Guadalajara poised for hotel demand growth: HVS

The enhanced international standing of Guadalajara, Mexico, as recent host of the Pan Am Games and site of the upcoming Digital Creative City is generating hotel demand from broader channels, according to a report from HVS.

Although aftershocks of the global economic recession and the H1N1 influenza outbreak hit Guadalajara in 2009, businesses — including hotels — have largely bounced back, HVS said. In October 2011, the city hosted the Pan American Games, and more than 1,500 rooms opened between 2009 and September 2011. More than 340,000 room nights were generated over the length of the games, according to the HVS report, and the games’ total economic impact on Guadalajara amounted to more than 2.8 billion Mexican pesos (US$223 million).

The city is also known as Mexico’s “Silicon Valley” and is the country’s foremost software producer, as well as a leading producer of electronic and digital components, the HVS report noted. In conjunction with the Pan American Games, an area of approximately 578 acres (234 hectares) within Guadalajara’s historic center and around Morelos Park was set aside for an “athlete villa” complex, but the project was subsequently relocated, paving the way for Guadalajara’s Digital Creative City project. Supervised by the Massachusetts Institute of Technology, the Digital Creative City will comprise a cluster of companies focused on digital animation and video-game design, among other specialties, and is expected to generate more than 10,000 jobs in the market as well as hotel demand.

Overall, hotel occupancy in Guadalajara improved year-over-year from 2009 through 2011. Hotel performance reached record highs during the two weeks of the Pan American Games; however, oversupply has impacted both occupancy and rates in the greater market during shoulder and low seasons. Nonetheless, the games, coupled with commercial and group demand, contributed to occupancy increases in 2011, HVS said.

Rooms supply is anticipated to increase as the Digital Creative City project takes shape and to continue to grow over the next decade, especially within the full-service 4-star and 5-star categories, according to the HVS report. Average rates in Guadalajara are also expected to climb as high-quality, national and international hotel brands gain new confidence in the area.