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Bass Consolidates Its Investments in Chile
Seis Continentes / Fall 2000

By Larry Luxner

SANTIAGO -- Chile's already saturated hotel sector is about to get even more crowded. The 103-room Inter-Continental Santiago, which started life five years ago as a Sonesta, will soon add 200 rooms and a 1,500-square-meter convention center when its new luxury tower is completed in March 2001.

Juan Raventós, general manager of the five-star property, says 60% of the $30 million project will be financed by a consortium formed by Republic National Bank of New York; Banco del Estado de Chile; BICE and Corpbanca. The remaining 40% will be financed by property owner Hotelera Luz S.A., a holding company controlled by José Rosenberg and five other investors.

Raventós says Inter-Continental took over the property from the Sonesta in 1997, only two years after it was built. At the time, Chile's export-led economy was booming, and investors were already planning the hotel's expansion.

"The 1990s were a very good decade for Chile, with GDP growing by 10% a year," he said. "But since 1998, we've been in a recession. This has put the brakes on growth, and last year the economy shrank by 8%, so we had low demand. At the same time, many new hotels have been inaugurated here -- for instance, the Sheraton Towers, with 150 rooms, and now the Marriott, with 280. This is a lot for a market like Santiago. We're talking about 2,500 rooms in five-star hotels."

Nevertheless, the Inter-Continental project is going forward, with workers swarming every day over the construction site in Santiago's Vitacura neighborhood. In addition to the 200 new rooms and convention center, the hotel is also adding 300 parking spaces and a restaurant.

"Our expansion is a long-term thing, looking at the next 20 years," says the 48-year-old Raventós, who was general manager at Santiago's venerable Hotel Carrera for two years, and commercial manager of LanChile before that. "When we took the decision to expand, the economy was much stronger. But the economy is cyclical, and we hope to recover this year."

At the moment, Raventós says the property is running at 63% occupancy, about the same as last year's. That's slightly better than the 56-58% average for Santiago as a whole, he said. Some 95% of the Inter-Continental's guests are business travelers; the remaining 5% are tourists. One-third of his guests are North Americans, one-third Latins (mainly from Argentina and Brazil) and the remaining third Europeans and Asians.

The average room rate at the Inter-Continental is $150, compared to $85 at the other Bass property in Chile's capital city -- the Crowne Plaza Santiago -- overlooking the Alameda, Santiago's main downtown boulevard.

Bass currently has six properties in Chile. In addition to the two hotels in Santiago, the chain also oversees Holiday Inns in Antofagasta, Concepción, Iquique and Temuco.

Eduardo Fahrenkrug, general manager of the Crowne Plaza Santiago and vice-president of Bass Hotels & Resorts Chile, says the country gets 1.6 million tourists a year but has "never given importance" to the tourism industry.

"Neither presidential candidate -- Lagos nor Lavin -- spoke one word about tourism during the campaign," he said. "All the hoteliers are working to establish a convention bureau to promote the convention business. We give a lot of important to mining, fruit and wine, fishing, but not tourism."

In June, Fahrenkrug presided over a ceremony marking the $12.5 million renovation of the 300-room Crowne Plaza, which was originally built 20 years ago as a Holiday Inn. Present at the inauguration party were hundreds of dignitaries including Santiago Mayor Jaime Ravinet and Tourism Minister Oscar Santelises.

"We renovated all the rooms, as well as the lobby, the business center, the bar and the outside façade. We added new elevators and a new pool," he said, estimating that Bass has invested over $100 million in the downtown property since taking it over five years ago.

Fahrenkrug, a native of the southern Chilean mountain town of Osorno, studied hotel management in Frankfurt and Dusseldorf before joining the Inter-Continental chain 26 years ago. In that capacity, he served as general manager of Inter-Continental properties in such places as Bangkok, Singapore and Maracaibo, Venezuela. On a large wall map of the world, the hotel executive has stuck colored pins into all the countries he's worked in and visited over the years.

He said the Crowne Plaza, which has annual sales of $20 million, employs 200 people and caters mainly to Europeans (60% of all guests). The remaining 40% of guests are Americans and locals. At least 65% of guests are on business or attending conventions of some sort.

Fahrenkrug says Bass soon plans to open two Holiday Inns in Santiago -- one downtown and one at Arturo Merino Benítez International Airport -- but must not lose sight of its mission at the Crowne Plaza.

"We have the newest facilities in town," he said. "Now we have to make sure we deliver service."

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