Eduardo Ibarra, Hotels Business Unit General Manager, Grupo Los Portales: Interview

Interview: Eduardo Ibarra

How has recent performance shaped future plans for the hospitality industry?

EDUARDO IBARRA: The hospitality sector in Peru has enormous potential. It has shown some significant growth rates in past years, consistently exceeding GDP expansion. This is a direct result of the sector’s long-term vision, which encompasses business opportunities in both the real estate and management segments of the industry. Investors in real estate usually show low-to-medium risk aversion in their long-term perspective, which makes this sector – with buoyant past and expected growth rates – an ideal investment. As for the operative and management side, Peru has appeal as a prime regional destination for both corporate and leisure tourism, and the world’s most important operators and hotel chains have been present in the country for several years now.

Corporate and event tourism have clearly benefitted from the country’s economic growth, investment opportunities and solid macroeconomic situation. As for leisure tourism, Peru – especially the Cusco region, with Machu Picchu – has been a globally recognised destination for decades. The industry can now look at broadening its offer, whether it be well-known destinations in the Central Andes, such as Choquequirao, or other destinations that usually have had a more domestic clientele, such as the northern coastal town of Máncora or the rainforest regions of Iquitos and Tarapoto. As a country we should capitalise on the power of Machu Picchu and Cusco’s pull, and provide a more comprehensive and geographically diverse offer for tourists. For this to happen, however, it is crucial that all sector players make an effort to build the necessary infrastructure, in order for new and remote areas to be appealing to foreign tourists.

What can be done to increase the number of foreign tourists visiting the country?

IBARRA: Infrastructure is the most important variable to take into account if we want to see exponential growth in the number of foreign tourist arrivals. Hotel infrastructure has already been built and will be able to cope with the expected growth of the sector in the coming five to six years. Conversely, our international ports of entry and exit, in Lima and everywhere else, are saturated and require significant expansions. Without additional and better infrastructure, our tourism numbers simply cannot grow as hoped. Several models, whether private concessions, public management or private-public partnerships, could be used to solve this situation as soon as possible, especially in regard to the country’s airport infrastructure.

The current over-utilisation of Peruvian airports has directly translated to higher prices for both airlines and passengers, particularly for transatlantic and long-haul flights, where most destinations are served by just one daily connection. The current state of infrastructure makes any planned expansion to other markets, such as Asia, the Middle East or Africa, extremely difficult. All of this negatively impacts the country’s ability to increase the number of foreign visits.

What niches should the tourism sector focus on to optimise profits and results?

IBARRA: Given the reliance on international visitors and foreign markets, tourism is a highly cyclical business where boom and recession periods challenge our forecasts and planning capabilities. To mitigate this and achieve a more balanced earnings flow, Peru should aim to position itself as a year-round destination, as it hosts a rather temperate and mild climate that allows visitors to access most regions of the country, no matter what season or month. Therefore, broadly speaking, our international promotion efforts – whether for event, business or leisure tourism – should highlight the year-round possibilities Peru has to offer. In terms of specific niches, I believe luxury leisure and experience tourism should be strengthened rather than placing an additional focus on high-income corporate travellers.