< PrevNext > Hotel Rates Fall Across Latin America in 2019 By Michael B. Baker / March 11, 2020 / Contact Reporter Share Many of Latin America's largest business travel markets faced political and economic unrest in 2019, but the region saw a fairly even mix of year-over-year increases and decreases in average travel per diems. Among those markets with increases, however, hotel costs were rarely the driving force."Overall, we saw the global demand in the travel business slow down in 2019, and we are expecting to see that trend continue in 2020," said Jose Camarena, American Express Global Business Travel VP and general manager for Latin America and the Caribbean. "There have been a number of new presidents being appointed in the last 18 months in Latin America, and there's little growth expected on GDPs for this year."As such, business travel volumes to Brazil, Argentina, Mexico and Chile all were "heavily impacted" last year, said Maren Hanschke, director of FCM Travel Solutions' Latin America network. In Q4 2019, Rio De Janeiro's per diem was down more than 20 percent year over year, the second-highest decrease in the region, behind Lima's decrease of 29.3 percent year over year. Peru also has faced an "uncertain political environment," which has slowed investment growth and business travel in the country, according to BCD Travel regional sales director for Latin America Manny Balian.Of the markets that saw year-over-year per diem increases of at least 1 percent, all were outside of those major markets and were in either Central America or Ecuador. The largest increase was in San Jose, Costa Rica, which was up 17 percent year over year, followed by Quito, up 10.3 percent, and Guatemala City, up 3.4 percent. All of those increases were driven entirely by higher food and taxi costs—Costa Rica also added a new value-added tax in 2019, which increased the prices of services there, Balian said—but hotel costs were down in all three markets.Hotel Supply Rising As Regional Economies FlounderIn fact, hotel costs were down year over year in every Latin American market measured in the Corporate Travel Index except for Santiago and Guayaquil, Ecuador. In its 2020 Industry Forecast, BCD Travel noted that both global and regional chains have been opening properties in the region, and that capacity has been coming on just as economic troubles have hit. Hotel occupancy across the region runs in the 50 percent to 60 percent range, according to the forecast."Many of the newly opened hotels are lower-priced, less luxurious properties, often preferred by millennial travelers," BCD said. "As a result, the average room rate is falling."That could reverse this year, as BCD projects overall hotel rates in the region to either remain flat or increase up to 2 percent year over year in 2020. The rate projection is a bit higher for Chile and Colombia, each forecast to see hotel rates increase between 1 percent and 3 percent, and a bit lower for Argentina, projected to see rates decrease up to 2 percent year over year.BCD noted that corporate spending in Argentina has been hit by "severe economic volatility" and that, unlike other markets in the region, it is not seeing hotel supply grow. "New properties have opened, but a few existing ones also have closed," according to the forecast. "Most new hotels are midscale or economy, partly because few Argentinians can afford higher service levels."Puerto Rico continues to face lingering impacts from Hurricane Maria in 2017 and more recent political upheaval, including the "telegram-gate" scandal that led to its governor's resignation last year. However, despite a per diem decrease of 7.5 percent year over year in the fourth quarter—including a 27.1 percent drop in average hotel costs—San Juan had the highest per diem for the region overall in 2019, followed by Lima and San Salvador, El Salvador. The lowest per diems in the region were for 2019 were Bogotá, Guayaquil and Guatemala City.Cost differences across the region's major markets, however, are not huge. The difference between San Juan's and Bogotá's average 2019 per diem is less than $90; the difference between the highest average hotel rate in the region, Lima, versus the lowest average hotel rate, Guayaquil, is less than $60.Risk RatingsTraveler risk remains somewhat elevated across the region, as every market has a risk rating in the index higher than average. Half of the markets were in the "safe" range of the risk score, and the other half fell into the "more risky" range, with Guatemala City and San Salvador having the highest scores. No markets rated as "very dangerous," though the ones with higher scores generally fell into the "very dangerous" range for women and LGBTQ+ travelers.From the fourth quarter of 2018 to the fourth quarter of 2019, risk ratings were up across all markets except Buenos Aires, though the increase was only one or two points in most.