Latin America: an industry that does not stop

By: Duván Chaverra and Santiago Jaramillo

During this year, the magazine GERENCIA DE HOTELES & RESTAURANTES carried out an analysis of the different construction, remodeling and adaptation projects that were carried out in Latin American hotels, taking as a reference the reports of the website www.indumedia.com, which is responsible for continuously monitoring the industry of the region to provide updated information on this specific to its exclusive subscribers.

At the same time, an investigation was carried out in which we inquired about which are the countries that present the most movement in the hotel industry. We also examine the tourist demand that occurs in each of the nations of the region taking as a reference the number of rooms and the type of travelers; and we also seek to obtain appreciations on the reason for the investments, either in new hotels or in their remodeling.

These assessments were collected from the interviews conducted with some of the hotel managers who, due to the importance of their investments, were contacted in order to deepen us about it and also tell us about the expectations to be met and the vision they have of the hotel industry in the future.

In the same way, we made a comparison of the hotel movement that has been presented in the main destinations with the aim of determining the number of projects that are being developed and will be developed in the medium and short term.

We also quantified the investments with the top five countries, in a ranking based on the report provided by Indumedia and which was analyzed by the magazine. In this article you will find both graphically and in writing the summary and the conclusions that we managed to infer about the research.

Mexico, the benchmark of the region
The study allowed us to deduce that Mexico is a country where investments in new hotels are made continuously and with large sums of money. 251 projects amounting to US$1,305 million guarantee the hotel and tourism potential of the North American country.

Regions such as Sonora, a state located on the northern border, and the Federal District, are the ones that house the largest number of constructions. That is the case of the Paradiso Resort & Beach Club Hotel in Sonora, in which US$300 million was invested in a theater room and a new resort, which are planned to be developed up to two years.

To deepen us a little more about it, we consulted Salvador Gómez Medina, general manager, who said that "due to the development that has been generated in this area of the country, it was thought to carry out a profitable investment in the medium term, which would support the development of the community and the destination generating sources of work and positioning of the square".

On the type of guest who visits the hotel, Gómez told us that they are more focused on the corporate segment, since the destination "is characterized by offering facilities for meetings and conventions, as well as being a preferred place to rest on weekends."

In what has to do with the expectations for next year in the hotel industry, the businessman said that it will not be a completely comfortable year: "We think that this industry will not have a significant rebound for this 2010, however, the expectation is to maintain minimum production levels that allow us to continue in the market, attacking segments that require professional and good quality services".

Another South American country that has grown in industry investments is Colombia, in part because of the economic stability that is currently presented. Another factor that affects the increase of projects with the favorable conditions of security and development of the main cities of this country.

According to Óscar Rueda García, Colombia's Deputy Minister of Tourism, more than 16,000 rooms have been built since 2004. To highlight, the most visited cities are Bogotá, Medellín, Barranquilla and Cartagena.

Indumedia revealed two new hotels that are worth highlighting: The Gran Hotel Bogotá, with an investment amounting to US$27 million and the Hotel Spiwak Chipichape, with an investment of US$25 million.

Argentina opens space
This nation has 96 projects, which speaks very well of the projection that the country has as a tourist reference. It is worth mentioning that the value of the investments amounts to about US$207 million, concentrating these in cities such as Buenos Aires, Córdoba and Bariloche.

According to STR Global, the capital of this nation has about 950 new rooms in operation, which places it in a special place in terms of tourism preferences in Latin America. For example, the Park Hyatt Hotel in Buenos Aires, which has already begun its construction, will provide 183 new rooms and the total work will be 5,000 m2, thanks to an investment of US $ 70 million.

The Inca country surprises
Peru, which in the last two years has been registering the best numbers of economic growth, can not leave aside investments in hotels, therefore, we register a considerable amount of constructions and renovations, what is most striking is the interest of international chains to invest in the South American country.

One of the palpable cases is that of the Hotel Libertador, which in strategic alliance with the international chain Starwood Hotels & Resort has a presence in cities such as Lima, Cusco, Arequipa, among others. In this case, the investment of the hotel in Lima was US $ 100 million, which means that it will have 300 rooms distributed over 30 floors, in addition to having a conference room that will house more than 2 thousand people.

To talk a little more about it, Jorge Melero, general manager, commented that "Peru is a country that has the three fundamental vertices in which tourism can be developed, which are security, something to offer such as nature, culture and gastronomy, and venture into new segments such as congress and convention tourism".

On the current hotel offer that is presented in Peru, our guest replied: "Competition there is, but the expectation of growth in the number of passengers and foreign tourists in the next six years is important enough to be able to make the investment today."

For her part, María Sarvia Huertas, representative of the Pastoruri Hotel in Lima, which had an investment of US$3 million, highlighted the interest in implementing ecological systems: "Within the equipment are being considered, for example, the use of LEDs for the lighting of the environments, we will also implement mechanisms that recirculate hot water and taps that will help avoid water waste."

Such is the case of the Dominican nation, where we find projects worth close to US$133 million. A clear example of these investments is the IFA Villas Bávaro Resort & Spa Hotel, which is part of the Spanish group Lopesan.

Carlos Jiménez, general manager, told us about the important points that were fulfilled in the project: "To date, the complex has 652 rooms that were recently renovated, with an investment of US $ 30 million with which the four-star category was achieved; and the idea now is to start with a five-star plus, in the all-inclusive category with an investment of €110 million (about US$163 million)."

Another prominent hotel in this nation is the Camp David Ranch, which invested $1 million in renovations and new rooms. Its representative, Nicole Bermúdez, explained that in her country there is considerable competition and that is why they use alternative means to attract all kinds of customers to Santiago de los Caballeros, where the traditional site is located.

In Panama, El Budda Bar Hotel & Spa invested US$50 million in renovations thinking about what is coming for them in the coming years. Carlos Salinas, representative, commented on the development of the industry for 2010: "I see it as hard since banks are turning their backs on hotel developers, and therefore almost double the capital is required to invest. In other years, with the capital that today you make a hotel before you did up to three, but at the same time this is good for companies like us, which have enough capital since many hotels, at least in Panama, are not going to be developed and will remain in models ".

Costa Rica also witnessed the investment in the Barceló Playa Tambor Hotel, with US$237 million, represented in a new hotel that will house 248 rooms, 50 villas and other tourist attractions.

In conclusion
We can deduce that despite the economic crisis that was experienced in the world and that still disturbs some industries, the hotel sector is confident in the recovery, and therefore, bets on continuing with important investments in the Latin American area, because it is aware of the potential that exists in the region, hoping that the investment made today will give its best returns in the medium term.

Surely by 2010, investments will continue along this path or even grow, with the purpose of maintaining healthy competition in an industry that although it could be hit maintained its ascendant presence and aspires to continue being a dynamizer of local economies.

HOTEL & RESTAURANT MANAGEMENT is already starting to work on the following analysis on investment and renovation of hotels in Latin America, in order to give the reader a new guide on the development of the industry. We invite you to keep an eye on the following reports that you will find in your publication.