One of Hilton Hotels founder Conrad Hilton's greatest achievements, apart from founding the world's first international hotel chain, was leading his hotel properties through several periods of severe economic hardship. The Hilton has announced the construction of its fifth hotel in Argentina, building on its international footprint and experience of making investments amid challenging macroeconomic conditions. real estate agent
The Hilton Pilar Hotel & Residences will be located in the Pilar Golf complex in the City of Pilar, Buenos Aires Province. The proposed three-story hotel would feature 170 suites, over 21,000 square feet of meeting space, and a variety of amenities. Aside from the hotel, the project will include 130 residential units, including condominiums and single-family homes. The hotel is anticipated to open in March of 2015.
The Argentine hotel industry is currently experiencing difficulties as a result of currency controls, which have made obtaining US Dollars more difficult, and the Peso's buying power has weakened due to high inflation. Tourists from Europe, whose disposable income has plummeted, are a major source of revenue for Argentina's leisure industry. Domestically, while rapid economic growth helped Argentine consumers weather some of the effects of inflation, the country's growth rate is expected to slow from nearly 9% in 2011 to slightly more than 2% in 2012. One of the most significant effects of the current economic recession would almost certainly be on holiday and luxury item spending.
A number of foreign companies have planned to close or scale down their operations in Argentina due to rising economic and political instability. Ralph Lauren, Ermenegildo Zegna, and Escada are among the luxury brands that have recently closed or reduced their operations. Owing to the possibility of continued foreign currency controls and deteriorating economic conditions, there are few reasons to expect a substantially improved operating climate for multinational companies in the near future.
The new Hilton project, on the other hand, will benefit from the fact that a large portion of the investment would be spent on the selling of residences. Many Argentines have tried to buy real estate as a result of concerns about Peso-denominated financial assets, a trend that has continued to drive up prices even as currency controls have reduced trade volumes in the mostly US Dollar-driven market. An opportunity to buy into a well-known foreign real estate brand could be perceived by Argentines as a good short-term defensive strategy as well as a long-term investment choice in an environment where safe harbors to avoid currency value erosion are dwindling.
More generally, the fact that Hilton is increasing its Argentina investment and country commitment at a time when the country's investment fundamentals are deteriorating, a strategy that runs counter to many foreign investors' historical experience, could pay off handsomely when Argentina's investment conditions improve.