Latin Trade (English Edition) Jan/Feb 2011 by Latin Trade Group

LATIN TRADE

ALSO IN THIS ISSUE: LATIN TRADE'S BEST OF TRAVEL

BEST OF BUSINESS TRAVEL IN LATIN AMERICA JANUARY / FEBRUARY 2011

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JANUARY / FEBRUARY 2011

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We have achieved so much. But there are still many pages to fill.

Delicious sandwiches, career

magazine, in Brazil, ranked McDonald’s

development, ecologically sustainable

number one in its research study of the

practices, corporate awards.

“Biggest and Best” companies, in the food industry category. These recognitions were

What do they all have in common?

a direct result of the great effort put in by each and every one of those who help

For Arcos Dorados, the company that

building the golden arches in our region.

manages McDonald’s in Latin America , we believe that they are all intertwined: it’s

It is a group accomplishment, achieved by

been our commitment to all things around

those who contribute towards serving

us precisely what brought us this far.

4 million guests who visit our restaurants daily.

We are proud to share with our customers,

Arcos Dorados is a Latin American company,

our commitments to quality, to real career

with more than 100,000 employees from

opportunities for our staff, to mutually

more than 20 different nationalities who

beneficial negotiations with our suppliers,

speak nearly 10 different languages. We are

the commitments to the communities

all working together towards always offering

in which we operate and the commitment

the best to our customers.

to sustainability. This is why we believe that everything we S ociet y a s a whole ha s recognized

have mentioned is just the beginning of

our daily efforts to comply with this vision

our journey. We have so much to do, and

through a variety of awards. For starters,

so much more to add to the development

we are ver y proud of the fact that

of Latin America . Together, we will write

Arcos Dorados has been recognized by

a story of hard work and success for all.

the Great Place to Work Institute as one of the best companies to work for in Latin America.

According to the Clarín newspaper, in Argentina , McDonald’s has one of the strongest corporate reputations. Exame

CONTENTS

J A NUARY/FE BRUARY 2011 V O L. 19 NO . 1

29 60 xx

21 Ready for the Main Course: Chinese corporations step up their buying

spree, moving beyond merely importing commodities to owning a piece of the action.

22 Chile Searches for a Strategy: China is now Chile’s largest individual export market. But Sino-Chilean trade is dominated by copper as commerce lags in other sectors. 24 A Match Made in Globalization: Oil-rich but cash-poor Venezuela finds a deep-pocketed and long-term partner who is pouring money into exploration, production and refining capacity. But at what price? 26 Life Beyond Commodities: A former Chilean mining and energy minister questions whether China’s economic impact represents a new world order or 21st century neo-colonialism.

30 47

48 49 51

Latin Trade’s Best of Travel 2011 The results of our ninth annual survey of readers’ preferred airlines, car rental companies, hotels and restaurants in a total of 19 cities. Post Mergers: Air alliances battle for the loyalty of the flying public. Less is More: Hoteliers look to their limitedservice brands for large-scale growth in Latin America. New Hotels: Openings around the region in 2010 Hotel Pipeline: Properties scheduled to open their doors in 2011 Road Rituals: Six region-trotting top hotel executives share their tips and insights about life on the road and in the skies.

LATIN TRADE

01-02/2011

52 M&A: Top Deals of 2010

54 56 57

Latin Trade’s editors pick the most noteworthy deals of last year. Slim, América Móvil make waves in 2010 LAN + TAM = LATAM Burst of activity keeps investment bankers busy

60 Managing the Megapolis

A look at the efforts of Lima, São Paulo and other cities to address their mass-transit needs. The Busing Evangelist: A Q&A with Luis Gutiérrez Aparicio, director of Latin America at Embarq.

68 Canada Goes for the Gold Canadian mining companies, large and small, are investing heavily in Latin America.

READY FOR THE MAIN COURSE: NEWSCOM; BEST OF TRAVEL: VISITMEXICO.COM; MANAGING METROPOLIS: NEWSCOM

21 Features

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CONTENTS

70 75

The Scene 12 Brazil’s Incredible

Shrinking Families The birth rate in Latin America’s largest nation is one of the lowest regionwide. The drop is on par with plunging rates in China but experts debate whether the trend toward smaller families is here to stay or just a blip.

16 Commodities Lifted

Stock Exchanges

Most stock markets in Latin America had a banner year in 2010. The top performing bolsa was in Lima, which ended 2010 up 64 percent, thanks to strong prices for minerals and other highdemand commodities.

LATIN TRADE

01-02/2011

Market Intelligence Analysis from Latin Business Chronicle

70 The Latin Tourism Index A look at the impact of foreign tourism on nations around Latin America. 72 The Latin Tax Index A measurement of the overall tax climate in 18 countries.

76 Panorama 76 The High Price

of Tablet Mania

Apple rolled out its iPad throughout Latin America in 2010. Latin Trade compares prices for the hit device and of the popular iPhone in major cities in the region from Miami to Santiago.

In Every Issue 8 Editor’s Note

Hardware 75 How to De-Stress

on the Road

High-tech travel companions to help you stay fit and rested when away from home.

THE HIGH PRICE OF TABLET MANIA: NEWSCOM

Sofitel Montevideo, Uruguay

EDITOR’S NOTE

What will China bring to the Latin American decade?

Editorial Director Latin Trade

LATIN TRADE 01-02/2011

BUSSEY: SERGIO GONZÁLEZ

As this edition of Latin Trade goes to press, Beijing authorities announced new rules allowing companies and financial institutions to move yuan offshore for investment. (The renminbi is the official name for China’s legal tender.) The easing of currency regulations, albeit on a trial basis, points to the expanding role of Chinese companies in mergers, acquisitions and joint ventures in Latin America. As a series of stories in this issue about the Chinese conquista shows, Chinese trade activity has turned into hyperactivity on the acquisition front as these companies, most of them state-run, seek operating control of projects that secure raw materials needed by a nation with a shortage of arable land, minerals and energy. For our cover package we turned to veteran reporters José Orozco in Caracas and Ruth Bradley in Santiago, Chile, to examine the growing economic ties and associated issues. Chilean Karen Poniachik, a specialist in international affairs, contributed an analysis piece that examines whether this new relationship — hailed by so many — will usher in a new wave of progress or will turn out to be a form of 21st century neo-colonialism. Meanwhile, the low-intensity currency war persists in the region. Chile has begun intervening to lower the value of its peso. Brazil, which first warned of the danger of a currency war as countries try to position their exports favorably, stepped up the pace of measures to curb the sharp appreciation of the real over the past two years. The increasingly corporate ties between Latin America and China added an additional twist to the surge in mergers and acquisitions in 2010, with billions of dollars of investments in regional companies. But the biggest deal of the year fell to the companies owned by the region’s – and the world’s – wealthiest man, Carlos Slim. Slim’s América Móvil wrapped up Carso Global and Telmex International in a merger that has created the largest company in the region outside of the stateowned petroleum companies. We know many of our readers spend days and weeks traveling throughout the region. Participants in our annual Best of Business Travel in Latin America survey weighed in about hotels and restaurants in the leading business cities around the region, as well as airlines and rental car companies. Turn to page 29 to see the survey results, which include nearly 100 hotels and nearly as many restaurants. As always, feel free to add your comments by emailing me at jbussey@latintrade.com.

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LATIN TRADE 01-02/2011

THE SCENE

BY TAYLOR BARNES

What’s behind Brazil’s

incredible shrinking families? RIO DE JANEIRO — From television soap operas to the halls of power, small families are increasingly becoming the norm – and Brazilian women appear to be fans of the shrinking family. According to freshly culled census data, the fertility rate in Brazil has fallen to 1.94 children per woman, one of the lowest in Latin America (the regional average from 2005-2010 was 2.26 children) and below the replacement rate of 2.1 children per woman, which

is the number needed to maintain the population. Demographers are scratching their heads over this falling birth rate. Is it the inﬂuence of the media portrayal of smaller families? Is it the sky-high urbanization rate, the rising income and educational levels, greater access to birth control or all of the above? Demographers say the magnitude of Brazil’s decline in birth rates is comparable to China’s plummeting birth rate over the past half-

century. But China’s low fertility rate can be traced to the nation’s one-child rule, introduced in 1978. Although no one disputes that the birth rate in Brazil has fallen drastically, not everyone is convinced the trend will endure. “If women in Brazil are postponing birth, it could be that this estimate is exaggerating the decline in fertility,” said Suzanne Duryea, the lead economist for the Inter-American Development Bank.

If women are simply postponing having children, the number of pregnancies will soar when these women have children in their late thirties or early forties, similar to a trend in the United States. It is too early to tell, said Duryea, who co-authored a 2008 paper for the IDB on the television soap opera effect on birth rates. The paper’s authors estimated that three million fewer babies were born over the two decades they analyzed, a drop they attributed to the immensely

FERTILITY RATES IN LATIN AMERICA & THE CARIBBBEAN 4— 3.5 — 3— 2.5 — 2— 1.5 — 1—

Venezuela

Uruguay

United States

Puerto Rico

Peru

Paraguay

Panama

Nicaragua

Mexico

Honduras

Haiti

Guatemala

El Salvador

Ecuador

Dominican Republic

Cuba

Costa Rica

Colombia

Chile

Brazil

Bolivia

Belize

0—

Argentina

0.5 —

Sources: Economic Commission for Latin America and the Caribbean, Instituto Brasileiro de Geograﬁa e Estatística, CIA World Factbook, Consejo Nacional de Población (Mexico).

LATIN TRADE 01-02/2011

popular TV programs that depicted working women, divorce and families with few children. Duryea said that women often choose to have fewer children in order to invest more in each child’s education. A Health Ministry study

published in December showed that the number of pregnancies in Brazil fell from 3.2 million to 2.9 million between 2000 and 2008. Nearly all of this decrease was among women ages 15 to 24, a group that has nearly half of the babies born each year.

Most experts believe urban and middle-class lifestyles reduce family size. But other experts argue accessible birth control is a major contributing factor. “We consider that [the fall] in the last eight years is related to the effort made by the Brazilian govern-

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LATIN TRADE 01-02/2011

ment to provide access to family planning,” said Télia Negrão, executive secretary of the Feminist Network of Health, Sexual and Reproductive Rights. Birth control has become widely used; emergency contraception has been available free of charge at public health clinics since 2004. Abortion remains illegal, but researchers estimate that the number of illegal abortions ranges from 700,000 a year to as high as several million. Lower fertility rates, Negrão added, are both a cause and effect of the greater participation of women in the public sphere, with the leading example being recently inaugurated President Dilma Rousseff, the mother of one daughter. The latest fertility statistics have raised the issue of the potential consequences of a Brazil that is turning gray. “Population [structure] is not good or bad in itself,” said Ana Amélia Camarano, a researcher with the Brazilian government’s Institute of Applied Economic Research. It ultimately depends on how the workforce is put to use and the pressures to raise the retirement age, said Camarano, who recently published a book about elderly care. Over the next 20 years, Brazil will still have more workers entering the job market than leaving it. Camarano predicted the age structure in Brazil in 2030 will look much like that of Japan in 2000, a “pillar” rather than a “pyramid,” with most age groups having roughly even amounts of population.

THE SCENE Commodities lifted regional stock exchanges in 2010 BY ALEJANDRA LABANCA

Venezuela / IBC

20%

Brazil / Bovespa

40%

-20%

-40% Source: Economática

LATIN TRADE 01-02/2011

Peru / IGBVL

USA / S&P 500

60%

Mexico / IpyC

Colombia / IGBC

2010 Stock Market Performances

ﬁrms represent 46 percent of the market capitalization on the Lima exchange. The 10 largest companies on the São Paulo exchange make up more than 56 percent of its value. Brazil bucked the regional trends in 2010. The São Paulo index, the Bovespa, inched up 2.3 percent in 2010 after surging 155 percent the year before. Venezuela was the only Latin American country whose stock exchange ended lower for the year. In dollar terms, the Caracas IBC index fell more than 40 percent. But in local currency, the Venezuelan stock exchange was up 14 percent. Change for the region could be coming in 2011, with Chile, Peru and Colombia moving to integrate their stock exchanges as long as the booming Peruvian market gains congressional approval.

Argentina / Merval

15 percent. London’s FTSE gained a mere 9 percent. “The reason why Latin American stocks did so much better than U.S. stocks can be explained in one word— commodities,” said Emery Ventura, director at Economática, a ﬁnancialservices ﬁrm based in New York. With world prices soaring, sales of gold in Peru, copper in Chile and cereals in Argentina boosted the economies, and the stock markets, of those countries in particular, Ventura said. Economists are not forecasting a drop in China’s seemingly insatiable demand for raw materials over the short term. “If commodities continue doing well, the region’s countries will do well,” Ventura said. But stock markets in many emerging markets are more highly concentrated than in more industrialized countries and can be more volatile. In Peru, mining

Chile / IPSA

nvestors in Latin American stocks had plenty of reasons to cheer 2010 as most stock exchanges closed out the year with stellar performances, thanks to the steady rise of commodity prices and renewed conﬁdence in emerging markets. The Lima stock index, the IGBVL, was the region’s best performer, surging to a 64 percent gain after a lackluster performance in the ﬁrst half and allowing investors to nearly recoup losses in 2008 and 2009. Following were Chile’s IPSA with a 47 percent gain; the Argentine Merval, up 40 percent; and Colombia, which posted a 35 percent gain. Mexico’s Bolsa de Valores rose 23 percent. Meanwhile, the S&P 500 in the United States, considered the most representative equities benchmark for the U.S. economy, ended the year up

CHINA’S BUYING SPREE

The Chinese conquista moves on to the main course

hinese President Hu Jintao led the charge of China into Latin America, setting off a steady stream of official visits nearly a decade ago to secure energy and natural resources via imports. The official visits have given way to a blitz of Chinese executives and bankers armed with cash to fund a flurry of corporate acquisitions. Early last year, the China National Offshore Oil Corp. invested $3.1 billion in the privately held Argentine oil producer Bridas. In November, the same company and Bridas paid $7 billion to acquire BP’s 60 percent stake in Pan American Energy in Argentina. Toward the end of the year, the China Petrochemical Corp. acquired Occidental Petroleum’s operations in Argentina. In another deal that closed in December, Sinopec, one of the world’s largest oil companies, plunked down $7.1 billion to buy a 40 percent stake in Repsol Brazil, giving the Repsol division the capital to carry out oil exploration. “China has close to $3 trillion in foreign exchange,” China expert Edward Friedman said. “Its firms are backed by cheap capital subsidized by the state. There seems virtually no limit to what they can buy up.” “The world has never seen anything like this,” added Friedman, a political science professor at the University of Wisconsin. Back in 2004, President Hu called for increasing two-way trade between China and Latin America to $100 billion and doubling Chinese investment, then $4 billion, by 2010.

Those goals have long been matched. In 2004, total trade was $36 billion. Six years later, trade between Brazil alone and China topped $36 billion. Many Latin American economies have benefited from China’s appetite for commodities, but the business has meant that many have also reverted to their historic role of providing raw materials for industry in other countries. Nations like Brazil also face a small risk that local currency appreciation — making their exports uncompetitive — could lead to deindustrialization, according to experts. A hard landing for China’s booming economy would pummel many of the Latin American economies now addicted to high commodity prices. Some analysts warn that countries are mortgaging their future by pledging future flows of crude oil to pay off the debt to China. There are some risks for China in a region with a long history of defaults and nationalizations, but much of the Chinese investments gives them management capacity. “China never merely signs contracts, they have joint ventures and other means to enforce agreements,” said Charles McMillion, president of MBG Information Services in Washington.

01-02/2011 LATIN TRADE

CHINA’S BUYING SPREE

BY RUTH BRADLEY

SANTIAGO — Chile might seem like a speck on the horizon to an economic superpower like China. Chile’s economy — estimated to reach $200 billion this year — is one-thirtieth of the size of China’s, and as President Sebastián Piñera pointed out during a recent state visit to Beijing, Chile is about as far away in the world as you can get from China. But far-off China is front and center for Chile. The world’s most-populous country is the largest single export market for Chile, receiving one-fourth of its foreign sales. Export growth to China has become a linchpin of Chile’s economic growth; therein lies the rub. The trade that binds these two disparate countries together is copper, by far Chile’s largest export. Roughly one-third of China’s copper imports came from the South American country in 2010, according to China’s National Bureau of Statistics. But the major copper trade has not broadened into other sectors, and Chile remains a virtual monoexporter to its largest export market. “When China thinks about Chile, it sees copper,” said Osvaldo Rosales, director for international trade and integration at the Economic Commission for Latin America and the Caribbean, the ECLAC. Some economists and business sectors have expressed unease over the growing stature that China has acquired in the small and open Chilean economy. Any slowdown in China’s economic growth could translate into a major setback for Chile’s foreign earnings, making the dependence on copper ties even riskier. But Rosales, a former top trade negotiator for Chile’s Foreign Ministry, dismissed fears that a drop in Chinese economic growth would have unintended consequences in Chile. Rosales forecast that China’s economic output would continue to grow at 8 percent for the next four to five years and would continue to have an impact on the structure of Chile’s exports. The two countries have long had unexpectedly close ties. In 1970, under the Socialist government of President Salvador Allende, Chile became the first South American country to establish diplomatic relations with the communist nation. Relations remained in place throughout the 1973-1990 dictatorship of Augusto Pinochet. Then, in the 1990s, Chile was one of the first Latin American countries to support China’s entry into the World Trade Organization. In 2005, Chile became the first nation in the world to sign a bilateral free-trade agreement with

LATIN TRADE 01-02/2011

China, just two years after Santiago signed a trade and investment treaty with Washington. For almost a decade, trade with China has offered an extra boost to Chile’s economy. Between 2003 and 2008, while the country’s total exports tripled, its sales to China increased fivefold. China helped, too, in the quick recovery from the 2009 recession. As China quickly recovered its appetite for copper, the international price of the metal rapidly improved after its late 2008 collapse. Moreover, earlier windfalls from copper exports were saved in an offshore sovereign fund, which the Chilean government tapped for its $4 billion stimulus plan in 2009. As a percent of its gross domestic product, the stimulus was reportedly the fifth-largest in the world. Since the free-trade agreement came into force in 2006, Chile’s imports from China have also surged and, in 2009, were almost double their 2005 level. In a country where income inequality remains extremely high, cheaper Chinese imports benefited the lower-middle class by reducing the price of consumer goods, particularly electronics, which were previously beyond their reach. Chinese imports are also largely responsible for a sharp drop in the price of clothing and footwear, said Rosales. China is now by far Chile’s largest individual export market, with reported exports of $12.5 billion in 2009, twice the amount of exports to the United States, Chile’s second-largest individual market. While exports to the United States are relatively diversified, copper accounts for about 85 percent of Chilean sales to China; wood pulp represents an additional 6 percent, according to ECLAC, a United Nations organization based in Santiago. Some diversification has taken place, according to Fernando Reyes, Chile’s former ambassador to Beijing. Chilean cherries, which are delivered just in time for the Chinese New Year, have captured an important niche market, he said. Chilean wine, too, has become fashionable. According to Vinos de Chile, the industry association, sales rose year-on-year by 70 percent in the first nine months of 2010. Chile’s wine exports to China topped $24 million in 2009. “Chilean wine has become an icon of quality among upperand middle-income groups in China,” Reyes said. But the gains in fruit and wine remain isolated achievements

Roughly one-third of China’s copper imports came from Chile in 2010. The country is now the largest single export market for Chilean commodities and goods.

NEWSCOM / MARTIN BERNETTI/AFP

Chile: In Search of a Strategy for Emerging Trade Behemoth

CHINA’S BUYING SPREE

by individual sectors. “There are signs of diversification,” said Rosales. “But without a public policy, the tendency toward concentration will remain strong.” Non-copper exporters are, moreover, contending with the negative impact of a strong currency that has made their export products more expensive, one of the unintended consequences of high copper prices. Another concern is the low level of investment flows between the two countries. According to ECLAC, China had invested just $63 million in Chile by the end of 2009, compared with investments that were four times larger in Peru. Remedying that lag is one of the aims of an agreement, secured by President Piñera during his visit to China in November, to negotiate a bilateral investment treaty. “Increasing Chinese investment in Chile should be a priority, and Chile has to offer projects,” added Reyes, the former ambassador. Rosales also suggested that Chilean companies invest more in

China, which would allow companies to piggyback on China’s rising exports by supplying inputs for these products. This strategy is already being followed by successful companies from other Asian countries, Rosales said. Chilean firms could also add value by forming joint ventures with Chinese companies in such areas as refining copper — either in Chile, China or third countries — instead of merely exporting ore or copper concentrate. “To take greater advantage of the Chinese market, Chile needs to advance in innovation,” Rosales said. If, as Piñera has suggested, the low valued-added of Chile’s exports is an impediment to his government’s goal of setting the country on course to attain full-fledged development status by 2018 – with per capita gross domestic product at the levels of a Portugal today – trade relations with China will be crucial. But if China continues to view Chile as merely a source of copper, Chile could become even more dependent on commodity exports and the accompanying vulnerability to the swings of the global economy.

Workers pack copper plates for export at the Chuquicamata copper mine, in the desert town of Calama, 1,000 kilometers north of Santiago, Chile. Chuquicamata is the world’s biggest opencast mine. It is part of Codelco, the state-run National Copper Corporation of Chile. Copper alone accounts for 85 percent of Chilean export sales to China.

01-02/2011 LATIN TRADE

CHINA’S BUYING SPREE

Venezuela: A Match Made in Globalization The oil-rich and cash-starved nation ﬁnds a partner in China BY JOSÉ OROZCO

CARACAS — Four years ago, when President Hugo Chávez delighted his Chinese hosts by announcing Venezuela would boost its crude oil exports to one million barrels a day by 2012, many industry analysts considered the plan a costly pipe dream. Venezuela was selling China just 150,000 barrels daily in August 2006 when Chávez announced his strategy to reduce ties with Uncle Sam and embrace the Asian giant. This shipment was roughly one-tenth the amount Venezuela was then shipping to the United States. “We are diversifying our markets,” the Venezuelan president said during a state visit to Beijing. Given the shipping distance and the higher cost of refining Venezuela’s heavy crude, many analysts dismissed the plan. But analysts no longer scoff at the deepening energy ties between oil-hungry China and Venezuela, which is suffering from declining oil production and is searching for badly needed investment capital. Venezuela now ships 360,000 barrels of crude a day to China, making Venezuela the third-largest supplier, according to the Venezuelan government. China and Venezuela closed out 2010 by signing more than $40 billion in energy-related deals that are intended to boost daily oil production by 800,000 barrels. More than a political alliance, Chávez has been looking for a long-term, and deep-pocketed, business partner. Yet while analysts may agree that diversifying markets makes sense, some worry that Venezuela is merely trading dependence on the United States for dependence on China — pledging its oil reserves to guarantee debt repayment. “Venezuela is potentially becoming increasingly dependent on the financing of the Chinese,” said Roger Tissot, an international oil consultant based in Canada. But for the Venezuelan government, Tissot noted: “There aren’t many alternatives.” The deals with Venezuela and other countries in the region are part of China’s effort to diversify its oil supplies away from the Middle East by financing oil exploration in other parts of the globe. For more than a decade, the country has been on a global quest to meet its growing energy needs with stakes in Africa and Latin America. “China is using its insatiable appetite for resources as a way

LATIN TRADE 01-02/2011

to develop resources in countries such as Venezuela, which is in need not only of capital but also of infrastructure and the expertise to get that oil,” said John Ing, president and CEO of Maison Placements Canada, an investment firm headquartered in Toronto. With its oversized foreign reserves of more than $2.5 trillion, China has become “the banker of the world,” Ing said in a telephone interview. The growing importance of China for Venezuela does not stop with oil. Trade between the two countries has skyrocketed from $1.3 billion in 2005 to nearly $8.9 billion in 2009, according to Bancoex, Venezuela’s state-run foreign trade bank. The China Development Bank has extended some $20 billion in loans to Venezuela. Chávez has tapped the funds to pay for construction of 10,000 housing units at a cost of $400 million. The homes are part of the rebuilding efforts after November rains and flooding left more than 130,000 people homeless. Venezuela is also using the loan to finance the purchase of 33 civilian aircraft within the next five years. Both countries also agreed last year to replenish a bilateral investment fund made up of $4 billion from China and $2 billion from Venezuela. The funds from China are a lifesaver for the Venezuelan government, which is no longer friendly with the International Monetary Fund and other big global lenders. Like much bilateral lending, there are strings attached. Borrowers such as Venezuela must use Chinese companies. Along with oil, Venezuela has awarded billions of dollars worth of contracts to China for housing, infrastructure, agriculture and powerplant projects, as well as for the purchase of commercial aircraft and military equipment. Venezuela has also agreed to repay the billions of dollars with shipments of petroleum. Under the terms of the lending, it is required to repay the loans with shipments of 200,000 barrels of oil a day out of the total 360,000 barrels supplied to China. Venezuela has agreed to increase this repayment amount to 300,000 barrels a day by 2012. The past year brought a slew of oil-related deals between the two. In April 2010, the China National Petroleum Corporation and Petróleos de Venezuela signed a joint venture agreement to produce 400,000 barrels a day at Junin 4, an oil field in the Orinoco oil belt named after a 19th century South American independence battle fought in Peru. A separate Chinese state-owned entity, the China National

Trade between China and Venezuela has skyrocketed from $1.3 billion in 2005 to nearly $8.9 billion in 2009.

CHINA’S BUYING

NEWSCOM / JUAN BARRETO

SPREE

Under a portrait of 19th century independence hero Simon Bolivar, President Hugo Chavez of Venezuela (left) speaks through an interpreter with Zhang Guobao (right), the Chinese Director of the National Energy Administration and Vice Minister of the State Development and Reform Commission, on April 17, 2010, during the signing of an oil agreement at the Miraﬂores presidential palace in Caracas.

Offshore Oil Corporation, signed an agreement with the Venezuelan state-owned oil company to cooperate in developing the Mariscal Sucre offshore natural-gas project that is expected to eventually produce 1.2 billion cubic feet of gas and 37,000 barrels of oil a day. The China Petroleum & Chemical Corporation, known as Sinopec, has signed agreements to work with the state oil company to build the Cabruta refinery, with a capacity of 200,000 barrels per day. In December, CNPC signed a $6 billion contract to expand Cuba’s Cienfuegos oil refinery, jointly owned by Cubapetróleo and PDVSA. The project will be financed mostly by China’s Export-Import Bank along with other Chinese banks and is guaranteed by Venezuelan oil, according to news reports. Also in December, Sinopec and PDVSA announced an agreement to develop the Junin 1 oilfield. The joint venture by the two state-run oil companies is slated to produce 200,000 oil barrels a day, according to the Venezuelan oil company. As part of the agreement Sinopec may also help PDVSA develop the Junin 8 oilfield, which could product up to 200,000 barrels a day. Both of these oil blocs have heavy, hard-to-refine crude. China has already poured money into expanding capacity and improving the quality of its installations to process the highsulfur crude at home. The Beijing government has drawn up plans to construct a new refinery for Venezuelan crude in China’s

Guangdong province. Tissot, the Canadian oil expert, said that diversification may make sense, given the current growth coming from emerging markets. “Market growth is not in Europe or North America,” Tissot said. “Growth is in China. It makes sense if you are an oil country to sell where the market is growing.” Chávez has also proposed selling off the refineries that belong to Citgo, the PDVSA subsidiary in the United States that was formed decades ago — when output exceeded demand — under the company’s strategy to guarantee its oil sales. Venezuelan oil exports to the United States have now dropped below one million barrels a day; oil from Canada has filled in that gap. “It kind of makes sense to reallocate your investment portfolio, reducing exposure to the U.S. market in terms of growth and profitability and perhaps looking into markets where growth and profitability are more attractive,” Tissot said. But selling Citgo wouldn’t provide Venezuela a huge payoff because refining margins are small in the United States, he added. And, at the same time, Venezuela’s embrace of China has done little to create what Chávez has championed as “oil sovereignty.” “They’re in a situation very contrary to oil sovereignty,” Tissot said. “If you sell oil reserves, you’re selling the future—privatizing the oil.”

01-02/2011 LATIN TRADE

CHINA’S BUYING SPREE

Life beyond commodities |

By Karen Poniachik

Is China’s economic impact ushering in a new world order or offering neo-colonialism in the 21st century? From the bastions of free-market thought to socialist-leaning countries across Latin America, government leaders, business executives and even the man on the street have celebrated deepening ties with China as the path to economic growth. But even as the trade and lending numbers climb, the economic relationship is beginning to look unsettlingly familiar, resembling the old dependency pattern that the region has been struggling to break for years. The current dynamic between China and Latin America could be characterized as a 21st century repeat of the neo-colonial “center-periphery paradigm,” or what some analysts call the “inter-industrial model,” in which Latin American countries are relegated to the production and export of primary goods, while China specializes in manufactured and high-tech products. Unless this pattern of economic ties is revisited, it will ultimately accentuate the risk that the region will rely too heavily on commodities and jeopardize its ability to diversify its export base. This problem can already be seen in the region’s trade. Latin America’s exports to China totaled $45.2 billion in 2009, 10 times more than what was sold in 2000. However, the basket of goods is dominated by unprocessed primary products and resourcebased manufactures, which together account for more than 80 percent of total exports. Research by Kevin Gallagher of Boston University shows that four sectors—copper alloys, iron ore and concentrates, soybeans and other seeds, and ore and concentrates of base metals—represent 65.5 percent of total sales to China. Likewise, most of Chinese investment in Latin America has been of the “resource seeking” kind. In December, the China Petroleum & Chemical Corp., known as Sinopec, bought all of the oil and gas assets in Argentina belonging to Occidental Petroleum Corp. for $2.5 billion. This acquisition came just weeks after Sinopec announced plans to acquire 40 percent of the Brazilian operations of Spain’s Repsol for $7.1 billion. With that, China’s oil and gas deals in Latin America reached $13.3 billion in 2010. In addition, the resourcethirsty giant also ventured actively into the region’s mineral, food producing and fertilizers sectors. These trade and investment trends attest both to China’s insatiable need for raw materials and to its carefully designed strategy of securing access to them. But what do they say about Latin America? Let’s look at other figures: While China accounts for 6.7 percent of the region’s total exports, the United States continues to be the largest buyer, with a 40 percent share. Latin America’s exports to its northern neighbor are more diversi-

LATIN TRADE 01-02/2011

fied and remained fairly balanced in 2009. Some 24 percent of the region’s exports are raw materials, another 12 percent is comprised of resource-based goods and 60 percent is manufactured products. Granted, these figures are somewhat distorted by the U.S.Mexico trade relationship, with Mexico’s large exports of manufactured goods to the United States increasing the weight of exports of value-added products—many of them made in U.S. assembly plants. The region’s export basket to the whole world is less concentrated in manufactured goods and more in raw materials. In total exports to the world, raw-materials exports rise to 36 percent, resource-based goods is 20 percent and manufactured goods fell to just 40 percent of the total. In fact, a larger number of Latin American companies, including small- and medium-sized enterprises, export a considerably wider variety of products to the United States than to China. For example, Chile, the world’s largest producer and exporter of copper, sold $5.6 billion in exports to the United States in 2009 versus $11.8 billion to China. Minerals accounted for 37.8 percent of Chilean exports to the United States, which bought 1,897 different products from 2,098 companies. That same year, only 851 Chilean companies did business with China, exporting 508 products. Minerals represented a whopping 83 percent of the total. U.S. investment in the region is also broader in scope and spans a whole range of value-added activities, including manufacturing, finance, telecom, retail and other services. So there is life in Latin America beyond oil, copper, iron and soy. In this context, the region should examine the dynamic of its economic relationship with China from a critical point of view. The benefits of increasingly high-priced growing commodity exports are undeniable. But there are risks. The steep overvaluation of the region’s currencies—due in part to the flood of investment flows and export proceeds—is eroding the competitiveness of its highervalue added goods and services. This could in turn fuel its already high level of overdependence on commodities. There is an imminent danger of getting stuck in a vicious circle that could, once again, take Latin American economies to the same position in the international economy, after countries and their leadership fought so hard to escape.

Karen Poniachik, who served as minister of mining and energy in Chile, is a visiting fellow at the Center for Hemispheric Policy at the University of Miami.

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BEST OF TRAVEL: READERS’ CHOICE

Travel Latin Trade started polling readers about hotels and restaurants for business travel in Latin America and the Caribbean nearly a decade ago. The ninth annual survey results are in, and Latin Trade proudly presents readers’ top choices for 2011 in 19 cities in 16 countries. The survey includes results about preferred airlines and car-rental providers for travel from Mexico to the Southern Cone . This special travel section also examines how mergers and alliances are reshaping options for ﬂyers. And we report on the latest trends in hotel development, with new and rebranded properties giving business travelers more choices in more cities. Finally, Latin Trade asked six top-level hotel executives — who travel constantly in the region — to share tips and their expertise about life on the road and in the skies.

01-02/2011 LATIN TRADE

BEST OF TRAVEL: READERS’ CHOICE

Post Mergers:

Air Alliances Battle for the Flying Public BY ADAM JACOBSON Mega-mergers and new alliances forged in the past six months have given Latin American business travelers a score of additional options. But as this merger era underscores, competition is fierce. The fight to fill seats with executives has shifted into high gear. For travelers, these rapid changes in carrier groupings mean discovering greater flexibility and multiple choices with the member airlines of Star Alliance. Led by United/Continental and Lufthansa, with participation that includes US Airways and Brazil’s TAM, Star Alliance has recently lined up other major regional carriers to join the partnership. Not only does the grouping stand to benefit from the merger of Chile’s LAN Airlines with TAM, but Star Alliance Services CEO Jaan Albrecht also announced the group had reached “a major milestone” by

Airline

signing up Avianca-TACA at the same time as that combo carrier’s major rival, Copa Airlines, based in Panama City. For the industry, the consolidation drive should boost the stronger carriers and shore up fragile ones. It also heightens competition on many levels. Until recently, OneWorld—the alliance led by American Airlines, British Airways and Spain’s Iberia—was poised to dominate the region, particularly with the participation of leading South American carrier LAN. OneWorld now is fighting to keep LAN from defecting to Star Alliance to follow merger partner TAM, Brazil’s largest airline. Executives for LAN and TAM have indicated that the carriers will retain their distinct brands and run independent operations out of Santiago for LAN and São

Overall

LAN TAM AVIANCA COPA DELTA AIR LINES AMERICAN AIRLINES TACA AIR FRANCE AEROMEXICO CONTINENTAL IBERIA BRITISH AIRWAYS UNITED AIRLINES LUFTHANSA

Score

Business Class

5 4.6 4.5 4.4 4.3 4.1 3.4 3.3 3.2 2.7 2.6 2.3 2.2 1.2

5.3 5.5 4.3 5.2 3.5 4.9 2.9 3.4 1.4 1.3 2.6 2.1 2 1.3

Cabin Comfort & Service

5.3 5 4.9 4.4 4.7 2.3 3.6 3.5 3.7 3 3 2.3 2.3 1.5

Paulo for TAM. But the alliance issue remains unresolved for a combined carrier that will officially be called LATAM Airline Group (see related article on page 56). Albrecht called TAM an integral part of Star Alliance, its membership giving the members access to South America, including Brazil, with its many business and vacation destinations and an ever-larger number of its own travelers. At a press conference in November, Albrecht said Star Alliance executives planned to meet with airline representatives in both Santiago and São Paulo to “make the best proposal.” The rapid change in the dynamics of Latin American air travel has taken many industry observers by surprise, said Raphael Bejar, who is the CEO and founder of Airsavings, a consulting

Food & Beverages

Freq. Flyer Program

5.2 4 5.3 4.5 4.6 2.1 3.5 3.7 3.6 2.9 3.1 2.7 1.7 0.4

4.8 4.3 4.1 4.6 4.1 5.1 3.2 3.3 2.9 2.9 2.3 2 2.7 1.3

firm focused on supplementary revenue and cost reduction for the industry. Bejar said the spate of merging ventures also underscored how, in one of the world’s hottest air travel markets, the alliances are at war with each other, perhaps to a greater degree than with the carriers themselves. “No one in the industry expected such a big change to happen so quickly,” Bejar said. “With the introduction of these new airlines, Star Alliance is welcoming three of the most well-connected airlines in the region.” While Star Alliance members will benefit from improved access to more destinations, Bejar predicted that travelers would find fewer bargains in travel. The airlines are expected to reorganize overlapping networks and cut unproductive routes, leaving travelers with fewer choices in some

Ticketing/ On-time Boarding Performance

4.6 4.5 4.4 3.6 4.7 4.5 3.7 3.3 3.8 2.9 2.6 2.4 2.4 1.5

4.6 4.4 4.7 3.6 4.5 4.8 3.8 3 3.9 3.1 2.6 2 2.2 1.4

Note: Final score based on number of votes for options ranging from excellent to poor, then weighted to reﬂect overall choice.

LATIN TRADE 01-02/2011

Airline Lounges

5 4.7 4 4.9 3.7 4.8 2.9 2.8 3.4 2.6 2 2.3 2.4 1.2

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BEST OF TRAVEL: READERS’ CHOICE

cases, he said. But Bejar said the success of low-cost and start-up carriers, including Aires in Colombia and both Azul and Webjet in Brazil, will keep the bigger airlines from controlling routes and prices. “With the introduction of lowcost carriers, the battle for dominance in Latin America will definitely be an interesting one—both from an industry and a customer perspective,” Bejar said. The addition of Avianca-TACA and Copa to Star Alliance means that global business travelers will have seamless access to the region via Avianca-TACA hubs in Bogota, San Salvador, Lima and San Jose and Copa’s hubs in Panama City. For Avianca-TACA, flights from Madrid and Barcelona will improve connections between Europe and Bolivia, Peru, Colombia and Central America. For North American passengers, this alliance now allows direct service from Latin America to Toronto, San Francisco, Los Angeles and Dallas. Copa’s entry into Star Alliance came as a surprise to some industry analysts, given its long-standing rivalry with Avianca-TACA. But Copa CEO Pedro Heilbron insisted his airline would continue to battle with AviancaTACA even though they operate

Rental car Dollar/Thrifty Hertz Avis Alamo Enterprise Budget Localiza

in the same alliance. “Together we will be better placed to compete against growing competition in the region,” Heilbron said in an interview with Latin Trade. “We will cooperate with each other, as US Airways does with United,” he said. “Star Alliance membership will not eliminate competition. If alliances were to exclude competitors, there would probably be no global alliances.” Avianca-TACA chief executive Fabio Villegas echoed Heilbron’s comments. “Our goal is not to be the dominant airline in the region,” Villegas said. “Competition is necessary, and growth in Avianca-TACA is due to this.” Competitors on Latin American routes include Lufthansa, the German carrier that restored flights between Frankfurt and Bogota in October after a lapse of eight years. Lufthansa also offers flights from Frankfurt to São Paulo, Buenos Aires and Caracas and operates nonstop service between São Paulo and Munich, where German automaker BMW has its headquarters. With OneWorld under pressure in South America, the carriers are bolstering their presence in North America. OneWorld faces not only Star Alliance but also Skyteam, which includes Delta, Aeromexico and Air France/ KLM. For instance, OneWorld

member Iberia, which has finalized its merger with British Airways, will launch four weekly Madrid-Los Angeles flights and three weekly trips between Barcelona and Miami in March. Iberia also plans to increase capacity on its service between Madrid and Chicago, New York and Boston. These additional routes make the United States the leading long-haul market for Iberia. To lure business travelers making transcontinental treks on Iberia, the airline is offering enhanced frequent-flyer benefits, including a free domestic flight for every excursion on any economy fare. Meanwhile, the bankruptcy filing and shutdown of Mexicana de Aviación in August has opened the prospects for low-cost carriers in Mexico. Volaris, Interjet and VivaAerobus could add new domestic passengers. But after Mexicana won the right to reorganize in Mexico, protected from U.S. creditors, industry insiders told Latin Trade that a restructured Mexicana began hiring employees in November and was expected to emerge from bankruptcy as a much smaller carrier, with three dozen domestic and international destinations. Although Aeromexico made no public comment on its rival’s bankruptcy, the only other national Mexican airline quickly reacted.

Overall Score

Rates

Reliability of Fleet

4.7 4.6 4 2 1.9 1.3 0.1

4.9 4.6 3.9 2.2 2.1 1.4 0.05

4.7 4.9 4.6 1.6 1.8 1.3 0.2

Service/ courtesy 5.1 4.7 4.3 2.2 2.2 1.3 0.05

Since October, it boosted the number of direct flights between Argentina and Mexico; launched new service between Mexico City, Bogota and San Jose; added a fourth Mexico City-Barcelona flight; and increased to nine its weekly flights between Mexico City and São Paulo. Among U.S. destinations, it added flights to Chicago, Las Vegas, Los Angeles, Miami, New York and San Antonio and reestablished 45 daily code share flights with Delta. Aeromexico was expecting to finish 2010 by having flown nearly 12 million passengers. It anticipates that it will serve 13 million air travelers in 2011.

The airports of Santiago and Panama City got the highest marks in our business travel survey; São Paulo-Guarulhos got the lowest. Find out how readers rated the region’s airports — as well as where the airlines are adding new ﬂights or expanding service — by visiting latintrade.com.

Speed In/Out 4.2 4.8 4 2.4 1.8 1.4 0.05

Vehicle Options 4.5 4 3.4 1.6 1.8 1 0.3

NOTE: Speed In/Out refers to time needed for check-in and check-out. Final score based on number of votes for options ranging from excellent to poor, then weighted to reﬂect overall choice.

LATIN TRADE 01-02/2011

BEST OF TRAVEL: READERS’ CHOICE

BRAZIL > TOP Hotels in São Paulo

Hilton São Paulo Morumbi

Situated within the east tower of the United Nations business complex, this hotel has an executive lounge offering great city views plus meeting facilities that include four boardrooms. Address: Avenida da Nacoes Unidas 12901, Marginal Pinheiros/Berrini; Tel: (5511) 2845-0000; Web: www1.hilton.com

InterContinental São Paulo

Holiday Inn Parque Anhembi São Paulo

Conveniently located next door to the Anhembi Convention Center with its own meetings rooms and exhibit space. Address: Rua Profesor Milton Rodrigues 100; Tel: (5511) 2107-8844; Web: holidayinn.com

Sheraton São Paulo WTC Hotel

Convenient to the business district and the convention centers, the hotel is walking distance to the chic shops of Rua Oscar Freire. Its City Athletic Club was renovated in 2010. Address: Alameda Santos 1123, Jardim Paulista; Tel: (5511) 3179-2600 Web: ichotelsgroup.com/intercontinental

Adjacent to WTC Convention Center and with direct access to the D&D decoration and design center, the hotel has standard rooms as well as suites with butler service. Address: Avenida Nacoes Unidas 12559, Brooklin Novo; Tel: (5511) 3055-8000; Web: starwoodhotels.com/sheraton

Grand Hyatt São Paulo

The rooms in this business-oriented hotel — especially convenient to the Berrini area — have views of the city skyline or the Estaiada Bridge. Address: Av. da Nacoes Unidas 13301, Marginal Pinheiros/Berrini; Tel: (5511) 2838-1234; Web: saopaulo.grand.hyatt.com

Fasano Hotel

A chic hotel, noted for its high style, prime location and trendy restaurant. Address: Rua Vittorio Fasano 88, Jardim Paulista; Tel: (5511) 3896-4000; Web: fasano.com.br

Hotel Unique

Renaissance São Paulo Hotel

Staybridge Suites São Paulo

10)

Hotel Emiliano

Original modern architecture and a stylish rooftop restaurant and bar distinguish this hot property. Address: Avenida Brigadero Luis Antonio 4700, Jardim Paulista; Tel: (5511) 3055-4710; Web: hotelunique.com.br

Well situated in the Jardim Paulista district, with 15 meeting rooms and an auditorium. Address: Alameda Santos 2233, Jardim Paulista; Tel: (5511) 3069-2233; Web: marriott.com/hotels

Spacious rooms and ample work areas in the Brascan Century Plaza business and entertainment center. Address: Rua Bandeira Paulista 555, Itaim Bibi; Tel: (5511) 3706-6600; Web: ichotelsgroup.com

Sleek boutique-style property with a helicopter pad, 24-hour spa and garden views. Address: Rua Oscar Freire 384; Tel: (5511) 3068-4393; Web: emiliano.com.br

BRAZIL > TOP Restaurants in São Paulo

Restaurante Figueira Rubaiyat

Top steaks and seafood with a patio shaded by a 130-year-old ﬁg tree. Address: Rua Haddock Lobo 1738, Jardim Paulista; Tel: (5511) 3087-1399; Web: rubaiyat.com. br/restaurantes/ﬁgueira-rubaiyat

Fogo de Chao

The ﬁrst location of the now-global chain, this churrascaria has been serving carnivores for 25 years. Address: Avenida Moreira Guimaraes 964, Moema; Tel: (5511) 5056-1795 Web: fogodechao.com

Fasano

Contemporary Italian fare in an elegant setting. Private dining room available. Live music every night at the bar. Address: Avenida Vittorio Fasano 88, Se Tel: (5511) 3062-4000; Web: fasano.com.br

LATIN TRADE 01-02/2011

Skye Restaurante at the Hotel Unique

A haven for power diners who enjoy Brazilian fare, pizzas and sushi. The rooftop locale transforms into a trendy lounge after-hours. Address: Avenida Brigadeiro Luís Antônio 4700, Jardim Paulista Tel: (5511) 3062-4000

Bar des Arts - Itaim

Traditional Brazilian fare, along with Italian and Argentine dishes, are available at this acclaimed Grupo Leopolldo restaurant. Address: Rua Pedro Humberto 9, Itaim; Tel: (5511) 3074-6363; Web: bardesarts.com.br/pt

Restaurante Figueira Rubaiyat

BEST OF TRAVEL: READERS’ CHOICE

BRAZIL > TOP Hotels in Rio de Janeiro

InterContinental Rio

A beachside resort offers proximity to the Fashion Mall and access to the Gávea Golf Club next door, plus complimentary shuttle service to certain city destinations. Address: Avenida Aquarela do Brasil 75, São Conrado; Tel: (5521) 3323-2200. Web: ichotelsgroup.com/intercontinental

JW Marriott Hotel Rio de Janeiro

Great views from the rooftop pool as well as the executive lounge, plus 12 meeting rooms, all on Copacabana Beach. Address: Avenida Atlantica 2600, Copacabana; Tel: (5521) 2545-6500 Web: marriott.com

Sheraton Rio Hotel & Resort

A beachfront resort with 559 rooms and suites, and 15 event rooms, in a pedestrianfriendly residential district of Leblon. Address: Avenida Niemeyer 21, Leblon; Tel: (5521) 2274-1122 Web: starwoodhotels.com/sheraton

Copacabana Palace by Orient-Express

A classic beachfront luxury hotel with beach and city views. Address: Avenida Atlantica 1702, Copacabana; Tel: (5521)2548-7070; Web: copacabanapalace.com

Fasano Hotel

Modern luxury in Ipanema designed by Philippe Starck with a hip and trendy scene at the rooftop pool deck. Address: Avenida Vieira Souto 80, Ipanema; Tel: (5521) 32024000; Web: fasano.com.br

Sheraton Barra Hotel & Suites

Every room has a private balcony at this beachfront property that is close to many corporate ofﬁces. Address: Avenida Lucia Costa 3150, Barra da Tijuca; Tel: (5521) 3139-8000; Web: starwoodhotels.com/sheraton/

10)

Hotel Santa Teresa

The former mansion of a coffee plantation has been converted into a chic boutique property in a historic district of the city. Address: Rua Almirante Alexandrino 660, Santa Teresa; Tel: (5521) 3380-0200; Web: santa-teresa-hotel.com

Rio de Janeiro

Caesar Park Rio de Janeiro – Ipanema

Classic décor on the beach with amenities that include butler service and a private reception area. Address: Avenida Vieira Souto 460, Ipanema; Tel: (5521) 2525-2525; Web: caesar-park.com

Hotel Soﬁtel Rio de Janeiro

Situated on the beach between Copacabana and Ipanema, near the fort, some rooms boast private terraces. Address: Avenida Atlantica 4240, Copacabana; Tel: (5521) 25251232; Web: soﬁtel.com

Mercure Rio de Janeiro Ipanema

With 52 rooms, this apartment hotel is steps from the beach but close to corporate ofﬁces. Address: Avenida Rainha Elizabeth da Bélgica 440, Ipanema; Tel: (5521) 2114-8100; Web: mercure.com

BRAZIL > TOP Restaurants in Rio de Janeiro

Hotel Cipriani Restaurant

Sophisticated and elegant Northern Italian dishes served in a classic setting inside the classic Copacabana Palace hotel. Address: Avenida Atlantica 1702, Copacabana; Tel: (5521) 2548-7070; Web: copacabanapalace.com

66 Bistrô

Cozy surroundings and authentic French cuisine, along with varieties of risotto. Address: Avenida Alexandre Ferreira 6, Lagoa; Tel: (5521) 2266-0838; Web: 66bistro.com.br

Terral at the Sheraton Barra Hotel

Mediterranean fare, with a Thai touch, at this oceanside resort. Address: Avenida Lucia Costa 3150, Barra da Tijuca; Tel: (5521) 3139-8000; Web: starwoodhotels.com/sheraton

Le Pré-Catelan

Contemporary French fare in a classic atmosphere. Address: Avenida Atlantica 4240, Copacabana (inside the Soﬁtel); Tel: (5521) 2525-1232

Sushi Leblon

A place to be seen, this ultra-chic Japanese restaurant attract a high-proﬁle clientele with its top-notch sushi. Address: Rua Dias Ferreira 256, Leblon; Tel: (5521) 2512-7830; Web: sushileblon.com

01-02/2011 LATIN TRADE

BEST OF TRAVEL: READERS’ CHOICE

MEXICO > TOP Hotels in Mexico City

Four Seasons Hotel

Our readers’ top-rated hotel is renowned for its beautiful, lush courtyard and colonialinspired architecture. Address: Paseo de la Reforma 500, Colonia Juarez; Tel: (5255) 5230-1818; Web: fourseasons.com/mexico

W Mexico City

Sleek and sophisticated rooms draw travelers while locals also patronize the hip restaurants and lounges. Address: Campos Eliseos 252, Colonia Polanco; Tel: (5255) 9138-1800; Web: starwoodhotels.com/whotels

Mexico City

JW Marriott Hotel Mexico City

Scenic views and spa facilities at this ﬁve-star property, including a gym and outdoor pool. Address: Andres Bello 29, Colonia Polanco; Tel: (5255) 5999-0000; Web: marriott.com

Presidente InterContinental Mexico City

Seven on-site restaurants and extensive meeting facilities make this a popular choice among local business people, too. Address: Campos Eliseos 218, Colonia Polanco; Tel: (5255) 5237-7730 Web: intercontinentalmexico.com/

Hilton Mexico City Reforma

Reﬂagged as a Hilton in 2009, this hotel features a heliport, its own convention center and a penthouse executive lounge. Address: Avenida Juarez 70, Col. Centro; Tel: (5255) 5130-5300; Web: www1.hilton.com

Hotel Nikko México

756 rooms with either park or city views. Onsite dining options include upscale Japanese. Address: Campos Elíseos No. 204, Colonia Polanco; Tel: (5255) 5283-8700; Web: hotelnikkomexico.com

Mexico City Marriott Reforma

The 16-story hotel is centrally located in the Zona Rosa, near the Angel of Independence monument, across Reforma from the Mexican Stock Exchange. Address: Paseo de la Reforma 276, Colonia Juarez; Tel: (5255) 482-2400; Web: marriott.com

Sheraton Maria Isabel Hotel and Towers

Overlooking the Independence monument, this hotel is just steps from both the American and British embassies. Address: Paseo de la Reforma 325; Tel: (5255) 5242-5555; Web: starwoodhotels.com/sheraton

Camino Real Polanco

10)

St. Regis Mexico City

The Mexican owners of this hotel, whose 1968 design was cutting edge, are investing millions to redecorate and upgrade the 712room property. Address: Mariano Escobedo 700, Colonia Azures; Tel: (5255) 5227-7200; Web: caminoreal.com

Five-star design and comforts at the Cesar Pelli-designed property, opened in 2009. Address: Paseo de la Reforma 439, Colonia Cuauhtemoc; Tel: (5255) 5228-1818; Web: starwoodhotels.com/stregis

MEXICO > TOP Restaurants in Mexico City Hacienda de los Morales

Puerto Madero

Restaurante El Cardenal

Upscale Mexican dishes in an elegant colonial setting. Address: Avenida Vázquez de Mella 525, Colonia Del Bosque; Tel: (5255) 5283-3055; Web: haciendadelosmorales.com

Popular Argentine steakhouse also noted for its martinis and wine list. Address: Presidente Masarik 110, Colonia Polanco;Tel: (5255) 55456098; Web: puertomaderorestaurantes.com

Traditional Mexican fare, with two other locations in the city. Address: Avenida de las Palmas 215, Lomas de Chapultepec; Tel: (5255) 2623-0402; Web: restauranteelcardenal.com

LATIN TRADE 01-02/2011

Astrid y Gastón

Au Pied de Cochon

The Mexico City location of the acclaimed Peruvian chain. Address: Alfredo Tennyson 117, Colonia Polanco; Tel: (5255) 5282-2489; Web: astridygaston.com

Mexican branch of the Paris institution serves French classics around the clock. Address: Campos Eliseos 218 (inside the PresidenteIntercontinenal), Colonia Polanco; Tel: (5255) 53277756; Web: aupieddecochon.com.mx

San Angel Inn

A former monastery reknowned for its renditions of traditional Mexican dishes. Address: Diego Rivera 50, Colonia San Angel Inn; Tel: (5255) 5616-1402; Web: sanangelinn.com

Azul y Oro

Contramar

Fonda el Refugio

10)

Solea at the W

Elegant Mexican fare in a casual setting, inside the Torre de Ingeniería on the UNAM campus. Address: Centro Cultural Universitario, Ciudad Universitaria; Tel: (5255) 5622-7135

Excellent seafood; lunch only. Address: Durango 200 (Plaza Madrid), Colonia Roma; Tel: (5255) 5514-3169; Web: contramar.com.mx

Elegant preparations of Mexican fare. Address: Liverpool 166, Zona Rosa; Tel: (5255) 5525-8128

Steak and seafood specialities. Address: Campos Eliseos 252, Colonia Polanco; Tel: (5255) 9138-1800

VISITMEXICO.COM

SPECIAL ADVERTISING FEATURE

“Latin America is turning into a hotbed of activity in the hospitality industry,” says Alvaro Diago, COO, IHG, Latin America and Caribbean. InterContinental Nordelta Buenos Aires Hotel Residences & Spa

InterContinental Maracaibo

IHG CONTINUES TO EXTEND FOOTPRINT IN LATIN AMERICA As the world’s eyes focus on Latin America, which closed 2010 with strong economic growth and a burgeoning market for investors, InterContinental Hotels Group (IHG) continues to strengthen its foothold in the region. The world’s largest hotel group by number of rooms, whose roots in Latin America can be traced to 1946, begins the New Year with a new phase of expansion across all of its brands in the region – InterContinental Hotels & Resorts, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express and Staybridge Suites. After having successfully opened the InterContinental Maracaibo in Venezuela in December, IHG continues the reinforcement of its leadership position as Latin America’s most experienced international hotel company with the opening of eight hotels in 2011, including the much-anticipated InterContinental Nordelta Buenos Aires Hotel Residences & Spa, located in the up-and-coming Nordelta District of Buenos Aires, and the Holiday Inn

Escazú, IHG’s sixth hotel in the city of San José, Costa Rica. Additionally, six Holiday Inn and Holiday Inn Express hotels will be opening their doors in key cities of South and Central America, including Belém, Bogotá, Buenos Aires, Cartagena, Maceio and Porto Velho. The properties will showcase the brands’ new sign, which is the seal of approval that these hotels exemplify the standards of the $1 billion Holiday Inn brand re-launch program. The Holiday Inn brand re-launch is the largest in the history of the hospitality industry, with more than 3,400 hotels around the world being updated - improving quality and driving consistency at Holiday Inn and Holiday Inn Express hotels around the world.

“Latin America is turning into a hotbed of activity in the hospitality industry,” says Alvaro Diago, COO, IHG, Latin America and Caribbean. “The region has garnered interest from not only local, but global investors, which is a very positive sign for the industry’s longterm growth.” With representation in 20 countries and territories, and 74 hotels situated in nearly every key market throughout Latin America and the Caribbean, IHG’s success is a testament to its brands global appeal with developers and consumers, its long-standing relationships and its unmatched level of experience. Over its 65 years, there has been no hotel operator company in the region with more international appeal and uncompromising global standards.

BEST OF TRAVEL: READERS’ CHOICE

ARGENTINA > TOP Hotels in Buenos Aires

InterContinental Buenos Aires

Gardens, grand architecture and comfortable rooms make this downtown property a top choice among business travelers. Address: Calle Moreno 89, Montserrat; Tel: (5411) 4340 7100; Web: ichotelsgroup.com/intercontinental

Hilton Buenos Aires

A short walk to the ﬁnancial district, the hotel has a new executive lounge and recently renovated meeting space. Address: Macacha Guemes 351, Puerto Madero; Tel: (5411) 48910000; Web: buenosaires.hilton.com

Palacio Duhau — Park Hyatt Buenos Aires

Modern décor and amenities complement the unique design of the original 1930s structure. Address: Avenida Alvear 1661, Recoleta; Tel: (5411) 5171-1234; Web: buenosaires.park.hyatt.com

Alvear Palace Hotel

Santiago Marriott Hotel

The Ritz-Carlton, Santiago

Old-world elegance and formality at what has been called the “grande dame” of luxury hotels on the continent. Address: Avenida Alvear 1891, Recoleta; Tel: (5411) 4804-7777; Web: alvearpalace.com

Four Seasons Hotel Buenos Aires

Contemporary comforts and period charm in an early 20th century French-style mansion. Address: Posadas 1086/88, Recoleta; Tel: (5411) 4321-1200; Web: fourseasons.com/buenosaires

CHILE > TOP Hotels in Santiago Santiago

W Santiago

Grand Hyatt Santiago

Cutting-edge style with views of snowy Andean peaks, and hot restaurants and lounges for people-watching. Address: Isidora Goyenechea 3000, Las Condes; Tel: (562) 770-0000; Web: starwoodhotels.com/whotels

Spacious rooms and Grand Club level extras, with golf facilities within walking distance. Address: Avenida Kennedy 4601, Las Condes; Tel: (562) 950-1234 Web: santiago.grand.hyatt.com

Close to corporate ofﬁces, shopping, this hotel has its own heliport and is adjacent to a park. Address: Avenida Kennedy 5741, Las Condes; Tel: (562) 426-2000; Web: marriott.com

This centrally located hotel is noted for its concierge services and executive-level suites. Address: Calle El Alcalde No. 15, Las Condes; Tel: (562) 470-8500; Web: ritzcarlton.com

InterContinental Santiago Services include grocery shopping service and an executive club level with a dedicated concierge. Address: Avenida Vitacura 2885, Las Condes; Tel: (562) 394-2000; Web: ichotelsgroup.com

URUGUAY > TOP Hotels in Montevideo

Sheraton Montevideo Hotel

Radisson Montevideo Victoria Plaza Hotel

Overlooking Rio de la Plata, this property is adjacent to a shopping center and golf club. Address: Calle Victor Solino 349, Punta Carretas; Tel: (5982) 710-2121; Web: starwoodhotels.com/sheraton

In the heart of the ﬁnancial and commercial district, this property has a casino and spa. Address: Plaza Independencia 759, Centro; Tel: (5982) 902-0111; Web: radisson.com

Holiday Inn Montevideo

On-site convention center and walking distance to the commercial district. Address: Colonia 823; Tel: (5982) 902-0001; Web: holidayinn.com.uy

LATIN TRADE 01-02/2011

Four Points by Sheraton Montevideo

Centrally located with an on-site meetings and events center. Address: Ejido 1275; Tel: (5982) 901-7000; Web: starwoodhotels.com

Hotel Lafayette

Downtown near ofﬁces and restaurants, this hotel is described as a good value. Address: Soriano 1170; Tel: (5982) 902-4646; Web: Lafayette.com.uy

AMERICAS SOCIETY / COUNCIL OF THE AMERICAS Uniting opinion leaders to exchange ideas and create solutions to the challenges of the Americas today

Latin American Cities Conferences 2011 Argentina Brazil

For updated information about our 2011 conference schedule, visit:

Chile

www.as-coa.org/LatinAmericanCities

Colombia Costa Rica .FYJDP Panama Peru Trinidad & Tobago

Our signature Latin American Cities conferences unite highranking government officials, prominent business leaders, policymakers, academics, and other noteworthy guests to dialogue on economic analysis and projections, political trends, opportunities for growth and investment, regional integration, as well as other relevant issues to the region and to each of the countries.

OFFICES /FX :PSL t 8BTIJOHUPO t .JBNJ

BEST OF TRAVEL: READERS’ CHOICE

ARGENTINA > TOP Restaurants in Buenos Aires

Cabaña Las Lilas

This formal restaurant is renowned for highquality parilladas. Address: Avenida Alicia Moreau de Justo 516, Puerto Madero; Tel: (5411) 4313-1336; Web: laslilas.com

La Bourgogne

One of the city’s ﬁnest French restaurants, in an elegant setting within the Alvear Palace Hotel. Address: Ayacucho 2027, Recoleta; Tel: (5411) 4808-2100; Web: alvearpalace.com

Sucre

A top choice with locals, this trendy spot serves up Argentine meats, ﬁne pastas and risotto dishes. Address: Sucre 676, Villa de Mayo; Tel: (5411) 4782-9082; Web: sucrerestaurant.com.ar

La Bourgogne

Sottovoce

Fine Northern Italian dishes in a formal, classy setting. Second location in Libertador. Address: Av. Alicia Moreau de Justo 176, Puerto Madero; Tel: (5411) 4313-1199; Web: sottovoceristorante.com.ar

La Estancia

This traditional restaurant known for grilled meats presents a tango show on Friday and Saturday evenings. Address: Lavalle 941, San Nicolas; Tel: (5411) 4326-0330; Web: asadorlaestanciacom.ar

CHILE > TOP Restaurants in Santiago

Astrid y Gastón

Agua

The Santiago branch of the Peruvian chef’s chain boasts top-quality seafood. Address: Calle Antonio Bellet 201, Providencia; Tel: (562) 650-9125; Web: astridygaston.com

Ultra-modern eatery renowned for its ﬁsh and seafood dishes. Address: Avenida Nueva Costanera 3467, Vitacura; Tel: (562) 953-5981

El Cid

Happening

La Mar

This Argentine-style steakhouse has been serving locals and visitors for 10 years. Address: Avenida Apoquindo 3090, Las Condes; Tel: (562) 233-2301; Web: happening.cl

This Peruvian cevichería’s Santiago outpost impresses with its seafood dishes. Address: Avenida Nueva Costanera 3922, Vitacura; Tel: (562) 206-7839; Web: lamarcebicheria.com

Continental cuisines in an elegant setting inside the Sheraton Santiago. Address: Avenida Santa Maria 1742; Tel: (562) 233-5000

Happening

URUGUAY > TOP Restaurants in Montevideo

El Viejo y El Mar

Fellini Risto Baretto

Seafood and local specialties enjoyed over expansive views of Rio de la Plata. Address: Rambla Gandhi 400, Carrasco; Tel: (5982) 710-5704

Pizza and pasta in a comfortable yet modern setting, with a full bar. Address: José Marti 3408 (esquina Benito Blanco), Pocitos/Punta Carretas; Tel: (5982) 706-9252

El Fogon

Tandory

Traditional Rioplatense dishes. Second location in Punta Carretas shopping center. Address: San Jose 1080, Centro; Tel: (5982) 900-0900; Web: elfogon.com.uy

LATIN TRADE 01-02/2011

Local favorite has a broad menu with Thai, Vietnamese, Indian and Morrocan ﬂavors. Address: Ramon Masini (at Libertad), Pocitos; Tel: (5982) 709-6616; Web: tandory.com

Francis

Gourmet fare that includes sushi, Uruguayan grilled meats, seafood and paella. Address: Luis de la Torre 502 (esquina José M. Montero), Punta Carretaas Tel: (5982)711-8063; Web: francis.com.uy

BEST OF TRAVEL: READERS’ CHOICE

COLOMBIA > TOP Hotels in Bogota and Medellin BOGOTA

JW Marriott Hotel Bogota

New hotel — opened mid-2010 — is earning accolades for luxury service and amenities. Address: Calle 73 #8-60; Tel: (571) 481-6000; Web: marriott.com

Crowne Plaza TequendamaBogota

In the heart of the business district, with extensive meeting facilities. Address: Carrera 10 #26-21; Tel: 877-270-1393/(571) 382-0300; Web: crowneplaza.com

Embassy Suites by Hilton Bogota Rosales

Suites in the Chapinero district, near the Universidad Nacional de Colombia. Address: Calle 70 #6-22; Tel: (571) 317-1313; Web: embassysuites1.hilton.com

Hotel Casa Medina

The 58-room luxury hotel has been designated as a cultural monument. Address: Carrera Septima No. 69 A-22; Tel: (571) 2170288; Web: hotelescharleston.com

Bogota Marriott Hotel

Close to the airport, this smoke-free property has soundproof windows and a new lobby. Address: Av. El Dorado 69b-53; Tel: (571) 485-1111; Web: marriott.com

MEDELLIN

InterContinental Medellin

The recently renovated hotel features two ﬂoors of Club InterContinental rooms. Address: Calle 16 #28-51, Variante Las Palmas; Tel: (574) 315-4443; Web: ichotelsgroup.com

Four Points by Sheraton Medellin

Steps from the Oviedo Mall, the hotel is a short ride to the convention center. Address: Carrera 43C #6 Sur 100; Tel: (574) 321-8088 Web: starwoodhotels.com/fourpoints

Holiday Inn Express Medellin

Medellin Royal

An all-suites property in a shopping center in the El Poblado district serves breakfast with panoramic views on the 21st ﬂoor. Address: Carrera 43A #1 Sur -150 Avenida El Poblado; Tel: (574) 444-0344 Web: hiexpress.com

This 2008 modern-styled hotel in El Poblado is walking distance from the Sante Fe mall. Address: Carretera 42 #5 Sur 130; Tel: (574) 448-5700; Web: hotelesroyal.com

Hotel Dann Carlton Belfort Medellin

This Zona Rosa hotel is half suites and half rooms and includes an executive ﬂoor. Address: Calle 17 No. 40B -300; Tel: (574) 266-7682; Web: danncarlton.com

COLOMBIA > TOP Restaurants in Bogota and Medellin BOGOTA

Andres Carne de Res

Parrilla served in a lively and fun environment, with colorful décor. Address: Calle 82 #12-21; Tel: (571) 863-7880; Web: andrescarnederes.com

Astrid y Gastón

The Bogota branch of chef Gastón Acurio’s Peruvian ﬂagship wins kudos here as around the region. Address: Carrera 7 #67-64 (entrance on Calle 68); Tel: (571) 211-1400; Web: astridygastonbogota.com

Harry Sasson

International cuisine, with an emphasis on meats. Address: Calle 70 #5-57; Tel: (571) 321-3640; Web: harrysasson.com

La Brasserie

La Fonda de Salvatierra

French bistro fare in the Zona Rosa, in an inviting, upscale dining room or out on a more relaxed veranda. Address: Carrera 13 #85-35; Tel: (571) 257-6402

Colombian specialties served in former hacienda barn; gauchos provide entertainment. Address: Calle 16 #28-170; Tel: (574) 311-8350

La Casa Vieja

El Cielo

Hatoviejo Palmas

San Carbon

Traditional national and local specialities in antique-festooned dining rooms. Three locations in the city. Address: Avenida Jimenez No.3 – 63; Tel: (571) 342-6752; Web: casavieja.com.co MEDELLIN

La Provincia

Mediterranean cuisine enjoyed either in an airy modern dining room or outdoor terraces. Address: Calle 4 #43A-179; Tel: (574) 3119630; Web: restaurantelaprovincia.com

Fusion cuisine in a hip environment, with extensive, multi-course menus. Address: Carrera 40 #10a-22; Tel: (574) 268-3002; Web: elcielococinacreativa.com

Popular spot with rustic décor, near the InterContinental, serves regional specialties. Address: Carrera 47 #52-17; Tel: (574) 251-2196

Locals endure waits for the steaks at this popular parrillada. Address: Calle 9A #37A13; Tel: (574) 268-5570

01-02/2011 LATIN TRADE

BEST OF TRAVEL: READERS’ CHOICE

PERU > TOP Hotels in Lima

JW Marriott Hotel Lima

Ultra-modern glass tower in the Miraflores district offers sweeping views of the Pacific from every guest room and over 18,000 square feet of meeting space. Address: Malecon De La Reserva 615, Miraflores; Tel: (511)-217-7000; Web: marriott.com

Country Club Lima Hotel

Sheraton Lima Hotel & Convention Center

This historic ﬁve-star property in the exclusive San Isidro district has 83 suites and offers guest privileges at the Lima Golf Club across the street. Address: Los Eucaliptos 590, San Isidro; Tel: (511) 611-9000; Web: hotelcountry.com

With 431 rooms and suites, the hotel is at the outer edge of Lima’s historic center. Address: Paseo de la Republica 170; Tel: (511) 315-5000; Web: starwoodhotels.com/sheraton

Crowne Plaza Lima

Newly renovated, this Miraﬂores property has executive ﬂoors and is close to some of Lima’s best restaurants.Address: Av. Benavides 300 Esq. Colón; Tel: (511) 610-0700; Web: crowneplaza.com

Swissôtel

Located in the San Isidro district, this hotel has 244 rooms and suites on 18 ﬂoors. Address: Via Central 150 - Centro Empresarial Real, San Isidro; Tel: (511) 421-4400 Web: swissotel.com/lima

PERU > TOP Restaurants in Lima

Astrid y Gastón

Cebicheria La Mar

La Gloria

Pescados Capitales

Huaca Pucllana

Owner/chef Gastón Acurio showcases Novoandino cuisine (modern preparations of indigenous ingredients) and international fare. Reservations highly recommended. Address: Calle Cantuarias 175, Miraﬂores; Tel: (511) 242 5387; Web: astridygaston.com

No reservations for seafood and traditional Limeño dishes at this upscale, fashionable eatery, another in Gastón Acurio’s culinary empire. Address: Avenida La Mar 770, Miraﬂores; Tel: (511) 421 3365; Web: lamarcebicheria.com

A mainstay for Mediterranean fare, the restaurant is increasingly featuring local ingredients and recipes. Address: Calle Atahualpa 201, Miraﬂores; Tel: (511) 4455705; Web: lagloriarestaurant.com

Nouveau criollo cuisine in a spectacular setting within the ancient adobe pyramid. Rustic colonial décor inside and outdoor terrace. Address: General Borgoño, Block 8 (Huaca Pucllana), Miraﬂores; Tel: (511) 4454042; Web: resthuacapucllana.com

LATIN TRADE 01-02/2011

ISTOCKPHOTO

Ultra-fresh seafood and ﬁsh at this spot renowned for its ceviche, served in an open, airy dining room. Address: Avenida La Mar 1337, Miraﬂores; Tel: (511) 421-8808; Web: pescados-capitales.com

BEST OF TRAVEL: READERS’ CHOICE

ECUADOR > TOP Hotels in Quito and Guayaquil QUITO

GUAYAQUIL

JW Marriott Hotel Quito

On-site restaurants serve Ecuadorian, Peruvian and international cuisine. Address: Orellana 1172 y Av. Amazonas; Tel: (5932) 297-2000; Web: Marriott.com

Sheraton Quito Hotel

In the city’s ﬁnancial and commercial zone, but easy reach of the colonial district. Address: Avenida Naciones Unidas y Avenida Republica de El Salvador; Tel: (5932) 2970002; Web: starwoodhotels.com/Sheraton

Hilton Colon Quito

Walking distance to the colonial Old Town, with ﬁve restaurants, heated pool and casino. Address: Amazonas N 1914 Y Patria Avenida 1, Quito, Ecuador 1701-3103; Tel: (5932) 2560666 Web: swissotel.com/quito

Swissôtel Quito

Holiday Inn Express Quito

Regular rooms as well as furnished apartments for extended stays. Address: Av. 12 de Octubre y 1820 Luis Cordero; Tel: (5932) 2256-7600; Web: swissotel.com/quito

Central location near the airport with antiseismic technology. Address: Av. Orellana N6-54 y Calle Reina; Tel: (5932) 2997300; Web: hiexpress.com

Hilton Colon Guayaquil

Sheraton Guayaquil

Courtyard by Marriott

Grand Hotel Guayaquil

Hotel Oro Verde Guayaquil

Sake

Sucre

Blu

City resort property has nearly 300 rooms and can hold events for up to 1,800 people. Address: Av. Francisco de Orellana Mz. 111; Tel: (5934) 268-9000; Web: www1.hilton.com

The hotel is in front of El Mall del Sol and just one mile from the World Trade Center. Address: Av Constitucion, Plaza Del Sol; Tel: (5934) 208-2088; Web: starwoodhotels. com/Sheraton

Free Internet, smoke-free and a designated table for working diners at its restaurant. Address: Francisco de Orellana #236; Tel: (5934) 600-9200; Web: marriott.com

This hotel shares a city block with the cathedral, which overlooks the property’s inner courtyard. Address: Boyaca entre Clemente Ballen y 10 de Agosto; Tel: (5934) 232-9690; Web: grandhotelguayaquil.com

An elegant boutique option downtown with three on-site restaurants. Address: 9 de Octubre y Garcia Moreno; Tel: (5934) 232-7999; Web: oroverdeguayaquil.com

Quito

ECUADOR > TOP Restaurants in Quito and Guayaquil QUITO

Zazu

El Atrio

Local ingredients in eclectic preparations at this hot spot. Address: Mariano Aguilera 331 y La Pradera; Tel: (5932) 254-3559; Web: zazuquito.com

San Telmo Bar Restaurante

Argentine-style steaks at an elegant New Town establishment. Address: Portugal 570 y Catalina Aldaz; Tel: (5932) 333-1944; Web: santelmorestaurant.com GUAYAQUIL

Creative fare overlooking the Plaza Foch — get a table near the tall windows for the best view. Address: Av. Reina Victoria N24-67 (Plaza Foch); Tel: (5932) 252-0581

La Belle Epoque in La Plaza Grande

Gourmet fusion dishes with panoramic views. Address: Calle Garcia Moreno N5-16, Chile de San Francisco; Tel: (5932) 256-6497

Matsuri

Caracol Azul

Simple spot serves well-priced sushi and Japanese dishes. Address: V.E. Estrada & Las Monjas, Urdesa; Tel: (5934) 288-550

Extensive menu showcases fresh seafood and ﬁsh. Address: 9 de Octubre 1918 y Los Rios; Tel: (5934) 228-0461

Japanese restaurant serves over 100 types of sushi. Address: Cicunvalacion Sur 110 y Victor Emilio Estrada; Tel: (5934) 288-7333; Web: sakeguayaquil.com

Pan-Asia fusion cuisine in a stylish setting. Address: C. C La Plaza local 1-C; Tel: (5934) 283-8066

Gourmet Mediterranean fare with décor to match. Address: Victor Emilio Estrada 701 y Ficus; Tel: (5934) 288-4954.

01-02/2011 LATIN TRADE

BEST OF TRAVEL: READERS’ CHOICE

VENEZUELA > TOP Hotels in Caracas

JW Marriott Hotel Caracas

Contemporary style downtown, across from the Centro Lido shopping mall and near the ﬁnancial and business districts. Address: Av. Venezuela con Calle Mohedano, El Rosal; Tel: (58) 212-957-2222; Web: marriott.com

Tamanaco InterContinental Caracas

In the heart of an upscale commercial and business district, with an outdoor pool. Address: Avenida Principal de las Mercedes; Tel: (58) 212-909-7111; Web: ichotelsgroup.com

Embassy Suites by Hilton Caracas

Across from the Centro Lido mall and immediately adjacent to a subway station. Address: Av. Francisco de Miranda con Av El Parque, Campo Alegre; Tel: (58) 212-7004200; Web: embassysuites1.hilton.com

Hotel Gran Meliá Caracas

The Hotel

Old-style grandeur in the Sabana Grande district, near El Recreo Mall. Address: Ave. Casanova, Urb. Bello Monte; Tel: (58) 212 762-8111; Web: gran-melia-caracas.com

Boutique property with rooftop lounges in the ﬁnancial district. Address: Calle Mohedano, el Rosal; Tel: (58) 212-951-3275 Web: thehotel.com.ve

Caracas

VENEZUELA > TOP Restaurants in Caracas

Lee Hamilton Steak House

Grilled meats and American standards in La Castellana. Address: Avenida San Felipe at El Bosque; Tel: (58) 212-261-0511.

Mezzanote

Italian specialties with dramatic vistas thanks to ﬂoor-to-ceiling windows. Address: Avenida Panorama, El Mirador; Tel: (58) 212-9938228.

LATIN TRADE 01-02/2011

Astrid y Gaston

Peruvian fusion dishes in Las Mercedes courtesy of Gaston Acurio’s regional chain. Address: Calle Londres, Quinta N° 1815; Tel: (58) 212-993-1119; Web: astridygaston.com

Restaurante Urrutia

Fashionable spot for Italian and Mediterrean cuisine, with an outdoor patio. Address: Cuarta Avenida, at the Quinta Transversal, Altamira; Tel: (58) 212-264-5762

Manolo Caracol

Spanish specialties at a family-run establishment; second location, Casa Urrutia, is in Las Mercedes. Address: Avenida Francisco Solano and Los Manguitos, Sabana Grande; Tel: (58) 212-763-0448

BEST OF TRAVEL: READERS’ CHOICE

CENTRAL AMERICA & THE CARIBBEAN > TOP Hotels PANAMA CITY, PANAMA

MANAGUA, NICARAGUA

InterContinental Miramar Panama

Great ocean views in the banking district, plus a conference and expo center. Address: Miramar Plaza, Balboa Avenue; Tel: (507) 206-8888; Web: miramarpanama.com

Panama Marriott Hotel

Smoke-free property in the ﬁnancial district with extensive meeting space and an on-site casino. Address: Ricardo Aragon & Cl 52; Tel: (507) 210-9100; Web: marriott.com

Le Méridien Panama

The ﬁrst urban location in Latin America for Le Méridien boasts a sleek, modern design. Address: Calle Uruguay and Balboa Avenue; Tel: (507) 297 3200; Web: starwoodhotels.com/lemeridien

Radisson Decapolis Hotel Panama City

A glass walkway connects to the MultiCentro, the mall that is also home to the Majestic Casino. Address: Avenida Balboa-Multicentro; Tel: (507) 215-5000; Web: radisson.com

Sheraton Panama Hotel and Convention Center

Real InterContinental Metrocentro Managua

In the capital’s new commercial center downtown, adjacent the largest mall. Address: Costado sur Centro Comercial Metrocentro Carretera Masaya; Tel: (505) 2276-8989; Web: ichotelsgroup.com/intercontinental

Crowne Plaza Managua

Convention facilities just ﬁve miles from the airport. Address: Octavia Calle Suroeste 101; Tel: (505) 2228-3530; Web: crowneplaza.com

Hilton Princess Managua

In the “Zona Viva” district in a complex that includes an ofﬁce tower and shops. Address: 14 Calle 2-51, Zona 10; Tel: (502) 2379-4444; Web: ichotelsgroup.com

Hotel Princess Reforma

Easy access to both the business districts and the airport. Address: 13 calle 7-65, zona 9; Tel: (502) 2423-0909; Web: hotelesprincess.com/en/guatemala

Real InterContinental San Salvador

Marriott San Jose

Sheraton Presidente San Salvador Hotel

Former colonial-era hacienda on a coffee plantation with meeting rooms and golf. Address: 700 meters west from Bridgestone/Firestone; Tel: (506) 2-298-0000; Web: marriott.com

Steps from restaurants, a short ride to the World Trade Center and corporate ofﬁces. Address: Ave. La Revolucion, Col. San Benito; Tel: (503) 2283-4000; Web: starwoodhotels.com/sheraton

Real InterContinental Hotel & Club Tower

Doubletree Cariari by Hilton San Jose

Resort-style hotel roughly halfway between the airport and downtown. Address: San Antonio de Belen, Ciudad Cariar; Tel: (506) 2-239-0022; Web: www1.hilton.com

SAN PEDRO SULA, HONDURAS

Real InterContinental Guatemala

SAN SALVADOR, EL SALVADOR

Crowne Plaza San Pedro Sula

Walking distance to the cathedral and less than a mile from the convention center. Address: Blvd. Morazan, 1 Calle 10 y 11 Avenida; Tel: (504) 550-8080; Web: crowneplaza.com

SAN JOSE, COSTA RICA

GUATEMALA CITY, GUATEMALA

Westin Camino Real

Adjacent to a large mall, with Mexican, Japanese and Brazilian restaurants on site. Address: Blvd. de los Heroes; Tel: (503) 22113333; Web: ichotelsgroup.com/intercontinental

In the suburb Escazú, with a new tower with private lobby, lounge and spa. Address: In front of the Multiplaza shopping mall; Tel: (506) 2208-2100; Web: ichotelsgroup.com/intercontinental

This hotel and convention complex is renovating rooms in 2011. Address: Avenida la Reforma y 14 Calle; Tel: (502) 2333-3000; Web: starwoodhotels.com/westin

Hilton Princess San Pedro Sula

Close to corporate centers and walking distance to restaurants. Address: Ave. Circunvalacion, 10 calle S.O.; Tel: (504) 2-556-9600; Web: www1.hilton.com

This downtown hotel recently renovated guest rooms. Address: Km 4.5 Carretera a Masaya; Tel: (505) 2255-5777; Web: www1.hilton.com

Across from the Atlapa Convention Center, with recently redecorated guest rooms. Address: Vía Israel y Calle 77, San Francisco; Tel: (507) 305-5100; Web: starwoodhotels.com/sheraton

Real InterContinental San Pedro Sula

15 minutes from the airport and adjacent to the Multiplaza shopping center. Address: Colonia Hernandez and Blvd. del Sur, Multiplaza Mall Tel: (504) 2545-2500; Web: ichotelsgroup.com/intercontinental

Hotel Princess San Salvador

Near the business district, guests get access to the Maya Country Club. Address: Av. Magnolias y Boulevard del Hipod; Tel: (503) 2268-4545; Web: www1.hilton.com SANTO DOMINGO, DOMINICAN REPUBLIC

InterContinental V Centenari

Hilton Santo Domingo

Holiday Inn Santo Domingo

Sea views and a casino within walking distance of the colonial and business districts. Address: Ave. George Washington 218 ; Tel: (809) 2210000; Web: ichotelsgroup.com/intercontinental

Five-year-old hotel has a nearly 4,000 square foot meetings complex. Address: George Washington Avenue, #500; Tel: (809) 685-0000; Web: www1.hilton.com

Located in the heart of the business district with meeting space for 150. Address: Avenida Abraham Lincoln 856; Tel: (809) 621-0000; Web: holidayinn.com

01-02/2011 LATIN TRADE

BEST OF TRAVEL: READERS’ CHOICE

PANAMA > TOP Restaurants in Panama City

Restaurante 1985

La Casa del Marisco

Fusion

Elegant French restaurant has an extensive wine list and remains open until midnight every day. Address: Calle Eusebio A. Morales; Tel: (507) 263-8571; Web: 1985.com

Venerable institution in the banking district – founded in 1965 – specializes in seafood. Address: Calle Manuel María Icaza; Tel: (507) 223-7755; Web: lacasadelmarisco-acha.com

Palms

Manolo Caracol

Eclectic fare in a hip atmosphere. A chic second-ﬂoor lounge has a bar and DJ music. Address: Calle 48 and Calle Uruguay; Tel: (507) 265-7256

The prix-ﬁxe multi-course menu changes daily, and showcases local ingredients. Address: Casco Viejo; Tel: (507) 228-0109; Web: manolocaracol.com

In the Radisson Decapolis, gourmet Asian-inspired fare with views of the glass-bottomed pool. Address: Avenidad Balboa; Tel: (507) 215-5000

CENTRAL AMERICA> TOP Restaurants GUATEMALA CITY, GUATEMALA

Hacienda Real

Wide variety of local and regional specialties in rooms with colonial-inspired décor. Address: 5ª Avenida 14-67, Zona 10 (one of three locations with a fourth opening soon) Tel: (502) 2380-8383; Web: hacienda-real.com

Jean François

Popular French eatery tucked inside an upscale shopping plaza. Address: Diagonal 6 13-63, zona 10; Tel: (502) 2368-0351

Tamarindos

Italian and Thai dishes, some fusion, some with a local twist. Address: Calle 2-19A, Zona 10; Tel: (502) 2360-2815; Web: tamarindos.com

La Marseillaise

French and international cuisine served in a villa-style house. Address: Los Robles, Calle Principal, #4; Tel: (505) 277-0224

Local, Italian and international specialties, plus outdoor dining, make this a popular choice for locals and visitors alike. Address: 15 Av 9 Cafe Mundo; Tel: (506) 2222-6190

Intermezzo del Bosque

SAN PEDRO SULA, HONDURAS

Elegant international cuisine in a colonial and garden setting with spectacular city views. Address: Del Colegio Centro América, 5 km al Sur; Tel: (505) 2271-1428 SAN JOSE , COSTA RICA

Le Monastère

French and international dishes served in a former monastery that overlooks the city. Address: San Rafael de Escazú, on the Santa Ana road from Escazú; Tel: (506) 2228-8515 or 2228-8516; Web: monastere-restaurant.com

MANAGUA, NICARAGUA

Los Ranchos

The popular steakhouse is famed for its grilled meat. Address: Carretera Sur km 3 1/2; Tel: (505) 266-0526

LATIN TRADE 01-02/2011

Grano de Oro

Europe meets Costa Rica at the hands of a French chef in a Victorian-tropical setting. Address: Calle 30, no. 251, between Avs. 2 and 4, Paseo Colón; Tel: (506) 2255-3322

Café Mundo

Restaurante Don Udo’s

Bonsai

Entre Pisco y Nazca

Gourmet continental cuisine in a colonial setting. Address: Avenida Mirador, Barrio El Centro, Copan Ruinas; Tel: (504) 651-4533 Web: donudos.com

Sushi, sashimi and a wide variety of Japanese dishes just two blocks from the Hotel Princess. Address: 14 Calle S.O.; Tel: (504) 553-5740

Gourmet continental cuisine in a colonial setting. Address: 6 Calle 18 (19 Avenida), Rio de Piedra; Tel: (504) 510-2752

BEST OF TRAVEL

Less is More Hoteliers look to limited service for large-scale growth BY MARK CHESNUT

dgy décor, gourmet restaurants and upscale amenities may draw accolades and a well-heeled clientele to Latin America’s posh hotels, yet the most powerful hospitality brands are turning their sights on less luxurious lodgings. From Marriott International’s plans to build 50 Fairfield Inns in Brazil to Accor’s rapid expansion of its Ibis portfolio around the region, hotel investors in Latin America are seeing stars, if only two or three, atop each

property. Over the past decade, international chains have successfully used their higher-end hotels to plant their flags in the region and build brand-name recognition, leveraging what one termed “the halo effect.” Even as major players add more upscale hotels and unveil their latest concepts in major metropolitan centers, demand is broader and deeper for their mid- and lower-tier offerings, industry executives say. Fueling the demand for the moderately priced lodgings are national and regional business travelers and Latin America’s burgeoning middle classes with their increasingly attractive domestic travel patterns. Both groups want value, hotel executives report, and are increasingly brand-conscious, looking for consistent standards and conveniences like reward programs that the larger chains offer. In many cases, limited-service brands are opening where fivestar properties are not feasible, said Danny Hughes, senior vice president for the Caribbean, Mexico and Latin America at Hilton Worldwide. “There are so many secondary cities where building a fullservice Hilton is, A, prohibitively expensive and, B, the city doesn’t necessarily need one,” Hughes said. “We’ve got a lot of growth

opportunities both in the Hampton Inn brand and the Hilton Garden Inn brand,” he said, adding that Hilton Worldwide plans to open four new Hampton Inns in Mexico by the end of 2013. Businesses across the board are opening up to opportunities in secondary cities. Countries like Colombia, Argentina and Brazil have major agribusiness centers, for example, that are home to significant wealth, said Tom Potter, Hilton’s area vice president for South America and Panama, in a separate interview. As an example, Potter cited São José dos Campos, the Brazilian industrial and research city located between São Paulo and Rio. São Jose dos Campos “has a gross domestic product greater than that of Paraguay,” he said. The lower construction and other costs associated with limitedservice brands attract a broader pool of potential developers. “More investors are seeing that they can get a high return for their investment” on limited-service properties, according to Salo Smaletz, regional vice president of development — Latin America, InterContinental Hotels Group. “The formula for the investor is an interesting one, because limited service means limited staff. You’re saving on work force, you’re saving on payroll,” Smaletz said. “That, for the investor, means higher returns. It’s quite simple to make the math for them.” IHG’s newest hotels in the region included Holiday Inn Express in Rosario, Argentina and in Cuiabá, Brazil; Holiday Inns in Manaus and Sño José. A separate division of IHG handles Mexico, which saw the debuts of both a Crowne Plaza and a Staybridge Suites in the central city of Queretero, an important industrial and manufacturing center with corporate residents like Canada’s aerospace company, Bombardier, among other openings last year. Limited service usually also means smaller hotels, which require a smaller investment in real estate, said Roland Mouly, vice president of development for the Caribbean, Mexico and Latin

01-02/2011 LATIN TRADE

BEST OF TRAVEL

America at Carlson Hotels, whose biggest brand in Latin America is the business-oriented Radisson. “Land prices are shooting up dramatically,” he told Latin Trade. “And when that happens you’ve got a problem because to do a large property with a lot of public space is very expensive.” Some mid-scale hotels, like Accor’s Mercure or Starwood’s Four Points by Sheraton, may have a restaurant and bar, but less space is devoted to these services. Others, like IHG’s Holiday Inn Express, are even more streamlined, forgoing such amenities in favor of limited breakfast service and lower operating expenses. “Where you can focus more on rooms … it becomes more feasible to play in that segment,” Mouly said. “And that’s what

they’ve told me in Brazil: They can’t afford to go too upscale.” Carlson’s Ambition 2015 plan, intended to expand the company’s global hotel portfolio by at least 50 percent within the next five years, has resulted in three senior-level appointments in Latin America, effective in January. Carlson’s former managing director for Asia Pacific, Jean-Marc Basuto, has been tapped for the Mexico City-based position of area vice president, Latin America. Busato will relocate to Mexico in the first quarter and will work closely with subsidiary Radisson and with Atlantica Hotels International, a master franchisor that owns and operates some 60 hotels in Brazil. Carlson has targeted the two biggest markets for its mid-level

2010 HOTEL OPENINGS Country

Argentina Argentina Argentina Argentina Brazil Brazil Brazil Brazil Brazil Brazil Chile Chile Chile Colombia Colombia Costa Rica El Salvador Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Panama Panama Peru Peru Uruguay Venezuela Venezuela

City

Cordoba Mendoza Rosario Zapala Cuiabá Maceió Manaus Manaus São José São Luis Antofagasta Santiago Santiago Barranquilla Bogota San Jose San Salvador Ciudad Juarez Cancun Hermosillo Mexico City Mexico City Poza Rica Queretaro Queretaro Panama City Panama City Paracas Sacred Valley Punta del Este Maracaibo Valencia

Hotel

Howard Johnson Hotel Cordoba InterContinental Mendoza Holiday Inn Express Rosario Howard Johnson Plaza Zapala Holiday Inn Express Cuiabá Mercure Maceió Pajuçara Holiday Inn Manaus Park Suites Manaus ibis São José Holiday Inn São Luís ibis Antofagasta ibis Santiago Estación Central Radisson Petra La Dehesa Hotel Howard Johnson Hotel Versalles Barranquilla ibis Bogotá Museo Days Hotel San Jose Crowne Plaza San Salvador ibis Ciudad Juarez Consulado Ramada Cancun City ibis Hermosillo Ramada Via Veneto Mexico City South The Westin Santa Fe Holiday Inn Poza Rica Aeropuerto Crowne Plaza Queretaro Staybridge Suites Queretaro Doubletree By Hilton Rui Panama Plaza Paracas Hotel Tambo del Inka Resort & Spa Fasano Las Piedras Hotel InterContinental Maracaibo Embassy Suites Valencia

SOURCES: Company reports, Latin Business Chronicle, Latin Trade research

LATIN TRADE 01-02/2011

Corporate Afﬁliation

Opened

Wyndham IHG IHG Wyndham IHG Accor IHG Carlson Accor IHG Accor Accor Carlson Wyndham Accor Wyndham IHG Accor Wyndham Accor Wyndham Starwood IHG IHG IHG Hilton Rui Hotel & Resorts Starwood Starwood Fasano IHG Hilton

September September January May November November February April January February November December October May August August May December February September July August June July October December September January May December November August

BEST OF TRAVEL

brands: In Mexico this means Country Inns & Suites and Park Inn for Brazil. Limited-service brands are more flexible for the region, Mouly said. “Park Inn is a brand that we can adapt very easily for conversion,” he said. “That helps us because we can go in to older properties and reposition them to give them a contemporary style and look.” However, for most international chains, converting an existing property is complex, even as they regularly field queries. Interested owners often operate older facilities that fall short of contemporary safety standards that the international operators require. Retrofitting a building with the likes of hard-wired smoke

detectors, sprinkler systems, self-closing doors with peep holes and a second staircase can necessitate a significant outlay on top of the expense of furnishings and cosmetic changes associated with a reflagging. Often the high costs scuttle potential deals. And unlike other regions, individual and family owners dominate Latin America’s hotel industry. Financing options are severely limited. Given the lack of deep-pocketed corporate and investor groups or other sources of capital, the pace of regional development of hotels has fallen short of the demand. Even in a country like Brazil, whose economy is booming, few banks are lending, said Roland de Bonadona, Accor’s CEO for South and Central America.

IN THE PIPELINE FOR 2011 Country

Argentina Argentina Argentina Argentina Argentina Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Chile Chile Colombia Colombia Colombia Costa Rica Costa Rica Mexico Mexico Mexico Mexico Mexico Mexico Panama Panama Panama Panama Panama Peru Peru

City

Buenos Aires Buenos Aires Buenos Aires Iguazu Ushuaia Belem Cuiabá Goiânia Maceió Natal Porto Alegre Porto Velho Rio de Janeiro Santos Santiago Villarica Bogota Bogota Cartagena San Jose Guanacaste Campeche Cancun Chiapas Guadalajara Mexico City San Luis Potosi Panama City Panama City Panama City Panama City Panama City Cusco Lima

Hotel

Holiday Inn Buenos Aires Ezeiza – Airport InterContinental Nordelta Buenos Aires Crowne Plaza San Eliseo Hilton Iguazu Resort Hilton Ushuaia Holiday Inn Express Belem Novotel Cuiabá Mercure Goiânia Holiday Inn Express Maceio Meliá Jacuma Novotel Porto Alegre Holiday Inn Express Porto Velho Mercure Nova Iguaçu Mercure Santos Clube XV Hilton Garden Inn Santiago Airport Villarrica Park Lake Hotel & Spa Hilton Bogota Holiday Inn Bogota Airport Holiday Inn Cartagena Holiday Inn Escazú Westin Playa Conchal Resort & Spa Westin Campeche Resort & Spa ibis Cancun Centro Hilton Garden Inn Tuxtla Gutierrez Westin Guadalajara Doubletree Mexico City ibis San Luis Potosi Hilton Panama Renaissance Panama Financial District Panamera, A Waldorf Astoria Hotel Trump Ocean Club Westin Playa Bonita Panama Palacio del Inka The Westin Libertador Lima

Corporate Afﬁliation IHG IHG IHG Hilton Hilton IHG Accor Accor IHG Sol Meliá Accor IHG Accor Accor Hilton Starwood Hilton IHG IHG IHG Starwood Starwood Accor Hilton Starwood Hilton Accor Hilton Marriott Hilton Trump Starwood Starwood Starwood

Expected Opening June May June October November August June April November June August November June May April December July June June April May June January March June September June September 3rd quarter August April October June May

01-02/2011 LATIN TRADE

BEST OF TRAVEL

“In Brazil the only source of financing is BNDES [the Brazilian development bank],” said the São Paulo-based de Bonadona at the South American Hotel and Investment Conference, in Cartagena, Colombia, in late September. The Paris-headquartered Accor operates 142 hotels in Brazil alone and has another 72 in the pipeline. “Brazil is the country that offers the best opportunities” in the region, said Gilles Gonzalez, development director for Accor Latin America, which includes all of the region except Mexico. With brands like the luxury Sofitel, midtier Novotel and Mercure and the budgetfriendly Ibis, the company aims to reach 300 hotels in South and Central America by 2015. Of the planned openings, 62 percent will be in what Gonzalez terms the “eco and budget” category, about one-third in mid-scale and only 7 percent in the upscale category. The French company is the leading hotelier in Latin America by number of hotels. Key to that distinction is Accor’s willingness and ability to partner with other investors in its properties. Virtually all the other international competitors seek management contracts for their branded hotels, but they do not hold equity stakes. “Hilton is prepared to invest some money but not like Accor,” said Ted Middleton, Hilton Worldwide’s senior vice president of hotel development and finance for the Americas, at the Cartagena conference. Brazil is just too big for any international chain to ignore. “There are 200 million people in Brazil, and 350 million in the U.S.,” said Hilton’s Hughes. “If you compare that to the number of hotels that we have—or anyone else has— in Brazil, there is just enormous potential.” The rise of the middle class in Brazil is creating consumers with disposable income and leisure time. “If you’ve taken 20 million people out of poverty in the last four years and you’re going to take 20 million more out of poverty, you can see how much [hotel product] needs to be manufactured,” said Andrew Houghton, area vice president of operations for the Caribbean, Argentina, Chile and Brazil at Marriott International. The Marriott group announced a partnership agreement with PDG Realty, based in Rio de Janeiro, to

LATIN TRADE 01-02/2011

develop 50 Fairfield by Marriott hotels. Marriott is adapting its format to local needs. Guest rooms at the planned Fairfield hotels in Brazil, for example, will measure about 200 square feet, versus the standard 300-square-foot size in North America. In addition, Marriott will furnish a larger percentage of the rooms with two beds, since companies in Brazil often require their business travelers to share rooms. Demand for new hotel rooms is huge because of two massive sporting events—the 2014 World Cup and the 2016 Summer Olympics in Rio. The industry has announced 9,000 new hotel rooms since the city won the bid to host the Olympic games. Brazil’s fast-growing discount airlines, Azul and Gol, are also playing an important role in tourism and hotel development, according to industry executives. “The trigger point for a lot of these new markets is airlift, access and improved infrastructure,” said Ricardo Suarez, vice president for acquisitions and development in the Latin American division at Starwood Hotels & Resorts. “Once those things begin to take shape in certain markets, we see places that you probably wouldn’t think of today that we think will have great potential and great demand for hotel product.” Starwood is looking at projects in cities like Manaus and Fortaleza, as well as for opportunities to complement its existing properties in Rio and São Paulo. But Brazil is not the only focus. Coming off years of political instability, Bogota is playing catch-up on the hotel front. The capital and other Colombian cities are reaping the benefits of expanded air service, including new flights by low-cost U.S. carriers like Jet Blue. In mid-2010, the Wyndham Hotel Group finalized its acquisition of the mid-priced, limited-service chain TRYP from Sol Meliá Hotels & Resorts, the Spanish operator. With hotels already up and running in Buenos Aires, São Paulo and Montevideo, a TRYP in Medellin is in the works. Accor anticipates opening at least 10 ibis over the next few years in Colombia alone. It has introduced the brand to Chile and is targeting Lima, Peru, where the company already operates both a Sofitel and a Novotel.

LT readers weigh in on ﬂying right From cabin comfort to efﬁcient check-in procedures and more, Latin Trade asked travel survey participants to evaluate the airlines that serve Latin America in seven categories. Here we present the top three performers in each category, as determined by our readers.

Business Class No. 1 TAM No. 2 LAN No. 3 Copa Cabin Comfort & Service No. 1 LAN No. 2 TAM No. 3 Avianca Food & Beverage Service No. 1 Avianca No. 2 LAN No. 3 Delta Frequent Flyer Program No. 1 American No. 2 LAN No. 3 Copa Ticketing & Boarding No. 1 Delta No. 2 LAN No. 3 American / TAM* *Tie On-time Performance No. 1 Avianca No. 2 LAN No. 3 American Airline Lounges No. 1 LAN No. 2 Copa No. 3 American

ROAD RITUALS: TIPS FROM TRAVEL PROS

ROAD WARRIOR TITLE & COMPANY

Trip Barrett VP, Brand Management, Latin America, Starwood Hotel & Resorts Miami

Roland de Bonadona CEO, Accor America Latina

Alvaro Diago COO, Latin America and Caribbean, InterContinental Hotels Group Miami

Denise Estefan President, Radisson Hotels Latin America

Danny Hughes SVP, Caribbean, Mexico and Latin America, Hilton Worldwide

Rob Steigerwald Chief Operations Ofﬁcer, Americas South, Marriott International

Miami

Twice monthly in Brazil, monthly to rest of the region

30-35 weeks a year

Visits in-region properties monthly

Almost always

Bethesda, Maryland y Every other week

ON THE ROAD

At least half the year

BIG PROJECTS FOR 2011

four Westins: Lima will be ﬁrst city in South America for the brand

Debuts of ibis in Peru, Pullman in Brazil; launch of Formule 1 in more cities in Brazil

nine openings, including the InterContinental Nordelta Buenos Aires

First-quarter signing in Buenos Aires, hoping to announce second hotel in Bogota

eight openings, with brand debuts in Santiago, Bogota and Panama City

JW Marriott in Cusco, Peru

BEST TRAVEL TIP

Use ﬂight time to sleep or relax, not work

Bring an iPod and headphones, like Bose, to make waits in long lines less stressful

Enjoy where you are. Make friends where you visit and call them

For women: wear ﬂats!

Drink lots of water; pack a charger, digital camera; check on cell phone service ahead of time

Never check luggage

NEVER TRAVELS WITHOUT

Workout gear, extra USBs with back-up copies of presentations

Lightweight luggage, backup jacket and trousers

If it is for pleasure, loved ones

Conﬁrmation numbers, iPad, iPhone

iPad, sneakers, family photo and return ticket

Bose headphones

Service issues at U.S. airlines’ domestic club lounges

Lack of leg room and space for computer work

The hassles of airport security

Waiting in lines and waiting for luggage

Airlines’ procedures and lack of honesty about delays

Not being able to connect — via wireless or other means

FAVORITE CITY TO VISIT IN LATIN AMERICA

Mexico City, for diverse cultural, business offerings

Cartagena, for its beautiful historic center

“Too many to choose one”

Bogota, her hometown

“Not fair to highlight just one city”

“Every city in the region has its own unique place for me”

RECOMMENDED RESTAURANT

Café O in Lomas in Mexico City

DOM in São Paulo “A must when Alex Attala is in the kitchen”

Astrid y Gastón, La Rosa Nautica in Lima begin an “endless” list

Rafael in Lima

Andres Carne de Res in Bogota

Stays within hotels even for dinners and entertainment

BIGGEST SHIFT IN REGIONAL BUSINESS TRAVEL SINCE 2000

Expanded service, often direct, to secondary cities

Incredible increase in air travelers

The growing middle-class, fueling intraregional travel

Bargain hunting: “May explain spike in select service projects”

Airlift: “Travel to Latin America has grown exceptionally”

Tremendous growth, especially in Brazil and Colombia

WiFi in hotels and airport lounges; “lie-ﬂat” seats in business class

Technology making reservations and check-in easier

Advent of the smartphone and mobile email

Smartphones

Smartphones: “a blessing and a curse”

Technology and performance

Panama City: “Fascinating growth and strategic location”

Colombia: “Could catch up with Argentina as a business and leisure destination”

Cities in northeast Brazil; Panama City; Guayaquil, Ecuador

Mendoza, Argentina

Bogota and Lima

Bogota

BASED IN

PET PEEVE WHEN TRAVELING

BIGGEST INNOVATION IN BUSINESS TRAVEL SINCE 2000 UP-AND-COMING OR UNDERRATED CITY OR REGION

São Paulo

01-02/2011 LATIN TRADE

2010 MERGERS & ACQUISITIONS

of the Year Mexico’s biggest corporations jumped back into deal making in 2010 after spending most of 2009 on the sidelines. The biggest merger or acquisition of 2010— América Móvil’s $33 billion consolidation of its Latin American holdings—was larger than the previous year’s top 10 deals combined. Brazil also figured heavily in M&A activity for the year, with five of the top 10 deals involving Brazilian companies. Here are Latin Trade’s picks of the year’s most significant deals.

LATIN TRADE 01-02/2011

DEAL OF THE YEAR: “THE GAME CHANGER” América Móvil completed the biggest deal of the year in June with the acquisition of Carso Global Telecom shares for $27.5 billion and Telmex International shares for $5.5 billion. The three companies, all controlled by Mexican telecommunications mogul Carlos Slim, have been integrated under the flag of América Móvil. The company offers fixed-line, Internet and wireless services throughout much of the region but faces tougher competition. The mega-deal delivers some savings and positions América Móvil to better compete with Spain’s Telefónica, especially in Brazil. Thanks to the merger, América Móvil becomes the fourth-largest company in the region with combined revenue of almost $50 billion, exceeded only by state-owned oil giants Petrobras, Petróleos Mexicanos and Petróleos de Venezuela.

2010 MERGERS & ACQUISITIONS

THE “HIGHFLYING” DEAL In one of the most emblematic signs of regional integration, two of the largest regional airlines are joining forces to create what will be known, fittingly, as LATAM Airlines Group. LAN Airlines, the carrier based in Santiago, signed an agreement to acquire Brazil’s TAM for $6.5 billion on Aug. 13 in a deal that would create the largest airline in Latin America. Once the merger is completed, expected in mid-2011, the new airline group would be traded under the stock symbol LATAM, but the two airlines would continue to be run as separate units.

THE “NEW PLAYERS” DEALS The arrival of Chinese investments to the region was underscored by the outsized $7.1 billion that Chinese refiner Sinopec Group spent to acquire 40 percent of Repsol Brasil, part of the Spanish oil producer’s holdings in Latin America. The funding will help Repsol develop its deposits in newly oil-rich Brazil. The deal was announced in early October. But Latin American links with Asia are not just about China. ONGC Videsh Ltd., the wholly owned subsidiary of India’s Oil and Natural Gas Corporation (ONGC), led a consortium that acquired a 40 percent stake in the Venezuelan oil field Carabobo-1 for $4.8 billion in June. Among the consortium investors are Indian Oil Corp. and Oil

India, both state-run companies, as well as Spain’s Repsol and Malaysia’s Petronas. The majority partner in the project is a unit of Venezuela’s staterun oil company, Petróleos de Venezuela. The Carabobo-1 project is scheduled to start oil production in 2013. The deal signals the need of India, with a population of one billion, to secure energy sources around the world.

THE “TOO BIG TO IGNORE” DEAL Brazil’s Petrobras finalized a secondary stock offering that raised $67 billion, setting a new record for IPOs worldwide. As part of the deal, the company issued $42.5 billion in stock to the Brazilian government in exchange for the right to develop five billion barrels of oil reserves. Brazil’s oil prospects have picked up after the discovery of massive oil reserves located in deep offshore deposits under a layer of salt.

HONORABLE MENTION: THE “MAINTAINING STRATEGY” DEAL Grupo Bimbo signaled it still has an appetite for bakery companies with the announcement in November that it was buying Sara Lee’s North American bakery business for $959 million. Although the deal is smaller than Bimbo’s previous acquisitions, it earns Mexico’s largest food manufacturer an honorable mention for staying the course. The purchase of Sara Lee bread brands boosts the Mexican bakery group’s

revenue outside Mexico, a strategy Bimbo expects to uphold. It plans to invest $1 billion in its U.S. operations in the next five years, according to Gary Prince, president of Bimbo Bakeries USA.

OTHER TOP DEALS • Telefónica, the Spanish telecommunications giant, acquired Brasilcel for $9.75 billion in a deal finalized Sept. 27. In an effort to control Vivo, Brazil’s leading mobile phone company, Telefónica waged a protracted battle with Portugal Telecom to gain a 100 percent ownership of Brasilcel, which controls 60 percent of Vivo. In the end, Telefónica won. • Heineken, the Dutch beer group, bought the beer-making unit of Femsa, a Mexican company, in an all-share deal valued at $7.9 billion. The purchase made Femsa one of the major shareholders in Heineken and allowed it to exit the beer business in Mexico and concentrate on its other sectors, from soft drinks to mini stores. • Shell International Petroleum Company and Cosan, a Brazilian producer of ethanol, have inked a $4.92 billion deal to create a joint venture to produce and sell ethanol and sugar internationally. Such a venture is estimated to be worth $12 billion. The merger with Shell gives Cosan a deep-pocketed partner and allows Shell to tap into the growing biofuels sector. The combined company would be the third-largest fuel distributor in Brazil.

• Norsk Hydro, the thirdlargest aluminum producer in Europe, announced in May the acquisition of the aluminum assets of Brazilian iron ore powerhouse Vale. The $4.9 billion cash and stock deal gives Norsk access to raw materials, including control of Paragominas—the third-largest bauxite mine in the world—and to the largest alumina refinery. Vale, which invested heavily in its aluminum division but faced rising energy costs, will hold a 22 percent position in Norsk, while the Norwegian government’s share in the aluminum producer will be reduced to 35 percent. • Brazil’s Braskem acquired rival Quattor Participaçãos for $4.1 billion to become the largest petrochemical company in Brazil and the largest maker of resin in the hemisphere. The deal, completed in April, was arranged through an investment agreement signed by oil giant Petrobras, the Brazilian construction firm Odebrecht, Braskem and petrochemical company UNIPAR. Under this agreement, Petrobras and Odebrecht will establish a new holding company to invest and Braskem will increase its own capital, while acquiring the stakes and shares held by UNIPAR. The deal is intended to help Braskem expand internationally in order to produce thermoplastic resins that are used extensively in manufacturing products like bottles for water and other beverages and Lego toy blocks.

01-02/2011 LATIN TRADE

2010 MERGERS & ACQUISITIONS

Just 20 years ago, Slim led the consortium that included Southwestern Bell and French Telecom to acquire Teléfonos de México for $1.7 billion from the Mexican government.

Slim, América Móvil make waves in 2010 BY DAVID AGREN

MEXICO CITY — Mexico’s Carlos Slim bolstered his standing as Latin America’s most iconic magnate in the past year when Forbes crowned him the richest man in the world and his 43-yearold son and namesake married in a wedding attended by a global line-up of political, business and cultural glitterati. But in a sign that the Mexican billionaire has lost little of his relentless pursuit to protect his telecommunications empire, Slim integrated his fixed-line, mobile and Internet operations in a $33 billion merger in a bold bid to shore up earnings. In the largest merger by far in the region last year, Slim’s mobile-phone operator, América Móvil, acquired its parent, Carso Global Telecom, which controls the fixed-line Teléfonos de México, or Telmex, as well as Telmex International. With this transaction, overseen by Daniel Hajj, the CEO of América Móvil, Slim’s son-in-law and possible heir apparent, the Mexican company vaulted past its rival, Spain’s Telefónica, to cement

LATIN TRADE 01-02/2011

its position as the largest telecommunications company in the region. The acquisition delisted both Carso Global, which was 82.7 percent owned by Slim, and Telmex International, which was 60.7 percent controlled by Carso Global. The deal positions América Móvil to stake a bigger claim in the expanding market for broadband Internet access and wireless telephony throughout the Americas. As of the end of September, América Móvil had 216.8 million cellular subscribers in 18 countries stretching from the United States to Argentina, making it the fourth-largest mobile telephone provider in the world after China Mobile, Vodafone and Telefónica. So far there are no announced plans to consolidate the fixedline operator Telmex and América Móvil into one operation. América Móvil, which was spun off from Telmex in 2001, experienced double-digit growth until 2008, but such heated expansion has slowed. Revenue growth has been lagging at Telmex as well as young

consumers forego land lines for wireless and cable companies claim market share. Just 20 years ago, Slim led the consortium including Southwestern Bell and French Telecom that acquired Teléfonos de México for $1.7 billion from the Mexican government. At the time, Slim’s telecom holdings were a fraction of those of the Spanish telephone operator, Telefónica, which had paid $2.8 to purchase the Argentine telephone company, $2 billion for the Peru’s telephone company and $4.9 billion for Brazil’s Telebras, among other investments in Latin America. In 2010, Telmex generated $1.7 billion — an amount equal to the purchase price — in cash flow in its operations in Mexico, where it controls about 80 percent of the fixed lines. América Móvil has a 71-percent share of Mexico’s wireless market under its Telcel brand, compared to Telefónica Movistar’s 21 percent. But Slim, now estimated to be worth $54 billion, faces an increasingly difficult environment in Mexico, where

the government of President Felipe Calderón has blocked Telmex from offering packages that combine telephone, pay television and Internet services while giving the green light to cable operators to sell the so-called triple-play combos. Telefónica has joined Televisa and Megacable in a joint venture to offer these packages. In contrast to past administrations, Mexican authorities have taken a harder line on the near monopolies of some of Slim’s companies and have dangled the prospect of triple play to extract concessions. Although Slim has not always seen eye to eye on Mexico’s economic policy under the Calderón government, the president and his wife, Margarita, were among the 1,500 guests attending the opulent October wedding of Carlos Slim Domit to 27-yearold María Elena Torruca. But unlike the situation in Mexico, the merger will enable América Móvil to tap the potential of “integrated communications services in the region,” the company said when it unveiled plans for

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2010 MERGERS & ACQUISITIONS

High-flying deal creates the region’s biggest airline BY THIERRY OGIER The merger of Chile’s LAN Airlines and Brazil’s TAM— aptly named LATAM Airlines—underscores the relentless pace of globalization. Gone are the national or even regional titles. Some companies are choosing to go continental to compete. “This is a continuation of the tendency to seek to be pan-continental,” said Andrew Jánszky, managing partner with the São Paulo office of the international law firm Milbank, Tweed, Hadley & McCloy. LAN, the region’s largest airline, and TAM, the largest in Brazil, plan to close the $3.7 billion deal in the second quarter as long as they receive approval from both Brazilian and Chilean antitrust authorities, which is expected. Although the announcement of the merger took the airline industry by surprise, analysts have applauded it as a bold strategy in a region where carriers have experienced higher profits than in other parts of the world but still struggle with a complicated route structure. “The airline industry as a whole will benefit,” said Respicio de Espirito Santo Junior, an air-transport professor at the Polytechnical Institute of the Federal University of Rio de Janeiro. “It will lead other airlines to become more aggressive and maybe move toward more mergers.” Espirito Santo said that at the top of his list for mergers are Gol, which is TAM’s main competitor in Brazil, and the Panama City-based Copa Airlines, another carrier active in the acquisition field. “Copa Airlines may also be an excellent partner for Gol,” he suggested. While LAN and TAM will become LATAM under merger plans, the two airlines will maintain their respective brands and operations. But the new carrier will be able to reduce costs through consolidation and plan a more efficient route schedule across South America, Espirito Santo said. “There will be a definite gain from the Brazilian side in terms of air freight, as LAN already has a strong cargo division and TAM doesn’t,” said Espirito Santo, who also chairs the Brazilian Institute of Strategic Studies and Public Policies in Air Transport. The air-transport expert predicted that integration of the mileage programs will take a year or more and could have a big effect on global airline alliances. “They will have to choose,” said Espirito Santo, who favors the Star Alliance, where TAM is a member, over One World, which includes LAN in its grouping. Star Alliance is led by carriers Continental, United and Lufthansa, while the biggest airline in One World is American Airlines. “Star Alliance will give the new company much greater operational synergies than One World,” he said.

LATIN TRADE 01-02/2011

its merger. These triple-play packages are driving revenue growth in the telecommunications business. For the moment, the promising markets for triple play are Colombia and especially Brazil, where Slim controls fixed-line phone company Embratel and América Móvil’s unit, Claro. “The main synergy opportunity is in Brazil, where today Claro and Embratel are run as separate companies and should be merged over the medium term,” said a 2010 client note from Credit Suisse analysts Andrew Campbell and Juan Esteban Moctezuma. The Credit Suisse note predicted that the “weak fundamentals” at Telmex would not be a major drag on América Móvil’s earnings because nearly 80 percent stem from the wireless business. The company took a step toward offering the triple play in August when Embratel increased its stake in the pay-television provider Net Serviços de Comunicação, or NETC. Brazilian law prohibits foreign majority control of cable TV providers. América Móvil also said late last year that it was already testing triple-play packages in Colombia. Another factor that contributed to the integration is the growing importance of network capacity for Internet and data services. Demand has been skyrocketing with the popularity of iPhones and other smartphones. Most wireless companies rely on copper to connect their cell towers to the main network and lack fiber-optic lines, which can accommodate more

data and which fixed-line operators often have in abundance. Tomás Lajous, the executive director of UBS Mexico Strategy & Research, called the merger “necessary” for Slim’s conglomerate. “With the merger, América Móvil now has the largest telecommunications infrastructure asset in the world,” Lajous said. “The company is building an undersea cable to link the United States with Colombia and Brazil,” thereby finishing a loop around the continent. The merger is part of a global trend for telecom companies, independent telecom analyst Carlos Silva Ponce de León said. “It’s a tendency we’re seeing all over the world,” he said. Some analysts, looking at the weak fundamentals at Telmex, took a more skeptical view about the record-setting merger. James Ratzer, an analyst at London-based New Street Research, suggested it was a way for Slim to pay himself a premium for his holdings. “We believe that the main driver for the deal was not cost or revenue synergies, but Carlos Slim’s desire to use América Móvil minorities to buy out his stake in Telmex and Telmex Internacional at a generous price,” Ratzer said in a research note in June. Slim rejected such skepticism and took a different view of the whole transaction. “There’s no merger of any kind,” Slim told reporters last year. “What there is, there’s a corporate restructuring of both businesses.” It should keep Slim and his telecom empire making headlines for much of 2011.

2010 MERGERS & ACQUISITIONS

Burst of M&A Activity Keeps Bankers Busy

Asian corporations from Beijing to Seoul have been snapping up Latin America commodity plays “like popcorn at the movies,” says one regional executive.

BY RON BUCHANAN MEXICO CITY – Spanish, British and U.S. companies have long scoured the region in search of private and staterun companies to acquire. But Chinese and other Asian companies are leading the charge to purchase worthy assets in Latin America. Booming economic growth and the resilience of corporate powerhouses in the region helped drive the pace of mergers and acquisitions throughout Latin America in 2010. But that was without considering the appetite of deep-pocketed Asian companies. One regional banker said that Asian corporations from Beijing to Seoul have been snapping up commodity plays “like popcorn at the movies.” The pace quickened to the rate of some $10 billion in deals in 2010, or about three times the annual rate over the past five years. China especially needs raw materials to feed its economic growth. As the global economic crisis abates, multinationals are once again looking for growth, often to be had through an acquisition. And their ranks include Latin American corporations as well as those headquartered in the United States, Europe and Asia. The homegrown companies and conglomerates that have achieved success and

expansion within the region and now seek opportunities elsewhere are increasingly important in the international M&A scene. “With the emergence of strong Latin American players with regional and global ambitions, cross-border capital flows in and out of the region are going to be more balanced,” predicted Martin Sanchez, head of mergers and acquisitions for Latin America with Bank of America Merrill Lynch. Early in 2010, the Brazilian mining giant Vale announced it would pay $3.8 billion to buy the fertilizer assets in Brazil of U.S.-based Bunge. Vale has a track record of extra-regional, strategic acquisitions: Some four years ago it bought the Canadian nickel producer Inco for $18.2 billion, beating out suitors from Canada and the United States. Though the value of mergers and acquisitions worldwide plunged by 27 percent in 2009, Latin America emerged relatively unscathed with a dip of less than 10 percent that year. Regional activity more than bounced back in 2010 as economic growth, combined with the healthy finances of the region, whetted appetites for acquisitions. The value of announced M&A deals involv-

ing a Latin American company doubled in 2010 compared to 2009, to $220 billion, according to Thomson Reuters data that further showed that Brazil alone accounted for $104 billion in M&As. “This is the region to be in,” said Marcus Silberman, head of Latin American mergers and acquisitions at Credit Suisse, which is the leading bank in the M&A arena in Latin America for the second consecutive year. “This trend will continue, going at a very fast pace.” Silberman attributes Credit Suisse’s success to a panregional approach and its ability to identify trends — especially the fast-emerging Chinese companies. For instance, Credit Suisse was the financial advisor for the Brazilian company EBX when it sold a 21.5 percent share in its iron-ore miner MMX to Chinese steelmaker Wisco for $400 million. BNP Paribas was the exclusive financial advisor to Wisco. The deal was hailed as a milestone in the history of mergers and acquisitions in the region, and it triggered a series of commodities plays. In September 2010, SK Networks of South Korea invested $700 million to also buy a stake in MMX. Then, SK Network’s sister company, SK Energy, sold its oil inter-

ests in Brazil to Maersk Oil, the oil exploration and production arms of Denmark’s AP Moller-Maersk, a huge freight and shipping line. Brazil, with its huge reservoir of natural resources, robust local economy and associated opportunities, has been a target for companies around the world. Brazil has further eclipsed Mexico as the main focus for multinationals. Its huge size advantage and booming economy are major factors. But Mexico is also seen as a market with mature corporations that do not lend themselves to takeover bids. “The strength of Mexican corporations, coupled with the high degree of consolidation in the market, leaves fewer openings for multinationals seeking growth,” Sanchez argued. Mexico’s dependence on the U.S. economy was underscored in 2009, when its economy contracted by 6.5 percent after the collapse of the U.S. market in the throes of the mortgage crisis. Over the same period, commodity exports to Asia kept the Brazil economy mostly on track. Not that Mexico has been overlooked. Dutch brewer Heineken added some froth to mergers and acquisitions by buying Femsa’s beer interests for $5.7 billion. And some

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2010 MERGERS & ACQUISITIONS

Mexican corporations, notably mega-baker Grupo Bimbo and the Monterrey-based Alfa industrial group, have continued to snap up assets in the United States. In a key shift, Sanchez said Mexican corporations have reached a comfort level in the United States and are no longer merely pursuing opportunities among the fast-growing U.S. Hispanic population. “They are confident there,” Sanchez said. “They know the overall market in the U.S.,

and they have been getting to know it well.” The Mexicans are not alone in heading north. More companies from around Latin America are likely to pursue deals in the United States, given the relatively cheaper prices of its assets. That point was recently made by Juan José Suárez Coppel, director-general of Mexico’s state oil monopoly, Petróleos de México. Suárez Coppel is shopping in the United States for a refinery

in order to process Mexican crude. He is not expecting to pay a high price. Countries such as Colombia and Peru, as well as the nations of Central America, are now in the sights of the multinationals. Even Argentina, despite its continued political and financial problems, is attracting interest. Only Venezuela is being ignored by corporate suitors as the country moves ahead with its “21st century socialism” amid a bevy of capitalist

activity. The only mergers and acquisitions of late in Venezuela have involved local players or the consolidation of existing interests in the country. One such deal was announced in August, when global brewer AmBev and the local Cervecería Regional said that they would combine their activities in one of the largest beer markets in Latin America, breathing a bit of life into M&A in the otherwise moribund market.

TOP M&A FINANCIAL ADVISORS IN LATIN AMERICA FINANCIAL ADVISOR

Credit Suisse Citi Santander JP Morgan Banco BTG Pactual SA Bank of America Merrill Lynch Morgan Stanley UBS Goldman Sachs Caixa Geral de Depositos Rothschild Itau Unibanco Banco Espirito Santo Deutsche Bank Credit Agricole CIB Mediobanca Société Générale Standard Chartered PLC Scotiabank-Bank of Nova Scotia Banco Bradesco Allen & Co. Barclays Capital BR Partners Estater Gestao e Financas HSBC Holdings TOTAL

2010 RANK

2009 RANK

NUMBER OF DEALS IN 2010 (ANNOUNCED)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 9 3 2 11 15 6 12 13 N.A. 5 4 69 14 17 N.A. 29 N.A. 34 8 N.A. 16 35 10 27

46 15 42 33 56 26 21 13 22 9 18 30 7 13 8 6 2 2 2 18 1 5 24 6 8

DEAL VALUE PER ADVISOR (US$ MILLIONS) 79,507.5 53,276.5 47,582.5 37,566.3 34,759.8 33,427.4 30,105.7 21,166.6 18,813.3 15,753.9 14,528.8 14,104.1 13,617.5 13,235.8 12,109.3 11,878.7 10,753.4 9,560.0 7,585.0 7,434.0 7,325.0 6,069.1 5,618.1 4,582.7 4,513.7 220,933.6

N.A.—Not applicable as bank was not in top 25 in 2009. Source: Thomson Reuters 01-02/2011 LATIN TRADE

INFRASTRUCTURE

Managing the Megapolis With some of the worldâ&#x20AC;&#x2122;s most sprawling and populous metro areas, Latin America faces the ongoing challenge of managing the stresses and strains that fast-growing populations put on resources, infrastructure and the environment. With goals like reducing pollution, easing congestion and shortening travel times, government agencies and businesses are seeking ways to make their cities better places to live and work. Latin Trade examines the efforts of Lima and SĂŁo Paulo, among other cities, to address their transportation needs, and interviews the regionâ&#x20AC;&#x2122;s leading proponent of rapid transit bus systems.

LATIN TRADE 01-02/2011

INFRASTRUCTURE

Lima tackles traffic with mass transit BY LISA K. WING

LIMA — Pleasant, organized, clean and timely—such attributes were never used to describe public transportation in Lima, where traffic is notoriously chaotic. But the image of mass transit is changing since the July debut of a streamlined bus system called El Metropolitano. “I stopped driving to work because I got tired of the aggressiveness of the other drivers,” said Rosario Gabaldoni, who works at Peru’s Central Bank in downtown Lima. “One day I decided to try the Metropolitano, and I went: ‘Wow!’” she said. “My commute is relaxing, safe and civilized.” Gabaldoni is just one of the thousands of limeños whose daily commute has improved dramatically thanks to the Metropolitano, the first mass transport system built in Peru’s capital in at least three decades. “It now takes me 15 minutes to get to work instead of the usual 45 minutes—and I always have a place to sit down,” Gabaldoni added. The system, which carried a price tag of $300 million, is operated by the Metropolitan Municipality of Lima. Progressively implemented over the second half of 2010, it was the pet project of former Lima mayor and current presidential candidate Luis Castañeda. Some 300 articulated buses ply a 28-kilometer dedicated lane

Mercedes Velásquez, a 45-year-old manicurist, said she has shortened her daily commute from two hours to 45 minutes. “Now I not only have time to eat breakfast, but to walk my dog before leaving for work,” Velásquez said. A mass transit system like the Metropolitano was long overdue, especially for a city like Lima, a sprawling metropolis of nine million people that is known for its disorganized and deafening traffic, say local urban planners like Edward Barclay. “Lima is full of small, narrow streets that cannot support large flows of traffic,” said Barclay, who heads his own architectural firm in Lima. “A rapid-transport project like this one not only shortens riders’ commute, thus giving them more working hours, but also helps stimulate commercial activity close by.” Commercial development is on the rise around the important bus stations. The new Real Plaza, a three-story shopping mall built in and around the city’s once-neglected Civic Center, offers direct access to the main central station downtown and features a food court, movie theaters, an indoor entertainment center for kids, a supermarket, various bank branches and office space in addition to shops. The $300 million cost for the Metropolitano was financed by loans from the World Bank and the Inter-American Development

ISTOCKPHOTO

After only six months of operation, El Metropolitano was transporting 285,000 riders a day. The bus system is designed to accommodate as many as 700,000 people a day, or almost 10 percent of greater Lima’s population. on a north-south corridor, with stops on raised platforms. More than 200 feeder buses from nearby areas connect to the main route. The Metropolitano’s modern, underground central station is in the heart of downtown. The system aims to reduce the city’s chronic air pollution with all the buses fueled by natural gas. After only six months, the Metropolitano was transporting 285,000 people a day, with ridership increasing by 8 percent each week, according to Fabricio Orozco, general manager of Protransporte, Lima’s transport authority. The new bus system is designed to accommodate as many as 700,000 people a day, or almost 10 percent of greater Lima’s total population. “With Lima’s current transportation situation, where street traffic has practically collapsed in some parts of town, the time riders can save by using the system is extraordinary,” Orozco said. “The fare, which is comparable in price to other public transportation options, also encourages people to use the system.” The system—which charges 1.50 soles or about 55 cents for a one-way adult ticket—is not without problems, including poor ventilation on the Chinese and locally made buses. Initial complaints about the slow pace have been resolved, and the buses now travel at speeds comparable to the cars on the road. And the directors and users say it saves time for many commuters.

bank, as well as private sector investments of over $200 million. Four different consortiums won the bid to operate the system. Affiliated Computer Services, a subsidiary of Xerox, won a $200 million contract for the smartcard ticketing system, where fares are paid by waving a rechargeable smartcard near a reader. Under the 14-year contract, Affiliated Computer Services will also install electronic screens at stops to alert passengers of the arrival of the next bus. The rollout of Lima’s Metropolitano bus system has gone relatively smoothly compared to the 2007 rollout of Chile’s Transantiago, a similar bus system, which created so many problems that then-President Michelle Bachelet sacked her first minister of transportation. There the system was plagued by problems, including a shortage of buses and technical difficulties with the software for the fare smartcards. Protransporte is evaluating a $125 million contract to extend the Northern Corredor, the first line of the Metropolitano, according to recent news reports. Extensions would address the issue of limited access to outlying districts, an ongoing point of contention. “Although there is still much to do, the Metropolitano is an important step forward to improving Lima’s public transportation,” Barclay said.

01-02/2011 LATIN TRADE

INFRASTRUCTURE

The Busing Evangelist BY ALEJANDRA LABANCA

Why was Embarq created? The world has gone through a process of urbanization linked to motor vehicles that has brought negative aspects into our way of life, such as more pollution, more road accidents and the lack of physical activity. Many of our cities today are sick, and they

LATIN TRADE 01-02/2011

are not sustainable. At Embarq, we believe that we need to reduce the use of private cars and give priority to high-quality public transportation, bike paths and a pedestrian-friendly environment. We concentrate in developing countries because they are the ones in need of help and resources to overcome these challenges. What kind of projects does Embarq promote? We promote sustainable transportation because we believe it contributes to the improvement of mobility as well as people’s quality of life and health. Cost-effective transportation reduces accidents, pollution and stress. With these goals in mind we have established five centers of sustainable transportation around the world — three in Latin America, in Mexico, Brazil and the Andean region — that support local governments in the implementation of cost-effective transportation systems. We help governments set goals, choose the right system and get financing, and we follow the project from start to finish. Depending on the characteristics of each city, we promote an array of solutions to reach sustainable transportation, such as urban recovery, alternative transportation, better technology and better fuel options. Who funds these projects? It’s a mix of public and private money. Cities fund the infrastructure, which amounts to about 60 percent of the project, generally with assistance from federal governments and multilateral institutions. In terms of the equipment, such as buses or trains, and their operation, we favor private businesses, so they are the ones financing that part of the system. We invest a small amount of money for technical assistance. What have you learned since you started in

terms of what systems work best in Latin America? We thoroughly research each city and we analyze what works best in every case, but over the years we have found that what we call Bus Rapid Transit – buses that run on exclusive lanes with dedicated boarding stations – are more cost effective than subways. The cost per passenger is normally lower, mostly because subway systems require higher investment. We’ve also learned that cities need the support of federal governments in terms of financing and technical assistance. We learned that we need to work with federal governments to help them establish procedures and methods to analyze projects and resource allocation to become stakeholders in the system. Continued on page 64

NEWSCOM/ZUMA/AYRTON VIGNOLA

As a former deputy minister of transportation in Peru and a consultant for the World Bank, Luis Gutiérrez Aparicio has had firsthand experience with the headaches of urban transportation and the challenges of mass-transit projects. Today, Gutiérrez is director for Latin America at Embarq, a nonprofit founded in 2002 that works with public-private partnerships to develop innovative and sustainable mass-transit projects in some of the most crowded and chaotic cities in Latin America. Embarq, an offshoot of the Washington-based World Resources Institute, draws its inspiration from the transportation system implemented in Curitiba, Brazil, some three decades ago. This Bus Rapid Transit (BRT) system, under which buses travel on dedicated busways, today transports some 70 percent of Curitiba’s commuters on privately owned buses managed by a quasi-public company. This system that helped put Curitiba on the map has served as a model for equally popular and successful systems, such as the TransMilenio bus system started in Bogota in 2000 that now covers 84 kilometers. Among Embarq’s major undertakings are Mexico City’s Metrobús and a restructuring of the transportation system in Arequipa, Peru, that is being financed by a $1.2 million grant from the Andean Development Corporation. Embarq has been directly or indirectly involved with 13 Bus Rapid Transit systems across Latin America that collectively carry three million people a day. The center also promotes light rail and metro systems and alternative fuels as well as bicycling and walking to try to make cities better places to live.

INFRASTRUCTURE

Metro delays worsen transit in bustling São Paulo BY THIERRY OGIER

SÃO PAULO — A bidding scandal has presented the latest delay for a needed extension of the São Paulo subway, a key project already moving at a snail’s pace. The extension of subway line No. 5 has been scheduled for completion before the 2014 World Cup in order to alleviate the over-burdened public transport system in the business and financial capital, which will host a number of key matches. But in October, authorities were acutely embarrassed when Brazil’s largest newspaper, the Folha de São Paulo, revealed it independently learned of the winners of the bid six months before the official announcement. The publication had filed this knowledge with a public registrar in April to authenticate its allegations that the bidding had been fixed. After Folha published its story, São Paulo state government officials promptly canceled the $2.3 billion (4 billion reais) awards to various groups, including a consortium of two privately held construction companies, Odebrecht and Construtora OAS. Authorities also postponed the tender pending an investigation. The consortium of Odebrecht and OAS has denied any impropriety and defended the bidding process, issuing a statement not-

More than 2 million people ride the São Paulo metro every day. Though considered relatively efﬁcient, the system does not extend to a number of important business and residential districts.

ing that “only two groups had the required equipment” required for that stretch of the subway line. Odebrecht has long been involved with the metro and scores of other transportation projects. Half a dozen contracts were to have been awarded for the subway expansion, which would offer some relief to São Paulo, home to traffic jams that turn a trip to the airport into an hours-long journey. The existing subway debuted in the early 1970s and is considered modern and relatively efficient, carrying an average of 2.1 million paulistanos every day. Since that debut, only one new line was added to the system, traveling under Avenida Paulista; otherwise, expansion has been limited to stations along the existing lines. Four years ago, the state government signed a public-private partnership with a consortium known as Via Quatro, which is led by the private infrastructure group Companhia de Concessões Rodoviárias (CCR). The Via Quatro group was awarded a 30-year concession to manage the new subway line, during which time it is expected to invest $2 billion. As of year-end, the Via Quatro consortium was operating only a short stretch of the line along Avenida Paulista and Faria Lima on an experimental basis. It is scheduled to formally take over in 2013. Despite an ambitious urban transport plan unveiled by the São Paulo state government in mid-2009 that called for $13.5 billion (23 billion reais) in investments by the end of the past year, major areas of the city are still left out. The new business districts of Berrini and Vila Olimpia each have train stations with links to the suburbs but none to the São Paulo subway. Construction of subway line No. 4 has been delayed since a deadly construction site collapse in 2007 that killed seven people. Another major challenge in the city is the lack of easy transportation between the domestic and international airports, causing lengthy commutes for connecting passengers. Successive administrations have repeatedly proposed and shelved plans to address this problem.

01-02/2011 LATIN TRADE

INFRASTRUCTURE

More Cities on the Move By 2014, Embarq estimates that the existing 15 BRT systems in Latin America will have added another 130 kilometers of routes, increasing the number of daily riders regionwide by two million. But buses are usually just one component of city transportation systems. Here are some other major urban transport initiatives from around the region.

ARGENTINA: Buenos Aires Mobility Plan The Subterráneo de Buenos Aires launched in 1913. The city is adding lines to the metro system as part of an approach that also includes expanding bus service and introducing cycling programs. The goal is to reduce travel times, improve connections and serve more residents and commuters. BRAZIL: Rio de Janeiro Metro Construction is expected to start in 2012 on the expansion of Line 1 of the Rio metro, a $712 million project that is slated for completion by 2014. The metro is operated by the privately held Metro Rio, which is majority owned by Citigroup and Brazilian pension funds such as Previ, Funcef and Valia.

MEXICO: Mexico City Suburban Train III Originally conceived as a third line of the suburban rail system to connect towns north of Mexico City, in the State of Mexico, with the federal district, the project was put on hold in 2010. The government is expected to announce bidding on a revised plan, perhaps one incorporating a dedicated bus-line component, in 2011. PANAMA: Metro de Panama Consorcio Linea 1, a joint venture between Odebrecht of Brazil and Spain’s Fomento

PERU: Tren Urbano de Lima A consortium formed by Graña y Montero and Odebrecht began building in 2010 the ﬁrst line of an electric light rail system that was originally conceived in the 1980s. After multiple postponements, the government agency ProInversión was expected to announce in early 2011 the winner of the bid to operate the train that will link the city center with Villa Salvador in the south. Source: CG/LA, Latin Trade research

de Construcciones y Contratas, won the bid to build the inaugural line of Panama City’s subway system. Civil works are under construction for the 13.6 kilometer northsouth route, with a formal service launch set for early 2014. France’s Alstrom has the contract to provide the trains.

Embarq...continued from page 62 How much do these projects cost? Bus Rapid Transit projects can cost from $3 million to $12.5 million per kilometer, including vehicles. Subways range from $70 million to $200 million per kilometer. What has been your most successful project to date? Mexico, our first project in 2002, was a resounding success. We had to overcome very difficult circumstances to launch a bus corridor designed after the Transmilenio system in Bogota. We started with one 20-kilometer corridor on Avenida Insurgentes that moved 350,000 passengers a day. Today BRT corridors in Mexico City are 50 kilometers long

LATIN TRADE 01-02/2011

and move 600,000 people a day. Mexico was spectacular for us because it established Embarq as a credible nongovernmental organization that succeeded in aligning the interests and the needs of the passengers, the authorities and the transportation industry. What are the biggest challenges you have encountered? Oddly enough, our biggest challenge has not been the infrastructure but the creation of solid transportation businesses. In many cities in Latin America, there is, for instance, one person who owns a couple of buses and another who owns another, and

so forth. To create a cost-effective system, those small endeavors have to either evolve into full-fledged, modern businesses or fold into one. This creates social tensions and even cultural clashes in cases when foreign companies enter the market. We insist that the new system include the people who were operating transportation businesses in that market and that there are mitigation policies in place to help those who are displaced. Another big challenge is helping the authorities build a state policy around sustainable transportation so that the projects will not end up being held hostage by partisan politics.

LATIN TRADE SPECIAL SUPPLEMENT

LEADERSHIP IN LOGISTICS: Integrating Global Supply Chains BY RICHARD WESTLUND

Latin Americaâ&#x20AC;&#x2122;s challenging logistics environment, a well-integrated supply chain can provide a major competitive advantage â&#x20AC;&#x201D; even the difference between business success and failure. Responding to that need for more rapid, secure and transparent transportation services, leading logistics companies are investing in new facilities and equipment, and deploying advanced technology.

01-02/2011 LATIN TRADE

LEADERSHIP IN LOGISTICS: INTEGRATING GLOBAL SUPPLY CHAINS

Poul Hestbaek, Senior Vice President, Hamburg Sud,Central America and the Caribbean

“Despite substantial economic growth, many nations have not invested in the port infrastructure,” says Hestbaek.

With trade levels rebounding in the hemisphere and around the world, logistics providers will be showcasing their latest solutions, services and alliances at Intermodal South America, to be held April 5-7 in Sao Paulo, Brazil. As a leading hemispheric conference, the event is often a showcase for major announcements. In 2009, for instance, TAM Cargo signed a contract with TAP Cargo to expand its operations to 15 new locations in Europe and Africa. This year, global supply chain integration is expected to be among the key topics, as Latin American companies look to reduce shipping time and lower costs. “Efficient consolidation, modern information technology (IT) systems and transparent order management can reduce transportation costs,” says Martin Spohn, a spokesman for Panalpina Management Ltd. in Basel, Switzerland. “Quality of service is also very important, and having a global network available is crucial to both service quality and costs.” Poul Hestbaek, senior vice president, commercial for Hamburg Sud’s Central America and Caribbean region, says that predictable service, price stability and economies of scale are also important factors in establishing efficient global supply chains. “One of the best ways to secure your supply

LATIN TRADE 01-02/2011

chain is to engage with a large company that can offer more frequent service, because that can reduce the level of inventory on the shelf and the amount of stock in transit,” he says. “There is a real value in providing consistent, reliable service.”

Investing in the region While the world awaits the 2014 opening of a wider Panama Canal, many other public and private projects are underway throughout the hemisphere to reduce transportation bottlenecks — whether physical or administrative. As the nation for the 2014 World Cup and the 2016 Olympic games, Brazil is investing in new airports and other transportation-related projects. In the U.S., the Florida Department of Transportation recently broke ground on a $1 billion tunnel designed to accelerate the flow of containers in and out of the Port of Miami. Many private companies are also enhancing their presence in the region. Panalpina, for instance, recently introduced a new express airfreight service from Hong Kong to Brazil, opened a new warehouse and distribution center in Cajamar near Sao Paulo, and is planning a new facility in Cordoba, Argentina, to serve the region’s automotive industry.

LEADERSHIP IN LOGISTICS: INTEGRATING GLOBAL SUPPLY CHAINS

Jose Acosta, UPS Vice President, Public Affairs, Miami UPS has developed new software tools to help small and mid size Latin American companies enter new export markets. “Instead of flying to another country, you can calculate the landed cost of your goods and see the applicable customs regulations,” says Jose Acosta, UPS Vice President. “That’s one example of how technology can expand trade opportunities.”

efficient electronic systems. “That would lower the cost of trade and drive more foreign direct investment into Latin America,” he says. “Once global trade recovers to pre-recession levels, the region’s governments will have to catch up quickly or fall behind the rest of the world.”

The big picture

Hamburg Sud has increased the frequency of its sailings to the region to help businesses accelerate their supply chains. But Hestbaek says the public sector has to step forward for real improvements to occur. “Despite substantial economic growth, many nations have not invested in the port infrastructure,” says Hestbaek. “That impacts the size of the vessel, which in turn affects the economies of scale and cost per unit.”

As Latin businesses evaluate their logistics providers, it’s essential to look at the overall picture, according to Acosta. “There are many things that go into a supply chain other than moving goods from point A to B,” he says. One example is having 24/7 online access to shipment information when adjusting inventories or placing new orders. Security is another concern, since lost or stolen merchandise drives up the overall cost per unit.

Noting the importance of a coordinated intermodal approach that includes interior roads and railroads, as well as airports and seaborne cargo facilities, Hestbaek says, “Right now, it is cheaper to move a container from northern Europe into Cartagena than to move that container from Cartagena to Bogota.”

“You also need to consider how the logistics service provider might affect your brand or reputation,” Acosta adds. “What is the cost to the business if a product arrives late or in bad condition? How difficult is it to make an exchange or get a replacement product? Who will deliver your items to the consumer – a uniformed driver in a new truck or someone pulling up in an old van? All these issues need to be considered when determining the true cost of logistics.”

Acosta adds that Latin governments and port authorities also need to replace today’s manual customs clearing processes with far more

Instead of flying to another country, you can calculate the landed cost of your goods and see the applicable customs regulations,” Acosta says. “That’s one example of how technology can expand trade opportunities.”

01-02/2011 LATIN TRADE

BY RICARDO CASTILLO ARGÜELLO

CANADA

GOES FOR THE GOLD 68

LATIN TRADE 01-02/2011

R D

CANADA

On a sweltering day last May, Canadian mining executive Clive T. Johnson traveled to La Libertad, a tiny outpost deep in Nicaragua’s central mountains, for the official reopening of gold mines that had been taken over by the Sandinista government in the 1980s. Also present for the ceremony, held in the clapboard headquarters of Vancouver-based B2Gold Corp., was President Daniel Ortega, who claims La Libertad as his hometown and who had presided over the nationalization of precious metals reserves almost three decades earlier. But at the re-inauguration last May, Ortega dropped much of his trademark anti-capitalist rhetoric and instead highlighted the importance of attracting foreign investment into this mining subsector in order to boost Nicaragua’s foreign currency reserves during the global crisis. “Foreign investors must protect the environment and promote the rights of workers and the community where they have their projects, and B2Gold has shown they are doing all that,” Ortega said. “Their investment also shows that the right conditions and security exist for long-term investment in Nicaragua,” the president said. La Libertad’s mining shafts and open pits, established in the 1940s, were largely unproductive after nationalization. But after Nicaraguan lawmakers approved new mining legislation, B2Gold acquired the mines in La Libertad and has so far invested $40 million. “We will increase our investment as the development and production and further exploration of the 12,000 hectares requires,” said Johnson, CEO of B2Gold, adding that investments could reach $90 million by the end of this year. Besides its interests in Nicaragua, the Canadian company has mines in Colombia, Costa Rica and Uruguay. Booming prices for copper, gold, silver and other metals, coupled with new laws guaranteeing investments, have whetted the appetites of Canadian mining companies for investment in Latin America. They are also sitting on growing cash reserves that can fund their activity, while the higher prices and improved investment climates have reduced their risks. “Canada has a long, active interest in Latin America’s geology,” said Richard Boulay, a Canadian geologist who founded San Gold Corp. as well as Latin American Minerals, which is exploring gold deposits near Paso Yobai, Paraguay, possibly opening that country’s first gold mine. Canada has greatly expanded its trade and investment in the region since the country partnered with the United States and Mexico in 1994 in the North American Free Trade Agreement. Ottawa has established free-trade agreements with Chile, Colombia, Peru and Costa Rica. Over the past decade, foreign direct investment in the region increased by one third, from $21 billion Canadian dollars in 2000 to $28 billion Canadian dollars in 2009. With a storied tradition of mining at home, Canadian companies have parlayed their technical know-how into dominance of the sector in Latin America.

The major firms are well represented: Barrick Gold Corp., IAMGOLD Corp., Yamana Gold, Agnico-Eagle Mines, Breakwater Resources and Kinross Gold Corp., all headquartered in Toronto; and Teck Resources and Goldcorp, both based in Vancouver. Yet most of the more than 600 Canadian mining companies currently operating in Latin America are small exploration companies. In addition to expertise, one of the most important factors behind Canadian mining success is the ability to raise cash in Canadian financial markets to finance projects that range from $1 million to $5 million or more. “Canada is the leading mining finance country for both junior and senior players,” Boulay said. “You don’t find many stock exchanges around the world doing that.” Boulay’s views were echoed by Jorge Ganoza Durant, CEO of Fortuna Silver Mines, which has corporate offices in Vancouver and management offices in Lima. “The Canadian market is the best place in the world to finance and access new capital for ideas and business plans,” Ganoza said. Over the past five years, Canada’s stock exchanges provided 32 percent of the world mining equities and more than 80 percent of its financing. Nearly 9,000 mining projects worldwide were listed on the Toronto Exchange in 2009. Eighteen percent of those projects were in Latin America. “Toronto and Vancouver have become for mining what Silicon Valley is for technology,” said Ganoza, whose Fortuna Silver has mines in Arequipa, Peru, and Oaxaca, Mexico. After a five-year exploratory phase, and reported revenue of $30 million in 2007, Ganoza said that Fortuna Silver had estimated sales of $72 million in 2010. “Although this is a cyclical business by nature, we don’t see the ongoing cycle ending any time soon,” Ganoza said. Activity has been stepping up in Colombia, which has put its problems of drug violence and kidnappings behind it. Canadians are among the mining as well as oil and gas investors looking to stake their claims in what in some cases was previously unexplored territory. Colombia’s largest independent oil producer, Pacific Rubiales Energy, is listed on both the Bogota and Toronto exchanges. “We expect to see many more initial public offerings of companies with Colombian assets,” said John Gravelle, a partner at PricewaterhouseCoopers, based in Toronto. But Canadian prospectors still face obstacles in their explorations or acquisitions. “Governments are more likely to boost taxes when commodity prices are high,” said Gravelle, citing Australia and Chile, both of which raised taxes on the sector in 2010. “Even when Chile is doing it to help fund reconstruction after the earthquake last year, it is a signal that the region’s governments keep making mistakes with their bad timing,” he said.

01-02/2011 LATIN TRADE

MARKET INTELLIGENCE French hotel company Accor is renovating the Hotel Casino Carrasco in Montevideo in order to convert the historic property into a Sofitel luxury resort and spa.

LATIN TOURISM INDEX

2010 The Leisure Factor The Latin Tourism Index from Latin Business Chronicle shows the total impact of foreign tourism on a series of countries in the region.Using 2009 data from the World Tourism Organization and the International Monetary Fund, the index measures tourism receipts as a percent of the Gross Domestic Product, tourism arrivals as a percent of the population, as well as the growth in tourism receipts and arrivals. Beyond the numbers, the index offers insight into the impact of foreign tourism on each countryâ&#x20AC;&#x2122;s economy and the pace of growth in international tourism. The top-ranked country is Uruguay, whose beaches in towns like Punta del Este are especially popular draws, particularly for citizens of neighboring Argentina, but which overall has been broadening its visitor base. Although Mexico ranks lower on the list, internal activity has made tourism one of the countryâ&#x20AC;&#x2122;s top industries and an important source of jobs. Brazil may be at the bottom of the ranking but foreign tourism was worth some $6 billion in 2010, according to preliminary estimates. 70

LATIN TRADE

01-02/2011

RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

COUNTRY Uruguay Dom. Rep. Panama Costa Rica Cuba Mexico Nicaragua El Salvador Chile Argentina Peru Ecuador Paraguay Colombia Brazil

SCORE 32.8 26.5 25.6 24.4 12.6 10.6 10.2 10.1 8.6 6.1 4.5 4.1 3.9 2 1.4

NOTE: Guatemala, Haiti, Honduras and Venezuela were not included due to insufficient data. Source: Latin Business Chronicle, a division of Latin Trade Group, online at www.latinbusinesschronicle.com

Benchmarking Indexes • Business Environment • Infrastructure • Security • Tax • Technology • Labor • Globalization

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Statistics & Forecasts • GDP • GDP Growth • Foreign Direct Investment • Trade Volumes

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Schedule a web tour now: Call 305-749-0888

MARKET INTELLIGENCE

Dealing with the Taxman The Latin Tax Index from Latin Business Chronicle measures the overall tax climate in 18 countries in Latin America. Rather than looking at corporate tax rate levels alone, it incorporates the number of payments and hours required to pay taxes yearly to assess the relative burden of each’s country tax system.

LATIN TAX INDEX COUNTRY

TAX RATE 17% 10% 25% 25% 30% 31% 30% 25% 30% 25% 30% 28% 30% 33% 34% 35% 25% 34%

Chile Paraguay Dom. Rep. El Salvador Honduras Guatemala Peru Uruguay Costa Rica Ecuador Nicaragua Mexico Panama Colombia Venezuela Argentina Bolivia Brazil

AVERAGE

28%

NUMBER PAYMENTS 10 35 9 53 47 24 9 53 42 8 64 6 59 20 71 9 42 10

NUMBER HOURS 316 328 324 320 224 344 380 336 282 600 240 517 482 208 864 453 1,080 2,600

RATE AS A PERCENTAGE OF PROFITS 25.30% 35.00% 39.00% 35.00% 48.30% 40.90% 40.30% 46.70% 54.80% 34.90% 63.20% 51.00% 50.10% 78.70% 61.10% 108.10% 80.00% 69.20%

419

48.50%

LTI SCORE 7.49 8.13 9.73 9.73 10.54 10.87 10.92 11.06 11.72 12.07 12.36 13.13 13.42 13.45 18.86 18.92 21.72 36.4

13.92

Source: Latin Business Chronicle (www.latinbusinesschronicle.com), a division of Latin Trade Group

LATIN TRADE

01-02/2011

2010

2009

2006

2004

2003

2001

2000

1999

Santiago, Chile

LT CFO MIAMI Economists, executives share optimistic outlook for Latin America in 2011

CFO VIEWS BURGER KING Mariluly Molliner-Medina, Americas Finance Director, is seeing potential in Latin America and focusing in the region for further growth for Burger King, which was recently acquired by the investment ﬁrm 3G Capital. VOLKSWAGEN Oliver Harmann, CFO of Volkswagen Group Latin America, said he expects that by 2018 a little more than half of the company revenue will originate in emerging markets – with Brazil being one of the brightest spots.

Participants at the November 2010 LT CFO event in Miami LATIN AMERICAN economies will remain strong in 2011, boosted by favorable terms of trade for most countries in the region. “It’s an exciting time for Latin America,” said Alberto Bernal-León, the head of research and strategy at Bulltick Capital Markets in Miami. Calling 2010 “very good,” Bernal-León predicted that 2011 would be a year of market consolidation. “I am still bullish, but it will be hard to beat expectations,” Bernal-León said at the Latin Trade CFO Forum in Miami in November. Bernal-León said that high commodities prices, continued growth of 8 percent in bigimporter China next year, capital controls by Beijing and loose monetary policies in developed countries would work together to favor the economies in Latin America and would help compensate for the appreciation of the region’s currencies against the dollar. This appreciation is making domestic manufactured exports more expensive. “Overall, the terms of trade will remain

very benevolent for Latin America,” the economist said. Bernal-León said that economic data suggest that the United States will avoid a double-dip recession and that interest rates will remain low until 2012. These circumstances enhance the appeal of emerging markets for investors looking for more favorable returns. More than two dozen financial professionals who participated in the Latin Trade CFO Forum held at the Four Seasons Hotel Miami agreed with his views. They also agreed that many companies are adapting their operations to take advantage of growing business opportunities in the region. Much of the focus of the discussion was on the economic performance of Brazil – a country that Bernal-León likened to the “beautiful girl at the party.” Brazil “can misbehave, but everybody still wants to be around her,” he joked. Mike McKenzie, managing director and head of Treasuries and Securities Services for Latin America at J.P. Morgan, said the bank was expecting a tighter monetary policy in Brazil as the government fights higher infla-

RICOH LATIN AMERICA William Zapata, director of ﬁnance, information technology and performance experience at the technology-imaging company, said he foresees that the company will double its business in Latin American in the next two years.

tionary expectations. “Over the short term, there is little economic slack remaining in the economy, which will drive inflationary pressures,” McKenzie said. Participants at the forum agreed that Brazil had lost little of its luster, but the country could be a challenging business environment. One of the biggest problems, according to participants, was the difficulty in attracting and retaining business executives. The shortage of educated executives and the strong currency have driven the cost of salaries and benefits through the roof. “Microsoft has found that talent management is a big issue in Brazil,” said Roberto Palmaka, Microsoft’s leading finance executive for the region.

01-02/2011 LATIN TRADE

LT CFO MIAMI

1. Roberto Palmaka, Senior Finance Director, Microsoft Corporation. 2. Joe Andris, Treasurer/Finance Manager — Latin American Division, Caterpillar Americas Services Co.; Cheryl McDowell, Vice President, Finance & Administration, ORACLE Corporation; Mike McKenzie, Managing Director, Head of Treasury & Securities Services for Latin America, J.P. Morgan. 3. Alberto J. Bernal-León, Head of Research, Bulltick Capital Markets. 4. Oliver Harmann, CFO, Volkswagen Group Latin America, Inc. 5. Oliver Harmann, Volkswagen; Mariluly Molliner-Medina, Americas Finance Director, Burger King Corporation; Mike McKenzie, J.P. Morgan; Mark Ludwig, LT CFO Contributing Editor, Latin Trade Group; Joachim Bamrud, LBC Editor in Chief, Latin Trade Group; Alberto J. BernalLeón, Bulltick. 6. Manny Favela, CFO, McDonald’s Corporation Latin America. 7. Mariluly Molliner-Medina, Burger King. 8. Peter Stanham, Finance Director, American Airlines; John Priddle, Finance Director, Duty Free Caribbean. 9. Mark Ludwig, Latin Trade Group; Alberto J. Bernal-León, Bulltick; Rosemary Winters, Executive Director, Latin Trade Group.

LATIN TRADE

01-02/2011

ALEX GORT

BY PAUL LEFTON

HARDWARE

How to De-stress on the Road High-tech travel companions can help you stay fit and calm away from home. From the hectic schedules to the late-night dinners with associates and clients, business travel can wreak havoc on diet regimens, exercise routines and even sleep patterns. But help for the traveler is here with some easy-to-use gadgets to keep you on track with your fitness goals – maybe even helping you to sprint to that next flight. The Tumi Travel Fitness Trainer ($165) means that music and monitors stream from one device, something like having a fitness coach in your ear. The device, which can be clipped onto a belt, worn on the arm or strung around the neck, keeps track of your performance and provides feedback. Loaded with a digital pedometer with 3-D motion analysis, a heart-

rate monitor and a stopwatch, the fitness trainer also includes an FM radio and an mp3 player that can store up to 4 GB of music. The device logs and displays your workout information, such as distance covered and calories burned. Another option is to turn on the voice mode to hear this same data through the ear buds, included in the package. The Tumi Travel Fitness Trainer comes with a USB charging cord and Windows-based HeartPal software for storing your workout information on your computer and tracking your progress. For the serious runner or exercise enthusiast, the Timex Ironman Global Trainer GPS Sports Watch ($249) offers performance information on the four-quadrant LCD display and with audio/visual

alerts that you can customize. In addition to measuring speed, distance, altitude and calories burned, this high-tech sports watch features a heartrate monitor that works with an optional chest strap and is compatible with other ANT+ wireless accessories. An added benefit of this sports watch – you won’t get lost running the streets of a strange city. The Global Trainer is Timex’s first sports watch to feature GPS technology, allowing you to track your current location, set and manage waypoints and save workout routes. When you have finished the run or walk, you can link the Global Trainer to your computer and keep an online training log along with analysis. This is compatible with both Windows and Mac.

After long or overnight flights to reach your business destinations, getting enough sleep is a priority. Since rest is often elusive after you have zoomed across several time zones, the Sharper Image’s Travel Sound Machine ($90) may lull you into dreamland. This lightweight device plays 18 soothing sounds, from bamboo chimes to ocean surf, that will help you drift off after a busy day, even in a noisy hotel. And you’ll never feel far from home, thanks to a dual clock that displays the time in your base city in addition to your current locale. The Travel Sound Machine also has a built-in voice memo feature so you can record your own wake-up message or store the brilliant idea that comes to you in the middle of the night.

01-02/2011 LATIN TRADE

PANORAMA

Latin America: The High Price of Tablet Mania

LATIN TRADE 01-02/2011

Sales taxes and import duties on electronics, plus an overvalued currency, are largely the reason for the enormous price differential. Brazil levies steep tariffs on imported electronics to protect local manufacturing and to encourage foreign manufacturers to open factories in the country. Apple products are made in China.

APPLE INDEX Prices in U.S. dollar equivalent, based on exchange rates as of January 3, 2011.

CITY

iPad

iPhone

Miami Mexico City São Paulo Bogota Lima Santiago Buenos Aires Panama City

$499 $611 $1,000 $521 $641 $643 $855 ****

$199 $799 $603 $454** $855** $545*** $603* $847

* Special introductory base price from authorized dealer Claro with two service plans included. **Base price from Movistar, with applicable service plan ***Promotional price from Movistar, with Multimedia Libre 85 plan **** Not yet available for sale Source: Apple, Latin Trade research

NEWSCOM

What a difference a tariff can make. When Apple’s iPad finally launched in Brazil this past December, residents lined up for hours to snap up the tablet computer. Editora Abril posted a picture of the first iPad buyer, grinning broadly. But the price was no bargain in São Paulo as Brazilians paid roughly double what they would pay in Miami or elsewhere in the United States. Across Latin America, residents shelled out more for their iPads or iPhones, except in Colombia, where the price of the iPad was just $22 higher than prices in the United States. The advent of iPad sales in Brazil allows Latin Trade to unveil its Apple index, inspired by the iPod index from the Australian bank CommSec in 2007. CommSec economists had wanted to assess the impact of foreign exchange values on consumer spending by comparing prices of the Apple music player in the region. Latin Trade has assembled its own Apple index, looking at the popular iPhone and the iPad, which was not available yet in Latin America when CommSec expanded its analysis to include the hit tablet device in May 2010. Brazil tops the index for the iPad. While the tablet retails for $499 in the United States, it goes for $1,000 in Brazil, and $855 in Buenos Aires. Although Brazil also used to have the most expensive iPhone, it is now more competitively priced thanks to a promotion.