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Business markets grow in South America
Hotel & Motel Management / June 16, 1997

By Larry Luxner

New hotels are going up all over South America, but the focus of investment these days appears to be the six nations comprising the Southern Cone Common Market, known in Spanish as Mercosur: Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay.

Nearly all multinational luxury hotel chains plan to develop properties in one or more of these countries.

Inter-Continental Hotels & Resorts, for example, says its $300 million joint venture with Brazil's Brascan Inmobilaria S.A. will build and manage 12 Inter-Continental or Forum brand hotels across Brazil by 2000. Initial targets are Brasília and Porto Alegre; later candidate cities include Bahia, Belo Horizonte, Curitiba and Manaus. Forums are chiefly second-city hotels, though to date, Latin America has only one: the Forum Las Lomas in Rionegro, Colombia.

Inter-Continental and Brascan were partners in the 437-room Hotel Inter-Continen-tal Rio, built 25 years ago. Last September, the partnership inaugurated the 193-room Inter-Continental São Paulo in the heart of São Paulo's financial district, right across the street from Citibank's Brazil headquarters. The $55 million property projects sales of $15-20 million in the first year of operation.

Likewise, Howard Johnson International has announced a deal calling for the development of 10 properties in Brazil over the next 10 years. HoJo's master franchisor for Latin America. "We're looking to develop the three-star market down there for a start," said Hal Alter, executive vice-president of Julio Bogoricin Real Estate Brazil, HoJo's joint-venture partner.

Mercosur, established in 1991 by Argentina, Brazil, Paraguay and Uruguay, is a customs union advocating the elimination of tariffs, quotas and eventually border formalities between member nations. In the last year, two more countries -- Chile and Bolivia -- have been accepted as associate members. Mercosur has quickly become the most dominant trade group in Latin America, and has succeeded in attracting billions of dollars in investment from Fortune 500 companies ranging from Chrysler to IBM. The influx of so many corporate travelers has, in turn, has sparked the need for luxury accommodations from Buenos Aires to Brasília.

"Business travel is definitely propelling the industry. There's a lot more interest in Latin America in general from the business community," says Myles McGourty, general manager of the Hyatt Regency Santiago. McGourty is also South American regional manager for Hyatt International, which plans five-star properties in Colombia, Paraguay, Ecuador and Peru.

Leisure travel is also picking up. Choice Hoteis do Brasil, a unit of the Barrington Group, will build two resorts in Brazil's northeastern city of Fortaleza -- a 126-room Quality Suites worth $6.7 million and a 240-unit, $11 million Comfort Suites. Choice Hoteis do Brasil holds the master franchise agreement to develop Choice brands in Brazil; Choice Hoteles del Plata has a similar deal covering Argentina, Paraguay and Uruguay.

Likewise, French hotel giant Accor plans to invest $100 million in Argentina, reports La Nación. Chairman Paul Dabrule told the paper his firm has two projects: to build a hotel in the up-and-coming Puerto Madero district of Buenos Aires, and to establish 20 to 25 hotels (with 100 rooms apiece) throughout Argentina's interior.

Across the Plate River from Argentina is Uruguay, another hot tourist market. Hilton Hotels says the casino located in its luxury Conrad International Punta del Este Resort & Casino -- but not the hotel itself -- is now open for business. The 38,500-square-foot facility, billed as "the first true Las Vegas-style casino in South America," is located in Punta del Este, which pulls in 750,000 well-heeled seasonal visitors annually, most of them Argentines and Brazilians. Construction on the 302-room, $150 million project will finish in September.

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