FOCUS: The Rise of Hotel Opportunities in Argentina

Co-authored by Elizabeth Karakachian, Marketing Co-ordinator, LHL Communications

Though Argentina has always sparked interest from investors around the world, some of the economic measures and political scandals related to the party that held the power for a decade (until December 2015) did not represent the best scenario for international investment. The more recent election of President Mauricio Macri, undoubtedly represents an important task of rebuilding the Argentinian economy and restoring its international credibility. Macri, already in his short stint thus far as president, has partially succeed with inroads here, and as such has been given the honor to host the World Trade Organization meeting in December 2017 along with the G20 Summit in 2018. Both events will be held in Buenos Aires.

South America ranks as the fourth largest travel destination in the world according to Statista. With an increasing interest from international travelers, the countries in this continent have come a long way with regard to infrastructure, hospitality, and tourism development (among other criteria) in recent years. Most notable of the South American countries is Argentina, which currently is the most visited Spanish-speaking country in South America (World Economic Forum April 2017).

Argentina has strengthened its destination promotion presence around the world by focusing marketing campaigns to build awareness around the great landscapes and experiences that it offers to travelers. The country’s national carrier, Aerolineas Argentinas, continues to expand airlift by adding inbound flights from the United States and Europe. Argentina strives to lead the South American travel industry by developing new hotels and other hospitality-related facilities.

In addition to its economic measures, which (among others) led to settle the country´s multi-billion-dollar debt and aid in the foreign exchange conflicts by favoring free trade deals with the United States, Argentina has shown great effort in pursuing transparency, — clearly showing its commitment to regaining the confidence of the international markets. Experts have now started to consider Argentina a frontier market. This title gives the country a competitive advantage with international investors as they see potential within such markets. While frontier destinations may have higher risks because they are emerging markets, the potential return on investment is also quite strong.

Investment Opportunities

Argentina has a prominent spot in the world’s supply market of astounding boutique hotels, which has helped conserve the history and culture of the Latin country. In addition to the many South American-based boutique properties, Argentina has been able to attract the leading global brands including Marriott, IHG, Hyatt, and Hilton.

Additionally, Argentina continues to lead the Latin American markets with the development of new hotel structures and other hospitality amenities. It remains the third largest economy of Latin America after Brazil and Mexico, with a GDP of more than $500 billion. In fact, it is the second country with a major proportion of middle class citizens, yielding therefore the smallest Gini coefficient of the region. As the Country Risk has fallen from 620 to 380 basic points between September 2015 and April 2016, a total of $22 billion domestic and foreign investment has been confirmed to date.

Clear Signs of Investor Confidence

With the steady rise in demand for hospitality development, the country has welcomed owners and operators to assist with increasing the well needed supply of hotel properties to the city:

  • Viceroy Buenos Aires – Viceroy Hotel Group (VHG) is expected to open its first Argentinian hotel in 2019. VHG has been selected to brand and manage this property which will comprise 125 hotel rooms and 30 residences. Viceroy Buenos Aires will be designed by esteemed architect Carlos Ott and will be located in the renowned Puerto Madero district.
  • Hampton by Hilton Bariloche – Hilton Worldwide plans to bring the Hampton Brand to Argentina as it continues to expand its portfolio throughout Latin America. Scheduled to open during the second quarter of 2018, Hampton by Hilton Bariloche will be part of a new-build, mixed-use development featuring 105 rooms.
  • Wyndham Nordelta Tigre Buenos Aires – Wyndham Worldwide continued on its successful journey in the Argentinian city by bringing the Wyndham Hotels and Resorts flagship brand to Buenos Aires in late 2015. Located across Nordelta Bay in Tigre, this 141-room hotel has already received the accolade of a 5-star property. In late 2016, Wyndham Hotel Group announced its acquisition of Latin America’s leading Fën Hotels, which added 26 management contracts across Argentina, Peru, Costa Rica, Uruguay, Paraguay, Bolivia, and the U.S.
  • Wyndham Hotel Group’s strength and significant scale as the company with more hotels globally than any other hotel company dramatically increases distribution, immediately enabling the company to grow faster in Argentina, and throughout the region ensuring more guests experience what Fën Hotels have to offer – according to Patricio Fuks, Fën Hotels CEO and co-founder.
  • Alvear Icon Hotel – With a grand opening in June 2017, and located in front of the Faena Arts Center, the $100 million, 34-story Alvear Icon Hotel features 159 rooms, nine floors with 50 residences, and a convention center for 1,300 people. This recent hotel opening now brings to five, the total number of hotels in the Alvear collection: The Alvear Palace Hotel, the Alvear Art Hotel, the Plaza Hotel and the Alvear Tower. The Icon, like its sister property, is a mixed-use building with both hotel and luxury residences.

Buenos Aires Tourism Growth

The numbers presented in the World Tourism Organization’s (WTO) Yearbook of Tourism Statistics clearly shows a continuous rise in international tourism arrivals to Argentina throughout the last two decades. The number of arrivals has more than doubled in that amount of time which also correlates with GDP per capita (current US$) during the same time period.

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International Tourism, Number of Arrivals in Millions

Buenos Aires itself is a city of tremendous culture and history and gives access to the landscapes and world wonders around it. The public transportation system in Buenos Aires (called the Subte) allows for a flow of travel from the city to the outer parts of the country. Its five lines connect its downtown neighborhood with the main tourist and hotel areas. The subway system also joins the main avenues and the railway/bus stations. The bus and train service provide tourists and citizens alike fast and efficient travel service along with food services and sleeping cars for longer journeys across the country.

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GDP per capita – current US$ in thousands

Rising from its Ashes

Observing the significance of Argentina and its capital city in the hospitality and investment communities for the last 40 years, the world has witnessed varying economic cycles and political decisions which greatly impacted its appeal. Currently, the industry finds itself at the start of a renewed positive outlook, with one of the more promising moments and opportunities for developing real estate and hotel related business in Argentina.

Source: http://hotelexecutive.com/business_review/5355/focus-the-rise-of-hotel-opportunities-in-argentina