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HOME > THE GLOBAL SERVICED APARTMENTS INDUSTRY REPORT 2011-12 > REGIONAL REPORT - CENTRAL & SOUTH AMERICA
Central & South America
Regional Report - Central & South America
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Latin America escaped the effects of the world recession almost unscathed (with an average 5% growth between 2005 and 2009). During 2010 its hospitality industry started to bounce back in every key destination except Brazil which experienced consistent expansion during 2009.

Although accurate figures are hard to come by in this region, 2010 occupancy increased by a healthy 10% over 2009, whilst corporate housing rates showed moderate increases over 2009 nightly rates.

In a relatively under-developed and immature serviced apartments sector, extended stay products and private landlord rentals dominate. Corporate housing in the region is mainly configured by the recognised hotel brands, a small number of apart-hotels and by private landlords letting their property through relocation agents who provide a one-stop-shop for expats and corporate accounts.

Business travellers who visit the region are wary about security issues and consequently when booking accommodation tend to sacrifice marginal savings (hotel rates are moderately reasonable compared to serviced apartments) for the security of staying in a major hotel. Kidnapping is still not uncommon in countries like Colombia, Mexico, Brazil and Venezuela.

The region is fertile ground for indigenous corporate groups such as Ecopetrol (Colombia), Petrobras, Embraer, Vale and EBX (Brazil), Pemex (Mexico) Enersur (Peru) and PDVSA (Venezuela). Many have announced investments in the region’s economy during 2011 of $224 billion.

Investment on this scale will generate a steady demand for specialised qualified project workers and therefore for the relocation market. Corporate travel is booming too, with volumes similar to Asia Pacific and well ahead of those in the domestic US market. Inbound and outbound activity is increasing rapidly as a result of more direct flights from key European cities.

Currently Brazil, Mexico and Argentina generate approximately two thirds of all corporate travel in the region, all with strong travel markets and world-class multinationals. The demand is there, but the main challenge is an underdeveloped infrastructure compared to Europe or the US.

2011 GDP growth rates are expected to be similar to those of 2010, when Peru and Chile both grew 6%, Brazil by 4.5%, Argentina by 4.4% and Colombia by 4%. However the MasterCard Index of Global Destination Cities study has forecasted that Caracas - along with Quito and Santo Domingo - will suffer a contraction in both number of arrivals and visitors expenditure in 2011.

Argentina

The concept of serviced apartments is well established in Argentina thanks to a very strong and proactive tourism industry that has positioned itself as a relatively safe, economic and pleasant destination for expats.

There are many relocation agencies offering serviced apartments in Buenos Aires and the standards are competitive in relation to the diminishing hotel equivalent in the area. The third biggest economy in Latin America is currently experiencing a boom in tourism and import activities fuelled by the strong Brazilian economy despite inflation running at 25% (though officially 10%).

Brazil

Repeatedly cited as the most important emerging market, the major airline players are regularly announcing new and more frequent flights to Brazil’s main destinations.

Brazil’s job market is booming, with the Labour Ministry reporting that 280,799 jobs were created in February 2011 alone. The new posts have included foreign workers too, with companies hiring 30% more in 2010 than in 2009.

Sao Paulo is the focus of the serviced apartments sector, with the Brazilian government due to invest over $1 trillion in infrastructure to support the staging of the 2014 FIFA World Cup and the 2016 Summer Olympics. According to Ernst & Young, half of investors in Brazil have focused on hotel developments due to domestic and international demand for rooms across varied lodging segments.

Accor is spending US$200m to add nearly 5,000 rooms in Rio de Janeiro as part of an expansion plan that will see 300 hotels in full operation by 2015. throughout Latin America with particular focus on their Ibis and Formula 1 brands.

Although Brazil is ranked #79 in the in the Travel & Tourism Competitiveness Index for business environment and infrastructure, there is no formalised corporate housing sector, with serviced apartments rented direct from private landlords or through an agency. The demand for accommodation is increasing, resulting in very little availability which suggests a bright future for the serviced apartments sector in Brazil.