All-Time High?
Despite unemployment rates in excess of 20% in Buenos Aires and economic and/or political turmoil in Venezuela, Colombia, Ecuador and Panama, there is no denying the rebounding strength of key Latin America markets.
By Staff, Chuck Bedsole and Paul Arnold -- HOTELS Magazine, 10/1/2000
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It goes without saying that the Latin America hotel market cannot be summarized in a blanket statement. All optimism or pessimism is localized, at the very least, within the borders of nations, if not destinations within countries. Some dare say interest in the region is at an all time high, yet others are hard pressed to agree when Buenos Aires’ unemployment rate is in excess of 20% and when countries such as Venezuela, Colombia, Ecuador and Panama all suffer some form of economic or political crisis.
At the same time, there is no denying the rebounding strength of economies in key Latin markets. After a problematic currency float last year, Brazil is standing tall as the country of choice for most developers. “The greatest propensity to invest has been in São Paulo and Rio de Janeiro, and the reason that Brazil has been able to develop hotel supply is that most of the investment is localized, either local investors or local pension funds,” says Scott Berman, Miami-based partner in the hospitality practice of PricewaterhouseCoopers. “Brazil, from a purely geographic perspective, is 65% of the land mass in South America. It is dominant in its size, economy, population.”
Analysts also are high on Mexico, which saw its ruling party leave office after 70 years, a political transformation seen as revolutionary that is credited with giving the country a favorable investment rating for the first time. “The positive progress of Mexico and Brazil is here to stay,” says Tom Arasi, outgoing president, Bass Hotels & Resorts, the Americas, because the two countries in the past year have shown the ability to decisively rise above their prior, seemingly cyclical economic problems.
But Arasi, echoing the concerns of many international brand executives, questions if a strong Brazil is enough to buoy the entire region. “Brazil has done a magnificent job managing business equilibrium and its currency exposure, but Argentina is beset by lesser stability and a lot of supply additions,” he says. “The real core of the problem is in Venezuela and Colombia,” where Bass has many hotels, which, despite high quality scores and decent profit margins, are struggling with top line revenues.
Venezuela is in the throes of economic crisis and suffered, some say, a destabilizing presidential election last year when voters elected Hugh Chavez, a public advocate of Saddam Hussein, as their new president. Colombia, aside from its well-documented security risk, leads a handful of prominent Latin American countries beset by financing difficulties, over-supply and decreased occupancies. Says Miami-based Emile Chehab, president and CEO, Radisson Hotels International, Latin America, “This is a good time to be in Brazil, but not Latin America.”
Chehab says Panama is another example of bullishness cycling into caution. “Just in the last three years, Inter-Continental, Marriott International and Radisson came into the market, just as the U.S. was phasing out its military base,” he says. The expectation was the Canal Zone would become a destination, and it still might, but as of right now, “Panama’s feeder markets are not performing very well.”
Still, the notion that each major region of Latin America (Mexico/Caribbean, Central America and South America) has something to encourage hotel development is supported by numerous opportunities seen by brand owners and analysts alike. Dallas-based Chuck Bedsole, hospitality practice leader, Ernst & Young, says one of the major differences for Mexico has been the emergence of U.S.-based opportunity funds for acquisition of hotel assets there.
CONSULTANT'S DREAM
“We’re seeing some private individuals going in and buying major parcels of land,” Bedsole says. “Maybe these are dot.com people willing to take on higher risk to get higher returns than what they get in the market here.” These types of players, interested in investing in Costa Rica as well as in Mexico, typically do not speak the local language, have no experience in hotels but do not lack the money. “A consultant’s dream,” he says. This emergence, as much as anything else, measures the renewed optimism in Mexico. “Five or six years ago, you never would have seen this.”
Established players are also bullish on Mexico and the Caribbean. Washington-based Marriott International will be opening a new-look Renaissance hotel in Mexico City in December and shortly thereafter plans to open a new Ritz-Carlton hotel in Jamaica. Bedsole says Mexico is a market many brand owners are penetrating with their major product, pointing to Hilton Hotels Corp.’s ongoing relationship with Grupo Chartwell and Grupo Posadas expanding its Explorean Eco-tourism product in non-traditional areas.
Grupo Posadas, already well established in its native Mexico with Fiesta Americana and Fiesta Inns, is targeting South America with the Caesar Park and Caesar Business concepts, but continues with new leisure developments at home, says Jorge Carvallo, vice president of development. He says Posadas has a 13-hectare parcel of land in the Cancún-Tulum corridor, and the company is developing a master plan for the area that will include large convention hotels and more of its successful Vacation Club concept. “Also, in Cancún, we have the opportunity to take over management contracts from independent hotels,” Carvallo says.
Still, Carvallo says, as the largest developer of hotels in Mexico, Posadas can now turn its focus to South America. “We want to be the second or third player in number of rooms (compared to Sol Meliá and Accor); we want to take the funds invested in Mexico and bring them down to South America.”
Spain’s Sol Meliá, like France’s Accor, is a Europe-based market leader in Latin America. Sol Meliá Communications Manager Monica Cerda says the company has made in the past year important acquisitions and investments in the Mexico market, including the conversion of the Meliá Mexico Reforma, the minority stake purchase of the Meliá Puerto Morelos (Cancún), the acquired majority stake in the Paradisus Cozumel hotel and an expansion of the Meliá Cancún. Sol Meliá also has debuted in key Caribbean and Central American markets with the Paradisus Coco Beach in Puerto Rico and Meliá Panama in Panama City.
At the same time, opportunism is gripping U.S.-based players like Starwood Hotels and Resorts Worldwide, White Plains, New York. “If you look at the landscape, you have the opportunity to go to Mexico and take a mid-scale product into 20 markets over the next couple of years,” says David Martinez, vice president of acquisitions and development, Latin America.
PricewaterhouseCoopers’ Berman sees numerous reasons for the broad optimism overhanging Mexico, starting with its favorable geography, which draws North American, South American and European travelers. “Latinos enjoy it in the summer, when for Chileans and Argentineans, it is winter,” Berman says. “Americans like it for the proximity to the U.S. and the resort atmosphere (of Cancún and the Yucatan peninsula).
Also having emerged as a consumer-friendly region is Los Cabos, on the Pacific Ocean, because of a proliferation of new product and available golf. “It’s really a golf and fishing village turned into an upper-upscale destination,” Berman says. “Rosewood, Westin, Sol Meliá are there, with more on the way.”
Jim Brown, the president and COO of Dallas-based Rosewood Hotels and Resorts, operator of the Las Ventanas resort in Los Cabos, says the property has the highest RevPAR in Mexico and considers the success a product of the Cabo market. Additionally, “the interest in Mexico since the elections has increased dramatically,” he says. “We will see more interest in investing in Mexico,” which should make the typical 50-50 debt-equity deals for developing a hotel there easier to put together.
The Caribbean is typical of the “low-hanging fruit” of years past; the easiest segment to seed was the 5-star resort, and it happened, with the debate today being over whether or development has peaked. “I don’t think there’s enough luxury product in the Caribbean to even say that it’s peaked,” says Brown, who is currently in the process of negotiating “a considerable number of locations” in the area, such as St. Vincent, Bonaire, Barbados and Bermuda.
Central America, meanwhile, would seem to capture the divided opinion on Latin American hotel prospects. Most frequently mentioned by analysts is Costa Rica, which, while certainly not undeveloped, might be receiving its first concentration of high-volume resort development activity.
“I think the story of the year in Central America is Costa Rica,” says PricewaterhouseCoopers’ Berman. “Talk is cheap, but finally we are seeing tangible results.” He explains development is shifting away from the capital city of San Jose. “Lately, we have seen the resort cities on the Pacific move forward with firm development and financing plans,” he says. “Four Seasons is contemplating a luxury product in a province called Guanacaste; Sol Meliá already operates there.”
BULLISH ON COST RICA
Berman believes the Pacific coast of Costa Rica is going to become the next hot beach destination in the Americas, following Cancún and Los Cabos. Others are less optimistic, or less sold on Costa Rica as a new frontier. “Costa Rica is saturated with hotel product,” says Ernst & Young’s Bedsole, who is concerned that the country’s transformation from a traditional backpacking spot into a more commercialized destination could be another case of killing the goose that lays the golden eggs.
Berman describes resort activity there as a chess game. “There are a lot of interested parties waiting to see what everyone else does,” he says. “But it’s going to happen,” because of Costa Rica’s inherent advantages and attractions: microclimates, a volcano, hundreds of miles of beach and relatively quick airlift from large population bases.
Jack Kerr, senior vice president of development, Hyatt Hotels Corp., Chicago, is convinced Costa Rica is still “several years” from turning into the next Cancún. “Costa Rica is still in the early stages of its development as a resort destination,” Kerr says. “Whether Costa Rica will become an attraction to investors in 5-star hotels will depend on the quality and sufficiency of the infrastructure being developed, increasing airline service and amenities such as golf courses.”
Similarly, Radisson’s Chehab views Costa Rica as having a lot of potential in the long term but adds, “we’re not moving forward until we have comfort with issues the government has to address, such as airlift.”
Berman sees the rest of Central America, such as Belize and El Salvador, as being long-term prospects. “Panama had a fairly significant growth spurt; it needs to absorb the supply, at least in Panama City,” he says.
Historically, the best and worst news about Brazil has been that its economic momentum characterizes most of the South American continent. “Brazil accounts for 87% of the Latin American gross domestic product, including the Caribbean,” notes Paul Sistare, president and CEO of Choice Atlantica Hotels, based in São Paulo, which he says boasts a GDP comparable to that of Mexico, while another Brazilian city, Campenos, is equal to the GDP of Chile.
“As Brazil goes, so does all of South America, but you need to dissect Brazil,” Sistare says. After flat GDP growth last year, Brazil is expecting 3% growth for 2000. But some cities are becoming question marks in terms of supply additions, he says. There are 20,000 new hotel rooms opening in São Paulo alone, Sistare says, “and we see the supply significantly outstripping the demand.” Statistics coming out of Brazil show that ADR is declining and occupancies are declining in the 5-star segment.
In contrast to São Paulo, most hotel companies are seeking a flag in Rio de Janeiro. And there is a broad trend toward secondary market product in Brazil from players like NH Hoteles and Tryp, recently acquired by Sol Meliá, according to Ernst & Young’s Bedsole. If secondary markets signal mid-priced products, then multi-brand international companies like Marriott and Starwood say they will participate.
“We have developed a [moderate-price] strategy not only for Latin America but for global positioning throughout the world,” says Ed Fuller, president, international, Marriott International, Washington. He explains Marriott has designated three Courtyard executives who will work exclusively on seeding Marriott’s largest mid-market flag outside of the U.S.
Fuller says Marriott is in no rush to over-develop Courtyard in Latin America. “We are moving forward with Courtyards that are less opportunistic, more historically accurate,” he says, terming 2000 a planning year and 2001 more of a rollout year for Courtyard in South America.
Hyatt’s Kerr says any assessment of the market, particularly the 5-star segment, requires perspective. “We believe that there are still many good opportunities for new Park Hyatt’s in Latin America,” he says. “Development of those projects is a multi-year process, so a long-term view of the market dynamics is essential.”
Starwood’s Martinez says his company maps out South America in terms of A-rated markets and B-rated markets, the former typified by the 12 largest cities or destinations, and the latter defined by the next 30 largest markets. “The strategy for Starwood is to enhance our presence in the A markets (where Starwood claims coverage in all but one) and to enhance our distribution in the B markets,” he says.
“Not all of those 41 cities will take an upscale flag,” he explains. “To do a Westin or Sheraton right, you have to spend some money.” That’s where Starwood’s lower-priced Four Points brand comes in. But Martinez stresses Starwood is not seeking to win a numbers game. “We’re not professing that a year from now we’ll have 200 hotels in Latin America, because to do that, we have to compete at the lower range of the B-markets. You will see other chains do whatever it takes to get into the markets, using throwaway brands,” he says.
Bass’ Arasi, however, maintains there is less urgency for any one company to try to establish presence quickly in Latin America because no one will clearly dominate. “I think in that part of the world, there is actually more room for medium and smaller players because the market is quite fragmented,” he says. “None of us have hundreds and hundreds of hotels down there. You’ll have to look much further in the cycle to see the consolidation in Latin America that you see in Europe and North America.”
Markets At A Glance
Argentina Secondary markets such as Mendoza are getting the bulk of the attention in this country, which still suffers from unemployment rates of more than 20%. Global brand owners are hedging their bets by developing affordable mid-market hotels, seeking to tap into the lucrative eco-tourism segment, or in the case of Grupo Posadas, building specialized products like its Caesar Business flag. Still, Argentina is beset by two familiar hazards: unstable currency and a glut of rooms.
Brazil As healthy and as inviting as Brazil currently is, there are a few caveats. One is infrastructure relative to the amount of development. Some executives are concerned this will become an issue as brand owners speed into the relatively undeveloped northeastern part of the country, typified by destinations such as Fortaleza and Salvador. But there is also ample proof that the locals are capable of planning big for the future, such as Costa do Sauipe, in Bahia, considered the country’s first world-class masterplan resort, which already has Marriott International, Accor and Superclubs signed up on a common, multi-hotel campus. Otherwise, a prosperous Brazil is lifting the entire region.
Caribbean The proximity between several otherwise diverse markets compels some analysts to view the Caribbean as being comprised of the Dominican Republic, Puerto Rico, Cuba, Jamaica, the Bahamas and the tip of Mexico’s Yucatan peninsula, defined by two destinations, Cancún and Cozumel island. About 75% of the rooms under development in the Caribbean are based in Puerto Rico, the Dominican Republic, Cuba and Jamaica, says Dana Ciraldo, senior vice president, Hodges Ward Elliott, Atlanta. Cuba remains embargoed by the U.S., the Dominican market is primarily “lower-rated wholesale business from Europe,” while the Bahamas and Puerto Rico have high labor costs. “Cancún, out of these, has become and is the best market to own a hotel in,” Ciraldo says. And along the hyperactive Cancun-Tulum corridor, “there is more English spoken than in Miami." While supply additions are robust, airlift is keeping up, he says.
Central America With Panama and nearby South American countries Venezuela, Ecuador and Colombia all in economic doldrums or political crisis, much of the focus for Central America has fallen on Costa Rica. But analysts and chain executives seem split on the destination, with some viewing the country as already saturated with rooms while others see the Pacific coast of Costa Rica turning into a Cancún-like resort destination. The determining factor, as usual, will be whether the area can attract capital.
Chile Perhaps because of its narrow geography, Chile is regarded as a second-tier Latin American destination at best, unable to host the critical mass of hotel rooms found in Brazil, Mexico and Argentina. Typical project for Chile? According to one analyst, it is mid-market product outside of Santiago, funded by private equity or pension fund-sourced capital. Although there is some interest in building Chilean resorts, that optimism is tempered by the geography, which keeps Chile “a long way from everywhere.” Santiago’s business market remains robust, evidenced by Bass Hotels & Resorts’ renovation of its Crowne Plaza hotel there, which will double in room count.
Mexico Although some view it apart from Latin America, Mexico has captured all things typical of the Latin hotel renaissance: booming resort destinations, emerging secondary markets, a new-look government and a rebounding economy. Destinations such as Los Cabos, Ixtapa and Puerto Vallarta, which traditionally have been profitable with 50% occupancy rates, are now getting 70%. “For the first time, you’ll see increases, so investment will follow,” Ciraldo says. “Mexico is just coming off the bottom of the cycle, so it’s a favorable place to be.”
Local Leverage
Choice Atlantica’s Paul Sistare
prefers cutting hotel deals in person, on the ground level
in Brazil, Chile and Argentina.
Back in 1998, Paul Sistare found himself at a crossroads. As president of Denver-based Richfield Hospitality, one of the largest management companies in the United States, he felt a shakeout coming in North America, even as the company was making moves to go global.
“I had flown down to Latin America several times and was amazed at the complete lack of management companies that were in that marketplace,” he recalls. “As president of Richfield, I got tired of competing with everyone [in the U.S.] out there for a 0.5% fee or a 1.5% fee, 90-day contracts cancelable upon will. I hated those types of things.”
Three years later, as the president and CEO of Choice Atlantica, the management company he formed with partners Gregory Ryan (fellow Cornell University graduate and former chairman of the Brazilian McDonalds subsidiary) and Nicholas Brady (former U.S. Treasury Secretary), Sistare has nine hotels open and 58 more under contract. The company holds the master franchise agreement for Choice Hotels International brands for much of South America.
More Than A Handshake
Despite the gap between open hotels and those in the pipeline, Sistare stresses 49 of the 58 are actually under construction. “That’s a big difference with us,” he says. “Major international companies will say ‘open and under development,’ which can mean a handshake. Meanwhile, the owners are shopping the management contract to other companies.”
He says if Choice Atlantica wanted to, it could count 80 more handshake deals, “but we haven’t closed them yet.” He claims the depth and breadth of his company’s development pipeline places them in numerical comparison with regional mainstays, such as Accor and Sol Meliá. Sistare has established offices in Ft. Lauderdale, Florida; São Paulo; Buenos Aires; and Santiago, Chile.
Sistare says he learned a stiff lesson about trying to operate a business in a foreign market with Choice Atlantica’s predecessor company, Barrington International, which forged into Eastern Europe before selling off its management contracts to Sol Meliá. “I don’t think a lot of companies truly evaluate legal risks,” he says. “In Yugoslavia, our contracts were not enforceable.”
Sistare finds the legal climate in South America, depending on the country, as much more comparable to the United States. Given that comfort, he decided to emulate the full-service, one-stop shopping experience used by Richfield and move it into the Latin markets, offering franchise, architectural, technical, marketing, reservation system and other forms of support. “Other companies were coming in and only providing the franchise, or participating in equity investment,” he says. “We said, ‘No, we’ll do all this for you.’”
He stresses the business model is nothing without recognizing the fine cultural differences in Latin America, what he refers to as glass walls. “We opened our first hotel in São Paulo about two years ago, and we brought in a Swiss general manager (GM) to operate the hotel,” he says. “We thought he would do an outstanding job, and he did, but this glass wall comes up because Brazilians want to deal with Brazilians. He spoke the language, but he could not get into the culture.”
Earlier this year, the GM was switched out for a local. “When we did that, the business of the hotel, it just seems like we opened the flood gates.”
The concern over cultural shock is one reason why Greg Ryan, who has developed more than 400 McDonalds restaurants in Brazil, is a key partner in Choice Atlantica. Thanks to Ryan’s previous experience, “wherever we go in Brazil, we know the market, we know the language,” Sistare says.
Sistare sees Choice Atlantica filling the gap between the established 5-star flags of international companies and the more modest non-flagged local offerings. “We came in and said, ‘let’s go right in the middle,’” he says. “We’re not Marriott, not Sofitel, not Gran Meliá.” And he stresses there are plenty of secondary markets in South America to seed Choice’s mid-market brands. “There are more cities in the country of Brazil with populations of a half-million or more than there are in the United States,” he says.
True Blue
Two decades of upscale tenure
in Brazil point the way for Chieko Aoki’s Blue
Tree Hotels.
At a time when private, regional hotel management companies are more and more the acquisition targets of global players, São Paulo-based Blue Tree Hotels appears destined to maintain its identity over the long haul. It has a portfolio of 30 hotels and resorts either open or under development, virtually all within the country of Brazil. Its closely held ownership consists of its founder, President Chieko Aoki, and a 20% stake held by Fundação dos Economiários Federais (FUNCEF), the country’s second-largest pension fund.
Aoki says the relationship with FUNCEF is one of the primary building blocks of Blue Tree. “We are managing most of their hotels, which are considered the biggest hotel investments in Brazil, giving Blue Tree a lot of exposure in the main cities,” she says.
The roots of Blue Tree date back nearly 20 years, when Aoki entered the hotel business in 1982 as director of marketing and sales for Caesar Park Hotels & Resorts, another Brazilian upscale brand. She advanced to president by 1986, overseeing a chain of 12 well-regarded properties, and she also served as deputy chairwoman at Westin Hotels & Resorts, which was purchased by Japan-based Aoki Corp. (her husband’s business) in the mid-1980s and then sold to Starwood Capital Group in 1995.
By December 1997, Aoki resigned from Caesar Park Group to concentrate on Caesar Towers Management Company, a brand of first-class business hotels she founded in 1992. Less than a year later, she changed the name of that company to Blue Tree Hotels, the first two words being a literal translation of her last name, “Ao” for Blue and “Ki” for Tree.
Beyond having her personal imprint on the name of the company, Aoki has a focused vision for where Blue Tree will be in the foreseeable, if not long-term, future. “In Brazil, it is difficult to have 10-year plans; it is more adequate to have a three- to five-year plan,” she says. “Blue Tree has aggressive growth plans for the next three years, but we invest in the structure to support the growth simultaneously or slightly ahead of the company growth, and with enough flexibility to adjust to critical financial situations in case Brazil faces sudden instability in the economy.”
Blue Tree products are segmented into upscale hotels and convention resorts; full-service deluxe convention/business hotels; and economy hotels. Although currently focused in Brazil, Blue Tree plans outward growth, Aoki says. “To grow in Latin America, especially South America, Blue Tree will pursue opportunities directly; to grow into other countries, we plan to have a partnership with a hotel chain with similar operational philosophy and products.” She would not give more specifics on the planned alliance.
Aoki counts among Blue Tree’s management strengths her long tenure in the Brazilian hotel market (she is a naturalized citizen), hotel executives well seasoned in international operating standards and a sales system that guards against needless rate-cutting.
“We also keep close follow-up on the operation of the hotels, as well as good communication channels with the managers in order to have them acting with speed and making adjustments as much as they are necessary,” she says. Such detailed planning filters down to the control of equipment costs, marketing expenses and the elimination of non-profitable spaces.
On the revenue side, “we do not bargain the room rates to the level of the competition,” Aoki says, “because we believe that quality in service is very important, especially in developing countries where these values are not totally consolidated within the local culture.”
The key remains flexibility within the local economy.
“We structure and operate the hotels to be profitable even if changes in the economy occur,” Aoki says. “This is the reason why our hotels have experienced excellent levels of operational profit.”
Trends
In Resort Development
As economies stabilize, Latin America has become a genuine
hot spot for hotel and resort development.
The positive economic outlook, combined with an increase in leisure and business travel and the relative lack of branded product, continues to motivate companies, such as Accor, Bass, Four Seasons, Starwood, Marriott and Sol Meliá, to pursue aggressive expansion in Latin America. These companies, as well as strong regional players, such as Posadas and Blue Tree, are making major investments in flagship commercial hotels in gateway cities, and several are expanding their mid-market brands into secondary markets in Brazil, Mexico and Argentina. Given the enthusiasm for the region, it is not surprising these operators also are driving the phenomenal growth of the resort segment as evidenced by the explosion of such destinations as Cancún and Los Cabos in Mexico, the development of new master-planned resort destinations such as Costa do Sauipe in Brazil, and the emergence of eco-tourism projects.
Mega-Destinations
As high-rise hotels crowd the beaches of Cancún and the amount of developable land in the hotel zone continues to diminish, the focus of new development in the area is in “Mundo Maya,” the coastal zone stretching from Cancún south down to Chetumal—an area that offers ecological and archaeological attractions. Driven by the investment of Spanish hotel companies and private Mexican and U.S. investors, the current inventory in Mundo Maya now exceeds 12,000 rooms, and it appears growth will continue in the corridor. However, there is concern further development will compromise the area’s unique experience.
The Los Cabos market also continues to mature due to its world-class reputation as a golf destination. Available sites in the corridor from San Jose del Cabo to Cabo San Lucas have become scarce, and development recently has expanded to the west cape and to the area east of San Jose del Cabo. Large master-planned communities, such as Cabo Real and Cabo del Sol, have recently enjoyed a boost in residential sales due in part to the booming U.S. economy and the addition of marquis hotels, such as Rosewood’s Las Ventanas al Paraiso. Puerto Vallarta is also getting into the golf business with the recent opening of Punta de Mita, a 1,500-acre community that includes a Four Seasons resort. CCA and its Mexican partners also are planning a major golf community in the foothills near Puerto Vallarta.
In Costa Rica, Marriott has expanded its presence with the opening of the 200-room Los Suenos Marriott resort. Following this trend, Four Seasons plans to open a 170-room resort in late 2002 as part of Peninsula Papagayo, a 2,350-acre, upscale development in Guanacaste. The plan for this project includes up to 1,000 residential units, timeshares, two marinas and three golf courses.
Brazil is waking up as companies want to capitalize on the optimistic outlook for tourism. Mega-resorts are in planning and development stages, including Costa do Sauipe, located in the state of Bahia. The first phase of this US$250-million resort development will open this fall, and will include five luxury hotels and six inns, totaling 1,650 rooms. Marriott and Accor each will operate two hotels, and SuperClubs will open an all-inclusive resort. The project is being developed by Construtora Norberto Odebrecht, a major international development and construction company, and is being financed by a Brazilian pension fund. In addition to Sauipe, Odebrecht also is pursuing another unique resort development, Complexos Turstico do Pantanal, an eco-tourism project anticipated to capitalize on the potential for nature tourism to the pristine Pantanal region of Brazil.
Alternative Activity
While resort development in Latin America traditionally has focused on the “sun, sand and sea” experiences, there is increasing interest in the development of eco- and cultural-tourism products. Sometimes perceived by lodging and travel operators as a “niche for backpackers who don’t spend a lot of money,” the emergence of a substantial number of affluent travelers from the U.S. and Europe has lead to the demand for these experiences.
As a pioneer in the segment, Costa Rica long ago realized the potential of its flora and fauna, and has developed a relatively advanced eco-tourism infrastructure. In fact, its marketing campaigns and certification program for eco-resorts are considered models for other destinations. Other Latin American countries have recognized the economic benefits of developing eco-tourism destinations, and Panama, Brazil and Mexico now have national eco-tourism policies and mandates.
The potential of eco-tourism has caught the eye of some major operators as well. With the opening of its first Explorean resort in March of 1999, Grupo Posadas became the first hotel company in the region to offer a branded product specifically targeted to this segment. Accor and SuperClubs also have indicated they are pursuing opportunities to expand in this segment.
When will the region stop sizzling? The fundamentals appear to be sound for the long-term, notwithstanding major political or economic crises. In the near term, if Cuba formally opens up to the U.S. market and gaming comes to Mexico, then things might even get hotter than the sand in Fortaleza.
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