SEPTEMBER 2012 | US$ 2,500
2011-2012 SOUTH AMERICA MARKET OVERVIEW
Prepared by:
Graciana García Iribarne Fernanda L’Hopital Mariela Cababié Pablo García Rosa Guillermo Reddig
Phones: +54-11-4515-1461 | From Brazil: (11) 3957-1496 | From Chile: (2) 656-3314 | From Colombia: (1) 589-7607 | From Peru: (1) 705-8417 www.hvs.com & www.hvssouthamerica.com
Regional Economic Overview based on a favorable balance of trade. The counter-cyclical policies adopted by some countries The recent performance of South America in terms of in the region, as well as the increasing relative weight of economic growth and political and institutional China in South American trade relations were some of stability has attracted interest among investors in the the factors that contributed to the fast recovery of the region, due to its promising business climate. The economies in the region. strengthening of the major economies of South The year 2011 saw growth for the region, although at America, and particularly the development of the more moderate levels than in 2010, in line with the primary cities of the region, represent significant global downturn and the toughening of policies. opportunities for potential investors. The expansion of more financially integrated raw- To place this in perspective, there follows some of the material exporting countries was led by a strong private indicators that reflect the investment climate in South domestic demand and underpinned by favorable raw America. material prices, very South America showed convenient external FIGURE 1: INVESTMENT CLIMATE INDICATORS signs of economic financing conditions, and slowdown in 2011 the outcomes of Overall 2012 "Ease of Doing Foreign Direct accommodative Business" Rank (out of 183 Long-term Investment consistent with the global macroeconomic policies economies) Sovereign Credit Flows 2011 (in recession Country South America World Rating millions) implemented in the past. Chile 1 39 A+ 5,476 Peru 2 41 BBB 8,119 In addition, most less financially integrated raw-material Colombia 3 42 BBB- 4,945 Uruguay 4 90 BBB- 2,526 exporting economies experienced vigorous growth in Paraguay 5 102 BB- 566 2011 (Argentina, Bolivia, Ecuador, Paraguay, Venezuela), Argentina 6 113 B 5,755 Brazil 8 126 BBB 67,690 mainly as a result of the high prices of raw materials and Bolivia 10 153 BB- 746 of expansionary policies. In some cases (Argentina, Source: Standard & Poor's; The World Bank Group; Economic Commission for Latin America Bolivia, Paraguay), Brazil’s dynamic demand also played (ECLA) a key role. The high international food prices, strong After a sharp economic slowdown in 2009 due to the domestic demand, and supply restrictions were all global economic crisis, South America showed clear signs instrumental in pushing up inflation rates (which in most of recovery in 2010, fuelled of these countries reached double digits). South America has shown by an increase in significant resilience to consumption and Argentina (8.9%) led the group in terms of economic growth in 2011, followed by Ecuador (7.8%), Peru the effects of the 2008- investment, as a result of (6.9%), Colombia (5.9%), Chile (5.9%), Uruguay (5.7%), 2009 financial crisis, and the implementation of stimulative policies, Bolivia (5.1%), Venezuela (4.2%), Paraguay (3.8%), and has recovered faster than inventory accumulation, Brazil (2.7%). Ecuador, Venezuela, Colombia, and Bolivia other regions in the higher commodity prices, bettered their 2010 performance, while the expansion of world. positive terms of trade and the other countries in the group was lower. On the other hand, Paraguay and Brazil were the worst performers as favorable external financing conditions. far as increasing their growth rates.
However, the pillars of this growth differed among the South America's better macroeconomic fundamentals various countries. Unlike those whose economies were combined with increased liquidity and uncertainty in more integrated to the financial markets of South capital markets in developed countries, along with America (those with lower spreads and higher credit historically low interest rates have all stimulated capital ratings such as Brazil, Chile, Colombia, Peru and flows across several countries in the region. These flows Uruguay), the rest of the region experienced restrictive and the rise in commodity prices (due to an increase in external financing conditions, so its growth was mostly global demand) have contributed to an appreciation in
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 2
nominal and real exchange rates in several countries in term and guarantee sustainability in the long run. the region, particularly in those adopting an inflation- targeting scheme and a floating exchange rate system. As far as the European crisis is kept under control, South America’s growth will very likely continue to improve, The currencies of the major economies in the region although at more moderate levels than in 2010-2011. appreciated between 2004 and 2008, with some Even if European financial problems do not get worse, exceptions like Argentina since 2006 onward, and the deterioration of global risk has already started to Colombia in 2006. In 2009, all the currencies of the affect South America. If risks increase, the region will not economies under study depreciated against the US be immune. One of the reasons is that bank branches in dollar. In 2010 and 2011, with the exception of the euro-zone hold 25 percent of total bank assets of Argentina, all local currencies appreciated vis a vis the Latin American countries, and many of those banks are US dollar. The chart below illustrates the inter-annual implementing more conservative credit policies to variations in exchange rates. strengthen their balance sheets.
FIGURE 2: EXCHANGE RATE EVOLUTION If the European financial crisis grew worse, the impact on the financial stability of euro-zone bank branches in 20% South America would be much more severe. Despite the fact that these banks have taken care to finance most of 10% their operations in Latin America with deposits held by domestic residents and in local currency, a greater
0% demand for US dollars is likely to occur, either due to a
% 2005 2006 2007 2008 2009 2010 2011 lower supply from their head offices or to a cut-off in
-10% external credit lines. This demand could lead to a reduction in the availability of credit in South American -20% countries, which would hinder confidence and private Argentina Brazil Chile investment. Furthermore, if European financial problems spread to other countries, raw material prices would fall, Source: HVS Buenos Aires based on data from Central thus negatively affecting growth and stability. Bank or the Institute of Statistics of each country The positive thing about this is that many South With regard to inflation rates, the year 2011 showed the American countries enjoy a sound macroeconomic and effects of slight overheating in most of the countries in financial situation thanks to the implementation of question. There are favorable prospects in that respect adequate policies following the 2008 crisis. for 2012 onward, especially in Peru, Chile, and Colombia. On the other hand, while Brazil and Uruguay will achieve In most countries, banks have a solid financial position, lower levels, inflation will continue to be a major monetary policy frameworks are credible, the levels of concern on the government’s economic policy agenda. international reserves are appropriate, and public Finally, inflation rates in Argentina and Venezuela will finances are robust. The major challenge lies in keeping remain high and hovering above double digits. these conditions in a highly uncertain scenario. The global economic scenario in 2012 looks less rosy. On the other hand, the stronger trade ties established Growth in developed countries has slowed down. with China by the regional economies, which were key to International financial markets are still under pressure their recovery, have made them more sensitive to a as doubts prevail about the health of advanced potential slowdown in China’s growth, especially on economies. The greatest risk lies in the evolution of the account of its potential impact on raw material prices European financial crisis. The progress made so far and hence on the fiscal accounts of many South American toward an all-round solution to the current European countries. fiscal and banking crisis has not yet appeased the The deceleration in the southern region will continue in financial markets. There is also uncertainty concerning 2012. However, domestic demand will keep rising more the United States as it has failed to produce a long-term than the GDP supported by a good confidence level. fiscal policy plan that may support growth in the short
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There will be a widespread slowdown in 2012, except in Finally, macroprudential policies should continue to be Brazil which, after a period of stagnation in the second part of the set of policies available. half of 2011, forecasts an uptrend through the implementation of a series of economic policies. It is important to underscore that, while growth prospects for South America are favorable, there are Peru (5.5%) will enjoy the greatest growth in South some latent exogenous risks that may affect South America in 2012, followed by Bolivia (5.0%), Colombia American economies. (4.7%), Chile (4.3%), Argentina (4.2%), Uruguay (3.5%), and Brazil (3.0%). Paraguay, on the other hand, will slow Although emerging economies are expected to keep down by 1.5%. expanding at a fast pace, the implementation of more restrictive internal policies and the global uncertainties appearing of late will slacken such growth prospects. FIGURE 3: REAL GDP FORECAST
10 08
06
04 % Change %
02 00 -02
-04 2012 2013 2014 2015 Argentina Bolivia Brazil Chile Colombia Paraguay Peru Uruguay Latam & Caribbean Source:IMF, World Economic Outlook Database, April 2012
For the 2012-2015 period, positive annual GDP variations are expected on the order of 4% for the main countries in the region. It should be noted that Peru stands as South America’s leader in terms of economic expansion.
In the South America´s countries where the GDP exceeds their potential level and domestic demand continues to be strong, the risk of overheating has decreased but is still not gone. In those economies with reduced inflationary pressure, inflation expectations in line with the goals set, and credible monetary policy frameworks, easing monetary policy could be appropriate until global uncertainty dissipates. If the situation deteriorates even further, the first line of defense should be monetary policy, including the provision of liquidity if required. In the meantime, the process of fiscal consolidation should move forward in order to prevent damaging fiscal credibility and rebuild margins for policy and political manoeuvre, given the risk of another global recession.
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Regional Tourism Overview
At a global level, South America accounts for 2.62% of total international tourist arrivals, which in 2011 amounted to 25.8 million travelers. Although this percentage represents a small piece of the global pie, it is important to highlight its strong and steady growth in recent years, with a 47% increase vis-à-vis 2002, when its market share was around 1.8%.
FIGURE 4: INTERNATIONAL TOURIST ARRIVALS PRECENTAGE CHANGE BY REGION AND WORLDWIDE
15,0
10 9 9 10,0 8 8 8 8 7 7 7 7 6 6 6 6 5,4 5 5 5 4,6 4 4 4 4 5,0 3 3 3 1 % Change % 0 0,0
-5,0
-7 -10,0 -9
Source: UNWTO, Barometer - July 2012 '11 vs. '10 YTD April-12
According to a survey conducted by the UNWTO (Figure For 2012, the UNWTO has published preliminary data on 4), the year 2011 was characterized by a continuous the first quarter of 2012, which showed a 5.4% increase uptrend in the tourist movement pattern already started vis-à-vis 2011, totaling 285 million international in 2010, which was rather arrivals, i.e. 15 million more than in the same period in In 2011 international slow in advanced 2011. The growth was led by Southeast Asia (9%), tourist arrivals in South economies and faster in followed by Northwest Asia (8%) and Central and developing economies. In America increased 9% vis- Eastern Europe (8%). The only negative result was seen 2011, international tourist à-vis 2010, almost in North Africa (-9%). So far this year, South America arrivals worldwide grew by stands as one of the regions with the biggest growth, doubling worldwide 4.6% vis-à-vis 2010, together with the abovementioned sub regions, Central average. reaching a total of 983 America, and Sub-Saharan Africa. million. South America, on the other hand, went up by Figure 5 illustrates the evolution of international arrivals 9.3% in 2011 as compared to 2010, almost doubling the during 2009-2011 by country, and compares them at a world average and just behind the Southeast Asia Sub- regional and global level. It clearly shows which region, which was the biggest growth area (10%) in the countries are growing above the world mean (4.6%); world. Argentina and Brazil, with Chile, Uruguay, Peru, and Paraguay standing out for reaching double-digit growth
and being above the regional mean (9.3%). It is
important to note the continuity of the regional
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leadership in the ranking of international arrivals, now significant demand generator. An example of this is the led by Argentina, which beat Brazil for the second opening of Westin Lima Hotel in June 2011, with a consecutive time by a very narrow margin (229,715 Convention Center with capacity for 2,000 attendees, visitors). However, Brazil will likely get back to the first placing Lima in the map of major events; and the even position with the organization of the world’s biggest newer announcement of CICB-Centro Internacional de sporting events in 2014 and 2016 – the FIFA World Cup Convenciones de Bogota-, designed to host 4,000 and the Olympic Games. attendees, projected for 2014.
FIGURE 5: INTERNATIONAL TOURIST ARRIVALS YEAR-ON-YEAR % CHANGE 2009-2011
25,0 24 22 20
20,0
14
15,0 13 13 % Change % 10 11 9 10,0 7 7 6 6 5 5 4 5,0 3 1 0,0 World South Argentina Brazil Bolivia Chile Colombia Paraguay Peru Uruguay America '10 vs. '09 '11 vs. '10 Sources: Mintur Argentina, Embratur Brazil, Sernatur Chile, Proexport & Das Colombia, Sernatur Paraguay, Mincetur Perú, Mintur Uruguay, UNWTO
It is worth underscoring the sharp growth of tourism in the region, which went up by 7% during the first quarter of 2012 vis-à-vis the same period in the previous year. Pipeline – New Hotel Projects
According to data on Central and South America FIGURE 6: RANKING ICCA 2011 gathered by STR Global in June 2012, there are 227 Ranking Country # Meetings Ranking City # Meetings hotels in the pipeline in Central and South America, 7 Brazil 304 16 Buenos Aires 94 totalling 32,242 rooms. Among the South American 18 Argentina 186 27 Rio de Janeiro 69 32 Colombia 113 33 Sao Paulo 60 countries enjoying the biggest growth figure Paraguay 36 Chile 87 43 Santiago, Chile 49 (38% with 796 rooms), Colombia (19% with 3,705 42 Peru 55 45 Bogotá 44 47 Uruguay 46 45 Lima 44 rooms), and Uruguay (11% with 529 rooms). Between 52 Paraguay 34 58 Cartagena 36 56 Ecuador 30 68 Asunción 30 January and July 2012, 24 hotels were inaugurated in the 77 Venezuela 11 76 Montevideo 27 region, and there are still 28 more to be opened along 83 Bolivia 9 92 Quito 23 the year. The Upper Midscale segment has reported the Source: International Congress & Convention Association (ICCA) greatest activity as it expects to open 903 rooms in 6 hotels, followed by the Upscale segment with 738 rooms According to the ranking 2011 of ICCA - International in 7 hotels. Congress and Convention Association-, which represents events organized by international institutions that rotate through a minimum of 3 countries, the countries of the region have been climbing up the ranks year by year, one of them ranking among the top 10 and six among the top 50. Likewise, investments in infrastructure announced in several markets project an even higher growth in this
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The following section will be focused on an analysis of eight of the region’s most representative markets: Bogota, Buenos Aires, Cusco, Lima, Montevideo Rio de Janeiro, Santiago, and Sao Paulo in order to identify trends and investment opportunities, based on their strong economic indicators, both current and projected; on their strong international increases in demand, above the regional and worldwide average.
It should be noted that the analysis herein included regarding the performance of the different hotel markets and segments is based on a representative sample of properties in these markets and segments and should therefore be regarded as a sample and not as information covering the full spectrum of properties. Should another kind of sample be considered, the results of this analysis would likely be different.
Additionally, although we have thoroughly looked into the hotel projects proposed and their current status in each of the segments and markets surveyed , it is impossible to ascertain which hotels will open in future given the nature and confidentiality of these developments.
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Argentina
Economic Indicators
In 2003-2007, Argentina’s economy enjoyed strong economic growth at rates higher than 8%. In 2008, these rates decelerated, and were practically nil in 2009, on account of the global economic crisis. On the other hand, the economic expansion was instrumental in reducing the unemployment rate by more than one percentage point between 2007 and 2011, and also in decreasing the debt-GDP ratio, which went from 67% in 2007 down to 44% in 2011.
FIGURE 7: KEY ECONOMIC INDICATORS - ARGENTINA
Estimates Indicator 2008 2009 2010 2011 2012 2013 2014 2015 after
GDP Constant Prices (% Change) 6.76 0.85 9.16 8.87 4.22 3.98 4.22 4.29 2010 GDP Current Prices (U$S, Billions) 328.13 310.35 369.99 447.64 472.82 501.24 523.97 540.69 2010 GDP per Capita, Current Prices (U$S) 8,256 7,733 9,131 10,945 11,453 12,032 12,465 12,751 2006 Inflation, End of Period Consumer Prices (% Change) 7.24 7.70 10.92 9.80 10.30 10.30 11.00 11.00 2010 Unemployment Rate (% of Total Labor Force) 7.88 8.68 7.75 7.15 6.66 6.32 6.16 6.00 2010 Population (Persons, Millions) 39.75 40.13 40.52 40.90 41.28 41.66 42.04 42.40 2006 General Government Gross Debt (% of GDP) 58.52 58.70 49.10 44.20 43.27 41.91 41.61 40.06 2010 Current Account Balance (% of GDP) 1.56 2.06 0.59 -0.50 -0.70 -1.14 -1.52 -1.51 2009 Exchange Rate (National Currency/U$S) 3.16 3.73 3.91 4.13 4.86 5.63 n/a n/a 2011
Source: International Monetary Found, World Economic Outlook Database, April 2012 * Private analysts estimate that inflation in consumer prices is considerably higher than official estimates since 2007 ** Central Bank of Argentina (BCRA). Annual average exchange rate until 2011. From 2012 data based on period end REM - BCRA
As to private investments, the signals sent out by the As to the peso stability, it remained stable against the US Government in recent months through the dollar since its devaluation in 2002 until 2008, under a implementation of economic policies, the expropriation floating exchange rate regime. Since 2009 onward, the of the country’s largest oil company, restrictions on peso started to devaluate and reached an exchange rate imports, foreign currency remittances, and on foreign of 4 pesos per US dollar at the end of 2010. It should be currency exchange have made private investors hesitant noted that since October 2011, a parallel exchange to invest in the country, either regarding new market has begun to develop with no official control, investments or reinvestments in existing companies. following the implementation of a permission system to purchase foreign currency imposed by the Federal With regard to inflation, economic experts agree that Administration for Public Revenue. This black market inflationary pressures have been strong since 2007 and has expanded as controls to purchase foreign exchange have remained unrecorded in official statistics. have become more stringent, which has risen the According to these private analysts, inflation rates have exchange rate to 1 US$/6.50 ARS, i.e. nearly 40% higher been on the order of 20% since that year onward. For than the official rate. 2012 and subsequent years, the inflation rate is expected Economic estimates indicate that the economy will keep to be higher than 20%. This is due to rising private growing although it will start to slow down in 2012. consumption, restrictions on supply (partly as a result of However, there are a number of doubts regarding the business disinvestment and of the impossibility to Government’s future political decisions and the import both finished products and production inputs), evolution of several relevant economic indicators such as the weakness of the Argentine peso vis-à-vis the US inflation, exchange rate, balance of trade, and fiscal dollar, the constraints imposed by foreign exchange accounts, among others. restrictions, and public spending which, as in previous years, will continue to increase in 2012.
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Tourism Indicators However, in recent months, the Brazilian real devaluation and the Argentine peso overvaluation have As illustrated in Figure 8, statistics show that in the last 8 decreased Argentina’s competitiveness against her years (2004-2011) international arrivals in Argentina neighbor, which led to a dip in the number of Brazilian have grown substantially at an average annual rate of tourist arrivals during the first months of 2012. 7.3%. During this period, international visitor arrivals shot up, going from 3,456,000 in 2004 to 5,663,000 in 2011. Buenos Aires FIGURE 8: INTERNATIONAL TOURIST ARRIVALS TO ARGENTINA – 2004 TO 2011 Buenos Aires is Argentina’s capital and largest city, in addition to being the second largest city in South 6,000 5,663 5,325 America, after the city of Sao Paulo. Besides being the 5,000 4,562 4,700 4,173 4,308 main gateway to international tourist arrivals for all 3,823 4,000 3,457 domestic final destinations, it has a wide array of 3,000 demand generators for all tourism segments, making
2,000 it a very attractive city for international tourism. Thousands 1,000 Tourism Indicators 0 2004 2005 2006 2007 2008 2009 2010 2011
Foreing Tourist Arrivals International arrivals at the Ministro Pistarini and Jorge Source: INDEC Newbery airports, Argentina’s main gateways, increased steadily during 2004-2008, in line with the country’s economic performance, where tourism stood out as one FIGURE 9: INTERNATIONAL TOURIST ARRIVALS TO of the most dynamic sectors of the Argentine economy. ARGENTINA BY COUNTRY OF ORIGIN – 2004 TO 2011 International tourist arrivals at the Ezeiza Airport dropped in 2009 as a result of the economic crisis and BoliviaOthers 4% USA/Canada 4% particularly of the swine flu (H1-N1) pandemic. In 2010 6% and 2011, consistently with the global scenario, the Brazil 23% trend reverted and international tourist arrivals picked up. Other America 9% FIGURE 10: INTERNATIONAL TOURIST ARRIVALS TO BUENOS AIRES THROUGH MINISTRO PISTARINI – EZEIZA Paraguay Chile 19% 11% INTERNATIONAL AIRPORT AND JORGE NEWBERY INTERNATIONAL AIRPORT – 2004 TO 2011
Uruguay 3,000 11% Europe 13% 2,648 2,692 2,418 2,500 2,377 Source: Mintur 2,147 2,083 2,000 1,876 Chile was at the top of the ranking of outbound travelers 1,586 to Argentina until outshone by Brazil in 2010. The flow 1,500 of Brazilian travelers into the country has increased 1,000 remarkably in recent years, especially on account of Thousands 500 Brazil’s economic recovery and of a favorable exchange rate. 0 2004 2005 2006 2007 2008 2009 2010 2011 Tourist Arrivals In 2011, Brazil was the largest source of outbound Source: INDEC travelers into Argentina, accounting for 23% of visitors, closely followed by Chile with 19%. Europe was lagging behind with 13%, while Uruguay ranked fourth with 12%.
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Market Performance while the Upper Midscale & Midscale segment exceeded 2008 rates by 10% during the first half of 2012. In 2008, average occupancy in the Luxury and Upper Upscale, Upscale and Upper Midscale, and Midscale A series of inaugurations have taken place in the Upscale segments was around 72%, 74%, and 75% respectively, segment in recent years, such as the Hotel Novotel and in line with the increase in the number of tourist arrivals several properties operated by NH and Fen Hoteles, in the city, which was stimulated by the country’s and among others. This new hotel room supply, mostly the region’s marked growth at the end of that year. concentrated in late 2009 and the beginning of 2010, has made the market more competitive in terms of ADR, Due to the global economic crisis, severely felt in late which partly accounts for the drop of nearly 7% in 2008 and during 2009, and to a great extent on account average rates in said segment. In 2011, average rates of the swine flu (H1N1), occupancy dipped by 19%, 23%, went up by 16% but could not attain 2008 levels. and 11% in the above segments in 2009 vis-à-vis 2008. The average rate, which was also hit by these events, dropped by 9% in the Luxury & Upper Upscale segment, FIGURE 12: UPSCALE HOTEL MARKET PERFORMANCE - by 12% in the Upscale segment, and by 16% in the Upper BUENOS AIRES
Midscale & Midscale segment. 120 85%
80% Toward the end of 2009, the world economy began to 100 75%
show signs of improvement. It was also noted that both 80
Argentina and the region had been less affected by the 70% 60
global financial crisis and had managed to pick up faster 65% Occupancy
than other countries in the northern hemisphere. Thus, 40 US Dollars US 60% demand started to grow steadily in late 2010, almost 20 reaching 2008 occupancy levels in all segments (to a 55% 0 50% lesser extent in the Upscale segment). This uptrend was 2008 2009 2010 2011 jun-11 jun-12 possible thanks to recovery in the global economy, to the YTD YTD
growth of the main countries in the region that are Average Rate RevPAR sources of outbound travelers to that destination, and to Source: STR Global Occupancy a favorable exchange rate, particularly against the Brazilian real. The Upper Midscale & Midscale segment began to show a faster growth of average rates in 2010, which shot up by FIGURE 11: LUXURY & UPPER-UPSCALE HOTEL MARKET 19% in 2011, thus surpassing 2008 levels. PERFORMANCE- BUENOS AIRES FIGURE 13: UPPER MIDSCALE & MIDSCALE HOTEL MARKET 250 85% PERFORMANCE - BUENOS AIRES
80% 200 100 85% 75% 90 80% 150 80 70% 70 75%
65%
Occupancy 60 US Dollars US 100 70% 50 60% 65%
40 Occupancy 50 Dollars US 55% 30 60% 20 0 50% 55% 2008 2009 2010 2011 jun-11 jun-12 10 YTD YTD 0 50% Average Rate RevPAR 2008 2009 2010 2011 jun-11 jun-12 YTD YTD Source: HVS Buenos Aires Occupancy Average Rate RevPAR Source: STR Global Occupancy
However, average rates have not experienced such a rapid improvement and have behaved differently in the three segments in question. The Luxury & Upper Upscale and Upscale segments have not yet reached 2008 levels,
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The Puyehue Volcano in southern Chile erupted in late Alvear Puerto Madero, and a hotel within the Madero April 2011 and spewed tons of ash on cities located in Harbour Mixed-Use Development will be inaugurated. southern Argentina and also, due to the wind direction and strength, on the City of Buenos Aires. The event FIGURE 14: LUXURY & UPPER UPSCALE MARKET SUPPLY continued with decreased intensity until October of the PROJECTION 2012 - 2015 same year and caused cancellation of hundreds of flights, consequently affecting hotel occupancy in Buenos Aires as many passengers called off their trips. 4.500
Notwithstanding this, occupancy rates consolidated in 4.000 2011 and reached similar levels as 2010 in the Luxury & Upper Upscale and Upscale segments. The Upper 3.500 Midscale & Midscale segment, however, declined by 7%, 3.000 but at the same time increased its average rate in US AvailableRooms 2.500 dollars by 19%. 2.000 According to 2012 YTD results, occupancy rates have 2012 2013 2014 2015 decreased between 3 and 9%, depending on the segment Projected New Rooms Supply Source: HVS Buenos Aires (again the Upscale segment is the worst hit). This slump *2012 includes projects opening in the same year became even more evident in April 2012 and may in part be explained by a number of factors; Argentina’s In 2012, the Hotel Boca Juniors by Design, the first inflation making the country a less attractive destination football-themed hotel, has been opened in the Upscale for foreign visitors, especially Brazilians, who have segment. Keeping up with the trend in recent years, a changed their shopping or ski tours in Argentina for a number of hotels will be inaugurated in coming months; trip to Miami; the European economic crisis; Argentine Dazzler Flats Quartier San Telmo, Dazzler Flats Palermo, foreign exchange restrictions, and the greater number of and Buenos Aires Grand Hotel, among others. public holidays that affects corporate travelling, to name a few. FIGURE 15: UPSCALE MARKET SUPPLY PROJECTION 2012 - 2015 According to 2012 YTD results, average rates in the Luxury & Upper Upscale and Upper Midscale & Midscale segments have climbed between 4 and 7% respectively, 5.500
while the Upscale segment has remained stable. 5.000
However, in recent years, the rise in average rates in 4.500
Argentine pesos has been lower than the rate of inflation, 4.000 so that the former cannot keep pace with the increase of 3.500
Available Rooms Available most operating costs, hence affecting profitability margins. This phenomenon is one of the major concerns 3.000 for hotel owners. In addition, it discourages potential 2.500 2012 2013 2014 2015 investors in the hotel industry. New Projected Room Supply
Source: HVS Buenos Aires Trends *2012 includes projects opening in the same year
Market demand prospects are uncertain for the current and upcoming year. Taking into account the dip in hotel occupancy rates in all segments in recent months, plus the local and global economic situation already described, the downtrend is expected to continue unless new actions succeed in reversing it. The market average rate will probably remain stable at the levels reached in 2011, or else pick up slightly as a result of local inflation.
After remaining stable for the last 6 years, hotel supply in the Luxury & Upper Upscale segment has started to expand. Between 2012 and 2014, the Alvear Art Hotel,
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Other hotels that have been announced or are under construction in the Upscale segment include the Hotel Two, Proposed Hotel located next to the current Hotel Aspen, Proposed Hotel in Puerto Madero, Proposed Hotel in San Telmo, Proposed Hotel at the corner of Córdoba and Reconquista streets, and Proposed Hotel in the Barrio Norte quarter.
FIGURE 16: UPPER MIDSCALE & MIDSCALE MARKET SUPPLY PROJECTION 2012 - 2015
600
400
200
Available Rooms Available
0 2012 2013 2014 2015 New Projected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
It should be noted that in recent years a number of hotel developments have started in the outskirts of Buenos Aires city, both belonging to local and international chains and in various segments. Among these hotels figure the InterContinental Nordelta (2011), Holiday Inn Ezeiza (2012), Dazzler Escobar (scheduled for 2012), Crowne Plaza Greenville of 120 rooms (scheduled for 2013) Floreal del Sol Mantra Hotel & Spa (scheduled for 2014). This trend is the result of a suburban boom, both in the residential and office segments that have moved to Greater Buenos Aires areas.
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Brazil
Economic Indicators
FIGURE 17: KEY ECONOMIC INDICATORS - BRAZIL
Estimates Indicator 2008 2009 2010 2011 2012 2013 2014 2015 after
GDP Constant Prices (% Change) 5.17 -0.33 7.53 2.73 3.03 4.15 4.00 4.12 2011 GDP Current Prices (U$S, Billions) 1,650.39 1,622.31 2,142.93 2,492.91 2,449.76 2,520.62 2,690.75 2,871.85 2011 GDP per Capita, Current Prices (U$S) 8,704 8,472 11,089 12,789 12,465 12,728 13,488 14,279 2010 Inflation, End of Period Consumer Prices (% Change) 5.90 4.31 5.91 6.50 4.96 5.02 4.50 4.50 2011 Unemployment Rate (% of Total Labor Force) 7.90 8.08 6.74 5.97 6.00 6.50 7.00 7.00 2011 Population (Persons, Millions) 189.61 191.48 193.25 194.93 196.53 198.04 199.49 201.12 2010 General Government Gross Debt (% of GDP) 63.54 66.92 65.15 66.18 65.10 63.12 61.45 59.88 2011 Current Account Balance (% of GDP) -1.71 -1.50 -2.21 -2.11 -3.22 -3.16 -3.28 -3.38 2011 Exchange Rate (National Currency/U$S) 1.84 1.99 1.76 1.67 n/a n/a n/a n/a 2011
Source: International Monetary Found, World Economic Outlook Database, April 2012 * Central Bank of Brasil. Annual average exchange rate until 2011 For more than a decade, Brazil has been one of the developing world's great hopes, outpacing the growth of household debt, currency appreciation, and higher labor Western Europe and the U.S. Many have even predicted costs (which are not offset by productivity). As a result, it would soon become a global superpower. the credit market has shrunk together with the manufacturing sector’s competitiveness. In future, it is Similar pressures are starting to hurt Brazil as most of expected that a drop in interest rates, favorable raw the other so-called BRICS countries — including Russia, material prices, , and a slight readjustment of the growth India, China and South Africa — whose fast growth has model more oriented to the supply side will keep the been turning them into world top players. country on the growth track. This rise, however, will not be higher than 4% in the medium-long run. This scenario Economic turmoil in Europe is cutting into demand for shows a clearly downward trend as in the long term it manufactured goods such as aircraft. Meanwhile, Brazil's depends on the moderation in credit markets and in tax still-strong currency (the real) makes its exports less policies. competitive; this situation, however, is gradually reversing. Tourism Indicators
Global turmoil and internal factors like deceleration in Brazilian tourism grew considerably in 2004 and 2005. credit growth and industrial weakness have hindered However, international tourist arrivals declined in 2006, Brazil’s economic recovery in 2012. The panorama will and a steady flow was kept between 2006 and 2008. One hopefully improve in future as a result of the rising of the main reasons for this slump was the substantial support provided by the country’s monetary policy. appreciation of the Brazilian real against the US dollar in late 2008, which turned Brazil into a more expensive In 2010, Brazil's economy expanded by 7.5%, but it only destination for foreigners (particularly the unfavorable managed 2.7% growth in 2011, while estimations for the Brazilian real exchange rate against the Argentine peso upcoming year are around 4%, in line with the and its impact on the main source, Argentina); the projections for the region. problems arising in Brazilian airports due to Brazil’s aviation crisis; and Varig’s financial crisis, which was Short-term inflation expectations have edged up in line seemingly responsible for turning away nearly 400,000 with the economy’s decline. Therefore, the inflation rate foreign travelers in 2006. In 2009, the number of visitors in 2012 would be near 5%, which shows significant reached its lowest level in the decade, and then started improvement as compared to 6.5% in 2011. to ramp up in 2010 and 2011.
The stagnation of the economy throughout the last year Brazil would be about to launch a new tourism campaign has raised doubts surrounding the sustainability of as the next host of the world’s biggest sporting events, Brazil’s growth model, centered on credit expansion and which will involve an investment of US$ 40 million until private consumption. A constant focus on demand has late 2014, plus the influx of visitors projected for that created substantial problems such as increased year.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 13
As illustrated in Figure 18, statistics show that in the last 8 years (2004-2011) international arrivals in Brazil have Rio de Janeiro grown moderately at an average annual rate of 1.8%. During this period, international visitor arrivals climbed Rio de Janeiro is the capital city of the namesake state slightly, going from 4,793,000 in 2004 to 5,433,000 in and the country’s main tourist attraction. Known as 2011. “Cidade Maravilhosa” (Marvelous City), it is FIGURE 18: INTERNATIONAL TOURIST ARRIVALS TO BRAZIL – internationally renowned for its cultural landmarks 2004 TO 2011 and landscapes, like the Sugarloaf Mountain, the statue of Christ the Redeemer (one of the seven 5,600 5,433 wonders of the modern world), the beaches of 5,358 5,400 Copacabana and Ipanema, New Year’s Eve 5,161 5,200 celebrations, and Carnival, to name a few. It is also 5,017 5,026 5,050 5,000 one of Brazil’s major economic, cultural and financial 4,794 4,802 4,800 hubs, and has the second largest GDP in the country
th Thousands 4,600 and the 30 in the world. Rio will increasingly become the center of attention worldwide over the coming 4,400 2004 2005 2006 2007 2008 2009 2010 2011 years as it will host major sporting events like the FIFA Foreign Tourist Arrivals World Cup 2014 and the Olympic Games 2016. Source: EMBRATUR
Tourism Indicators
As illustrated in Figure 20, statistics show that in the last According to recent data from Embratur, Argentina and 8 years (2004-2011) international arrivals in Rio de the United States stand as the biggest outbound travel Janeiro’s Galeao International Airport and Santos markets, with 29% and 11%, respectively, with Uruguay, Dumont Airport have grown moderately at an average Germany, Italy, Chile, France, and Paraguay lagging far annual rate of 3.3%. During this period, international behind. visitor arrivals increased slightly, going from 779,000 in 2004 to 978,000 in 2011.
FIGURE 19: INTERNATIONAL TOURIST ARRIVALS TO BRAZIL FIGURE 20: INTERNATIONAL TOURIST ARRIVALS TO RIO DE BY COUNTRY OF ORIGIN - 2011 JANEIRO 2004 TO 2011
1,200 978 1,000 886 926 833 779 758 750 Others 800 744 20% Argentina 29% 600 Bolivia 2% 400
Colombia 2% Thousands 200 UK 3% Portugal 0 3% USA 11% 2004 2005 2006 2007 2008 2009 2010 2011 Tourist Arrivals Spain 4% Source: EMBRATUR Paraguay 4% France 4% Uruguay 5% Chile 4% Germany 4% Italy 4% Source: EMBRATUR
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 14
Market Performance From 2008 onward, average occupancy in the Upscale segment increased substantially until reaching almost Average occupancy in Luxury & Upper Upscale hotels in 90% in the first half of 2012. These growth rates, Rio de Janeiro grew by 10.4% in 2011, continuing the however, have gradually decelerated throughout said 2010 uptrend (10.9%), after the decline in 2009 (-6.6%). period. Hotel demand was stimulated by economic growth and investment in Brazil. Occupancy rate growth slowed On the other hand, average rates in the Upscale segment down during the first half of 2012, with an increase of kept pace with the expansion in demand and even 3.4% vis-à-vis the same period in the previous year. attained higher growth levels, except for 2009.
FIGURE 21: LUXURY & UPPER UPSCALE MARKET Trends PERFORMANCE - RIO DE JANEIRO The current number of beds in Rio de Janeiro is not
400 85% enough to meet the needs of the city’s corporate and leisure travelers. In recent years, Rio de Janeiro has seen 350 80% a hike in the number of events organized and in the 300 75% influx of visitors; however, hotel developments are 250 70% insufficient to match demand. 200
65% Occupancy US Dollars US 150 60% 100 FIGURE 23: LUXURY & UPPER UPSCALE MARKET SUPPLY
50 55% PROJECTION - RIO DE JANEIRO – 2012 A 2015
0 50% 2008 2009 2010 2011 jun-11 jun-12 YTD YTD Average Rate RevPAR 3.000 Occupancy 2.750 Source: STR Global 2.500
2.250 2.000 1.750 1.500 1.250
Avialable Rooms Avialable 1.000 The average rate in US dollars in the Luxury & Upper 750 500 Upscale segment rose by 12.9% in 2011 as compared to 250 0 2010; however, it should be noted that in local currency 2012 2013 2014 2015 terms the variation was smaller due to the Brazilian real New Projected Room Supply appreciation. In the first half of 2012, the average rate Source: HVS Buenos Aires went up by 8.3%. *2012 includes projects opening in the same year
FIGURE 22: UPSCALE HOTEL MARKET PERFORMANCE - RIO Rio de Janeiro has always been Brazil’s most expensive DE JANEIRO market and, in the past years, the country’s growing demand and expanding economy have contributed to a 250 100% rise in hotel occupancy and average rates in the city. 90% 200 80% This uptrend in occupancy and average rates will
70%
150 60% continue thanks to the events and conferences to be
50% hosted in Rio in the coming years.
100 40% Occupancy US Dollars US 30% With regard to projects in the Luxury & Upper-Upscale 50 20% segment, the Hotel Grand Hyatt Rio de Janeiro featuring 10% 408 rooms is expected to open in mid-2015. 0 0% 2008 2009 2010 2011 jun-11 jun-12 YTD YTD Average Rate Source: STR Global
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 15
As far as the Upscale segment is concerned, although we FIGURE 25: INTERNATIONAL TOURIST ARRIVALS TO have not identified any publicly-known projects, the GUARULHOS INTERNATIONAL AIRPORT AND CONGONHAS segment’s high occupancy rates will undoubtedly INTERNATIONAL AIRPORT – 2004 TO 2011 stimulate new hotel supply coming into the market. In connection with the Upper Midscale & Midscale segment, 1,200 978 1,000 886 926 an Hotel Ibis is scheduled to open in Copacabana in 833 779 758 October 2012. 800 744 750 FIGURE 24: UPSCALE MARKET SUPPLY PROJECTION – RIO DE 600
JANEIRO -2012 TO 2015 400 Thousands 200
3.500 0 3.000 2004 2005 2006 2007 2008 2009 2010 2011
Tourist Arrivals 2.500 Source: EMBRATUR 2.000 1.500
Available RoomsAvailable 1.000
500 Market Performance
0 2012 2013 2014 2015 During 2009, the global financial crisis led to an New Projected Room Supply occupancy decline in all market segments, which Source: HVS Buenos Aires *2012 includes projects opening in the same year amounted to a fall of 9% in the Upscale segment, 6% in the Luxury and Upper Upscale segment, and 8% in the Upper Midscale and Midscale segment. Average rates were also affected to a lesser extent, with a drop of 4% in the Luxury and Upper Upscale segment and of 3% in the Upper Midscale and Midscale segment, and a rise of nearly 2% in the Upscale segment. Sao Paulo FIGURE 26: LUXURY & UPPER UPSCALE HOTEL MARKET Sao Paulo has a population of approximately 20 PERFORMANCE - SAN PABLO million and is South America's largest city. A strong industrial activity has stimulated its expansion and the 350 85% development of a wide and diverse culture, which has 300 80% turned Sao Paulo into Brazil's most educated town. Its 250 75%
inhabitants, the majority holding an academic degree 200 70% and having middle-class status, have varied ethnic 150 65% backgrounds and have created one of the most Dollars US dynamic cities in the world, which is home to Brazil’s 100 60% most distinguished universities 50 55%
0 50% 2008 2009 2010 2011 jun-11 jun-12 Tourism Indicators YTD YTD Average Rate As illustrated in Figure 25, statistics show that in the last Source: STR Global 8 years (2004-2011) international arrivals in Sao Paulo’s Guarulhos International Airport and Congonhas Airport have dipped slightly at an average annual rate of 0.5%. In the last 8 years, visitor arrivals declined a little, going from 2,168 in 2004 to 2,094 in 2011.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 16
FIGURE 27: UPSCALE HOTEL MARKET PERFORMANCE –SAN hotel is 10 years old. This is an untapped business PABLO opportunity for lack of funding sources. With regard to occupancy, the Luxury & Upper Upscale 200 85%
180 segment has enjoyed the fastest recovery, with a 15% 80% 160 increase, while the Upscale segment has gone up by 13%,
140 75% and the Upper Midscale & Midscale segment by 8%.
120 70% 100 In 2011, average rates in US dollars rocketed (30% in the 65%
80 Occupancy US Dollars US Upscale segment, 29% in the Luxury & Upper Upscale 60 60% segment, and 22% in the Upper Midscale & Midscale 40 55% segment). Like in the previous year, the rise in average 20 rates in local currency was lower for the same reasons. 0 50% 2008 2009 2010 2011 jun-11 jun-12 YTD YTD On the other hand, occupancy has remained stable in all Average Rate Source: STR Global segments, with a slight hike of 1-2%, although reaching record levels in the period under study. FIGURE 28: UPPER MIDSCALE & MIDSCALE HOTEL MARKET PERFORMANCE - SAN PABLO According to 2012 YTD results, the trend has changed as occupancy starts to drop more sharply in the Luxury & 140 85% Upper Upscale and Upper Midscale & Midscale segments 120 80% (6%), while the Upscale segment declines by 2%. The
100 75% Brazilian real devaluation has produced a contrary effect
to the above comparison of rates in US$ dollars and local 80 70% currency, with a dip of 1% and 2% in US dollar rates in
60 65% Occupancy US Dollars US the Upscale Upper Midscale & Midscale segments, and an 40 60% increase of 6% in US dollar rates in the Luxury & Upper 20 55% Upscale segment.
0 50% 2008 2009 2010 2011 jun-11 jun-12 YTD YTD Trends Average Rate Source: STR Global Sao Paulo’s market has seen an expansion in the leisure segment, which in the past accounted for almost 10% of demand and has now gone up to nearly 20% .
The year 2010 saw a sharp recovery in all segments. According to the information gathered, there has been Average rates in US dollars climbed above 23%; no hotel supply increase in the Luxury & Upper Upscale however, average rates in local currency showed smaller segment in recent years. The “Boutique Hotel” category, increases (between 10% and 12%), which is accounted which after the arrival of Hotel Fasano, Hotel Unique, for by the Brazilian real appreciation of almost 12% and Hotel Emiliano has not seen any further investment, during said period. has led demand to push up average rates and occupancy in the segment. The year 2010 saw a sharp recovery in all segments, partly due to the growth of the middle class that has A number of investments have lately been made in the greatly stimulated domestic travelling, and also to the Upper Midscale and Midscale segment, so that the country’s economic expansion. Average rates in US supply-demand ratio has been kept stable. At present, dollars climbed above 23%; however, average rates in apart from the fact that the number of economy hotels local currency showed smaller increases (between 10% has swelled since 2010, there is very strong pressure and 12%), which is accounted for by the Brazilian real demand-wise. appreciation of almost 12% during said period. Average rates in the luxury segment have significantly risen, taking into account that demand is currently higher than the supply available in the segment, where the newest
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 17
Although we have not identified any publicly-known projects in the Luxury and Upper Upscale and Upscale segments, as occupancy rates increase, new hotel supply will certainly come into the market. In connection with the Upper Midscale and Midscale segment, a Hotel Ibis is scheduled to open in Copacabana in October 2012.
FIGURE 29: LUXURY & UPPER UPSCALE MARKET SUPPLY PROJECTION SAN PABLO
3.000
2.500
2.000
1.500
Available Available Rooms 1.000
500
0 2012 2013 2014 2015
New Projected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
FIGURE 30: UPSCALE SUPPLY PROJECTION 2012 TO 2015
9.000 8.000
7.000
6.000 5.000 4.000
3.000 Rooms Available Rooms 2.000 1.000 0 2012 2013 2014 2015 New Prjected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
FIGURE 31: MIDSCALE & UPPER MIDSCALE SUPPLY PROJECTION 2012 TO 2015
9.000 8.000
7.000
6.000 5.000 4.000
Available Rooms Available 3.000 2.000 1.000 0 2012 2013 2014 2015
New Projected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 18
Chile
Economic Indicators
FIGURE 32: KEY ECONOMIC INDICATORS - CHILE
Estimates Indicator 2008 2009 2010 2011 2012 2013 2014 2015 after
GDP Constant Prices (% Change) 3.03 -0.86 6.14 5.92 4.30 4.53 4.50 4.52 2011 GDP Current Prices (U$S, Billions) 179.40 172.71 216.09 248.41 272.12 292.04 311.32 328.94 2011 GDP per Capita, Current Prices (U$S) 10,711 10,169 12,571 14,278 15,453 16,386 17,312 18,128 2009 Inflation, End of Period Consumer Prices (% Change) 7.09 -1.48 2.97 4.44 3.17 3.00 3.00 3.00 2011 Unemployment Rate (% of Total Labor Force) 7.75 10.83 8.15 7.13 6.63 6.90 6.90 6.90 2011 Population (Persons, Millions) 16.75 16.98 17.19 17.40 17.61 17.82 17.98 18.15 2009 General Government Gross Debt (% of GDP) 4.92 5.81 8.65 9.91 10.05 9.79 8.73 7.60 2011 Current Account Balance (% of GDP) -3.23 2.04 1.51 -1.30 -2.38 -2.40 -2.36 -2.27 2011 Exchange Rate (National Currency/U$S) 0.00 0.00 0.00 0.00 485.00 n/a n/a n/a 2011
Source: International Monetary Found, World Economic Outlook Database, April 2012 * Central Bank of Chile. Annual average exchange rate until 2011. 2012 Outlook Survey Data of Central Bank estimated in October 2012
During the past ten years Chile has managed to Tourism Indicators consolidate an open market economy that exports over one quarter of its GDP; it has made commercial As illustrated in Figure 33, statistics show that in the last agreements with 57 countries. It has a well developed 8 years (2004-2011) international arrivals in Chile have financial market and has the best qualifications of grown substantially at an average annual rate of 8.1%. soveriegn bones in South America. In the period between During this period, international visitor arrivals almost 2004 and 2011 its GDP has grown at about 5% per year, doubled, going from 1,785,000 in 2004 to 3,069,000 in with the exception of 2008 and 2009, that, due to the 2011. international crisis, grew 3.7% and fell 0.9% FIGURE 33: INTERNATIONAL TOURIST ARRIVALS TO CHILE respectively. Likewise, it is worth mentioning that in – 2004 TO 2011 spite of the devastating earthquake suffered by Chile in
February 2010, the country's economy grew 6.1%, since 3,500 the economy's strength mitigated the effects of the 3,070 3,000 2,699 2,750 2,766 earthquake. 2,507 2,500 2,253 2,027 As a result of its economic growth in recent years, Chile 2,000 1,785 has managed to bring its unemployment rate down to 1,500 1,000
nearly 7%. Thousands 500 On the other hand, Chile’s inflation rates have remained - low, except for 2007 and 2008. In 2009, the country 2004 2005 2006 2007 2008 2009 2010 2011 Tourist Arrivals underwent deflation due to the impact of the global Source: Sernatur financial crisis on its economy. Since 2011 onward, the annual inflation rate is expected to go back to normal levels, i.e. around 3%.
As from 2003, the Chilean peso has steadily appreciated, except for 2009. This process was resumed in 2010 and 2011. The first half of 2012 shows a 4% depreciation of the local currency against the US dollar, vis-à-vis the same period of the previous year.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 19
FIGURE 34: INTERNATIONAL TOURIST ARRIVALS TO CHILE As illustrated in Figure 35, statistics show that BY COUNTRY OF ORIGIN - 2011 international arrivals in Santiago’s Merino Benitez Airport in 2011 improved significantly vis-à-vis 2010, as arrivals increased to 208,129, growing at an average annual rate of 6.6% in the last 8 years (2004-2011). Others UK 2% 15% According to data from Sernatur, the trend growth rate Spain 2% for 2012 would climb slightly. It is worth noting that France 2% Argentina Santiago stands fourth in the ICCA ranking for 2011, Germany 2% 37% Colombia 2% behind Buenos Aires, San Pablo, and Rio de Janeiro. USA However, the city has suffered a 16% drop in the 6% number of events hosted as compared to 2010. Bolivia Peru 10% 11% Market Performance Brazil 11% Occupancy rates increased between 2002 and 2008, in
Source: Sernatur line with the country’s economic growth during the same According to data from Sernatur, Argentina is the period and as a result of a larger number of visitors in absolute leader and the main and steady source of Santiago de Chile and a fairly steady hotel room supply. outbound travelers to Chile, with Peru, Brazil, and Bolivia lagging far behind, and to a lesser extent the US. Average daily rates slowly ramped up from 2006 to Brazil ranks as the country with the highest growth 2008, when higher occupancy levels were reached. One (41%) vis-à-vis 2010, followed by Argentina and Peru. In of the drivers of this rise in the average daily rate in US contrast, the United States went down by 2%. dollars was the appreciation of the local currency between 2004 and 2008, which was interrupted in 2009 when a sharp dip in ADR occurred in line with the global Santiago trends.
Santiago is Chile’s capital and most important city. After 2009, when the market suffered the effects of the Chile's steady economic growth has transformed global economic crisis and, later on, of the swine flu (H1- Santiago into one of Latin America's most modern N1), and the earthquake that severely hit the country in February2010, Santiago de Chile embarked on a fast metropolitan areas recovery path during the second half of 2010, and managed to close the year with an occupancy increase of Tourism Indicators 7.5% in the Luxury and Upper Upscale segment and of 5.9% in the Upscale segment vis-à-vis 2009. FIGURE 35: INTERNATIONAL TOURIST ARRIVALS TO SANTIAGO THROUGH INTERNATIONAL AIRPORT MERINO It is interesting to note that, in terms of occupancy, the BENITEZ – 2004 TO 2011 Luxury and Upper Upscale segment had suffered a sharper decline in 2009 than the Upscale segment. This 1,400 is partly accounted for by the inauguration of the Hotel
1,200 1,147 W Santiago in 2009, which incorporated 194 rooms into 1,011 986 the Luxury & Upper Upscale market, thus impacting on 923 939 1,000 875 818 the segment’s average occupancy. 800 731
600 The hike in occupancy as from 2010 was hinged upon the economic boom experienced by Chile and the main
Thousands 400 countries in the region with outbound tourism to that 200 destination. In the case of the Luxury and Upper Upscale 0 segment, a change in supply was brought about in late 2004 2005 2006 2007 2008 2009 2010 2011 2010 when the Hotel InterContinental added 81 new Tourist Arrivals Source: Sernatur rooms.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 20
The Figure below illustrates a similar behavior both in segments in question, projections indicate a steady the Upscale and the Luxury & Upper Upscale segments in growth in line with the estimated rise in demand. terms of occupancy and average rate trends. No doubt, performance indicator figures regarding the segments under study will stir up the interest of GRÁFICO 36: LUXURY & UPPER UPSCALE HOTEL MARKET potential investors in the city. The Luxury & Upper PERFORMANCE - SANTIAGO Upscale segment has achieved a most important milestone when it succeeded in breaking through the 250 85% US$ 200-average rate barrier. Also, occupancy in the
80% Luxury and Upper Upscale and Upscale segments points 200 to a high demand in the market and to signs of 75%
unaccommodated demand during several periods 150 70% throughout the year. 65%
100 Occupancy US Dollars Las Condes and Providencia are areas capturing the 60% 50 interest of potential investors for the Luxury and Upper 55% Upscale segment. In particular, Isidora Goyenechea 0 50% Street and the Golf area, not only because they are high- 2008 2009 2010 2011 jun-11 jun-12 YTD YTD end neigborhoods but also because of their proximity to Average Rate the main drivers of demand, both for corporate and Source: HVS Buenos Aires - STR Global leisure travelers. Nueva Las Condes is another area FIGURE 37: UPSCALE HOTEL MARKET PERFORMANCE offering great potential for hotel developments, being SANTIAGO perhaps more attractive for Upscale than for Luxury and Upper Upscale products. 180 85%
160 80% FIGURE 39: LUXURY & UPPER UPSCALE MARKET SUPPLY 140 75% PROJECTION – 2012 TO 2015
120
100 70%
80 65% 3.000
Occupancy US Dollars
60 60% 2.500
40 2.000 55% 20 1.500 0 50% 2008 2009 2010 2011 jun-11 jun-12 1.000 YTD YTD Rooms Available Average Rate 500 Source: STR Global 0 2012 2013 2014 2015 The occupancy increase in the Upscale segment is New Projected Room Supply Source: HVS Buenos Aires remarkable in 2011, approaching nearly 77%. In *2012 includes projects opening in the same year connection with average rates, positive variations in excess of 10% have been reached from 2010 onward. Finally, it is worth underscoring the Merino Benitez Given that rates and occupancy levels have improved International Airport area, where two hotels have been significantly in both segments, except for 2009, the recently inaugurated – the Hilton Garden Inn Hotel and period in question shows significant positive REVPAR the Diego de Almagro(belonging to a National Hotel variations. Chain), both in the Upscale segment. In the same segment, a new hotel belonging to the Atton national Trends chain with approximately 290 rooms has recently opened in the Vitacura area. We estimate that market demand will stay in an uptrend in the coming years, mostly as a result of the country’s With regard to future developments, there are several and the region’s favorable economic indicators. With projects underway in the Luxury and Upper Upscale regard to occupancy and average rate levels for the segment, among which figure the Costanera Center 5-
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 21
star hotel with 250 rooms, a 5-star hotel on Isidora Goyenechea St., with approximately 120 rooms and a Proposed Luxury Hotel of International Brand of aproximatedly 200 rooms.
With regard to the Upscale projects, we can mention an Upscale hotel in the mix-use Costanera Center, an international chain hotel featuring 150 rooms, and a Hyatt Place Hotel in Vitacura with 160 rooms.
FIGURE 40: UPSCALE MARKET SUPPLY PROJECTION – 2012 A 2015
4.200 3.900 3.600 3.300 3.000 2.700 2.400 2.100 1.800 1.500 Available Rooms Available 1.200 900 600 300 0 2012 2013 2014 2015 New Projected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 22
Colombia
Economic Indicators
FIGURE 41: KEY ECONOMIC INDICATORS - COLOMBIA
Estimates Indicator 2008 2009 2010 2011 2012 2013 2014 2015 after
GDP Constant Prices (% Change) 3.55 1.65 4.00 5.93 4.72 4.43 4.48 4.48 2009 GDP Current Prices (U$S, Billions) 235.72 233.38 287.25 328.42 378.71 394.13 414.35 435.02 2009 GDP per Capita, Current Prices (U$S) 5,303 5,189 6,312 7,132 8,127 8,359 8,685 9,011 2009 Inflation, End of Period Consumer Prices (% Change) 7.68 2.00 3.17 3.73 3.12 3.10 3.01 3.01 2010 Unemployment Rate (% of Total Labor Force) 11.30 12.00 11.80 10.83 11.00 10.50 10.00 9.50 2010 Population (Persons, Millions) 44.45 44.98 45.51 46.05 46.60 47.15 47.71 48.28 2009 General Government Gross Debt (% of GDP) 30.82 35.87 36.06 34.67 32.33 32.35 31.43 31.59 2009 Current Account Balance (% of GDP) (2.89) (2.15) (3.08) (2.84) (2.66) (2.39) (2.00) (2.32) 2009 Exchange Rate (National Currency/U$S) 1,966 2,156 1,897 1,848 1,824 1,807 n/a n/a 2011
Source: International Monetary Found, World Economic Outlook Database, April 2012 * Bank of the Republic of Colombia. Annual average exchange rate until 2011. From 2012 data of end of period based on survey of inflation expectations and exchange rate published by the Bank of the Republic of Colombia.
In recent years, prior to the global economic crisis, As from 2012, Colombia's economy is expected to grow Colombia’s economy grew at an annual rate higher than at an annual rate higher than 4% . 4%, with peaks of 7% per annum for the 2006-2007 period. Beyond the effects of the global economic crisis, Tourism Indicators its good performance was mostly based on a series of actions implemented to curtail public expenditure, on an As illustrated in Figure 42, statistics show that in the last export-oriented growth strategy, on the enhancement of 8 years (2004-2011) international arrivals in Colombia domestic security, and on high commodity prices. Direct have grown steadily at an average annual rate of 10.4%. foreign investment hit a record US$ 10.6 billion in 2008, During this period, international visitor arrivals doubled, which dropped to US$ 7.2 billion in 2009, before it going from 791,000 in 2004 to 1,582,000 in 2011. started to pick up in 2010, mostly in the oil sector. The FIGURE 42: INTERNATIONAL TOURIST ARRIVALS TO year 2011 saw significant growth on the order of 6%. The good performance of the mining, trade, and COLOMBIA – 2004 A 2011 transport sectors contributed to this fast recovery. 1,800 1,582 Foreign investment was well above US$ 13 billion in 1,600 1,475 1,354 2011, and is expected to rise more than 25% by the end 1,400 1,195 1,223 of 2012. 1,200 1,053 1,000 933 791 The unemployment rate was nearly 15% at the 800 beginning of the decade. Since 2005 onward, it has 600 Thousands 400 fluctuated between 10% and 12%, in line with the 200 country’s economic performance. 0 2004 2005 2006 2007 2008 2009 2010 2011
Inflation remained fairly high until 2008., when it Foreign Tourist Arrivals became stable at an annual rate of around 3% . Source: Ministry of Commerce, Industry and Tourism
The good performance of macroeconomic indicators, the current fiscal order, the approval of important structural changes, positive economic expectations and positive results with regards to safety are some of the factors that have contributed and contribute to the long term qualification of the Colombian debt, as well as to the positioning achieved in the ranking of countries with the best business envirnonment in Latin America.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 23
FIGURE 43: INTERNATIONAL TOURIST ARRIVALS TO Tourism Indicators COLOMBIA BY COUNTRY OF ORIGIN- 2011 Arrivals at the El Dorado Airport, Colombia’s main gateway, significantly ramped up until 2007, to drop in 2008 and 2009, and then started to recover in 2010. USA Arrivals hit record in 2011 with over one million 21% passengers. A good economic performance plus a series Others of security actions implemented by the Government have 28% been key drivers of Bogota’s positioning as a business Venezuela hub and leisure travel destination. 14%
Panama Market Performance 2% Chile The average hotel occupancy rate in Bogotá’s Luxury & 3% Ecuador 6% Upper Upscale segment gradually dropped between Peru 5% 2008 and 2010. From late 2008 and during 2009, Mexico 5% Brazil 6% Colombia, like other countries in the region, suffered the Spain 5% Argentina 5% Source: Ministry of Commerce, Industry and Tourism effects of the global financial crisis and the swine flu (H1N1). Additionally, occupancy rates slumped because the rise in demand was offset by a sharp hotel room supply increase in the segment following the opening of the Marriott Hotel at the end of 2009 and of JW Marriott in 2010. However, the year 2011 began to show a According to data from the Ministry of Commerce, positive uptrend of nearly 5%. This hike was mostly due Industry, and Tourism, the United States is the largest to rapid economic growth and by the fact that Luxury outbound travel market, accounting for 21% of visitors, and Upper Upscale hotels attracted greater market followed by Venezuela with 14%, and by Ecuador and demand. This latter process was mainly led by the Brazil with 6%, and then by the bloc made up of recently inaugurated hotels. The first half of 2012 shows Argentina. a fall both in occupancy levels and room rates vis-à-vis the same period of the previous year. It is worth mentioning the inauguration of the Hilton Bogotá in Bogotá November 2011, which has probably accounted for this deceleration in the segment. Bogota is Colombia's capital city and its cultural, educational, trade and business center. The town is On the other hand, rates in US dollars went down in mainly a tourist, trade, and business destination. In 2009, to pick up sharply (around 14%) in 2010 and recent years, its infrastructure and corporate services 2011. This is partly explained by the incorporation in the have been significantly improved, and this has led to segment of properties with higher rates, by demand the establishment of a rising number of major pressures, and by the appreciation of local currency against the US dollar. multinational companies.
FIGURE 44: ARRIBO DE TURISTAS INTERNACIONALES A BOGOTA
1,200 1,070
1,000 936
786 785 800 719 667 601 600 514
400 Thousands
200
0 2004 2005 2006 2007 2008 2009 2010 2011 Tourist Arrivals Source: Proexport Colombia 2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 24
renovation in order to belong to the city centre and thus, FIGURE 45: LUXURY & UPPER-UPSCALE HOTEL MARKET turn into a spot for hotel development opportunities in PERFORMANCE - BOGOTÁ the short term. With regard to projects in the Luxury & Upper-Upscale 200 85%
180 segment, the W Bogotá with 168 rooms is scheduled to open 80% 160 in 2014, the Whyndam Bogota Hotel with 261 rooms, the
140 75% Grand Hyatt Bogota Hotel with 297 rooms, and the
120 Whyndam Garden Villavicencio Hotel with 198 rooms. 70% 100 65% 80 Ocupación Although we have not analyzed the Upscale and Upper 60 60% Midscale & Midscale segments in depth, it is worth 40 Dólares Americanos Dólares mentioning their evolution in recent years, which has led to 55% 20 the opening of international chain hotels such as Aloft 0 50% 2008 2009 2010 2011 jun-11 jun-12 Bogotá (2011), Holiday Inn Bogotá Airport (2011), Tryp by YTD YTD Wyndham (2012), Crowne Plaza Suites Tequendama (2012), placed next to the legendary Crowne Plaza Fuente: STR Global Tarifa Promedio Tequendama Suites.
Trends Regarding the Upscale segment the opening of a Hilton Garden Inn with 191 rooms at the airport is scheduled for Taking into account the country’s economic performance 2013, an Atton Hotel with approximately 250 rooms, and a and global projection, along with the marked increase in BH Torre Bicentenario Hotel with 53 rooms, a Four Points international arrivals at an annual rate of 14% in 2002- Hotel with 140 rooms, and a Holiday Inn Express with 100 2010, Bogota enjoys a favorable outlook, despite the rooms. Indeed, the Upscale and Upper Midscale segments presence of new supply in the market. Therefore, despite have seen the highest activity in the market. a readjustment of supply and hence of hotel performance in upcoming years, market prospects are positive. This is FIGURE 46: LUXURY & UPPER UPSCALE MARKET SUPPLY demonstrated by the segment’s rapid absorption in the PROJECTION – 2012 A 2015 last 3 years, with the addition of 748 rooms that more than doubled its supply. Occupancy quickly adapted to approach the 70% mark. 3.500 3.000
Bogota is gradually consolidating itself as a business 2.500 centre in the region, due to its strategic geographic 2.000 location and to its favorable business climate that 1.500
Availabe Availabe Rooms motivate the starting up of new regional offices of 1.000 multinational companies. The appointment in about the 500 completion of the CICB -Bogota's International Centre of 0 2012 2013 2014 2015 Conventions-, which is planned for 2014, consolidates Projected New Room Supply even more this positioning. There are undoubtedly more Source: HVS Buenos Aires opportunities for new projects, in alignment with the *2012 includes projects opening in the same year growth of the country and of Bogota itself. Fiscal incentives, currently available for projects until 2018, transpire the political decision to develop the offer the country and the city are demanding for the following years.
To the traditional neighbourhoods of hotel development, from North to South, Usaquén, Calle 100, Parque de la 93, Nogal and Salitre, we believe it is time to add the Centre of the city, also called International Centre, that, based on private and public projects already announced, expects to undergo a strong urban and architectural
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 25
FIGURE 47: UPSCALE MARKET SUPPLY PROJECTION – 2012 TO 2015
6.800 6.600
6.400
6.200 6.000 5.800
5.600 AvailableRooms 5.400 5.200 5.000 2012 2013 2014 2015 Projected New Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 26
Peru
Economic Indicators
FIGURE 48: KEY ECONOMIC INDICATORS - PERU
Estimates Indicator 2008 2009 2010 2011 2012 2013 2014 2015 after
GDP Constant Prices (% Change) 9.80 0.86 8.79 6.91 5.51 6.03 6.03 6.00 2011 GDP Current Prices (U$S, Billions) 126.19 127.19 153.83 173.50 184.96 200.22 216.91 233.76 2011 GDP per Capita, Current Prices (U$S) 4,403 4,370 5,205 5,782 6,070 6,470 6,903 7,325 2009 Inflation, End of Period Consumer Prices (% Change) 6.65 0.25 2.08 4.74 2.60 2.30 2.00 2.00 2011 Unemployment Rate (% of Total Labor Force) 8.38 8.39 7.88 7.50 7.50 7.50 7.50 7.50 2011 Population (Persons, Millions) 28.66 29.10 29.55 30.01 30.47 30.95 31.42 31.91 2009 General Government Gross Debt (% of GDP) 25.17 28.39 24.56 21.64 20.74 19.79 19.18 18.72 2011 Current Account Balance (% of GDP) -4.21 0.17 -1.71 -1.31 -1.96 -1.91 -1.75 -1.68 2011 Exchange Rate (National Currency/U$S) 2.93 3.01 2.83 2.75 2.62 2.62 2.62 n/a 2011
Source: International Monetary Found, World Economic Outlook Database, April 2012 * Central Bank of Peru. Annual average exchange rate until 2011. From 2012 data of end of period based on survey of inflation expectations and exchange rate published by the Central Bank of Reserve of Peru
Peru’s economy underwent a significant expansion Tourism Indicators between 2002 and 2008, reaching the highest growth As illustrated in Figure 49, statistics show that in the last rates as from 2005. This boom was triggered in 2007 8 years (2004-2011) international arrivals in Peru have and 2008 by higher international mineral and metal grown substantially at an average annual rate of 9.8%. prices and by an aggressive trade liberalization strategy. During this period, international visitor arrivals almost But it then plummeted to 0.9% due to the global crisis doubled, going from 1,349,000 in 2004 to 2,597,000 in and the fall in export commodity prices. Peru quickly 2011. recovered in 2010, and is expected to become South America’s fastest growing country in the upcoming years. FIGURE 49: INTERNATIONAL TOURIST ARRIVALS TO PERÚ – 2004 TO 2011 The country has managed to keep inflation rates low in 3.000 recent years, except for 2008. The Instituto Nacional de 2.598 Estadística e Informática (National Institute of Statistics 2.500 2.299 2.058 2.140 1.916 or INEI as per its Spanish acronym) informed that the 2.000 1.721 1.571 annual inflation rate for 2011 (around 5%) was 1.350 1.500
accounted for by the hike in vegetable and fuel prices.
1.000 Thousands The exchange rate, on the other hand, has remained on 500 the order of 3.50 soles per dollar. However, in 2003 the 0 country embarked on a gradual appreciation process, 2004 2005 2006 2007 2008 2009 2010 2011 which ceased in 2009 to be resumed in 2010. Source: Mininter, Dingemin, Mincetur Foreign Tourist Arrivals The prevailing fiscal and institutional order and the good performance of macroeconomic indicators have encouraged large investment flows into Peru, which has According to recent data from Mincetur, Chile and the ranked second among South American countries (only to United States stand as the biggest outbound travel Brazil) in terms of attracting FDI and in "Ease of Doing markets ( which is largely due to the major corporate Business" 2012. At the same time, in 2011 the country interests from these countries in Peru), with Ecuador, has obtained a better sovereign debt rating. Argentina, Brazil, Colombia, and Spain lagging far behind. Among the countries boasting double-digit growth rates figure Brazil 34%, Chile 24%, Argentina 16%, and Colombia 14%.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 27
years, international visitor arrivals have improved significantly, going from 403,000 in 2004 to 670,000 in GRÁFICO 50: INTERNATIONAL TOURIST ARRIVALS TO 2011. PERU BY COUNTRY OF ORIGIN - 2011 Market Performance
Others 11% According to the data included here, 2008 was a good
Italy 2% year in terms of occupancy and average rate levels, both Mexico 2% in the Luxury and Upper Upscale and Upscale segments. Venezuela 2% Chile In the two following years, the market was severely hit 29% by the global economic crisis and the swine flu (H1-N1) UK 2% Canada in 2009, and by the Aguas Calientes mudslide in January 2% France 2010, whose effects were felt almost until the end of that 3% year. These two events adversely affected the market, Bolivia USA 3% 16% which is mostly focused on leisure travelers and is Spain 4% therefore very sensitive to events of that kind. Argentina Colombia 6% Ecuador 4% 6% Brazil 5% Occupancy rates in the Luxury and Upper Upscale
Source: Miniter, Digemin, Mincetur segment plummeted nearly 31% in 2009. This fall, however, was partly offset by a 12.5% rise in the average rate. In 2010, the Aguas Calientes catastrophic event impacted both on occupancy and average rates. The Cusco access to Machu Picchu , Peru’s and the region’s main tourist attraction, was restricted for nearly six months, The City of Cusco is the head of the Cusco Department which led to the cancellation of room nights during that and the historical capital of the Inca Empire. It was period and also of bookings along the year due to fears declared a World Heritage Site in 1983 by UNESCO raised among travelers. In an attempt to offset the drop and is Peru’s main tourist attraction. Known as the in occupancy and attract new guests, hotels announced “Rome of South America” for its large number of rate discounts. As from 2011, occupancy and average monuments, it is also a must-see place on the way to rates showed a most significant rebound following the Machu Picchu, which was declared one of the 7 gradual recovery in the market. Already in the first half of 2012, occupancy, and average rates to a lesser extent, Wonders of the Modern World in 2007, based on the continues to be on a steady uptrend. In 2010, the Aranwa results of a worldwide poll. Cusco with 43 rooms joined the segment.
Tourism Indicators In 2009, the Upscale segment got hit harder than the Luxury and Upper Upscale segment, with a decrease in As illustrated in Figure 51, the number of international occupancy and average rates that led to a +30% fall in tourist arrivals in Machu Picchu has been used to RevPar. On the other hand, the Upscale segment measure arrivals in the city of Cusco in the last 8 years performed better than the Luxury & Upper Upscale (2004 – 2011). Statistics show a sharp increase at an segment in 2010 because, despite a 13.7% dip in average annual rate of 7.5%, while taking into account occupancy, average rates improved slightly. From 2011 the drop in 2010 due to strong storms. In the past 8 onward, occupancy has grown steadily. However, rates have remained stable, unable to exceed 2008 values. FIGURE 51: INTERNATIONAL TOURIST ARRIVALS TO MACHU PICHU
800 670,959 700 616,115 581,880 600 548,168 475,315 480,741 472,742
500 403,413
400
300
Thousands 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011
Foreign Tourist Arrivals Source: Mininter, Dingemin, Mincetur 2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 28
FIGURE 52: LUXURY & UPPER-UPSCALE HOTEL MARKET With regard to the Upscale segment, as in the Luxury & Upper Upscale segments, we expect a steady growth of PERFORMANCE - CUSCO demand, more in relation to occupancy than to rates, as
250 80% the Upscale segment is fairly competitive.
70% 200 The latest news in the Upscale segment is the revamping 60% of the former Hotel Savoy, which has been converted to 50% 150 the Sonesta brand, and the acquisition of the Hotel 40%
100 Ocupación Picoaga, which since June 2010 is operating as Hotel 30% Costa del Sol Picoaga Ramada 20%
50 Dólares AmericanosDólares 10% As to new developments, several chains are seriously 0 0% 2008 2009 2010 2011 may-11 may-12 analyzing the Cusco market, especially the Upscale, YTD YTD
Tarifa Promedio Upper Midscale and Midscale segment. We know there Fuente: STR Global RevPAR Ocupación are at least three Upscale projects in the pipeline and others under study, such as one by the Peruvian Casa FIGURE 53: UPSCALE HOTEL MARKET PERFORMANCE Andina chain which already has one property in Cusco, to name a few. 120 90%
80% 100 On the other hand, some hotels like Costa del Sol Picoaga 70% and Sonesta Cusco are adding new rooms.
80 60%
50% 60 In addition to the hotel supply offered by international 40%
Ocupación chains, there are several 4- and 3-star local chain hotels
40 30% like José Antonio, San Agustín, and Eco Inn, among 20%
Dólares Americanos Dólares 20 others. Some of these chains, for instance San Agustín, 10% have announced new openings in the area under study. 0 0% 2008 2009 2010 2011 jun-11 jun-12 YTD YTD
Tarifa Promedio Fuente: STR Global RevPAR Ocupación
Trends
In line with Peru's and the region’s economic expansion, as well as with the recovery of some developed economies after the financial crisis in late 2008 and 2009, we forecast a consolidated growth of demand. Additionally, it is interesting to point out that the market is slowly picking up after the sharp downturn caused by the events already described. This positive curve will be underpinned by Peru's increasingly strong position as a travel destination worldwide.
Last June hotel Las Nazarenas was inaugurated. It adds 55 suites to the supply in the Luxury segment and it is operated by Orient Express. Also, the Hotel Libertador Palacio del Inka has started to operate under Starwood’s Luxury Collection brand. The opening of JW Marriott with 153 rooms, managed by Marriott is expected for the second half of the current year adding more rooms to the top segment.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 29
each other as they offer different experiences. The goal is FIGURE 54: LUXURY & UPPER UPSCALE MARKET SUPPY that a growing number of visitors should combine both PROJECTION CUSCO 2012 -2015 destinations with an increase in the average length of stay in the area.
750
600
450
300
Available Rooms Available 150
0 2012 2013 2014 2015 New Projected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
FIGURE 55: UPSCALE MARKET SUPPLY PROJECTION -CUSCO 2012 -2015
700
600
500
400
300
Available Rooms Available 200
100
0 2012 2013 2014 2015 New Projected Room Supply Source: HVS Buenos Aires *2012 includes projects opening in the same year
Finally, even though not located in the City of Cusco, several hotels have been inaugurated and others have been opened and/or announced in the Sacred Valley of the Incas, which has substantially increased the number of rooms available following the opening of the Libertador Tambo del Inka Luxury Collection, Aranwa Valle Sagrado, and Río Sagrado (Orient Express), among others. These hotels have joined an already interesting group of hotels in the area, including Sol & Luna, Sonesta Yucay, San Agustín, Casa Andina Private Collection, etc. The Valley area has attracted significant interest from several investors like Aman Hotel Chain, the peruvian Hotel Chain Inka Terra, etc. The hotel supply in the top segment will likely expand in the Valley of the Incas area over the next few years, which will help gain positioning worldwide.
Today, the hotels situated in the Sacred Valley do not compete with those in Cusco, but rather complement
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 30
Lima Market Performance The above data indicate an overall market average, with Lima is the capital and most populated city of Peru, as an occupancy rate of 74.4% for the Luxury and Upper well as its financial, industrial, commercial, political Upscale segment in 2008. In 2009, the effects of the and cultural center of the country. Besides being the global economic crisis, to a lesser extent, and of the gateway to the country’s main tourist destinations swine flu (H1-N1), to a greater extent, were evident, with such as Cusco, Machu Picchu and The Sacred Valley; it occupancy levels dipping to 65.3%. By 2010, occupancy has become an important destination in South improved and went up to 70.6%. But in 2011 it dropped to 65.2%, which was partly due to the fact that the hike America itself. The town, with its multicultural and in supply, with the addition of the Hotel Westin with 301 multiethnic heritage, offers an interesting array of rooms, could not be offset by an increased demand. In tourist attractions, ranging from colonial architecture, the first half of 2012, this trend starts to reverse and museums, nightlife and its world famous cuisine demand begins to absorb the rising supply, attaining levels near 69%. Tourism Indicators
As illustrated in Figure 56, statistics show that in the last FIGURE 57: LUXURY & UPPER-UPSCALE HOTEL MARKET 8 years (2004-2011) international arrivals in Lima’s Jorge Chavez International Airport have grown PERFORMANCE- LIMA substantially at an average annual rate of 10.1%. During 250 85% this period, international visitor arrivals almost doubled, 80% going from 741,000 in 2004 to 1,454,000 in 2011. 200
75%
150 70%
FIGURE 56: INTERNATIONAL TOURIST ARRIVALS TO JORGE 65%
100 Occupancy CHAVEZ INTERNATIONAL AIRPORT - LIMA – 2004 TO 2011 Dollars US 60% 50 55% 1.600 1.454 0 50% 1.400 1.249 1.277 1.205 2008 2009 2010 2011 jun-11 jun-12 YTD YTD 1.200 1.054 908 1.000 882 Source: STR Global Average Rate 741
800
600 FIGURE 58: UPSCALE HOTEL MARKET PERFORMANCE - Thousands 400 LIMA 200
0 140 85% 2004 2005 2006 2007 2008 2009 2010 2011 120 80% Tourist Arrivals Source: Mininter, Dingemin, Mincetur 100 75%
80 70%
60 65%
US Dollars US 40 60%
20 55%
0 50% 2008 2009 2010 2011 jun-11 jun-12 YTD YTD
Source: STR Global Average Rate With regard to average rate levels (ADR), 2008 hit a historical record with an ADR of US$212 for the group of hotels under study. In 2009, ADR levels declined, both in Peruvian Soles and US dollars. Rates started to resettle
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 31
slowly in 2010. And, despite a slight decrease in terms of With regard to future developments, there are several Soles given the exchange rate appreciation of the local projects in the Luxury and Upper Upscale segment, currency, rates showed an increment in US dollars. This among which figure the Hilton Hotel with 207 rooms, an trend will continue throughout 2011 and 2012. Lima’s international brand luxury hotel in Miraflores, with Luxury & Upper-Upscale segment has experienced approximately 175 rooms, the Hotel Parque El Golf, the moderate variations rate-wise because, having Hotel Larcomar, and a Four Seasons Hotel in Cuartel San undergone significant occupancy changes in the past Martín. It should be noted that, even though these are four years, the market has not achieved the margin significant announcements for the Luxury & Upper required for a rate boost during said period. Upscale segment, several of these projects are at the Notwithstanding this, the performance in the first half of budding stage and their completion may be delayed 2012 is considered a promising prospect. As to the Upscale projects, we can mention a Courtyard Occupancy variations in the Upscale segment were less Hotel in San Isidro, with approximately 150 rooms, an relevant. The effects of the global financial crisis and the Upscale hotel in Miraflores, with 140 rooms, a Dazzler swine flu (H1N1) were felt more on the average rate Tower Hotel in Miraflores, with 140 rooms, a Costa del than on the number of rooms sold. The ADR plunge in Sol Hotel in San Isidro, with approximately 110 rooms, a 2009 probably contributed to attract demand to a Boutique hotel in Miraflores, with approximately 60 certain extent, which was before targeted toward the rooms, an Atton Hotel, with some 250 rooms, a Novotel Luxury and Upper Upscale segment, thus preventing a Hotel, with approximately 120 rooms, and a Four Points further drop in occupancy levels. Occupany and average Hotel, with 130 rooms. rates began to recover in 2010. These variables have deriorated slightly in the first half of 2012, partly due to Additionally, there are two Upper-Midscale projects of the inauguration of new hotels in 2011, such as the Atton the Ibis brand, one in Miraflores with 150 rooms and in San Isidro with 252 rooms. another in El Callao with 130 habitaciones, both scheduled to open in 2014. Average rates reached a historical peak in 2008, mostly on account of the country’s economic growth and of Although the projected rise in demand will put pressure demand pressure resulting from two major world on average rates, such pressure will be moderate as the summits hosted in Lima. existing hotels will remain cautious about the arrival of new market competitors who will seek to penetrate the Trend market by offering more competitive startup rates.
According to our projections, the rise in demand will be By way of conclusion on the market’s future consolidated in line with the country’s performance. opportunities, we believe it is critical to consider the Also, Peru will continue to attract investment and supply boom in coming years. We recommend assessing increasing the number of corporate travelers in the hotel the projects announced and, particularly, the market’s segments in question. Furthermore, we expect a hike in absorption pace, which will undoubtedly be key factors leisure and convention/conference travelers in view of when evaluating future investment opportunities in the country’s increased event-hosting and Luxury & Lima. Upper Upscale and Upscale hotel room capacity. FIGURE 59: LUXURY & UPPER UPSCALE MARKET SUPPLY This good news has encouraged the development of a PROJECTION – 2012 TO 2015 large number of projects in Lima in most segments. Also, a series of hotels have recently been inaugurated like 4.000 Westin, Atton, Casa Andina Select, and Ibis, among 3.500 others. 3.000 2.500 For the current year onward, hotel supply will shoot up, 2.000 1.500 in line with the opportunities generated by the market Rooms Available 1.000 and its operational performance indicators, mostly in 500 0 Lima’s prominent San Isidro and Miraflores districts. In 2012 2013 2014 2015 addition, the Surco and Callao neighborhoods stand as New Projected Room Supply good options for hotel project developments. Source: HVS Buenos Aires *2012 includes projects opening in the same year
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 32
FIGURE 60: LUXURY & UPPER UPSCALE MARKET SUPPLY PROJECTION – 2012 A 2015
1.800 1.600
1.400
1.200 1.000 800
600 Available Rooms Available 400 200 0 2012 2013 2014 2015 New Projected Room Supply
Source: HVS Buenos Aires *2012 includes projects opening in the same year
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 33
Uruguay
Economic Indicators
FIGURE 61: KEY ECONOMIC INDICATORS - URUGUAY
Estimates Indicator 2008 2009 2010 2011 2012 2013 2014 2015 after
GDP Constant Prices (% Change) 7.18 2.42 8.90 5.70 3.50 4.00 4.00 4.00 2010 GDP Current Prices (U$S, Billions) 30.37 30.50 39.41 46.87 52.35 55.41 58.57 61.98 2010 GDP per Capita, Current Prices (U$S) 9,108 9,117 11,742 13,914 15,485 16,334 17,204 18,144 2005 Inflation, End of Period Consumer Prices (% Change) 9.20 5.90 6.93 8.60 6.96 6.01 5.96 5.96 2010 Unemployment Rate (% of Total Labor Force) 7.60 7.32 6.67 6.10 6.00 6.00 6.00 6.00 2010 Population (Persons, Millions) 3.33 3.35 3.36 3.37 3.38 3.39 3.40 3.42 2005 General Government Gross Debt (% of GDP) 63.30 62.67 58.36 54.19 49.05 47.24 45.00 42.73 2010 Current Account Balance (% of GDP) -5.69 -0.38 -1.18 -2.21 -3.63 -3.18 -2.64 -2.33 2010 Exchange Rate (National Currency/U$S) 20.69 22.23 19.79 19.02 n/a n/a n/a n/a 2011
Source: International Monetary Found, World Economic Outlook Database, April 2012 * National Institute of Statistics. Annual average exchange rate until 2011.
Following financial difficulties in the late 1990s and early 2000s, economic growth for Uruguay averaged 6% 7% in 2008, and continued to improve such levels in annually during the period 2004-2008. The 2008-2009 subsequent years until reaching 6% in 2011. global financial crisis put a brake on Uruguay's vigorous growth, which decelerated to 2.5% in 2009. Nevertheless, the country managed to avoid a recession The World Economic Outlook, published by the and keep positive growth rates, mainly through higher International Monetary Fund in April 2012, estimates public expenditure and investment. Thus, GDP growth that Uruguay’s economy will grow around 3.5% in 2012 exceeded 8% in 2010 and was near 6% in 2011. and 4.0% in 2013. At present, the economy is going This economic growth has been fuelled by private through a period of overheating, with inflation levels consumption, investment, and the external sector. In this above the Government’s “target”. One of the country's sense, it should be noted that exports of goods and main challenges is to curb this price rise. services reached a historical peak in 2011, amounting to
US$ 8.022 billion. The international scenario has also played a major role; the world food prices hitting a record high strongly boosted Uruguay’s foreign trade. It should be recalled that the country's economy is characterized by the export of such commodities.
With regard to inflation, due to the overheating of its economy, Uruguay suffered peaks in 2007 and 2008. During 2010 and 2011, this variable remained high.
Uruguay also ranks as a favorite country in terms of attracting FDI, with investments around US$ 2.4 billion in 2010 and on the order of US$ 2.5 billion (historical record) in 2011.
Also, as a result of its economic growth in recent years, it managed to bring its unemployment rate down to nearly
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 34
Tourism Indicators Montevideo As illustrated in Figure 62, statistics show that in the last 8 years (2004-2011) international arrivals in Uruguay Montevideo is Uruguay’s capital city and the largest have grown substantially at an average annual rate of town in terms of population. It is the country’s major 7.4%. During this period, international visitor arrivals economic and financial hub, and concentrates a wide shot up, going from 1,570,000 in 2004 to 2,588,000 in range of companies and industries – agriculture, 2011. chemical, meat packing, dairy, tanning, paper, heavy industry, mining, banking and financial services, FIGURE 62: INTERNATIONAL TOURIST ARRIVALS TO consulting, technology, logistics and port services, URUGUAY – 2004 TO 2011 construction, to name a few. Montevideo is also relevant from an institutional viewpoint as is the seat 3,000 of the Mercosur and of ALADI (Latin American 2,588 2,500 Integration Association). Additionally, the city boasts 2,055 2,000 an important natural port that facilitates Uruguay's 1,724 1,802 1,632 1,570 1,543 1,555 trade with the rest of the world. 1,500
Thousands 1,000 Tourism Indicators
500 Figure 64 below illustrates the statistics of international - arrivals in Uruguay in 2011, with Montevideo as a final 2004 2005 2006 2007 2008 2009 2010 2011 Source: HVS Buenos Aires based on the Ministry of Tourism Tourist Arrivals destination. As seen, figures have improved vis-à-vis *It does not include arrivals by cruise ships 2010, since arrivals increased to 31,783, growing at an average annual rate of 4.7% in the last 8 years (2004- 2011).
FIGURE 64: INTERNATIONAL TOURIST ARRIVALS TO FIGURE 63: INTERNATIONAL TOURIST ARRIVALS TO URUGUAY WITH MONTEVIDEO AS FINAL DESTINATION – 2004 TO 2011 URUGUAY BY COUNTRY OF ORIGIN - 2011
800 728 696 Chile 700 2% Others 13% 583 590 593 587 589 Paraguay 600 527 2% 500
400 Brazil 16% 300 Thousands 200 Argentina 67% 100
- 2004 2005 2006 2007 2008 2009 2010 2011
Source: HVS Buenos Aires based on the Ministry of Tourism Tourist Arrivals Source: Ministry of Tourism *It does not include arrivals by cruise ships Finally, as illustrated in Figure 65, statistics show that in According to data from the Ministry of Tourism, the last 7 years (2004-2011) international arrivals in Argentina is the absolute leader and the main and steady Carrasco Airport have grown substantially at an average source of outbound travelers to Uruguay, with Brazil annual rate of 9.9%. In the past 7 years, international lagging far behind, and to a lesser extent Paraguay and visitor arrivals have improved significantly, going from Chile. Argentina ranks as the country with the highest 222,000 in 2004 to 392,000 in 2010. Data for 2011 was growth (37%) vis-à-vis 2010, followed by Paraguay.. not available at the time of writing this report.
2011-2012 SOUTH AMERICA – MARKET OVERVIEW | PAGE 35
Cervantes, Hotel Cottage (Transoceánica), Ibis, and Days Inn. FIGURE 65: INTERNATIONAL TOURIST ARRIVALS TO MONTEVIDEO THROUGH CARRASCO INTERNATIONAL Additionally, the Montevideo market offers a wide AIRPORT – 2004 TO 2011 variety of 4- and 3-star independent or national-chain hotels, mostly located in the Old City and downtown
450 area. 392 400 350 306 312 The table below shows a projection of supply and 286 300 247 260 demand trends in a specific set of hotels. 250 222 200
150 In the last 7 years, hotel supply in the segment under Thousands 100 analysis has not undergone major changes, except for the 50 opening of Regency Zonamérica in 2009 and of Hotel - 2004 2005 2006 2007 2008 2009 2010 Esplendor Cervantes in 2011, among others. Tourist Arrivals Source: HVS Buenos Aires based on the Ministry of Tourism With regard to demand, for the period 2006-2008 an increase is observed until 2009, when demand drops to start picking up again in 2010. In 2009, the effects of the Market Performance global economic crisis and the swine flu (H1-N1) are evident, with a (10.4)% decrease in occupancy levels vis- The Montevideo market has approximately 75 hotels à-vis 2008. A positive trend is seen in 2010, with classified on a scale ranging from 1 to 5 stars, of which 3 occupancy rates slightly below 2008 levels, and a market hotels are ranked as 5 stars and 13 as 4 stars. average of 72.3% or 10.4 % growth. A surge occurred in 2011 with an average occupancy rate of 74.1%, i.e. a As there is currently no major presence of international 2.5% rise vis-à-vis the previous year. The first half of chain hotels and no information available on a critical 2012 shows a 6.6% fall vis-à-vis the same period of the mass of hotels to segregate data by segment, we have previous year. selected a sample of properties that represents the Upper Upscale and Upscale segments so as to analyze Furthermore, the average rate has evolved favorably market trends in recent years. since 2005 until 2011, with high growth rates in 2007 and 2008. In 2009, the pace of growth slackened slightly, FIGURE 66: HOTEL MARKET PERFORMANCE DE MERCADO - but in 2010 growth rates were above the double-digit MONTEVIDEO level, to finally end with a market average on the order of $125.31 of ADR. It should be noted that the marked 160 85% increase in rates in US dollars is not only accounted for
140 80% by a rate increase in Uruguayan pesos but also by the
120 continuous depreciation of the local currency vis-à-vis 75%
the US dollar since 2007, which stopped in 2009. The 100 70% first half of 2012 shows a sharp increase in average 80
65% rates due to an increase of nearly 21.5% in local Occupancy Occupancy US Dollars US 60 currency, which is offset by a depreciation of around 5% 60% 40 against the US dollar. 20 55%
0 50% Although occupancy levels have dropped in the first half 2008 2009 2010 2011 jun-11 jun-12 YTD YTD of 2012, the market has registered positive RevPar on Average Rate RevPAR Occupancy account of the higher rates, which is in line with what Source: STR Global has been happening in the last couple of years.
The figures shown here illustrate the market’s With regard to international chains, we can mention the remarkable performance in recent years (except for Tryp Montevideo hotels, Four Points by Sheraton, 2009) in terms of occupancy and average rate levels. As a Sheraton Montevideo Hotel, Radisson Montevideo Hotel, result of a slow increase in supply in the last seven years Holiday Inn Montevideo, NH Columbia, Hotel Esplendor
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and a strong demand over the same period, hotels have managed to significantly rise their average rates.
The figures observed in Montevideo’s hotel market performance are the result of the city's economic growth and of its relevance for the country and its contribution to the national GDP. Countless multinational corporations and companies have chosen to establish their offices in the city, thus further contributing to the economy and activities of the market area.
The number of visitor arrivals in town has increased, so that Montevideo has currently become the Uruguayan destination receiving the largest amount of tourists (although mostly corporate travelers), surpassing even cities like Punta del Este and Colonia. This trend is expected to continue in future.
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Trends City and downtown areas, and also nicer beaches, in the case of leisure travelers. Rumors are circulating that the The economic and hotel-industry indicators forecast a Old Citty and downtown areas are unsafe after business favorable environment for hotels, which in recent years have witnessed a rise in demand. Also, the market may FIGURE 67: MARKET SUPPLY PROJECTION MONTEVIDEO – further benefit from the arrival of international brands. 2012 A 2015 Montevideo will thus be positioned as a major regional destination. 2.500
2.000
The sharp rise in demand in recent years, which has not been accompanied by a similar increase in supply, has 1.500 boosted average occupancy rates by nearly 74% in the segment under discussion. This phenomenon, along with 1.000
available Rooms available the promotion and incentive law for the development of 500 tourist projects in Uruguay, has attracted national and 0 international investors, who are already building or 2012 2013 2014 2015 assessing hotel developments in the Montevideo area. Projected New RoomSupply Most projects under way have a Condo Hotel structure, Source: HVS Buenos Aires *2012 includes projects opening in the same year partly because of the scarce financing available but mainly as a result of a recent decree (404/2010 of December 2010) whereby the Executive establishes tax benefits for the activities undertaken by condominium hours. However, market information indicates that the hotels. government is considering a project to revamp the area in view of its great architectural potential. It is estimated that as competitors enter the market, especially from 2014 onward, average occupancy rates Among the Luxury & Upper Upscale projects figures the will drop on account of the sharp increase in the number Sofitel Carrasco Hotel with 116 rooms, which will be the of available rooms. As from that moment, a period of 4-6 first international brand luxury hotel in the city. Hence, it years will be required before market occupancy reaches will be interesting to see the market’s behavior and levels similar to those in 2011. reaction to this new property. The hotel will occupy a historic building boasting stunning architecture and the In connection with average rates, a 10-15% growth is former site of the traditional Hotel Casino Carrasco. expected for 2012 and 2013. As from 2014, this rise will be attenuated by the powerful arrival of competitors in There are also three international brand Upscale hotel the marketplace. Also, by the fact that in the medium and projects including a Pestana Hotel, a Hotel Regency long run, when demand is stable and no marked (belonging to a national chain already having several fluctuations in price and/or exchange rate levels are properties in Montevideo), a Hotel Esplendor Artigas, expected, the growth in rates will tend to stabilize with 279 rooms (which will expand the presence of Fen around 3%. Hoteles in the marketplace, in addition to the recently inaugurated Esplendor Cervantes and a future Dazzler As to locations for Hotel Projects, the Old City and Tower to be erected in the Pocitos area with over 200 downtown areas continue to boast the largest rooms). concentration of developments. However, the Punta Carretas, World Trade Center, and Carrasco areas are starting to attract new hotel projects.
The advantage of the Old City and downtown areas is that they have the greatest concentration of offices and financial institutions. Notwithstanding this, it is currently noted that, for a product of similar category, the hotels in Punta Carretas, Pocitos or Carrasco get higher rates, mainly because most corporate staff prefers to stay in those districts on account of the environment, including better restaurants and stores than in the Old
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Acerca de los autores
Graciana Garcia Iribarne is the Managing Director of HVS Buenos Aires & HVS Lima. She Joined HVS in the year 2002. Prior to assuming this position she worked as Senior Consultant and Executive Vice President of the HVS Buenos Aires office. Graciana has consulted for numerous mid and large-scale mixed- use developments, valuations, feasibility studies, operator searches, and hotel openings, and has provided strategic advice in Latin America, mainly in Colombia, Peru, Chile, Argentina, Uruguay and Paraguay. In Addition to her duties with HVS lima and HVS Buenos Aires, Graciana is Vice President of the South American Hotel & Tourism Investment Conference (SAHIC), the region’s largest annual hotel investment conference, which is held in a different South American city each year.
Before Joining HVS, Graciana achieved more than ten years of hotel operations and management experience. She graduated from Hotel Management at the University of Belgrano. Er Hospitality career started in 1992 at the Caesar Park Buenos Aires (Westin Hotel). In 1998, she traveled to Europe and worked at the Caux Palace (Montreaux) adding to her knowledge the recognized expertise and excellence of the Swiss hotel school. Back in Argentina, she worked for renowned hotel chains, such as Marriott International and Starwood Hotels & Resorts.
Fernanda L’Hopital has degree in Economics from Universidad de Buenos Aires and a MBA from Universidad del CEMA. She started her profesional career as a consultant in the Corporate Finance area, working for local companies specialized in the SME sector. In 2002, Fernanda joined Argentina’s Ministry of Economy as a Consultant at the Dirección Nacional de Cuentas Internacionales (National Board of International Accounts), being responsible for estimating direct foreign investment accounts and private debt in the Balance of Payments. In 2006, she joined the HVS Buenos Aires team in the consulting and valuation area, where she has acquired great expertise in the industry through her participation in numerous market studies, feasibility analyses, vualitions, and strategic planning for hotels, resort, adnd mixed.use proects. Most of the projects Fernanda has worked on are located in Argentina, Chile, Peru, Colombia, and Uruguay.
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Mariela Cababie joined HVS in 2007 after gaining a vast experience in the hotel industry working for several years in the Kempinsky Hotels in Buenos Aires in the Human Resources area an the becoming General Manager. Prior to her hotel experience, she held marketing positions in various companies where she worked on the design and implementation of strategic marketing plans.
Mariela holds a BA in Business Management from the Universidad de Bueos Aires, a postgraduate degree in Strategic Human Resources from IDEA and Diploma in Marketing from University of California, Berkley.
Guillermo Redigg Joined HVS Buenos Aires in 2012, where he currently Works in the preparation of economic and financial feasibilitym valuations and market studies for hotel investments. He began his career as a consultant in the area of Corporate Finance, where he worked for local firms specialized in this field, Guillermo also worked as an advisor for the Investment Undersecretary of the Buenos Aires City Goverment
Guillermo holds a degree in Business Administration from the University of CEMA a MBA from the University of CEMA
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This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before action or refraining action on any of the contents of this publication. HVS would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. HVS accepts no duty of care or liability for any loss occasioned to any person action or refraining form action as a result of any material in this publication.
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HVS HVS is the world’s leading consulting and services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Established in 1980, the company performs more than 2,000 assignments per year for virtually every major industry participant. HVS principals are regarded as the leading professionals in their respective regions of the globe. Through a worldwide network of 30 offices staffed by 400 seasoned industry professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. For further information regarding our expertise and specifics about our services, please visit www.hvs.com.
HVS SOUTH AMERICA
HVS Buenos Aires is the continuance of RHC – Hospitality Consulting, founded by Arturo Garcia Rosa in 1995. Since then, HVS actively works in the regional market - mainly in Peru, Colombia, Chile, Uruguay, Bolivia, Panama, Ecuador, Argentina, Paraguay y Brasil - offering a wide range of services for the hospitality and real estate industry and tourist destinations.
Since 2008, HVS organizes the leading event of the industry in the Region, SAHIC – South American Hotel & Tourism Investment Conference. The first four editions were held in Buenos Aires, Argentina; Rio de Janeiro, Brazil; Cartagena de Indias, Colombia and Santiago, Chile; while SAHIC 2012 edition is taking place in Lima, Peru, on September 10-11.
Since 2010, Arturo García Rosa became Chairman of HVS South America, overseen the operation for the whole region. For more information regarding our team and its expertise, you can also visit www.hvssouthamerica.com.
Phones: +54-11-4515-1461 | From Brazil: (11) 3957-1496 | From Chile: (2) 656-3314 | From Colombia: (1) 589-7607 | From Peru: (1) 705-8417 www.hvs.com & www.hvssouthamerica.com