BY TAYLOR BARNES
Latin Trade Magazine
“If one conference fills the hotel and doubles the prices of nearby ones, it means something,” Cohen says. When reserving for the event earlier this year, Cohen was limited to the most exclusive suites at the
Visitors like Cohen are transforming the
“The focus is on South America” for Latin American hotel investment and activity overall, says Scott Berman, principal and U.S. industry leader, hospitality & leisure, at PwC US, the assurance, tax and advisory services firm. “Eighty percent, maybe even more, is in
For the hospitality industry in
“Security really affected this sector,” he acknowledges. He adds that the government’s “Choque de Ordem” program, which focuses on keeping beaches clean and regulating street vendors, has helped, too.
To stimulate hotel development, the
But in less than two years, in June 2014, soccer fans will descend on
“My impression is that
Securing a local partner has long been a big challenge for foreign hotel brands in
A number of recent deals suggest an evolution in
Some 17 new hotel projects in Rio have been approved by authorities; eight of them are under construction.France’s Accor, the leading international chain in Brazil, plans to add six more hotels in Rio, where it currently has 10, from the luxury Sofitel to the budget ibis. The local Windsor chain, with 10 properties in Rio only, intends to open three more, says SindRio.Windsor also is investing in renovations: The upgraded Atlantica Windsor in Copacabana reopened in December, and, in April, the Windsor Miramar, also in Copacabana, closed for a two-year overhaul.
Brazil Hospitality Group (BHG), which operates the Golden Tulip brand in
New hotel construction in
But hotel industry representatives question the potential of Barra, given the lack of metro access. A trip to Copacabana by taxi can encounter delays in heavy traffic.
However, soaring real estate prices are making construction increasingly difficult in popular districts such as Ipanema and Leblon, says Alexandre Sampaio, president of the Federação Brasileira de Hospedagem e Alimentação (Brazilian Federation of Hospitality and Food). He is optimistic that Rio will soon see improvements — and hotels — in its decrepit port zone, an area close to many downtown businesses that has been targeted for revitalization by the municipal government.
“In a city where it’s difficult to build, everyone wants to build,” Sampaio says.
Otavio Barros, president of a residents association in a favela in the Alto da Boa
Libertador, owned by the
The 301-room Westin is the chain’s first in
The inauguration of high-end hotels like the Westin is an important first step to redefining
Owners and operators are responding. Casa Andina, a leading national chain, has unveiled plans for the business-oriented Casa Andina Select. The first will open in
Stoessel says that efforts to tap the business traveler are in part related to the restrictions that the Cultural Ministry has placed on daily visitors to
The business travel segment already generates 30 percent of Casa Andina’s total sales, he says. “Clearly, the demand for four- and five-star hotels in
Travel agency professional Galdos concurs. “Available choices for the corporate traveler are still insufficient — demand continues to be greater than supply,” she says. More projects are in the pipeline, such as a Hilton Hotels & Resorts that is due to open next year in Miraflores, where Hilton already has a Doubletree.
The hotel and tourism consulting group HVS calculates that
Nothing appears to keep the business hotel market down in
“The impact of the violence has been only to shorten the stays of foreign business travelers,” says Roberto Zapata, chairman and chief executive of Hoteles Misión. “They are visiting
Hoteles Misión has 35 hotels in
The resilience of the growth in hotels for the business traveler in
A wave of development of Class A office space and high-end hotels in
Beyond the influx of new and renovated properties in the capital, the emergence of industrial and commercial centers in smaller cities has been important for the hotel industry, Katzman says. “Many of these places had no hotels that offered modern facilities for the business traveler,” he says.
Unable to support a five-star property,
“We saw a niche,” says Blanca Herrera, director of franchise services at City Express, a national chain. “You could find independent hotels at 500 pesos [just over $40] a night, and the business-class ones were charging about 1,100 pesos.”
When the chain launched nearly a decade ago, the market was wide open, says Misión’s Zapata. “City Express has set the pace in the affordable segment of the individual business traveler, as distinct from conventions and the like,” he says.
The chain today has 55 hotels nationwide and has diversified its portfolio to include City Junior, where prices are as low as $40 a night. City Junior attracts a significant proportion of the national business travel market, Herrera says. City Suites is a more upscale option of furnished apartments.
Herrera says City Express keeps a close watch on the competition, which has been heating up. In 2010,
Marriott is expanding its limited-service Courtyard brand. Projects include a 292-room
And more high-end hotels are coming. Starwood will open the Westin Guadalajara in October and its second W hotel in
Cranes are stacking floor after floor on the residential, office and hotel towers that continue to transform Panama City’s skyline. Boosted by the $5.25-billion expansion of the Panama Canal, foreign direct investment and government infrastructure spending, Panama’s economy expanded at 7.5 percent last year — a rate government and independent economists expect the country to maintain in the coming years — and one that has attracted significant investments in the hospitality sector.
Based on projects under construction, the Panamanian Hotel Association expects the country to end 2012 with 28,000 available rooms, an increase of 60 percent compared with 2009, with much of the expansion coming in the bustling capital.
Some hotel industry executives wonder if the market has expanded too quickly, especially given a tight labor market and limitations on bringing in more visitors.
Occupancy rates are currently at about 70 percent, up 5 percent so far in 2011, says association president Sara Pardo, who also is general manager of Le Méridien
The supply will keep expanding, with about 4,900 new rooms in 2011 alone. Mega-projects include the Hard Rock Hotel Panama Megapolis, a 66-floor tower that will boast 1,499 rooms, a spa, eight restaurants and bars when it opens by year-end. A casino is nearby.
Hard Rock executives are bullish. “
Compared with other Latin American cities, Panama is principally a leisure market and one that still has potential for hoteliers, says Berman of PwC. “Panama seems to have absorbed [the rooms] it has,” he says. “It’s all about controlling development costs, which appear to be on the rise compared to
In addition to competition for customers, hotel operators face the challenge of finding trained, English-speaking staff — the type of workers coveted by other sectors of the booming local economy. Once fully operational, the Hard Rock might need more than 2,000 employees.“The big players enter the market this year, and this is where we’re going to see if we have to take other alternatives” to find skilled labor, Pardo says. “But, definitely, every day it is harder for us to find qualified bilingual people to work in hotels.”
Another big player is the Trump Ocean Club International Hotel and Tower, a $400 million luxury development that has designated more than one-third of its 1,000 apartments as condo-hotel units. Doubts persist that all the buyers will close on the tower’s pricey units, payments the developer, Newland International Properties, needs to meet debt obligations, as noted by Fitch Ratings.
Stevenson says he has been surprised to find enough skilled people — including housekeepers conversant in English — in spite of bleak warnings. He credits the Trump name and brand to attracting staff.
But others foresee an increasingly tight and expensive labor market. “They will be able to find [employees], but they will have to pay them higher wages, which many of these hotels might not be able to (handle) because of the cost structure,” posits David Saied, an independent economist in
Current tourism programs are not entirely in English, an issue that needs addressing, Saied says. Another hurdle to filling thousands more hotel rooms is limited airline capacity. “Let’s say I want to bring 100 (people) on a tour — I cannot bring them through Copa,” says Saied, referring to the dominant carrier Copa Airlines. “I have to charter a plane.”
Copa has positioned
Tourism authorities are planning an airport in central
“Definitely, the coming years are going to be difficult unless we can take advantage of something new or have a new product that can increase volume,” Pardo says. “It’s a concerning situation.”
With reporting by Lisa K. Wing in Lima, Ronald Buchanan in Mexico City, Sean Mattson in Panama City and
This article originally appeared in the July/August issue of Latin Trade magazine.
© Copyright Latin Trade Group