Hungarian-born American billionaire George Soros’ investment firm has agreed to spend up to $300 million on an Argentine hotel company’s Latin America expansion. The Wall Street Journal is calling the move "a vote of confidence" in a region that has been suffering slow economic growth and waning investor interest.
Soros' investment will help finance as many as 5,000 new hotel rooms in Peru, Chile, Ecuador, Argentina and other South American countries within the next three years, according to Fen Hotels Chief Executive Patricio Fuks. His Buenos Aires-based hospitality company will manage the properties.
By focusing on Latin America, Fuks thinks he can get a lot more for his partner’s money than in other parts of the world. New hotel acquisition or construction in major U.S. cities is increasingly competitive and expensive, he said, “but you can still build for a reasonable price in Latin America’s capital cities.” The region’s economies have slumped as the global commodity boom has wound down amid slowing demand from China and much foreign investor money has rushed for the exits. But Soros’ commitment to develop thousands of hotel rooms over the next three years in South America suggests some seasoned investors are already banking on these countries’ eventual rebound.
Latin America looks north
Latin American lodging brands are also starting to expand beyond their borders, the story notes. Grupo Posadas S.A.B. de C.V., Mexico’s largest hotel company, in June said it was teaming with private-equity firm Bighorn Capital Inc. to open up to 10 luxury hotels in the U.S. over the next five years.
Brazil’s luxury hotelier Fasano, meanwhile, is preparing to take over as operator of the famed Shore Club in Miami Beach, its first project outside South America. Fen Hotels is also looking to establish a presence in the U.S., with its Dazzler brand property in Brooklyn and other hotels in Miami and Los Angeles.