REGIONAL REPORT : LATIN AMERICA
Q & A : FËN HOTELS ' BIG DEAL
With a US $ 300 million investment from George Soros ’ Quantum Strategic Partners announced in November , Fën Hotels , Buenos Aires , has the means to finance up to 5,000 new hotel rooms in South America within the next three years . CEO Patricio Fuks would not comment on the specific relationship with the Quantum fund beyond the financial arrangement but says Fën ’ s 10-year goal is to become the biggest management company in each of the countries it sets foot in . Fen manages and franchises 14 Esplendor boutique and 15 Dazzler hotels in Latin America — along with one in Brooklyn — two brands created by the company , and it manages two hotels in Florida . Here is Fuks ’ take on what ’ s next for the company .
HOTELS : How is Quantum ’ s investment transformative ? Patricio Fuks : This deal will allow us to accelerate our growth and scale rapidly throughout the region . It will allow us to access solid credit funds to construct multiple hospitality developments at the same time . and the general slide of Latin American currencies guarantees a very optimistic scenario for us .
H : Why the regional focus ? PF : Internationally , tourism in South and Central America has been increasing at an amazing pace , with expansion higher than 50 % in the last decade . Governments are making their own efforts to display their countries as popular tourist destinations . Furthermore , the tourism industry is growing rapidly in relation to other major industries , and governments know that .
H : What are the primary risks ? PF : Our anticipation of risk is really low . Big political changes had been occurring in the region , and our expectations are hand in hand with the big leap forward of the middle classes .
H : You are avoiding Brazil , at least for now . Why ? PF : In the hospitality area , development costs were too high — land and construction prices were similar to the U . S .— and hotel nights were not strongly demanded . From our point of view , it is still an expensive country in which to invest .
H : What is the biggest obstacle to getting deals signed ? PF : The right selection of the next site .
H : How many hotels have you signed deals on and have financed in the region ? PF : We have 35 hotels under contract , most in Argentina , Costa Rica , Paraguay , Peru and Uruguay — though in 2015 we expanded to many cities of the U . S . as well . We have 11 hotels in Buenos Aires and in all of them we get annual average occupancy rates higher than 80 %.
H : Where will the investment be distributed ? PF : At least 10 Central and South American countries including Argentina , Bolivia , Chile , Colombia , Costa Rica , Ecuador , Paraguay , Peru and Uruguay .
H : Where is the priority rity area ? PF : South America . You can buy land in triple-A locations in capital cities , get rates and occupancies similar to Manhattan , and yet build hotel rooms for a tenth of the cost of New York City . The significant decline of the price of crude oil , falling commodity costs
H : Where is the next up-and-coming area for investment ? PF : Paraguay and Peru are growing at one of the highest paces in Latin
America , and very few people see this . Prospects for growth in the real estate sector are highly optimistic .
H : Are you considering changing the mix of properties ?
PF : We are starting a very solid finan- cial stage . We are not changing or selling our properties . Now we have solid investment flow . It is time to buy .
www . hotelsmag . com March 2016 HOTELS 33