Arturo Garcia Rosa, president and founder of the South American Hotel & Tourism Investment Conference (SAHIC) has released an updated Regional Economic Overview for the continent indicating that the economic activity and growth in Latin America is expected to finally pick up and reach an increase of 3% in 2015. “Growth has been sluggish the last few years,” claims Garcia Rosa, “though the recovery of the most advanced economies globally is an incentive for the economic growth in our region.” Three factors contribute to the slow-paced improvements in the region:
- The weakening of domestic demand
- Tougher and more volatile financial conditions
- Drop in raw material pricing
However, Garcia Rosa adds that despite the slow and steady uptick, the region remains appealing. At a global level, South America accounts for 2/6% of total international tourist arrivals, which in 2013 totaled 27.4 million travelers. “Although this percentage represents a small piece of the global pie, it is important to highlight its strong and steady growth in the last 13 years, with a 79% increase in the number of tourist arrivals since the year 2000.”
Tourism growth well above the world mean were exhibited in Bolivia, Peru, Colombia and Ecuador, while other countries like Paraguay have higher growth rates, but at a more moderate pace. Brazil keeps in line with global average growth rates and has succeeded in breaking the record of 6 million visitors. Noteworthy too is Chile – with a cumulative tourism growth rate from 2010-2013 of 30% – thanks in part to strong investment in the country’s international promotion of the destination.
Additionally, according to data compiled by STR Global in July 2013, there are 248 hotels in the pipeline in Central and South America, totaling 39, 127 rooms. The biggest hotel development growth can be seen in Paraguay, Colombia and Uruguay, with the greatest activity in the luxury segment.
“Many of the countries in the continent offer opportunities for development,” explains Garcia Rosa. ”Some of the countries have incentives for new construction, others are growing economically and showing transparency which make it interesting for foreign investors and international private funds. Colombia and Peru, for example, are very attractive these days. Ecuador, Bolivia and Paraguay are showing potential and interest from local companies (not necessarily hotel related) or regional investors. Brazil continues to be attractive, particularly for the volume of potential business, despite the fact that it can be a difficult place to get deals done.”
Additionally, it is significant to note that during 2012 and 2013, there were several hotel transactions, which is rather novel for the region. These sales include: Accor’s acquisition of 29 hotels belonging to Grupo Posadas; the sale of the Hotel Thunderbird El Pueblo in Lima; the purchase of the Marriott Plaza Buenos Aires by the Sutton Group, and the recent sale of the Ritz Carlton Santiago and Crowne Plaza Santiago hotels.
More trends, observations and analysis will be shared at the 2015 edition of SAHIC — South American Hotel & Tourism Investment Conference, to be held September 28-29, 2015 at the Westin Lima Hotel & Convention Center in Lima, Peru. SAHIC brings together more than 450 industry decision makers from 30 countries, and has established itself as the venue to uncover new development and investment opportunities in the region and establish new business relationships.