The SLS hotel brand, part of Los Angeles-based SBE Entertainment Co., is expanding into Mexico, where it will manage five properties to be built by the Armar Group, a privately held Mexican real estate development and investment company.
The first two resorts will be built in Medano Beach in Cabo San Lucas and in the heart of the hotel zone in Cancun. The remaining three will be in Puerto Vallarta, Mexico City and Punta Mita.
"The demand for Mexico is there," said Arash Azarbarzin, president of the SBE Hotel Group. "The lift from the U.S. is great, and our SLS guests at our other properties in Beverly Hills, Las Vegas and South Beach kept asking when we would be in Mexico.
"We picked Cabo because it is an easy two-hour flight from Los Angeles. Cancun is readily accessible from Miami and other gateways. The others were selected based on the availability of sites, and all are major tourist destinations in Mexico."
The first phase of the Cabo San Lucas project, scheduled to open in 2017, will feature a 200-room SLS Lux Hotel and 250 residential/SBE club membership units.
A large site in Cabo along Medano Beach has been selected and will house the SLS hotel in the first phase as well as a Hyde property in the second phase. (Hyde is a new SBE brand that will launch in Miami next year.)
Guests at either hotel will have access to the amenities and facilities at each, although rooms at the Hyde property will be at a slightly lower price point.
The Cancun project, slated to debut in 2018, will feature a 150-room SLS Lux Hotel and 150 residential/club membership units.
The Puerto Vallarta, Mexico City and Punta Mita projects will be newbuilds and will follow building codes well above the minimum for hurricane construction.
None will be all-inclusive hotels.
"We will have packages that will include meals, but our guests want to curate their own experiences, including dining at the property and in restaurants outside the hotels," Azarbarzin said. "The all-inclusive business model goes against our business model."
The SLS hotels will target the luxury market but will offer value components along with the luxury experience.
"Our rates will be market-driven but will not be the highest prices in each destination," he said.
Other hotels in the current pipeline are planned for New York and Miami in 2016 and Philadelphia and Seattle in 2017.
"We've had growth ranging from 6% to 13% in all our properties in the first quarter of this year," Azarbarzin said. "We are very optimistic about Mexico going forward."