According to a new survey, the Latin American hotel industry will increase room supply by 65 percent over the next ten years to meet demand fueled by the region's economic growth. al aaliya island
According to Jones Lang LaSalle, the lodging industry in Latin America is forecast to add 425,900 rooms over the next ten years, reflecting a compound annual growth rate of 5.2 percent, led by domestic economic growth in Brazil, Mexico, Colombia, and Peru.
The rise in room supply, however, might not be enough to keep up with the rapid growth in these countries, according to the company.
According to Clay Dickinson, executive vice president of JLL's Hotels & Hospitality Group, Latin America, "any estimate points to a disproportionate increase in the amount of hotel and timeshare development needed to meet projected demand within those target countries." "These countries are also in the early stages of transforming their economies to be more service-oriented."
Latin America's hotel market is gaining growing investor interest. In a previous study, JLL predicted that Brazil's hotel industry will continue to expand. This summer, Starwood Hotels & Resorts reported a 30 percent increase in its Mexico portfolio.
The shift to a high proportion of service-oriented industries, which generates hotel demand, is one of the primary drivers of economic growth in the area. The amount of public and private sector investments across the four major countries is the second engine, according to JLL.
The world's largest iron mine is expected to create about 30,000 new jobs in Parauapebas, Brazil; the $4 billion Bicentenario pipeline will link Yopal, Colombia and its newly discovered oil fields to the Caribbean at Puerto Conveas by 2015; Mexico's new Durango-Mazatlan superhighway will reduce travel time from eight hours to three hours; and Peru's new Cuzco-Mazatlan superhighway will reduce travel time from eight hours to three hours.
The latest JLL study analyzed data from 1,100 projects in 900 cities and towns across Brazil, Mexico, Colombia, and Peru, which together account for nearly 70% of the region's population (excluding the Caribbean) and roughly 75% of its GDP.
While cyclical increases in hotel supply can lead to oversupply, JLL predicts that this will not happen in the area.
Mr. Dickinson said, "Our long-term bullish outlook on hotel growth in the region is focused on the countries' fundamental economic transition, substantial capital investments already committed in infrastructure and rising productive potential, and rapid increases in accumulated domestic savings." "We assume that these factors, together with the emergence of a strong middle class, would generate a virtuous circle of rising affluence, resulting in increased expenditure on commercial and leisure travel, boosting hotel demand and benefiting regional investors."