South America Hotel & Tourism perspectives

A “new era” seems to be emerging in this early 2017 after a hectic 2016, a year in which events of great impact occurred in the whole world such as Brexit, Dilma Roussef’s impeachment, attacks in Brussels, Nice and Berlin, Aleppo’s tragedy in Syria, Fidel Castro’s death and the assassination of Russia’s ambassador to Turkey, among others.

Although with greater resonance in Latin America, but undoubtedly with strong impact, it is impossible not to mention “Panama Papers” scandal and the billionaires bribes that came to light and that, according to the United States Department of Justice, Odebrecht would have paid to carry out works in Brazil, Guatemala, Mexico, Colombia, Ecuador, Argentina, Peru and the Dominican Republic.

As a breath of fresh air, remember that in the midst of the crisis that Brazil was going through, the country hosted the XXXI celebration of the Olympic Games under a climate of splendor though with some failures that did not overshadow the great celebration of world sports.

Of course, the signing of Peace in Colombia, which despite the internal political circumstances led to President Juan Manuel Santos to be awarded the Nobel Peace Prize.

A quick look at what ́s coming in 2017

2017 seems not to have started as a year that lags behind in high-impact news.

United States

It began with the assumption as President of the United States of a recognized businessman who has no record in the political life of the first world power.
The United States, Latin America and the whole world are beginning to note that a major shift seems to be taking place in the way of driving the destinies of the northern nation. Immigrants were the first to face this change, while the heads of countries such as Mexico, Germany and Australia seemed to have confirmed it in the events that had them as protagonists somehow. We’ll see what happens next.

At the time of writing these lines, Silicon Valley publicly declared against the American President’s “immigration veto.” Ninety-six technological companies located in the cradle of the industry that have transformed people’s lives worldwide have presented themselves as “amicus cuariae” (third parties to a dispute, who voluntarily offer their opinion to collaborate with justice) in the Federal Court of Appeals of San Francisco that will resolve on the suspension to the mentioned immigration veto.

Europe

Though significant, it seems to be just the beginning.

Europe will be a source of no less important news this 2017. The imminent electoral calendar seems to indicate the possibility of new high impact news.

On 15 March, citizens of the Netherlands will elect new deputies where the far right wing of the Freedom Party, the third most voted force in the previous elections, seeks to hold a referendum for the Netherlands to leave the EU (“Nexit”).

In Great Britain, British Prime Minister has said she wants to formalize the separation of the EU before the elections in France next April, aiming for the final separation to occur in early 2019.

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Foto: Jean-Paul Pelissier – Reuters

In the aforementioned elections in France, the expectation is focused on how far will go the National Front of Marine Le Pen, the populist who also favors the separation of his country from the EU.

 

That same month of April, Turkey will express itself in the polls where it will define whether to continue with the parliamentary system or on the contrary, will incline to a presidential system, a decision that would put Erdogan in a position of almost absolute power.

The dessert of this electoral panorama will undoubtedly be the general elections in Germany, the great European power, where it will be decided if Angela Merkel will remain in her fourth term. Her great opponent will be Frauke Petry, the leader of Alternative for Germany, right-wing populist party that is clearly against the migration policies of the current leader.

Austria and the Czech Republic will go through similar processes and in both cases with similar situations regarding the advance of the nationalist right.

China

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Foto: AFP

The other world locomotive has slowed its growth and it is unknown how this process will
continue. Used to grow at 10% a year, the country has seen its development rates decline since 2013 and it is estimated that 2016 closed in the order of 6.6%, the lowest level of expansion in the last quarter of the century. Some analysts expect a decline in 2017 with a deepening in 2018. The most pessimistic people even fear for a supposed hard and emergency landing, as Mike Jakeman of the Intelligence Unit’s Global Forecasting Team reports from the prestigious London-based magazine “The Economist”. “In this case, there will be a global recession because China is fundamental to the entire planet,” he warned.

Without going that far, the most relevant question will be how the relationship with the new administration of the United States evolves.

South America

The announced separation of the United States from the Pacific Alliance will undoubtedly be a blow to the trade treaty that gathers four major regional economies: Mexico, Peru, Chile and Colombia. The Pacific Alliance has been the trading bloc that has thrived in a world where most of the similar trade treaties have tended to crack. A few remember about the existence of the Andean Community and Mercosur, which is still in force, has been hit by the crisis of its two largest partners: Brazil and Argentina.

At the time of writing this, the first leaders of the largest South American economies, President Temer and President Macri, are meeting in Brazil, where Mercosur will surely be among the main topics on the agenda. The revival of both economies within the framework of new political realities could resurrect an agreement that leads and fuels the growth of the economy throughout the region.

South America: hotels and tourism business in 2017

Given such scenario, it may be strange to conclude in a positive vision of what to expect for this year 2017 in the hotel and tourism business.

However, the concrete signals from the major markets of the region (to which two of its main players- Argentina and Brazil- are starting to join again) in the figures of the last quarter of 2016 and the first month of this year are a clear positive sign, which seems to be the dawn of a long day that will cover the whole year to come.

With the exception of Venezuela, which unfortunately still shows no signs of starting to follow the long path that all recovery entails, all South American markets are forecasted to grow in the business in the order of 4.7% while some countries in particular will do so in the order of 6 to 9%.

Investments will accompany this growth and in many cases the projects in folder begin to take the state anticipating that they will begin to materialize during the current year. The second semester will be a great surprise, which will leave most skeptical people speechless.

Investments in South America

Investors in the region will definitely play the leading role in the above mentioned investments but, in a situation like the one described above, what can be expected from international investors is that they may lose expectations for certain markets, even if they are traditional markets. However, what they will never lose is their vocation for business.

South America will undoubtedly be a region to consider. A market that, although some years unpredictable and some uncertain, begins to become the alternative for those who can lose almost everything but their nose for opportunities.

The return to the sources

The world has changed and will continue to do so more and more by leaps and bounds. Latin America will do so as well and is seen as an increasingly attractive alternative.

Most countries in the region are well aware of the process that many countries in the northern hemisphere seem to want to start in order to safeguard what they have apparently lost.

The populism, nationalism and demagoguery of many Latin American leaders have been some of the most important reasons for the failure and delay in the development of their countries and, above all, of their people.

The focus, even when the realities can be hard and involve a lot of effort to carry forward, is on forgetting that populism and that demagoguery that have caused so much damage. Today, the goal is to recover the values of effort and grow again in a world that will be increasingly global or will hardly be.