Latin America continues to be an industry that does not rest to renew and offer new services to guests that have increased in demand, which forces hotel guilds to improve and build new places to satisfy consumers.By: Duván Chaverra and Santiago Jaramillo
The year 2010 enters its final stage, there is already talk of results and reaches the moment in which the balance sheets begin to be the word of mouth of the industry.
HOTEL MANAGEMENT has within its responsibilities to give a vision of the behavior of the industry this year, and as we did in 2009, we rely on the information guide Indumedia.com, from where we could verify that investments, either for new hotels or for improvements in sites already in operation, continue at a constant and growing pace.
Although the data extracted by Indumedia in 2010 indicate that value investments were not as large in some establishments as they were in the previous year, we observe that both the number of hotels and investments were more representative, which indicates that the Latin American industry continues to increase its optimism for new investors who believe in the economic potential that exists within the region.
Mexico continues to reign in the ranking based on Indumedia, being the country with the highest number of investments registered between January and October 2010 with a total of 340 projects in remodeling or new construction, 89 projects more than the previous year. Peru also increased its results from 60 projects in 2009 to 103 this year. Similarly, Colombia continues to demonstrate its growth in the industry by improving its figures from 18 to 66 projects.
Countries such as Argentina remain in the average, reporting for Indumedia 87 projects compared to 96 in 2009. While Panama registered on this occasion a significant lower registration in 2010 with only one project, contrasting with the 10 it had the previous year.
But the overall index shows that most countries improved in investment this year, showing that the 2009 economic crisis has disappeared and that investor confidence is resurfacing.
Encouraging prospects
A behavior that has definitely favorably influenced the recovery of the hospitality industry is the strengthening of construction in the different countries of Latin America, which has been hand in hand with the reduction of interest rates for mortgage loans, as well as the high rate of development of projects of this type, that complemented by growth in the commercial, educational and office sectors have positively marked the industry.
In terms of mortgage credit, the last five years have been a period of constant growth in the countries of the Latin American region, with a wide dynamic of sales, filing of credit applications and disbursements, despite the onslaught of the global economic crisis that although they shook this industry did not manage to make a dent as it happened in other latitudes of the world.
So far in 2010, the sum of investment in commercial, educational, hotel and office projects in the region exceeds by 30% those of 2009, according to surveys made by different media and statistics of the region.
According to the latest World Bank report, in 2010 Latin American economies will grow by 4.2% and in 2011 and 2012 the average growth would be 4.5%, a level slightly lower than that registered during the last period of regional economic boom, but much higher than that of other regions of the world, especially industrialized countries.
According to the World Bank, growth in Latin America will be much higher than the global economic progression that will barely be around 2.9% and 3.5% in the next three years. Which puts the region as one of the strongest engines of global growth along with the Asia-Pacific region that will have growth rates of between 7% and 8% thanks to the push of China.
What this reflects is a very promising present and future outlook for the hospitality industry in the region, which thanks to its dynamics and knowledge of the market has been able to comfortably carry the different difficulties.
Latin American Bonanza
A phenomenon that has been gaining strength in the region, definitely, is tourism. This behavior has occurred thanks to the economic strengthening that the economy has had. According to data provided in 2009 by the International Monetary Fund (IMF), Brazil has the highest GDP in the region with US$ 1,570 million (54% of South America), followed by Venezuela (12%), Argentina (11%), Colombia (8%), Chile (6%) and Peru (4%). The remaining 5% corresponds to the other countries in the area.
This same IMF report highlights that the projections for next year in economies such as Peru (which tops the list in terms of performance and with growth prospects of 7.5% in 2010), Brazil (7.3%), Argentina (6.6%), Chile (5.3%) and Colombia (3.4%). For 2011, GDP growth rates are expected to be similar to those of 2010: Peru (6%), Chile (6%), Brazil (4.5%), Argentina (4.4%) and Colombia (4%).
This behavior in general of the economies in these countries, induces that broad expectations are generated in front of the hotel sector. As is the case of foreign investors who see in the business a good opportunity for expansion and generation of a new world order in terms of the hotel sector.
There are specific cases such as Colombia, Peru, Chile, which have developed a particular model that has generated great growth. Colombia, for example, currently has a high demand in the sector, which has even led it to generate oversupply.
The hotel union in this country revealed that after two years of degrowth the sector was reactivated. Last August, activity grew 1.5% compared to the same period last year. Cotelco established that in 2008 the average hotel occupancy in Colombia stood at 54.5%, in 2009 at 50.8% and this year the national average is at 52.3%, with the cities of Bogotá, Medellín, Cali and San Andrés being the best figures.
Meanwhile, Peru has had a very special behavior that puts it in a privileged place, according to figures from the National Chamber of Tourism (Canatur) the increase in tourist routes to and from Lima, the stable economic outlook and the favorable conditions of the country will make it possible to realize US $ 3,000 million in hotel investment by 2015.
According to Canatur, the five-star hotels located in the Lima district of Miraflores have an occupancy of more than 60%; while the four and three stars register between 70 and 80%, respectively.
According to Indumedia.com in the Inca country there are numerous investments, such as the one made by the Hotel Melodía (Lima), which totals US $ 15,000,000, justified in the creation of a new sustainable real estate development in 652 thousand square meters, based on the environment. Such as bungalows, recreational areas, restaurant, among others.
Chile also registered important investments during this year, such as the one being made by the Hotel Chapelco, an establishment located in the sector of La Araucanía and that suffered the rigors of the earthquake last February.
"We had to repair the ceilings, some walls and bathrooms throughout this year, fortunately we are already finishing with the renovations," said Myriam Reyes, representative of the hotel, which made an investment of US $ 2,400,000.
Other aspects in which the establishment invested were in the construction of seven suite rooms and in reforms in the reception area. In addition, the rooms were decorated in colonial style.
Myriam Reyes also assured that in the region where they are located, more hotels are needed, since tourism is growing representatively.
Among the countries in the region, Brazil tops the list in number of visitors, followed closely by Argentina and then by Chile. Brazil also leads international tourism revenues, with a total of US$ 5,305 million in 2009, representing 29.5% in South America, followed by Argentina with 21.8%, Peru (11.4%), Colombia (11.1%) and Chile (8.7%).
Brazil is the largest country in South America and one of the fastest growing; therefore, it is a great generator of tourism for the region. On the other hand, the organization of the FIFA World Cup Brazil 2014 and the 2016 Olympic Games (in Rio de Janeiro) promises to generate an extraordinary expansion for the industry and stimulate the arrival of visitors to Brazil and the main tourist destinations in South America. These two major events will bring with them important investments in Brazil. It is estimated that they will serve to increase the confidence of private investors, especially due to official policies for the sector. All these factors are expected to strengthen the overall economic situation, resulting in greater purchasing power and more tourism for the region.
All of the above results in an excellent outlook for the region, which will surely imply greater development in infrastructure, flow of tourists and services, which in the end does nothing other than generate profits for the sector.
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