Ten years ago, two significant transformations in the Dominican hotel industry were unthinkable: the momentum gathered by the seven main North American hotel franchises in the country and the powerful investment by national and foreign investment funds. On the one hand, Spanish investment dominated the leisure market, with a share of close to 65% of hotel rooms, especially in Punta Cana, the most emblematic holiday destination, which accounts for more than 50% of the total rooms in the country, most operated under the all-inclusive system.
On the other hand, the European issuing countries’ market share was 22%, while the US and Canada represented 43%. Europeans arrived mostly through tour operators.
Back then, when there were hardly any indications, I dared to point out that the big North American hotel brands would make a strong commitment to the Dominican market in the near future, and that they would also participate in the all-inclusive model. I may have misjudged the timing, but I was right on the mark with both my predictions.
In response to a substantial change in technology-driven distribution channels, and an increased influx of tourists from North America, which increased during the pandemic, the number of major US hotel brands franchises, such as Marriott, Hyatt, Intercontinental (IHG), Hilton and Wyndham, among others, has grown exponentially in the last five years.
The effect has been interesting, maybe too much. We have gone from vertical integration in most of the large Spanish hotel companies like Meliá, Barceló, Iberostar, Bahia Principe, etc., which participate and/or participated in the tour operation business directly or indirectly, and we have moved on to a significant growth of the large international hotel brands (mainly North American), under the franchise model. There are hotels owned by Spanish capital, managed by independent operators, marketed and distributed by third parties, and with North American franchises.
The phenomenon manifests itself in another way. There has been an expansion of investment in urban centers, especially Santo Domingo and Santiago. The participation of Dominican capital in the hotel industry has increased, what we would call the second wave, now led by national investment funds. The first wave happened in Playa Dorada, with properties such as the Holiday Inn, Dorado Naco, Villas Doradas, Puerto Plata Village and Radisson hotels, among others. There has been an expansion in previously unexplored segments, such as medical tourism, for example, the Residence Inn by Marriott currently being built next to the Santiago Metropolitan Hospital (HOMS).
To give you a bigger picture, last November, Iberostar sealed a strategic alliance with InterContinental Hotels Group PLC to boost the marketing of resorts and hotels in the Caribbean, America, southern Europe and North Africa. The company’s properties will be included in IHG’s system in December 2022 under the Iberostar Beachfront Resorts brand.
The agreement allows IHG to use the Iberostar brand for an initial term of thirty years with an option for additional twenty-year periods. It will integrate up to 24,300 rooms from seventy properties into the system over the next two years, increasing the company’s global equity by 2.8%.
What should we expect from the upcoming franchises established in the Dominican Republic? That they will expand their portfolio of products and services, they will study the new demands of consumers in terms of the experiences they are looking for, complementary offers, quality of materials, greater attention to detail, etc. That they care about personnel training, cooperate with university programs, train better professionals who add value to the country and the brand they represent.
We are in a time of constant changes in the sector. Globalization requires us to modernize the relationship with users, include or eliminate amenities, but nothing will be more important than selling experiences and that they bring them closer to the nature we enjoy and the kindness of Dominicans. May tourists feel that everything they see and do can be treasured in their hearts for life.
*The author is former President of Asonahores and CHTA and a renowned expert lawyer in foreign investment and the tourism sector.
Source:
Listín Diario
