HOTEL INVESTMENT F ORECASTF OR A RGENTINA,BRAZIL …

H O T E L I N V E S T M E N T

F O R E C A S T F O R

A R G E N T I N A , B R A Z I L ,C H I L E A N D M E X I C O

12827C01 CorriganFocusOnLAm.qxd 8/8/01 12:11 PM Page 1

Latin America signifies a host of different countries to different people. For our purposes, Latin America applies to theregion south of the United States encompassing Mexico, the Caribbean, Central America and South America, as pre-sented in the table below.

Although the recent prospects for Latin America’seconomies seem dubious, there are signs of recoveryand opportunity on the horizon.

The global economic deceleration, including the economies of Latin America, has been one of the top news headlinesof 2001. Frequently, there are examples of economic struggle such as the Argentine government’s battle to sell treas-ury bills to a captive domestic debt market or the devaluation of Brazil’s currency, the real, which has lost more thanone-fifth of its value since the beginning of the year, despite interest rate hikes. Chile’s normally strong peso has alsoslid against the dollar. Even Mexico’s economy is slowing, with its exports being impacted by shrinking U.S. demand.However, many predict a Latin American recovery by the beginning of 2003, led by the global and U.S. economicrecovery. The predicted U.S. rebound, with expected growth of 1.6% in 2001 and close to 2.9% in 2002, should espe-cially benefit countries exposed to the international business cycle, such as Mexico.

The global recovery should also coincide with the completion of domestic policy tightening. By 2002/2003, most LatinAmerican governments are anticipated to have tight domestic policies in place, bringing current account deficits wellbelow the long-term flows. Excess capital flows in relation to current account deficits should make for easier interna-tional financial conditions and sustained decline in interest rates, which could spur domestic demand.

An Argentine rally and reduced pressure on capital inflows could also contribute to the Latin American recovery.Although the recovery is anticipated to be gradual, it might diminish concerns about debt-default risk and conse-quently ease access to international capital markets, reducing external borrowing costs. However, the recovery willlikely be uneven across countries. In particular, oil exporters such as Colombia and Venezuela could benefit less fromthese factors, as they might be impacted by the projected drop in oil prices. Countries with a strong tourism industry,namely Argentina, Brazil and Mexico, should in turn recover at a swifter pace.

The Caribbean IslandsAruba & Netherlands Antilles, Anguilla,Antigua & Barbuda, Barbados, British

Virgin Islands, British West Indies, Cuba,Dominica, Dominican Republic, Grenada,Haiti, Jamaica, Montserrat, Puerto Rico,

The Bahamas, Trinidad & Tobago, St.Kitts & Nevis, St. Lucia, St. Vincent &

The Grenadines and the U.S. Virgin Islands

Mexico and Central AmericaBelize, Costa Rica, El Salvador,

Guatemala, Honduras, Mexico, Nicaraguaand Panama

South AmericaArgentina, Bolivia, Brazil, Chile, Colombia,Ecuador, French Guyana, Paraguay, Peru,

Suriname, Uruguay and Venezuela

Latin America


U. S. A.

MEXICOTHE BAHAMAS

CUBA

PANAMA

EL SALVADORGUATEMALA

BELIZEHONDURAS

NICARAGUA

COSTA RICA

JAMAICAHAITI

DOM. REP.

ARGENTINA

BOLIVIA

COLOMBIA

VENEZUELA

PERU

BRAZIL

FRENCH GUIANASURINAME

GUYANA

CHILE

ECUADOR

PARAGUAY

URUGUAY

FALKLAND ISLANDS

SOUTH GEORGIA ISLAND

Caribbean Sea

Gulf of Mexico

a n

Comodoro Rivadavia

Neuquen

Barreiras

Cachimbo

Cuiaba

Porto Velho

Valdivia

AlbuquerqueLas Vegas

Antofagasta

Concepcion

Talara

Trujillo

Tucson

Rosario

Belem

Belo Horizonte

Campinas

Curitiba

Fortaleza

Goiania

Manaus

Porto Alegre

Recife

Rio De Janeiro

Salvador

Sao Paulo

Charlotte

DallasJacksonville

y

New Orleans

NorfolkOakland

Birmingham

Houston

Los AngelesMemphis

San Diego

San Francisco

Sao Goncalo

St. Louis

Tampa

La Paz

Sucre

Brasilia

Santiago

Bogota

Havana

Quito

Port Stanley

Mexico City

Washington D. C.

Montevideo

Caracas

Buenos Aires

Asuncion

Lima


1Percent change on year earlier.Source: The Economist Intelligence Unit, The CIA World Factbook and Business Monitor International.

N/A: Not Available

Country

1. Argentina2. Brazil3. Chile4. Costa Rica5. Colombia6. Cuba7. Mexico8. Peru9. Puerto Rico

10. Venzuela

Population(millions)

371681544111

100264

25

Unemploy-ment Rate

15.0%6.4%8.8%5.6%18.0%6.0%2.6%7.7%

13.0%12.5%

GDP1

-2.1%+4.1%+3.3%+2.5%+1.7%+6.2%+1.9%-0.9%+4.2%+3.5%

ConsumerPrices1

+0.2%+7.7%+3.6%+10.0%+7.9%+0.3%+6.6%+2.6%+5.2%+12.5%

Interest Rates(short term)

16.8%18.3%3.5%19.5%12.7%N/A9.4%11.7%3.7%12.8%

Currency Unitsper US$ (7/11/01)

1.00 (peso)2.54 (real)667 (peso)375 (colon)2,311 (peso)1.00 (peso)9.28 (peso)

3.51 (nuevo sol)1.00 (US$)

720 (bolivar)

Jones LangLaSalle Presence

XXX

X

2001 Primary Latin American Economic and Financial Market Indicators

Source: Jones Lang LaSalle Hotels

Country

1. Argentina2. Brazil3. Chile4. Costa Rica5. Colombia6. Cuba7. Mexico8. Peru9. Puerto Rico

10. Venzuela

Major Hotel Market(s)

Buenos AiresSao Paulo/Rio de Janeiro

SantiagoSan JoseBogotaHavana

Mexico City/CancunLima

San JuanCaracas

2001Occupancy (f)

50%50%/68%

53%75%45%75%

64%/75%48%75%60%

2001ADR (f)(U.S. Dollars)

$145$145/$140

$177$125$115$100

$105/$110$90

$200$120

Recommended HotelInvestment Strategy

WatchWatch/Select Buy

WatchStrong Buy

SellWatch

Select Buy/WatchSell

Strong BuySell

2001 Primary Latin American Lodging Markets

The Latin American hotel market cannot be summarized ina blanket statement; all optimism or pessimism is local-ized. The above table provides an overview of economicand financial market indicators for Latin America’s 10largest economies. We then focus on four of the region’smost prominent countries in terms of investment potential:Argentina, Brazil, Chile and Mexico; each of the countries’hotel supply/demand dynamics and investment potentialwill be discussed. $50

$70

$90

$110

$130

$150

$170

$190

$210

San Juan

Santiago

Buenos Aire

s

Sao Pau

lo

Rio de Janeiro

San Jose

Caraca

s

Bogota

Cancu

n

Mexico

City

Havana

Lima

Latin American Cities' ADRs



Argentina, the second largest economy in South America after Brazil, is entering its third and most acute recessionyear. Confidence is at its lowest point as international lenders are pondering Argentina’s ability to repay its sovereigndebt. This lack of confidence is apparent with the difficulty Argentina has encountered in selling its governmentbonds, carrying rates above 16% for short- and mid-term bonds. Additionally, unemployment is at a record high of 15%and growing.

Recently, Domingo Cavallo, the newly appointed Economy Minister, has been given a full range of powers to turnaround the economy. He started by convincing the international lending community to swap short-term debt obliga-tions for longer-term expirations, easing the Argentine financing burden by $16 billion for each of the next five years.He also created a new parity for the Argentine peso for import/export transactions, basically devaluating the peso fortrade purposes by approximately 8%. The long-term goal of the Economy Minister is to slowly abandon the U.S. dol-lar/peso parity for a currency basket comprised of the euro and U.S. dollar. This policy may result in a peso devalua-tion, making Argentine products more competitive in international markets and boosting GDP growth.

On the hotel/commercial real estate investment front, transactions are practically non-existent. Bond yields havejumped from approximately 13% to more than 16% in the last two months limiting interest in commercial real estate,which has traditionally provided stabilized yields of between 12% and 16% (depending on asset class and position inthe market). Most local real estate owners are not ready to sell in a depressed market at higher cap rates, and as aresult, are holding onto their assets until the market improves. The buyers, on the other hand, have little incentive toacquire assets at returns below long-term bond yields.

Furthermore, debt and equity remain scarce, although some of the foreign players who are taking a long-term view onthe region are beginning to conservatively re-enter the market, such as GE Capital and Prudential.

The future of Argentina lies ultimately in its abilityto extract itself out of the current recession. Twoschools of thought exist regarding this speculation:

a) Argentina has hit the bottom of its economiccrisis and the next six to 12 months should showsigns of recovery, making it an ideal time to investin Argentina at the bottom of the cycle.

b) The worst is yet to come, and Argentina is still along way from the bottom. The economic crisiswill widen in the region, taking its toll on Brazil and Chile, dragging South America via contagion into recession withlittle help from the northern hemisphere as it deals with its own recession fears. At this point, it is too soon to gaugeas the United States is still sending mixed signals with its own slowdown.

Argentina - GDP Growth

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1999 2000 2001 2002 f

Source: Business Monitor International

Argentina


Until 2000, hotels in Buenos Aires were perform-ing fairly well given the economic environment.However, upon entering its this third year ofrecession, the hospitality industry is showingsigns of weakness. In addition, the city has seenthe opening of several mid-scale and upscaleproperties in the last 12 months, which has fur-ther eroded occupancy and ADR. This erosionwill most likely continue throughout 2002. If theeconomy improves, Jones Lang LaSalle Hotelsexpects that a hotel market recovery shouldstart in 2003.

The good news is that the laws recently passedby the Economy Minister should alleviate someof the operating costs associated with the hospi-tality industry, making Argentine hotels morecompetitive in the region. Specifically:

• Moratorium on real estate taxes until 2003;• 100% of payroll tax credited toward a hotel’s

sales tax;• Abolition of taxes on private foreign debt;

and• Foreign travelers reimbursed for 21% hotel

tax upon departure.

• With twelve million people, Buenos Aires is the second largest metropolitan area in South America after Sao Paulo.

• It is a well-renowned international destination with total visitor volume leading other cities in South America.

• Foreign companies invested more than $89 billion in the city between 1994 and 2000.

• Buenos Aires is considered the most cosmopolitan city in South America; its essence is more European than Latin American.

• The city offers a modern infrastructure, a well-educated labor pool and easy access to Brazil and Chile.

Buenos Aires Area Highlights

25%

35%

45%

55%

65%

75%

Buenos Aires Occupancy 1997 - 2001f

Occupancy 71% 69% 61% 51% 50%

1997 1998 1999 2000 2001 f

$100

$110

$120

$130

$140

$150

Buenos Aires ADR 1997 - 2001f

ADR $142 $139 $147 $149 $145

1997 1998 1999 2000 2001 f



Our opinion is that Argentina has hit the bottom of the cycle, and although there are very few hotels offered for saleon the market, medium- and long-term investors should have Argentina on their radar screen.

Investing in ArgentinaPros

• Monetary transparency

• New government reforms should be reactive to asluggish economy

• Should reach investment grade in the next five years

• Educated workforce

• Dollar/peso parity creates an “easy-to-understand”environment for new investors

• After five or six years in operation, the newly priva-tized pension fund system is reaching critical mass,yet fund managers have not invested in real estateto date due to the long-term takeout for investment

• Higher cost of conducting business

• Some deflation expected due to “semi-dollarized”society

• Unemployment still high, with no relief in sight

• Scare availability of debt and equity

• Locally financed projects

• Political uncertainty is major limiting factor and lasthurdle for country to overcome

• The Argentine economy is driven by outside invest-ment and exports, rather than internal consumption.Thus, there is too much reliance on foreign capital.

Cons

Buenos Aires contains approximately 8,200 hotel rooms. Following are the additions to the Buenos Aires lodging sup-ply within the last two years, which constitute a 19.3% increase.

Property/DeveloperEmperorLoi SuitesHilton Puerto MaderoArgenta TowerNH FloridaNH JoustenChateau Park PlazaElegance ParkElevage HotelHoliday Inn SelectNH LatinoTotal New Supply

Rooms27011242197168856343103126101

1,589

Open20012001200020002000200019991999199919991999

Buenos Aires Hotel Market Additions To Supply


• Sao Paulo generates 32% of Brazil’s GDP.

• It is considered the commercial and cultural center of Brazil.

• Sao Paolo is the second largest city in Latin America, after Mexico City.

• $16 billion of direct foreign investments were injected into its economy in 2001.

• It has a significant tourism-related infrastructure.

• 1,400,000 foreign tourists visit annually.

Sao Paulo Area Highlights

Brazil

Brazil is the eighth largest economy in the world and the largest economy in South America, dwarfing all other coun-tries in the region. Its GDP is larger than Denmark, Belgium and the Netherlands combined. In 1999, a Latin America-based Citibank investment banking official commented on the crisis of the moment: “Brazil’s reaction to this crisis hasbeen applauded by international investors by virtue of the controlled inflation rate, smaller-than-expected GDP decline,relatively calm foreign exchange and declining interest rates. The fiscal discipline the government has been showing,along with IMF funding, should continue to restore market confidence in Brazil.”

Two years later this optimistic view has beensomewhat tarnished. The latest survey from theNational Confederation of Industry shows thatbusiness confidence has slipped significantly inthe first quarter of 2001, from 65 to 60. The rea-son lies with the contagious crisis in Argentina,Brazil’s largest trading partner, the electricalenergy crisis and some recent corruption scan-dals casting a shadow over economic recovery.This uncertainty has put pressure on the real,which has slipped more than 20% since thebeginning of the year.

But not all is gloomy. GDP is still expected to rebound to 3.6% in 2002. Inflation is still under control with a projectedrate of 5.3% by year-end 2001, up from previous forecasts due to the higher cost of energy. It should drop down below4% in 2002, assuming that the energy crisis is successfully managed.

Brazil - GDP Growth

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

1999 2000 2001 2002 f


Sao Paulo is both a city and a state. The state of Sao Paulo is responsible for 44% of all industrial activity in Braziland 32% of the total Brazilian GDP. The city of Sao Paulo is considered the nation’s business center, and, with its 17million people, the city accounts for 22% of the Brazilian population.

Sao Paulo is mainly a business destination with some leisure demand. In recent years, occupancy and ADR haveslipped due to a construction boom. This situation will most likely worsen as supply is expected to surge in the next20 to 36 months. Fifty percent of the projects are condo hotels, a capital structure popular among Brazilian developers.

Due to the lack of capital availability, hotel chains havechosen two ways to expand their brands in Brazil.European hotel chains, less restricted than U.S. chainsthat are encumbered by strict SEC regulations, havetaken the condo hotel route, associating themselves withlocal developers. For example, in 2000, Accor built anIbis property that was sold in a mere 48 hours.Executives at two major, international brands decided tobuild hotels with their own funds and are spending $70million and $100 million respectively to build hotels in Riode Janeiro and Sao Paulo. Although many managementcompanies are reluctant to own or invest in real estate,sometimes it is impossible for these companies to com-plete hotels unless they provide some type of financing.

25%

35%

45%

55%

65%

Sao Paulo Occupancy 1997 - 2001f

Occupancy 59% 61% 50% 56% 50%

1997 1998 1999 2000 2001 f

$100

$125

$150

$175

$200

$225

Sao Paulo ADR 1997 - 2001f

ADR $213 $209 $193 $188 $145

1997 1998 1999 2000 2001 f


Property/DeveloperAccor (Mercure)HiltonGrupo PosadasSol MeliaSol MeliaSol MeliaSol MeliaSol MeliaSol MeliaGrupo PestanaGrupo PosadasSol MeliaSol MeliaSol MeliaTotal New Supply

Rooms260500400200210151396154400300383323252160

4,089

Open20032003200220022002200220022002200220012001200120012001

Sao Paulo Hotel Market Additions To Supply

Sao Paulo has a total inventory of nearly 16,000 rooms. The following pipeline room supply represents a 25.6%increase.


Sao Paulo, the financial epicenter of Brazil, is a vibrant emerging market. Although there is some concern about thesupply coming on line in the next 24 months, this supply should be absorbed by the domestic demand in the long run.Hotel companies should focus on the limited-service sector in order to capture Brazilian market share. This is a newdevelopment as in the past there was virtually no mid-scale product in this sector.

Investing in BrazilPros Cons

• 8th largest economy in the world; 87% of LatinAmerican economy

• Largest economy in South America

• Sao Paulo makes up 32% of Brazil’s GDP

• Fiscal discipline and IMF funding should restoreconfidence

• Inflation is under control

• Fernando Enrique Cardoso is a savvy leader

• Crime and poverty

• Lack of capital

• Lack of infrastructure

Chile

“Investment grade” in South America? In addition to Mexico, Chile has the enviable reputation as being one of theinvestment grade economies in Latin America. According to Standard & Poor’s and Moody’s Investors the countryhas a risk rating of A- in part due to the transparency of its regulations and the predictability of its market decisions.

Chile’s A- investment rating is the highest in Latin America, a fact that has permitted Chilean firms to finance invest-ments through credits, collections of bonds and shares in both local and international markets.

Moreover, the perception of country risk has continued to improve, moving Chile further away from the rest of thecountries in South America. Contributing factors include the minor costs of financing and the best spreads obtainedfrom the collection of its bonds, both public and private. As a result, Chile remains one of the most dynamic andpromising markets in Latin America.

At present, Chile occupies the 15th place in the world in terms of international competitiveness, according to theWorld Economic Forum. The country’s prudent economic policy has also insured a long-term stability that cannot befound in other Latin American countries.


In spite of the Asian crisis and its repercussionson other countries, especially in emerging mar-kets, Chile attained vigorous growth though the90s (averaging 7.3% per annum). Forecasts forGDP growth in 2001 and 2002 are 4.0% and5.7%, respectively. The slowing in growth is inpart due to the general slowing in the globaleconomy, along with the uncertainty of theArgentine economy and the recent currencydevaluation of South America’s largest economy,Brazil.

Several significant changes to foreign investment laws occurred in 2000/2001, whichhave improved capital flows. First, foreign investors are no longer obligated to maintain their capital in the local mar-ket for at least one year. Secondly, and more importantly, the 15% capital gains tax levied on foreign and domesticinvestors trading in Chilean stocks has been eliminated.

Chile - GDP Growth

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1999 2000 2001 2002 f


• Santiago offers strong international air access from all major regions.

• Chile has an investment grade risk rating.

• Strong underlying GDP growth is forecasted.

• There is limited new hotel supply in the pipeline (only two projects).

• Per the World Economic Forum, Chile ranks 15th place in the world in terms of international competitiveness (per the World Economic Forum)

Santiago Area Highlights

Since 1999, Santiago has experienced a largeincrease in room stock particuraly in the four- tofive-star market. Much of the new supply was ini-tiated on the back of the growing GDP, increasingbusiness confidence and booming real estatemarkets pre-1999. The upswing caused overconfi-dence among developers resulting in a 25%increase in new hotel stock during the past fewyears bringing the city’s room inventory to 3,900.

25%

35%

45%

55%

65%

75%

85%

Santiago Occupancy 1997 - 2001f

Occupancy 81% 74% 64% 60% 53%

1997 1998 1999 2000 2001 f



A slowing in the global economy, the languishingrecession in Argentina and increasing new supplyin the city has caused a dramatic softening in theSantiago hotel market. The market is reliant onincreases in demand from the corporate sector toboost overall performance. This is likely to requirea short-term recovery period where the currentnew supply can be effectively absorbed. Withgood prospects for GDP growth and the contin-ued sound investment-grade ranking, underlyingbusiness confidence and opportunities shouldbegin to facilitate a recovery in hotel profitability.

Santiago continues to enjoy strong air access from all major markets. These include: Aerolineas Argentinas,Aeromexico, Air France, American Airlines, Delta, Iberia, Lacas (Costa Rica), Lloyd Aero Boliviano, Lufthansa, Qantas,Swiss Air, TAM (Paraguay), Tame (Ecuador), United and Varig. These airlines have allowed Santiago to remain accessi-ble from all the major regions including the USA, Asia Pacific and Europe.

$100

$110

$120

$130

$140

$150

$160

$170

$180

$190

Santiago ADR 1997 - 2001f

ADR $168 $174 $182 $180 $177

1997 1998 1999 2000 2001 f


Investing in ChilePros Cons

• Lower risks

• Highly developed market compared to other marketsin Latin America

• Long-term stability anticipated as government isslowly leveraged, and the export of key productsprovides a solid economic base for future growth

• Pension funds continue to grow providing goodinvestment partners

• Lower returns

• More sophisticated competition

• Relatively small market – only 15 million people

• Many funds are beginning to “over-invest” relative tointernational institutional investment standards andmay become sellers in years to come


As expected, the Mexican economy slowedsharply in Q1 2001 under pressure from a deteri-orating external environment. The global eco-nomic slowdown, particularly in the UnitedStates (Mexico’s main trading partner), andlower oil prices have both hit Mexican exportrevenues hard. This has had a resounding effectthroughout the economy. GDP growth fell to atwo-year low in Q1 2001, while industrial activitycontracted in February, March and April. On theother hand, domestic demand remains surpris-ingly dynamic, although there are indicationsthat it is starting to ease up slightly. Looking beyond the short-term, Mexico’s recovery will pick up pace in 2002 asU.S. demand for Mexican exports returns. GDP is expected to grow by 2.7% in 2001 and by 4.5% in 2002.

Mexico - GDP Growth

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1999 2000 2001 2002 f


Mexico

• Mexico City is the largest metropolis in the world with a population of close to 20 million.

• The city serves as headquarters for most multinational corporations operating in Mexico.

• Mexico City constitutes the major center of economic, cultural and political activity in the country.

• It contains a significant tourism infrastructure.

Mexico City Area Highlights

The Mexico City hotel market is mostly reliant onthe corporate segment, which comprises 60% ofoverall demand. The leisure segment generates16% of demand, with the meetings and airlinesegments generating the balance of 24%. Thebusiness center sub-markets of Reforma, Polancoand Santa Fe are where most of the city’s luxu-ry/upscale full-service product is located.

Demand growth in Mexico City is expected to dipin 2001, while ADRs are also expected to declineslightly due to the economic slowdown withinMexico and the United States. Few sites are available for new hotel development, whichlimits new supply. Some market segments such as extended-stay and the corporate mid-market niche are under-served, representing good opportunities for future development.

25%

35%

45%

55%

65%

75%

85%

Mexico City - Occupancy

Occupancy 58% 59% 62% 65% 64%

1997 1998 1999 2000 2001 f

Source: SECTUR and Jones Lang LaSalle Hotels


SummaryUntil the 1990s, a period when market-economy policies and democratic ruling started to take center stage, LatinAmerica was an unappealing economic market. Today, despite a decade of market reforms, Latin America remainsdependent on foreign capital. However, we expect to see a rollout of fresh reforms, more transparency, less corrup-tion and more accountability in the next five years. Although growth will certainly slow in the next 12 months, webelieve that the region will recover by 2003. This recovery will create opportunities for mid- to long-term investors,providing sufficient yields to justify a fund allocation to Latin America.

Investing in MexicoPros Cons

• Booming resort destinations (Los Cabos, Ixtapa,Maya Riviera and Puerto Vallarta)

• Emerging secondary markets (Guadalajara andMonterrey)

• “New-look” government with President Vicente Fox• Ranked as an investment grade country

• Extremely dependent on the United States• High-level Mexican politics and economics are not

user-friendly, not even to Mexicans

$50

$60

$70

$80

$90

$100

$110

Mexico City ADR 1997 - 2001f

ADR $85 $92 $103 $108 $105

1997 1998 1999 2000 2001 f

Source: SECTUR and Jones Lang LaSalle Hotels

Property/DeveloperFiesta InnsCamino Real (extended-stay)W HotelRenaissance by MarriottTotal New Supply

Rooms250200239203892

Open2003200320022002

Mexico City Hotel Market Additions To Supply

Mexico City has a hotel inventory of 47,000 rooms, 10% of which are rated as luxury/upscale hotels.


StrongInvestorInterest

InvestorInterestFalling

InvestorInterest

Emerging

LowInvestorInterest

Cancun

Sao Paulo

Caracas

Lima

Bogota

BuenosAires

Rio de Janeiro

Santiago

Havana

San Jose

San Juan

Mexico City

Latin America 2001 Hotel Investment Cycle

Hotel Investments in Latin AmericaOpportunities Avoid

• San Jose – Costa Rica• San Juan – Puerto Rico• Rio de Janeiro – Brazil• Havana – Cuba• Mexico City• International hotel branding opportunities• Mid-priced hotels• Significant discounts to replacement costs• Resort development

• Bogota – Colombia• Lima – Peru• Caracas – Venezuela

Investing in Latin AmericaPros Cons

• Young population• Growing middle class• Emerging democracies• Favorable labor costs • A 500-million population market

• Can be volatile and more risky• Financing environment is difficult• Lack of capital and dependency on foreign

investment• Poor infrastructure outside of urban areas


Christian Charre, Vice President, Jones Lang LaSalle HotelsChristian Charre is Vice President of Jones Lang LaSalle Hotels in Miami. His primaryresponsibilities include maintaining active contacts with investors throughout the UnitedStates, Latin America, Europe and the Caribbean. As a hotel specialist, Mr. Charre has soldand been involved with the operations of numerous hotels and resorts worldwide.

Gregory Rumpel, Senior Vice President, Jones Lang LaSalle HotelsGregory Rumpel is Senior Vice President of Jones Lang LaSalle Hotels. Previously, Mr.Rumpel headed up the New Zealand operation of Jones Lang LaSalle Hotels with his mainareas of responsibility being investment sales and advisory services. Mr. Rumpel relocatedto Miami at the beginning of 2001 to assist Jones Lang LaSalle Hotels’ expansion into LatinAmerica.

Biographies of Contributors

Anwar Elgonemy, Associate, Jones Lang LaSalle HotelsAnwar Elgonemy, Associate, joined the group’s Miami office in May 2001. His primaryresponsibilities include investment sales, as well as hotel advisory work including valuationsand strategic hotel real estate consulting. Elgonemy speaks five languages and, during hiseight-year tenure in the hospitality industry, has conducted assignments in Egypt, Spain,Mexico, Portugal, South Korea and the United States.


New York153 E. 53rd StreetNew York, NY 10022tel: +1 212 812 5700fax: +1 212 421 5640

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Office Addresses

Jones Lang LaSalle Hotels is the largest and most qualified specialist hotel investment banking services group in the world.

Through our 18 dedicated offices and the global Jones Lang LaSalle network of 6,000 professional across more than 100 key mar-kets on five continents, we are able to provide clients with value added investment opportunities and advice.

Our recent track record for the last two years alone included the sale of 13,994 hotel rooms to the value of US$1.4 billion in 75 citiesand advisory expertise to the value of US$32.6 billion across 173,021 rooms and 343 cities.

The majority of active investors worldwide have bought or sold hotel and tourism real estate through Jones Lang LaSalle Hotels,taking advantage of our extensive professional relationship and innovative strategies.

Our experience and success also extends to the other services, including mergers & acquisitions, valuation & appraisal, asset man-agement, strategic planning, operator assessment & selection, financial advice & capital raising, and industry research.

FrankfurtPlatz der Einheit 2D-60327 Frankfurt Am Maintel: +49 69 7543 1041fax: +49 69 7543 1040

Paris49, Avenue Hoche75008 Paristel: +33 1 4055 1515fax: +33 1 4622 2828

BarcelonaPasseig de Gracia 11la Planta, Esc. A08007 Barcelonatel: +34 93 318 5353fax: +34 93 301 2999

Singapore9 Raffles Place#38-01 Republic PlazaSingapore 048619tel: +65 536 0606fax: +65 533 2107

Mumbai128-B Mittal Towers210 Nariman PointMumbai 400 021, Indiatel: +91 22 282 9667fax: +91 22 283 6186

JakartaP.T. Procon KonsulindoJakarta Stock ExchangeBuilding Tower 2, 19th FloorSuite #1903, SudirmanCentral Business DistrictJ1. Jend Sudirman, Kav. 52-53tel: +62 21 515 3888fax: +62 21 515 3113

Tokyo22nd Floor, Ark Mori BuildingMinuato-kuTokyo 107-6022, Japantel: +81 3 3568 3355fax: +81 3 3568 3356

SydneyLevel 18400 George StreetSydney NSW 2000tel: +61 2 9220 8777fax: +61 2 9220 8765

MelbourneLevel 21, Bourke Place600 Bourke StreetMelbourne VIC 3000tel: +61 3 9600 1866fax: +61 3 9600 1715

Disclaimer Copyright — All material in this publication is the property of Jones Lang LaSalle Hotels (NSW) Pty. Ltd. (ABN 65 075 217 462). No part of this publication may be reproduced orcopied without written permission. The information in this publication should be regarded solely as a general guide. While care has been taken in its preparation, no representation is madenor responsibility accepted for the accuracy of the whole or any part. This publication is not part of any contract and parties seeking further details should contact the author.


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