CARTAGENA DE INDIAS, Colombia—An encouraging picture of the recovering hotel sector was revealed on the opening day of the South American Hotel & Tourism Investment Conference.
Unlike what’s happened before previous recessions, many global regions were not overbuilding before the current downturn, Steve Rushmore, president and founder of HVS Global Hospitality Services, said during an overview of the global hotel sector at SAHIC. Supply growth has been slow and steady for the most part worldwide, he said.
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Steve Rushmore
president and founder
HVS Global Hospitality Services
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And unlike previous recoveries, this one is closely tied to gross domestic product, which is forecast to turn positive for the world’s regions during 2010, Rushmore added.
“The recovery will be rapid and strong when it occurs,” he said. “Now is the time to buy hotels, distressed hotels, hotels trading well below replacement cost.”
Indeed, the hotel sector has seen a turnaround from the dark days of 2009. Revenue per available room in the United States is expected to end 2010 up 4.3%, with jumps of 7.1% and 8.1%, respectively, during 2011 and 2012, Rushmore said. These increases follow a RevPAR drop of 16.8% during 2009, he said.
Values increasing
U.S. value per room is expected to jump considerably during the coming years after beginning its recovery this year, Rushmore said.
| Year |
Value per room |
% change |
| 2009 |
US$56,000 |
-31.3 |
| 2010 |
US$65,000 |
+16.1 |
| 2011 |
US$83,000 |
+27.7 |
| 2012 |
US$105,000 |
+26.5 |
Source: HVS and STR
“We’re headed for a very strong recovery in the U.S., and now’s the time to start looking to buy those hotels,” Rushmore said.
Other global regions are going to see rising room values, too, during 2010:
- Europe: +2%;
- India: +8%; and
- Asia: +2%.
While values per room are increasing, it’s still going to be tough for hoteliers to obtain financing for at least the next two to four years, Rushmore said. But even that might aid the global recovery by limiting supply.
Forecast
The world’s hoteliers should be smiling over the rosy forecast Rushmore revealed during his presentation.
| Year |
Occupancy |
% change |
ADR |
% change |
RevPAR |
% change |
| 2010 |
57.7 |
+5.3 |
US$96.70 |
-1.0 |
US$55.80 |
+4.3 |
| 2011 |
59.1 |
+2.5 |
US$101.05 |
+4.5 |
US$59.76 |
+7.1 |
| 2012 |
60.9 |
+3.0 |
US$106.11 |
+5.0 |
US$64.62 |
+8.1 |
| 2013 |
62.1 |
+2.0 |
US$111.94 |
+5.5 |
US$69.51 |
+7.6 |
| 2014 |
62.7 |
+1.0 |
US$117.54 |
+5.0 |
US$73.71 |
+6.0 |
| 2015 |
62.7 |
0.0 |
US$121.07 |
+3.0 |
US$75.92 |
+3.0 |
Source: HVS and STR
The South American situation
Later in the day, Arturo García Rosa, senior partner of HVS Global Hospitality Services and president of HVS Argentina-Peru and SAHIC, was equally optimistic about the prospects for South American hotels.
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| Downtown Cartagena de Indias, host city of the 2010 South American Hotel & Tourism Investment Conference. |
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“The region has a lot of potential,” García Rosa said, according to an English translation of his presentation, which was made in Spanish.
Following is a summary of his thoughts of how upper-scale and luxury hotels are likely to hold up in South America’s key regions.
Buenos Aires, Argentina
- The region’s cultural attractions and capacity to hold conferences gives it an edge.
- Between January and July 2010, RevPAR increased 20.4%. “The recovery is amazing,” he said.
- The city will be home to 4,907 new rooms during 2014, up from 4,278 during 2009.
Santiago, Chile
- Rate recently hit the US$200 level; it is currently at US$230. “There is a certain fear, but finally Santiago has found its level,” he said.
- The city’s hotels rebounded quickly following the February earthquake.
- There will be a total of 2,302 rooms in Santiago during 2014, up from 1,707 during 2009.
Lima, Peru
- There were no recent significant additions to supply for Lima.
- Flooding in January kept tourists away, but recovery has occurred since with demand up approximately 20% during the January-to-July period of 2010. “Peru has struggled a lot, but they have worked hard to get back,” García Rosa said.
- There will be 2,253 rooms in Lima during 2014, up from 1,616 during 2009.
Bogotá, Colombia
- Tourism in the city has flourished since 2000.
- During 2009, rates fell by approximately 9%.
- During 2014, there will be 2,253 new rooms in the city, up from 1,616 during 2009.
