Mayakoba exec: Mexico resorts weathering 'perfect storm'
Friday, October 21, 2011
For most of the past 38 years, British hotelier James Batt has been running luxury resorts in Europe, the United States, Canada, the Middle East and Asia. The first 20 years of his career were spent with Trusthouse Forte Hotels, and he later spent 11 years in Thailand (yes, he was there for the 2004 tsunami) as managing director of Laguna Resorts and Hotels. For the past year, Batt has been vice president of hotel operations and marketing at Mayakoba, a 640-acre property along Mexico’s Riviera Maya that hosts the PGA Tour’s Mayakoba Golf Classic. Batt talked with Golfweek about expansion plans at Mayakoba, the future of the tournament and the status of Riviera Maya’s luxury resorts in a down market.
Golfweek: The three resorts at Mayakoba range from luxury to super-luxury. There are plans to add two more resorts. Where will those resorts fall on that spectrum?
James Batt: Exactly right there. I think what’s important is that the hotels maintain the luxury-super luxury space, but differentiate themselves from the hotels that exist. But in addition to hotels, they are going to need to support some real estate because that’s also part of Mayakoba’s brief. So having brands that will support that is no bad thing for us.
GW: Has Mayakoba re-signed to host the PGA Tour event?
GW: Will the Tour event move to the Fall Series, and what value does it bring to Mayakoba?
JB: I think we will know that (date) in the next 30 days. It will almost certainly move to the fall in 2013. But for 2012, we’re currently holding the date in February, but we’re (hopeful it) can be made to happen in 2012. And all I’m aware of at the moment is that the PGA Tour is working feverishly to see if that can be made to happen. From a hotel point of view, the fall would suit us much better. In February, we’re already sold out. So when we put the golf tournament on in February, we are displacing paying business. That would be far less likely to be the case in November.
GW: What does that tournament do for Mayakoba?
JB: It’s huge. The main labeling of Mayakoba comes through the Mayakoba Golf Classic. I think, however, that over the years we’ve been running it, it has done so largely in the golf space. Most of your readers are probably aware of Mayakoba through the Mayakoba Golf Classic. What we would like to do going forward is to leverage it more in the non-golf space so that we can appeal to more than the serious golfers.
GW: Let’s talk about Riviera Maya. Does it compete against, or work collaboratively with, Cancun?
JB: It’s works collaboratively with Cancun. But there is a reason why Riviera Maya has separated itself from Cancun. Don’t forget we have to share the airport with Cancun, so we are in bed with them for better or worse. But there is that spring break, all-inclusive Cancun image that is very different from the Riviera Maya image. I’m not sure that we use the word Cancun very often in our marketing materials for anything to do with Mayakoba because it does have a slightly negative connotation.
The interesting thing is, when we look at the statistics for arrivals to Cancun airport, we can see that certain nationalities have a propensity to stay in Cancun rather than the Riviera Maya, and others have a propensity to come to the Riviera Maya as opposed to coming to Cancun. I think that has a lot to do with the way the two destinations have been marketed. In the United States, it’s about 50-50 – half of them will stay in Cancun, half of them will come to the Riviera Maya. Whereas if we look at Great Britain, about one-tenth of the visitors stay in Cancun and nine-tenths will visit Riviera Maya. So I think Riviera Maya has done the right thing to differentiate itself a little bit from Cancun.
GW: What has been the impact of the recession on the tourist business along the Riviera Maya?
JB: We did a study of business in the Caribbean. We chose a group of super-luxury hotels in the Caribbean, and a group of super-luxury hotels in Mexico. And we plotted their changes in occupancy and average rate since 2008. In 2009, which is when we saw the big downturn, Mexico was fighting swine flu, the economic chaos, and to some extent the security issues that we can’t deny face us. At the same time, the Caribbean was facing only the economic chaos. So Mexico did have sort of a perfect storm. One year later – in 2009 over 2008 – Mexico in that super-luxury set had seen a 40 percent downturn, whereas the Caribbean set saw an approximately 20 percent downturn. So the Caribbean super-luxury hotels were affected about half as badly as the Mexican hotels. (For) year-to-date 2011 (through August), we see that the Caribbean hotels have clawed back 3 or 4 percent, and the Mexico hotels have fallen off by about the same amount. So we’re now looking at a situation where the Mexican downturn over 2008 is significantly more difficult than the Caribbean downturn. But the good news is that 2011 appears to be the year where we’re seeing some of that (business) come back. In Mayakoba (through August), we’re now 28 percent ahead of prior year in room nights, which is a lot.
GW: You’ve said that resorts that don’t adjust their pricing to meet market realities risk becoming “empty palaces.” What advice do you give to the resorts at Mayakoba regarding pricing?
JB: “Empty palaces” is an expression that I’ve probably used quite a bit in my career. Branding a hotel by saying we have the highest average rate doesn’t mean a whole lot – it’s the cash in the bank that matters. Let’s look at July and August. We know that there are visitors coming to the area. We were sitting on occupancies in the 30 percent area. And so we challenged the hotels to get out and promote in July and August. We saw revenues in one of the hotels nearly double in July and August over the prior year. Now, promoting does mean that we’re going to see a lower average rate, but what we look at is revenue per available room (RevPAR). When we look at the RevPAR, we see that it increased enormously. Profit increased, too, because we did more restaurant, bar and spa business.
GW: Can you share occupancy figures for those months?
JB: I can’t give it to you by brand, but in one of the hotels we did 57 percent this year as opposed to 44 percent last year. And in another we did 54 (percent) this year against 34 (percent) last year.