South American hotel market growing strong

SANTIAGO, Chile—There’s bound to be a lot of smiling faces at the South American Hotel & Tourism Investment Conference later this month.  07 September 2011, By Shawn A. Turner, Finance – Editor HotelNewsNow.com

There’s bound to be a lot of smiling faces at the South American Hotel & Tourism Investment Conference later this month.

Colombia, Peru, Chile, Brazil—nearly every hotel market has seen growth.

“We are seeing for the last couple of years in Latin America, and mainly South America, that the economies are still growing,” said Arturo Garcia Rosa, president of HVS Argentina.

Arturo García Rosa HVS South America

The continent has had a strong 2011 thus far, according to research by STR Global, a sister company of HotelNewsNow.com. Year-to-date through July, South America recorded a 5.2% increase in occupancy to 66.2%; a 21.2% gain in average daily rate to US$142.83; and a 27.5% jump in revenue per available room to US$94.57.

Fueling hotel performance has been foreign visitation, Garcia Rosa said. The continent has seen 4% year-over-year growth in foreign visitors. That number climbs to 14% if the nations of Argentina, Brazil, and Chile are excluded.

The potential for investment and further development is sure to be a hot topic at SAHIC, which takes place 21-22 September at the W Santiago in Chile.

Most markets in South America remain undersupplied, Garcia Rosa said. Brazil, the site of both the FIFA World Cup in 2014 and Summer Olympics in 2016, is the site of a lot of activity as the country gears up to host the two massive events. There are approximately 150-160 hotels in development in the country, Garcia Rosa said.

Most of the development in Brazil, he said, will be in the midmarket sector.

“The (Brazilian) economy is growing every week,” Garcia Rosa said.

Potential in Chile
There is also potential for investment in SAHIC’s host country of Chile, Garcia Rosa said. The country’s stable, dependable economy provides for a favorable hotel transactions market.

Debt is available at terms similar to what is being underwritten in Europe and the United States.

Typical loan-to-value is in the range of 50% to 70%, Garcia Rosa said. Interest rates are also relatively low, he said.

“The market is little, but there are development opportunities; not only in the capital (Santiago), but in different cities,” he said.