlift.”
What major consumer and economic trends will have an impact on hotel performance and growth in Latin America in 2017?
“The state of hotel investment in the U.S. market should benefit investment in Latin American hotel assets. That is, with most U.S. markets at or just past their peak performance levels, it will be more difficult to reach desired yield levels by purchasing U.S. hotel assets. With cap rates expected to rise and little expectation of further improvements in revenue per available room, it will be increasingly difficult to ‘buy low and sell high.’ Therefore, as investors look for higher-yield alternatives they will look south to Latin America and especially Mexico—a nearby, relatively low-risk market where hotel density in both urban and resort markets has significant remaining growth potential.”
Andrew Cohan is the Managing Director for Horwath HTL primarily serving the Sunbelt States and the Caribbean Basin, based in Miami. Horwath HTL has been operating for 100 years in the hospitality consulting space with expertise in valuation and feasibility studies, resort hotel and resort real estate consulting, asset management and tourism and leisure consulting.
A seasoned hospitality professional with extensive real estate, marketing and account management skills in North America and Latin America, Andrew has consulted for projects with leading branded management companies such as Canyon Ranch, Six Senses, Montage, Auberge and Alila.
Andrew has extensive experience in the wellness and sustainability space, especially as it pertains to resort properties. He especially enjoys working on ground-up projects, teaming with land planners to determine the optimal resort configuration to fit market demand with destination and site attributes, and helping land owners assemble their development teams.
As health and wellness have moved from the margins of the industry to become important components of mainstream hospitality projects, Andrew’s expertise has been in demand to conduct an increasing number of assignments for proposed sustainable wellness resort properties, particularly as the industry continues to strengthen in Central America, the Caribbean, Mexico and the “sunbelt states” in the United States. As the focus changes from the hotel product to the hotel experience, “property personality sharpening” through programming rather than capital expenditures has become one of the consultancy’s strengths. He has written numerous articles on topics ranging from Miami’s continuing growth to topics of interest in eco-tourism, active adventure tourism, and wellness tourism.
Prior to Horwath HTL, Andrew spent nine years with HVS’s Miami office. During his tenure there, Andrew earned his MAI designation from the Appraisal Institute, and holds Certified General Real Estate Appraiser and Real Estate Broker Associate licenses in the State of Florida. He has a Masters degree in Business Administration (M.B.A.) from the University of Pittsburgh, and a Masters in Hospitality Management from Florida International University, in addition to a Bachelor of Arts in Economics from Tulane University. He is a member of the International Society of Hospitality Consultants (ISHC), the Urban Land Institute (ULI) and the Global Wellness Institute.
Prior to joining HVS, Cohan rose through the ranks at AT&T, serving in their Latin America Wholesale Markets Division, managing a team with personnel in four countries, and having responsibility for maintaining tens of millions of dollars of annual revenue.