HVS South America Outlook & Alternatives 2023

Aerial view of Brazil's Rio de Janeiro - Photo by Agust
  After overcoming the affect of the Omicron variant, the Brazil resort market started a notable restoration. The demand development allowed common every day charge (ADR) to extend. In 2022, a lot of the main cities recorded a RevPAR near the 2019 degree, and people with a sound mixture of company and leisure demand even surpassed 2019 ranges.

After a number of financial and political disruptions throughout South America, there may be now larger readability in a number of nations, giving rise to driving alternatives in some city markets and throughout the leisure sector. The outlook seems vivid all through a lot of the area.


After a number of financial and political disruptions throughout South America, there may be now larger readability in a number of nations, giving rise to driving alternatives in some city markets and throughout the leisure sector. The outlook seems vivid throughout a lot of the area, and I’m happy to share a few of my insights under.


After overcoming the affect of the Omicron variant, the Brazil resort market started a notable restoration. The demand development allowed common every day charge (ADR) to extend. In 2022, a lot of the main cities recorded a RevPAR near the 2019 degree, and people with a sound mixture of company and leisure demand even surpassed 2019 ranges. The resort market was a key driver. Whereas former president Jair Bolsonaro’s supporters generated political turmoil in October 2022 after his defeat within the presidential election that 12 months, this disruption had little affect on resort demand.

The primary months of 2023 present an upward development each in occupancy and ADR, which is anticipated to proceed throughout the remaining months of the 12 months. With a modest new provide pipeline, resort efficiency is anticipated to proceed enhancing, indicating alternatives for brand spanking new developments. Within the Brazilian resort markets, there are ample alternatives for leisure-oriented developments, from standalone European-plan or all-inclusive properties to master-planned developments. Additionally, worldwide model penetration in key markets remains to be low, representing alternatives to extend their footprints. The excessive rates of interest and the shortage of accessible financing stay the first challenges for buyers.


Peru’s sound financial efficiency in pre-pandemic years translated to stable resort outcomes and attracted investments not solely to Lima but additionally to regional enterprise journey cities and leisure locations. Some markets suffered from sudden will increase in provide simply earlier than, throughout, and after the peak of the pandemic. The mix of elevated provide and diminished demand resulted in decrease occupancies and ADR. Many properties confronted difficulties assembly their money owed, which brought about industrial banks to cease financing new tasks. The temporary time period of former president Pedro Castillo from July 2021 to December 2022 added uncertainty to the markets, inflicting many investments to stay on maintain or be canceled.
Violent protests began in Peru when Congress eliminated the then-president from workplace and his vice chairman Dina Boluarte turned Peru’s head of state. The unrest, which continued from December 2022 to mid-February 2023, affected the resort trade as a result of many airports had been closed for a number of days. Subsequently, many journeys had been canceled in Q1 2023. Additionally, reservations for teams and leisure company throughout the the rest of 2023 had been canceled or postponed. In consequence, the outlook for 2023 is modest for a number of of Peru’s key resort markets.

Nonetheless, with the political scenario at the moment underneath management (although nonetheless fragile) and motels working usually, demand is anticipated to return, and new provide is anticipated to be absorbed. The growth of Jorge Chavez Worldwide Airport is anticipated to be a key driver and to set a brand new sample for journey. With a inflexible lending surroundings, many tasks are on maintain or canceled. This development, along with sound financial prospects, robust lodging demand fundamentals, and affordable resort working prices, may symbolize a chance for buyers, particularly in choose locations inside northern Peru and for leisure-oriented merchandise related to pure assets and native tradition. Some city locations additionally current alternatives on a focused foundation.


The pandemic brought about a extreme financial recession for Colombia in 2020. Throughout that point, social unrest and public demonstrations steadily escalated into violent occasions with police and army involvement.
Colombia’s 2022 presidential elections put some corporations’ funding selections on maintain, affecting company journey within the brief time period. Nonetheless, in 2022, resort demand in Colombia considerably elevated in all segments. Some markets, like Cartagena, Santa Marta, and Medellin, noticed spectacular rises in each occupancy and ADR.

In 2023, the resort efficiency is anticipated to proceed a restoration. The nation’s potential within the leisure sector and assembly and occasions section, along with robust home demand and affordable working prices, point out appreciable alternatives for future growth in leisure locations and focused alternatives in enterprise markets. The principle challenges are growing growth prices and rates of interest.


Argentina had a few of the tightest restrictions and longest quarantines associated to the COVID-19 pandemic. In Q1 2022, occupancy for the nation was lower than 80% of the 2019 degree. Starting within the second quarter, as company demand and conferences and occasions returned and leisure demand continued to develop, occupancy skilled a pronounced improve, reaching the 2019 degree in This autumn 2022.

The financial system is anticipated to contract in 2023 on account of runaway inflation, a falling peso, depleted financial savings, excessive rates of interest, and uncertainty on account of October’s presidential elections. Nonetheless, the outlook for the resort trade is optimistic for 2023 because the company and group demand segments are anticipated to develop, albeit at a slower tempo. Leisure demand can be anticipated to extend; we anticipate that this section would be the most affected by the low price of Argentina on account of a weak peso. Within the context of rising demand and foreign money devaluation, a number of markets have skilled improved working margins, though the market is affected by excessive inflation, since resort charges have a tendency to regulate quicker and extra considerably than working prices.
Argentina presents choose alternatives for resort manufacturers to extend their footprints, as a number of of the nation’s secondary and tertiary cities are underserved by high quality resort provide. Additionally, model penetration in Buenos Aires is proscribed, creating alternatives to develop midscale and upscale merchandise. With areas and sights like Patagonia, Mendoza, and Iguazu, amongst others, Argentina is properly positioned for investments associated to luxurious and experiential tourism. Because of the lack of financing and threat notion of the nation, a lot of the resort developments are anticipated to be undertaken by native buyers.


The resort trade in Chile was some of the affected by the pandemic in South America. The change of president in Q1 2022 additionally influenced resort demand. The market’s demand step by step recovered in 2022, with occupancy surpassing the 2019 degree within the fourth quarter.

The resort outlook for 2023 is average because the financial system is forecast to sluggish barely. China’s reopening is anticipated to contribute to the Chilean financial system’s enchancment within the brief time period, whereas mining strikes and higher-than-expected inflation and rates of interest are draw back dangers. Regardless of the challenges, financial fundamentals stay stable, and Chile’s resort outlook is favorable, with a average new provide pipeline.
When it comes to developments, alternatives stay modest in choose enterprise locations, in addition to for boutique motels in markets related to pure assets. Chile options massive and complex monetary markets and a large number of vital institutional buyers when in comparison with different nations in South America. Nonetheless, entry to resort financing is at the moment restricted, as many motels confronted difficulties assembly their money owed throughout the pandemic and as rates of interest elevated. As Chilean markets get well and new alternatives come up, financing for resort tasks is anticipated to return. 


The resort trade all through South America has just lately confronted challenges. A lot of the nations had been severely hit by the pandemic, and up to date presidential elections generated political and financial unrest or uncertainty, briefly affecting lodging demand and inflicting some buyers to enter a “wait and see” mode. In some nations, left-wing presidents received, and political turmoil adopted. A much less supportive exterior surroundings additionally influenced the funding local weather by means of such elements as larger growth prices and tighter financing circumstances.
Regardless of these points, most markets have continued to get well. The tempo of restoration has been completely different in every market, relying on its drivers. Basically, the restoration in sure leisure and industrialized areas goes comparatively properly, whereas full-service motels in capital cities and different massive city facilities are recovering extra slowly.
There may be curiosity in enterprise lodging alternatives on a focused foundation and for city mixed-use tasks, in addition to potential for manufacturers to increase their footprints in secondary and tertiary cities and in particular segments of the area’s main markets. Leisure markets additionally present alternatives for the event of luxurious merchandise, lifestyle-oriented and all-inclusive standalone motels, and master-planned and mixed-use tasks. Nations like Ecuador, Uruguay, Bolivia, and Paraguay current alternatives on a choose foundation. A number of South American nations are engaging as a result of a lot stays to be carried out. In lots of nations, the potential to draw regional and worldwide demand is appreciable, and in lots of markets, growth and working prices are decrease than in additional developed economies, probably permitting for larger returns. The rhythm of recent developments shall be influenced primarily by inflation expectations, rates of interest, and entry to affordable financing.

Please attain out to Fernanda L’Hopital if you need additional perception or require help with a growth in South America. She can be excited to advise on the tasks and investments you might be contemplating within the area.

About Fernanda L’Hopital

Fernanda L’Hopital, a Vice President with HVS, has devoted half of her 20-year skilled expertise to resort consultancy. Fernanda has in-depth information of the tourism, hospitality, and associated actual property markets in South America. Throughout her profession within the resort trade, she has carried out greater than 200 research and has gained loads of expertise in performing market analysis, feasibility research, strategic planning, enterprise plans, growth plans, highest and greatest use research, operator search, administration and franchise contract negotiation, and valuations for motels and different actual property tasks. Her regional expertise is especially constructed on her thorough work in nations like Colombia, Peru, Chile, Argentina, Ecuador, Uruguay, Bolivia, and Paraguay, the place she has labored each on working and creating motels and different actual property tasks. Fernanda has a bachelor’s diploma in Economics from Universidad de Buenos Aires and a grasp’s diploma in Enterprise Administration from Universidad del CEMA. For extra info, contact Fernanda at flhopital@hvs.com.

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