This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.  Find out more here  Close
Opportunities in Brazil, Colombia, Chile, Peru
September 3 2013

Hoteliers are preparing for SAHIC, where they’ll discuss four South American countries that provide the most opportunity to invest in hotels with significant upside.

Highlights
  • The perception of Brazil’s hotel performance is hurt by the currency exchange rate.
  • The Colombian government is “aggressively” trying to ramp up hotel investment.
  • Santiago, Chile, has absorbed a good bit of 4-star supply.
     
By Jason Q. Freed
Contributing Editor, Tech Impact Report

GLOBAL REPORT—The way experts see it, there are four countries in South America that will provide the most upcoming opportunity for hoteliers: Brazil, Colombia, Chile and Peru.

While those four countries experienced slight lags in hotel performance from 2008-2010, their economies held up much better than the United States and Europe, and hotel performance rebounds came quicker and more easily, sources said.

For South America’s top markets, 2011 will go down as “one of the strongest years in recent history,” according to Clay Dickinson, executive VP of the Latin America region for Jones Lang LaSalle’s Hotels & Hospitality Group.

Economic outlooks and hotel performance softened a bit in 2012, but opportunities remain to purchase and develop hotels with significant upside, Dickinson said.

From 23-24 September, hotel developers, owners and operators will gather at the JW Marriott in Bogota—Colombia’s capital city—for the South American Hotel & Tourism Investment Conference to discuss South America’s challenges and opportunities.

Arturo Garcia Rosa, president of HVS Argentina and president of SAHIC, said the conference will bring together hoteliers from the U.S., South America, Europe and Asia to develop relationships that could lead to business partnerships in these hot South American countries.

“There is lack of knowledge about the hospitality business; we must educate potential investors,” said Daniel del Olmo, senior VP and managing director for the Latin America region within Wyndham Hotel Group. “… In addition, the construction and permitting environment in each market, and within each city, is still very complex. It takes an army to finalize efforts for one property due to the complexities of all the required permits.”

Garcia Rosa agreed the focus will be on Brazil, Colombia, Peru and Chile, with the most emphasis being placed on the global travel hub that is Brazil.

Brazil
“Fundamentally, Brazil has shown a bit of weakness in terms of (revenue per available room), especially in Sao Paolo,” Dickinson said. “Demand has weakened a bit but (average daily rate) continues to go up.”

According to STR Global, sister company of Hotel News Now, Brazil’s occupancy in July was 66.5%, down 1.9% from July 2012. Average daily rate was 259.74 Brazilian Real, up 6% year over year, and RevPAR was 172.65 Real, up 3.9% from July 2012.

Currency exchange rate can hurt the perception of Brazil’s hotel performance, Dickinson said. When converted to dollars, both ADR and RevPAR show year-over-year declines in Brazil due to the steady strengthening of the dollar and weakening of the Real.

“In local currency, decreasing demand is not enough to overcome rising ADR,” he said.

While rates lag a bit in Brazil’s capital city of Sao Paolo, Dickinson said the city is still undersupplied. Other markets, such as secondary cities around Rio—where the 2016 Olympic Games will be held—are very “supply constrained,” he said.

“There is more developable land where the Olympics are going to be, but there are oversupply concerns,” he said.

Colombia
Garcia Rosa said the Colombian government is “aggressively” trying to ramp up hotel investment and has put in place large developer incentives to do so.

SAHIC 2011 was held in Cartagena, but Garcia Rosa said HVS is now “going for the capital.”

“It gives attendees the opportunity to understand the market and appreciate it,” he said. “SAHIC, from the very beginning, the idea was to move the conference to different countries in the region.”

According to STR Global, Bogota’s July occupancy was 64.5%, up 15.9% from a year ago. July ADR in Colombian pesos was 274,385.68, up 1.8% from July 2012, and RevPAR was 176,934.53 Colombian pesos, up 18%.

Dickinson said Bogota is another market with oversupply concerns, “but nonetheless demand is growing strongly.” He blamed perceived underperformance on the volatility in dollar exchange rates.

Chile
“Santiago, Chile—that market continues to be very robust,” Dickinson said. “There is some supply coming online in the 4-star segment, but the market has proved to absorb that very well.”

According to STR Global, Santiago’s July 2013 occupancy checked in at 69.3%, down 7% from July 2012. However, ADR jumped 3.3% to 79,941.53 Chilean pesos, leaving RevPAR down 3.9% at 55,419.15 Chilean pesos.

Peru
According to STR Global, Peru reported July 2013 occupancy at 65.9%, down 1.6% over last year. However, ADR was up 18.3% to 407.19 nuevo sol, spiking RevPAR 16.4% to 268.24 nuevo sol, partly attributable to the site of 2012 SAHIC, the Westin Lima Hotel & Convention Center.

“In Peru, our properties around Lima’s international airport are seeing significant growth, as Lima is the primary gateway to cities that are seeing increased business and leisure travel, such as Cusco,” Del Olmo said. “Our hotels are ideally positioned and located to fulfill the need for hotel rooms as travelers make their way to additional markets throughout the country.”

“Lima’s fundamentals continue to be very strong,” Dickinson added, “even though they have moderated a bit.”

COMMENTS   Show All
Login or enter a name   Post Your Comment  Check to follow this thread via email alerts (must be logged in)
(4000 characters max)

Comments that include links or URLs will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff

TRENDING
How to get to No. 1 on TripAdvisor
5 changes coming in hotel financial reporting
Baha Mar’s setbacks point to larger issues
5 trends in hotel F&B profitability
5 performance trends in the top 25 US markets
Group business is back but changing
VIDEO
HDC attendees discuss revenue strategies
Hotel Data Conference: Day Two in review
Hotel Data Conference: Day One in review
NYU Investment Conference Recap
Hunter Hotel Conference postgame wrap
LATEST NEWS
Hoteliers react to sharing-economy competition
5 things to know: Alternative accommodations
The impact of the sharing economy on hotels
Top destinations crack down on Airbnb, others
Airbnb is an old idea with a new tech twist
An inside view of Airbnb in New York City
Contact Us
Hotel News Now
18500 Lake Rd.
Suite 310
Rocky River, Ohio 44116
        
Copyright © 2004 - 2014 Hotel News Now, a division of STR, Inc. All Rights Reserved.   Privacy