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Inter-Continental unveils plans for Central America
Hotel & Motel Management / March 1, 1999

By Larry Luxner

SAN SALVADOR -- The long-neglected countries of Central America could get up to a dozen five-star business hotels over the next three years, thanks to a recently signed joint venture signed between Inter-Continental Hotels and El Salvador-based Grupo Poma.

Three hotels are already in business: a 228-room property in San Salvador, a 260-room hotel in the Costa Rican capital of San Jose, and a 150-room property in San Pedro Sula, a fast-growing industrial city in northern Honduras. All are known as Camino Real Inter-Continental Hotels -- a concept developed by hotel industry executive Alvaro Diago.

"The focus of our Latin American development strategy has been to expand among all the main capital and secondary cities of the region," said Diago, who in early February was promoted to president of Inter-Continental/Crowne Plaza's Latin American division after 29 years with the company.

"There was a very big vacuum when it came to our presence in Central America," said Diago, 49. "Through a friend of mine, we learned that Grupo Poma, which owns Camino Real hotels, was looking to brand its hotels with a company like ours, and they had interviewed with just about every major hotel chain."

In September 1997, Diago flew to San Salvador to meet with the chain's owner, Ricardo Poma, and struck a bargain the same evening. "Never in my life did I get a deal in one hour of meetings," he said. "Sometimes it takes years to get one hotel."

Poma, who already had Camino Real hotels in El Salvador, Costa Rica, Mexico and Honduras, had been part of the Westin group but was owned by a Mexican company. In 1993, Camino Real separated from Westin and Grupo Poma opened its own management firm, called Grupo Real, which later purchased the master franchise for Choice hotels in Central America.

"To develop the Choice brand, they concentrated on San Pedro Sula, Tegucigalpa (Honduras) and Managua (Nicaragua), because at that time, they assumed these three markets were more feasible for budget tourism than the upscale market," said Thomas Pauly, general manager of the Camino Real Inter-Continental San Salvador, which was built in 1972 and sits across the street from the biggest shopping mall in Central America.

After his meeting with Diago, however, Poma decided to hand over branding and reservations for his three properties to Inter-Continental while keeping the Camino Real name, which Pauly says "is very well-known in Central America." Last year, both the San Salvador and San Jose properties (average room rates of $95 and $103 respectively) had occupancy rates of 70%, while the Inter-Continental San Pedro Sula, where rates average $112 a night, enjoyed 74% occupancy.

At least nine more properties are on the drawing board, with planned investments of $25 million to $30 million per hotel. The next two to open, in early 2000, will be the 150-room Camino Real Inter-Continental in Tegucigalpa -- the hurricane-ravaged capital of Honduras -- and the 150-room Plaza Real Inter-Continental in Managua, Nicaragua, which still hasn't recovered from a 1972 earthquake.

Surprisingly, construction on the Tegucigalpa property began right on schedule in early December, only a few weeks after Hurricane Mitch roared through the region and left much of the city in shambles. Like the other properties, shopping malls will be built adjacent to each of the two properties under construction.

In addition, Grupo Poma is arranging financing to build a 150- to 200-room Camino Real Inter-Continental near Miami International Airport, in an area already bustling with new hotel construction. The six-story, L-shaped property, worth $50 million if all 250 rooms are built, would be owned by Poma and managed by Inter-Continental.

While Costa Rica is a well-known tourist destination and about 40% of the Camino Real Inter-Continental San Jose's guests are tourists, that's not the case in El Salvador or Honduras -- where 99% of guests are American or European businessmen.

Most of the people who stay at the two hotels in San Salvador and San Pedro Sula are executives coming to check up on garment factories or agribusiness investments. Since Mitch, however, both properties have hosted a number of World Bank and IMF officials involved in hurricane reconstruction efforts.

Interestingly, says Diago, "the so-called Asian financial crisis that has severely affected Brazil and Chile has not severely affected Central America," which tends to trade almost exclusively with the United States and is therefore less vulnerable to commodity and stock fluctuations in the Asian market.

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