American Money

South America experienced the global downturn very differently compared with the rest of the world. Lacking in direct investment from those countries worst hit, and generally speaking, most regions and countries are entering a period of remarkable stability. Whether they have seen the light and are tired of revolution, or they are more interested in making money, the fact is South America has turned into one of the world’s most favourable destinations for hotels investment. A continent that has huge diversity, amazing cultural heritage, spectacular climate and natural wonders, and is easily accessible by most of the world, is finding its place in the world of tourism like never before. The four key markets are; Santiago, Chile; Buenos Aires, Argentina; Lima, Peru and Bogota, Colombia. Here is a look at the major reasons why.

• Ease of Doing Business. All of the countries here have improved their ease of doing business. Chile, which has long been the testing ground for South America has an investment grade rating, and Peru has made huge strides in how they deal with foreigners and doing business. Colombia, of all countries is in the lead, and this is indicated by the large amounts of investment from American and European countries in 2010 and 2011.
• Economic Stability. All of these countries have shown considerable improvement in their economies, albeit in different ways. Colombia is showing stability and proactive government that maintained it’s direction during the last decade. Argentina, while having a more mixed and left-ist perspective has shown signs of a real and stabalised recovery after many years of inflation. Peru has maintained democracy since 2001, and regular GDP of 5% each year. Chile, the longest standing democracy of the region, supported by a wealth of natural resources continues to maintain macro-economic control. It continues to attract investment and build its reputation as the silicon valley of South America.
• Open Markets. The Sheraton has invested over 90 million US dollars in 2011 in Colombia’s northern beach town, Catajena. There is little competition from international brands. This is the case with all of these locations. This compares with market saturation in Europe and the US.
• Welcoming Foreign Investment. Investment in South America has not always been easy. The political climate and the social and cultural influences of that climate have not always been conducive to investment from those who were once seen as imperial dictators. Perhaps it is a changing of the guard, or it is the passing of time, and another generation has become a part of the adult population, creating an air of change. South America, and these locations are particularly ready for investment. Colombians have the money, they have the local political power, and they know they need the international expertise if they want the international business. Tourism is the business that comes from nowhere, to change the politics and autocracy of any country. Tourism brings money, freedom and even fun. It doesn’t tell a country what to do.

Understanding which hotels in what regions will boom will take more than the best property valuation software, it takes those who understand the industry, have the relationships, and are on the ground where it counts. Investment into these markets is not an easy task, and it is only those who have the skill and are prepared to take the risk will make the returns. What will happen?