Exchange Rate, Foreign Investors Boosting Argentina Luxury Hotel Sector

A suite at the new Algodon Mansion hotel being built by New York City developers in Recoleta.

While new hotel construction slowed in Argentina in 2008-09, the sector is starting to come back to life thanks to a more favorable peso/dollar exchange rate and the determination of international investor groups, according to Ellen Hoffman of Hotel News Now (HNN).

The current 3.8 peso/dollar exchange rate, about 20% higher than two years ago, has helped New York-based developers like DPEC Partners get new hotels across the finish line. Their project, a beautifully restored 1912 property in Recoleta called Algodon Mansion, is a prime example of the type of ultra-luxury boutique hotel opportunity awaiting foreign investors in BA.

Private investor groups continue to target the high-end by renovating historical in-town landmarks, while large international chains like HoJo and IHG continue to explore new opportunities in the suburbs and surrounding provinces. According to government sources, hotels under construction in Argentina represent US$1.7 billion of investment; HNN says 59% of those funds are for new hotels in Buenos Aires, while the remainder are going toward new projects in cities like Mendoza, Cordoba and Bariloche.

Hotel research firm STR Global says 690 guestrooms are currently under construction in Buenos Aires, while HVS reports a 71% occupancy rate (1Q10) for BA’s 5-star hotels, an 11% increase over 1Q09. In other BA hotel news, the Park Hyatt Buenos Aires will play host to the 2010 Masters of Food & Wine three-day event next week.

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