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At 50, Venezuela's Hotel Tamanaco faces major challenges
Seis Continentes / July 2003

By Larry Luxner

CARACAS — The Inter-Continental Tamanaco, one of the country's most famous luxury hotels, will mark its 50th anniversary this December, but few people are celebrating.

Venezuela is in the midst of one of its worst economic and political crises in its history.

"For the time being, we have nothing to scream about," says the hotel's new general manager, Ricardo Tapia. "The country is in a state of flux."

That's putting it mildly. Venezuela's GDP is expected to drop 9% this year after tumbling 10% in 2002, largely a consequence of the policies enacted by populist President Hugo Chávez. Continuing political unrest and a punishing strike by oil workers has scared away foreign investors, the bread-and-butter of the Tamanaco's clientele.

As a result, the 535-room hotel has been forced to lay off 100 of its 600 employees. Tapia says revenues this year are expected to total no more than $10 million, compared to $40 million as recently as three years ago.

"The total pie is 40% smaller. Arrivals and seat capacity have dropped by 40-50%, and we have three new players in the market: Marriott, Embassy Suites and Four Seasons, which is now closed," he said. "Five or six years ago, the market was better, and there was a lot of optimism. This year, Caracas will probably end up with occupancy in the 30s, and the hotel will be in the high 20s."

Tapia, who was born in St. Louis, Mo., of Panamanian parents, took over management of the hotel in March, having arrived from the Cartagena Hilton in Colombia, where he spent five years as general manager. The 60-year-old executive had been with the Hilton chain for 36 years, serving in 17 countries including Jamaica, Trinidad & Tobago, Malaysia, Thailand and Brazil.

He says the Tamanaco, inaugurated by then-Venezuelan President Pérez Jiménez on Dec. 3, 1953, is 100% privately owned, and that no more than 5% of the hotel's guests are tourists.

Caracas is not a tourist destination. In that, it is very similar to São Paulo," he said. "I would imagine that the little tourism which exists here is a very upmarket kind of tourism."

And unlike Buenos Aires, where constant devaluations have made Argentina a cheap city for international visitors, Venezuela is no particular travel bargain.

"Caracas continues to be an expensive city," he said. "It is not as expensive as it was before, and most probably, big-ticket items in dollar terms are cheaper today, for example apartments and land. But not automobiles, because they're built from imported parts."

He added: "The entire country is depressed, but it all depends how you look at it," he said. "I look at it as an opportunity. At moments like this, you can do things you cannot do under normal circumstances, like cut staff."

For the moment, about 60% of the Tamanaco's guests are individual business travelers, with another 25% group and convention travel. The remaining 15% are local Venezuelan families taking advantage of weekend packages.

Whether economic conditions will improve by the Tamanaco's 50th anniversary in December is anybody's guess. Much depends on whether a referendum on Hugo Chávez takes place, and whether foreign investors are willing to return to a country that ranks among the biggest suppliers of oil to the United States.

"In general, we will work under any circumstances, and we try to be as neutral as possible," said Tapia. "Venezuela has always been influenced by the United States because of the oil industry. So they're very sophisticated, generally speaking, and with the devaluation, prices tend to be dollarized, since 60% of what people consume here is imported. Automatically the local market will tend to find that level."

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