Hotel Infrastructure on Rise in Colombia with Marriot Opening in Bogota
In Colombia, opportunities for hotel infrastructure investment abound. International tourism in the country is growing at a rate of roughly 10 percent each year, almost four times the global average, cruise ship arrivals are up by 52 percent and The New York Times says that the country is “One of the 31 Places to Go in 2010”.
This growing demand has triggered investments in new hotel projects focused mainly on business travelers. Hotel investments have increased by nearly 200% since 2007, with levels above $500 million USD. And international hotel chains, such as InterContinental Hotel Group, Starwood, Carlson, Sofitel and Hilton, are taking advantage of this trend.
Case in point: Marriott will open its second hotel in the country in July, with 264 rooms. The hotel, located in the financial center of Bogota, received backing from the El Salvador-based Poma Group, which invested in the project, because it recognized a great opportunity to expand its portfolio. Hilton also sees lots of room for growth and investment. “Colombia is one of the most interesting and prosperous focuses for our chain on the [South American] continent,” says Cristiano Gonçalves, Vice President of Development for Hilton Corp. South America.
Colombia offers many incentive packages for investors, such as:
- An income tax exemption for a 30-year period for hotel services provided in new hotels built between 2003 and 2018;
- Income tax deductions of 30% on investments made in real fixed productive assets;
- A special free trade zone with one 15% income tax rate for industrial users of goods, services and operators and no customs taxes on merchandise imported from abroad;
- A tax deduction on capital goods used for tourism exports; and
- Legal stability agreements in which the Colombian government guarantees investors that contract terms will generally stay the same, even if legislation changes.
Investors also see a great return on their moneywith Average Revenue per Available Room (RevPAR) rates close to $100 USD per night. RevPAR in the main Colombian tourism destinations is higher than in other Latin American cities, including Mexico City and Sao Paolo.The country’s “Meetings, Incentives, Conventions, Exhibitions” (or MICE) tourism segment has also grown substantially in the last few years, as Colombia has hosted high-profile events, such as the World Economic Forum Latin America 2010.
The country’s MICE infrastructure includes more than 18 convention centers, but the fast growth of demand continues to make it essential to increase the offerings of this type of venue in the country.Large convention centers are being built across the country, however, they are still in need of world-class hotel infrastructure to support them.
