Latin America Unveils Pivotal Potential for Investment Opportunities Post Brexit
By Arturo Garcia Rosa President & Founder, SAHIC South America and SAHIC Cuba | August 21, 2016
Only few weeks ago, Britain withdrew from the European Union and the term "Brexit" (British Exit) echoed in the news around the world. After Brexit was approved by 52 percent of British voters, foreign investors can't help to speculate about the future of the UK, and of Europe as a whole. As investment volatility seems to be one of the consequences of this decision, attention is gradually being shifted to another part of the world: Latin America.
2015 showed that Latin America is a tourism force to be reckoned with. The continent's image as a trending destination has proven to cater to every kind of traveler. This, however, should come as no surprise. Brazil capitalized on its eminence as the World Cup host and as the soon-to-be epicenter of the Summer Olympics. Colombia and Mexico have taken over billboards and Instagram to showcase its scenic beauty while highlighting its progressively sophisticated domestic economy. Peru's growing supply of event facilities and room capacity triggered an increase in corporate leisure and convention travel. Argentina's dramatic change in its economy is generating booming opportunities for multiple hotel segments, ranging from budget, to full service, to luxury.
As Latin America continues to be present in the consumer's mind as an intriguing and desirable destination, there is a simultaneous growth in economic conditions and tourism infrastructure. These three factors combined create the ideal scenario for investment prospects. It is estimated that the tourism in Latin America will increase faster (3.7%) than in Europe (2.9%) all while inbound tourism rises to 6% compared to the global average of 4.9% . As an international investor, it is critical to stay ahead of these trends. This is the time for LatAm and the time is now - here is why
- The continent's total contribution from Travel and tourism was $371 billion in 2015 and it is forecasted to grow to $535 billion by 2026.
- Likewise, GDP is expected to increase from 9.0% to 9.7%.
- International tourist arrivals are forecasted to grow from $45 billion to $76 billion – an additional $30 billion and 5.3% growth.
- Business spending (19%) and Leisure spending (81%) are low compared to the global average of 23%, which means there is remarkable room for growth.
The individual markets within Latin America demonstrate a latent potential that can't be overlooked. Let's take a look at some of the highlights:
2015 revealed that the hotel supply in Rio de Janeiro is not enough to satisfy the emergent tourism market of the city. Although its inflation has somewhat moderated this year at around 9%, it is still above the Central Bank's target rate, with very unlikely interest rate cuts happening in the short term. As the country gets ready to host the 2016 Olympics, it is concurrently creating an air network to feature and connect other destinations often unseen in the typical travel guides. This new travel interface is a prime example of how Brazil managed to emerge from the recent global recession relatively unscarred - all while maintaining its inflation under control, stabilizing its overall political environment and generating a thriving banking system.