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Chile’s hotel sector is growing quickly, especially in Santiago and the popular central region. Areas outside the center lag but could present significant development opportunities.
Chile’s central regions, including the cities of Santiago and Valparaiso, are the favored destinations of 65% of all tourists visiting the country. Not surprisingly, it is also where most of Chile’s current hotels and resorts are found and where most touristrelated new construction will take place.
This is especially true of the region northwest of Santiago, which includes Valparaiso. The region has the highest concentration of hotels and resorts (179) in Chile, representing 17% of the country’s total. The metropolitan region, which includes Santiago, comes in second with 125 hotels and resorts, or 12% of the total.
The metropolitan region, however, has the most rooms (8,515) or 23% of the national total, whereas Valparaiso (5,333 rooms) has 14% of the total. Nearly 50% of the 36,844 hotel and resort rooms in Chile are located in Santiago, Valparaiso and Antofagasta, a north-central region with 3,786 rooms.
Hotel investment in Chile is dynamic. Hotel development proposals range from large foreign chains like Accor (with projects for its IBIS and Novotel brands), Hilton (the recent opening of the Hotel Garden Inn at the airport) and plans to add four more in the coming years hotels, Hyatt (with projects in Santiago and Viña del Mar), and national chains such as Atton, Diego de Almagro, Radisson, and The Singular.
Most (58%) of the 31 tourist-related building projects scheduled for construction by 2013 will be in the Valparaíso and metropolitan regions. This will add nearly 1,800 rooms in the metropolitan region, a 21% increase, at an investment of $419 million. Valparaíso’s capacity will increase 13% with 716 new rooms and an investment of $130 million. Countrywide, new hotel construction will add more than 3,600 rooms to the current hotel capacity by 2013.
Many tourism projects are for large foreign chains like Accor. The French multinational has been in Chile for ten years and currently operates five hotels there: three in Santiago, one in Antofagasta and one Concepcion. It is planning a major expansion mostly in Santiago.
“Accor has defined Chile as a priority country for development for the group in Latin America,” says Gilles Gonzalez, Senior Vice President Development Latin America. “By 2015 we plan to operate 30 hotels in Chile with a concentration in Santiago, 40% to 50% of our portfolio, because the capital itself concentrates almost 50% of the country’s GDP.”
Hilton, which recently opened the Garden Inn Santiago Airport, plans to add four more hotels. Hyatt has projects in Santiago and Viña del Mar. And national chains such as Atton, Diego de Almagro, Radisson and The Singular are also expanding.
Much of the hotel investment focused on the metropolitan area and Valparaiso is due to the region’s developed infrastructure and promotional expertise which facilitates the development of hotel initiatives. Chile’s challenge now is to promote tourism in regions with less-developed infrastructure and lacking promotional expertise.
Some projects are on the books for these areas nevertheless. Projects that would add 470 new rooms (an increase of 17%) are being considered in the Bio Bio region. In Aysén, one of the regions with lowest hotel capacities, two projects are expected to add 125 new rooms which means an increase of 36% and bringing the total for the entire region to 474 rooms.
But other regions such as Arica-Parinacota, Tarapacá, Maule and Los Rios (which has the lowest number of rooms in hotels and resorts) have no projects planned. Chile’s Undersecretary for Tourism, the National Tourism Service and the National Forestry Corporation have launched a call for projects of sustainable tourism in 12 wild protected areas (ASP). The projects selected in this process have not yet made known, but 13 proposals for accommodation from hotels, lodges and cabins, total an estimated investment of nearly $87 million.
Sustainability is becoming an expected amenity by many travelers to Chile wanting to experience some of the world’s most spectacular landscapes. In 2007, Chile became the first country in South America with a hotel certified for sustainable construction practices by the U. S. Green Building Council. Since then other resorts that have little to no negative impact on the environment have been built in some of the remotest regions of the country.
Accor: Chile makes development easy
The French multinational Accor is the world’s leading hotel operator with more than 4,200 hotels in 90 countries. It is present in ten Latin American countries where it has 200 hotels. It has been in Chile for ten years and operates five hotels there including three in Santiago.
Brazil is Accor’s strategic country in Latin America. The country makes up more than 82% of Accor’s portfolio in the region. However it has made other countries a priority for development including Chile, Argentina, Peru, Colombia and Mexico. By the end of 2015, Accor plans to open 85 more hotels across Latin America.
“The results we have had in Chile are very encouraging which is why we are planning to operate a total of 30 hotels there by 2015, half of these will be in Santiago,” says Gilles Gonzalez, Senior Vice President Development Latin America. “These investments will be made by Accor and our local partners.”
Chile has excellent fundamentals, according to Gonzalez, including a secure and stable business and legal environment, known rules of the game, and funding opportunities in the local currency at competitive rates.
“It’s very easy to do business in Chile which promotes our development,” says Gonzalez. “Besides anticipating operating 30 hotels the only limit is that the market, which while promising, is still limited because the population is only 17 million. The GDP and population of Brazil are ten times higher!”
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Source: World Bank