Hotel Investors Increase Focus on Latin America for Counter-cyclical Investment Opportunities

“While all future expansions are being strategically weighed heavily in this current economic environment, many groups have accelerated their canvassing efforts. In the past three months, we met with over a dozen international investors who are seeking opportunities in Latin America, with a focus on Brazil, Columbia, and Peru,” said Manuela Gorni, senior vice president for Jones Lang LaSalle Hotels in São Paulo.

Brazil’s still strong domestic demand is boosting hotel fundamentals and creating hotel investment and development opportunities. Some Brazilian markets have posted double-digit RevPAR growth thus far in 2008.

“Brazil will remain more insulated from the global credit crisis as its market has historically been a low leverage investment environment. While not immune to some economic softening in 2009, Brazil benefits from a very buoyant long-term economic outlook,” said Ricardo Mader Rodrigues, an executive vice president for Jones Lang LaSalle Hotels in São Paulo. “The most significant opportunity is to develop the underserved mid-market and budget sectors across the country.”

Columbia and Peru are also increasingly on the radar of international hotel investors. Columbia could be a standout thanks to its newfound political stability and increased demand fundamentals in cities like Medellín and Bogotá. Columbia has already begun to emerge as a stronger market and some regional players have been successful in rolling out developments in Bogotá, Cali and Santa Marta.

As an up-and-coming market, Peru has attracted increasing interest. “Lima, the capital, is growing steadily; while tourism in Peru is expected to continue to increase. There has been more interest in visiting the country, specifically Machu Picchu, and there are also some beach resorts in early stages of development,” said Mader.

The increase in Latin American hotel investment conferences indicate the growing level of interest in the hotel sector in Latin America: Real Estate Investment World Latin America was held in Miami in September; the first South America Hotel and Tourism Investment Conference took place in Buenos Aires later in the month; the ULI Fall Meeting and Urban Land Expo occurred late in October in Miami Beach, and the Hotels & Money Latin America conference in Miami this week.

“A strong economy, increasing real estate transparency, high risk-adjusted returns and a large and growing domestic market all support the region’s many opportunities for hotel development,” said Clay Dickinson, an executive vice president for Jones Lang LaSalle Hotels. “Our expanded platform in Brazil with a depth of local experts on the ground helps investors migrate the changing capital market dynamics. The demand for solid advice is fueling our strategic advisory business as more owners and operators turn to emerging markets for growth.”