Lights and shadows of the hotel and tourism business in South America

Spanish version

After little more than ten days since the end of the fifth edition of SAHIC – the South American Hotel & Tourism Investment Conference-, which was successfully held in Lima and was attended by nearly 500 participants from 25 countries, is enough time to ponder on the expectations and comments collected both during the presentations by renowned speakers and in informal converstions outside sessions.

The presence of the highest number of participants ever in this fifth edition, certainly attests to the rising interest in understanding and being part of a region that offers countless business opportunities. Indeed, it is neither China nor India, but the region is no doubt a valid option, with stable and booming economies, in general, as is the case of the major countries in the region.

Brazil, that “different animal”, as one of the most prominent Brazilian consultants put it to differentiate it from its counterparts in the region, has woken up from its “siesta” and has started to grow again, which shows that the actions taken by Dilma Rousseff’s administration are proving successful.

The interest shown by investors and hotel chains in Brazil continues to be very strong in a market which is currently dominated by three groups; Accor, the largest hotel conglomerate in the country; Atlántica, led by Paul Sistare (a multi-brand conglomerate that initially started with Choice and then introduced other brands like Radisson and Park’s); and the newest arrival, BHG, led by Pieter van Voorst Vader. However, groups such as Marriott, Hilton, and Intercontinental progress on the development of upscale and selected services brands, segments where all are focusing, in a country with nearly 200 million inhabitants, where consumption is fuelling all sector of the economy.

There is also the issue of airports, which in some cases are totally congested, for example, Guarulhos, Sao Paulo’s main airport, whose facilities the government expects to put back into shape through a series of infrastructure investments planned in support of the two major sporting events to be hosted in the coming years – the FIFA World Cup 2014 and the Olympic Games 2016.

Apart from «this different animal” of Brazil, Peru, Colombia, and Chile have in turn been the stars of SAHIC 2012, as participants were eager to know Where, How, and With Whom to do business in their various destinations. It is an apparent competition that in fact turns out good for everyone. In our understanding, there will be neither winners nor losers in this “seeming struggle”. There is enough for everyone to get their fair share.

It appears that Argentina and Ecuador should work on their image. A top European investor, with major interests in the region, was quite forceful in this sense, stating, “We are very clear about it. We invest in Latin America where conditions are favorable, that is, in Brazil and Mexico, and recently in Chile, Peru, and Colombia. Venezuela, Ecuador, and Argentina are not part of our plans. We have too many problems to add yet more. Don’t forget that we as investors are neither pioneers nor daring people. We want to make sure we get the expected revenue and that we can make money without any trouble”.

Cierre de Campaña Electoral Venezuela – Foto El Universal

Venezuela is holding presidential elections next month, on October 7. We will then know whether the country will continue on its current path or whether winds of change will materialize. In the case of Argentina and Ecuador (two very different realities), their markets are quite dissimilar in size; one is South America’s main destination for international travelers (Argentina), with 5.7 million arrivals in 2011, while the other (Ecuador) has a variety of destinations to develop and attracted 1.3 million visitors in 2011. Both countries have shown an interesting expansion of the sector in recent years and will likely continue on this path despite the above comments. There is quite a lot to do in terms of attracting foreign investment, particularly by changing the image and by pulling down real or imaginary barriers as perceived by the international community.

Uruguay, always present at SAHIC, is a small player playing an increasingly bigger game and attracting investments that start to exceed the scope of Argentina, the always-on-top player. Brazil, the United States, and Europe (to a lesser extent at the moment) keep investing in this small and remote South American country.

Paraguay and Bolivia, particularly Asunción and Santa Cruz de la Sierra, have started to offer a series of business opportunities in the hotel segment. As a result of the huge reserves of natural gas, Santa Cruz de la Sierra is the city with the biggest growth throughout Latin America.

As can be seen, there are varied scenarios and much work ahead of us. On September 23-24, 2013, we will have the chance to check on the progress made during SAHIC’s next edition to be held in Bogota, Colombia. Let’s hope there are no shadows, only light. The region and especially its inhabitants deserve it.

Arturo Garcia Rosa
October 2, 2012

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