Hilton Hotels' expansion opportunity in Chile's growing tourism market

Hilton/Chile

Chile -- The world's longest country offers a long list of potential investment opportunities for the Hilton Hotels Corporation

Because of the general global instability gripping the world, embarking upon a new venture by any company dependant upon tourism, even a company as large and as durable as the Hilton Hotels Corporation, must be viewed with caution. The Latin American region where Chile, the world's longest country, is located might be viewed with a raised eyebrow as a whole. This is not simply routed in general fears and trepidation regarding the health of the hospitality industry. There are always financial concerns regarding the Latin and Central American region's legendary economic instability, its tendency towards hyperinflation, its many nations plagued with high rates of debt, and other factors that might deter investors and tourists alike. However, the nation of Chile has many features that will make it an attractive potential destination in the future for business and leisure travelers, features which makes it unique, despite the legitimacy of some of the woes regarding its regional neighbors.

Furthermore, is always best for a company to be a first-mover in any new, expanding market. For the Hilton Corporation, to become a first-mover into the expanding Chilean leisure and adventure travel industry, as well as to offer the best accommodations to the growing influx of business travelers to Chile would be an unparalleled opportunity. Chile offers, for the Hilton Corporation's future prospects, a likely source of potential growth in a number of expanding tourist and business markets.

Chile: a country overview

Current business environment of Chile

Chile has shown remarkable economic health over the past decade, compared with its neighbors. According to the World Economic Forum: www.weforum.org http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/EXWhere is the Wealth of Nations? (2005) - Total wealth per capita, Chile ranked 32 out of 118 countries, fourth in Latin America after Argentina, Uruguay and Brazil, in terms of the overall wealth of the population. (All statistics found in "Chile" entry 2006, Wikipedia)

Chile's official website quoted the objective authority of the National Statistics Institute, INE, which reported that Chile's Consumer Price Index (IPC) rose only 0.5% in July 2006, meaning the country accumulated only 2.6% inflationary growth in the first seven months of 2006 and 3.9% in 2005. (The Chilean Government, 2006) This demonstrates not only that Chile is not currently affected by the hyperinflation that was so much of a concern and a deterrent for Latin American investors, but also that because of Chile's relatively stable economy, business travel within the region is likely to increase within the next ten years. The Hilton Corporation, by offering attractive hotels for the likely influx of business travelers could establish its name within the borders of the country, before similar names such as Marriott attempt to gain a foothold.

Economic infrastructure

Chile is one of Latin America's most economically developed countries and one of most highly industrialized countries in Latin America. ("Chile," 1994," Library of Congress Country Studies; "Chile," 2006, Wikipedia) In terms of quality of life, it was ranked first by The Economist of all countries in Latin America. One particularly significant recent development regarding foreign investment, according to a press release of the Chilean Embassy, occurred on July 7th, 2006, when Moody's Corporation upgraded Chile to a low-risk country for foreign investment. This matched the Standard & Poor's rating, one of the world's foremost providers of credit ratings and risk evaluation, which also ranked Chile quite high in this regard. (The Chilean Embassy, 2006)

Cultural aspects

Chile's historic social stratification, or wealth gap between the rich and poor has been mitigated, to some extent, by the government's new educational and housing investments in programs for very poor and in upgrading the water and sanitation systems that serve the nation's poor. These investments have helped lower infant mortality rates and raise life expectancy, giving country a relatively high human development index (HDI) world ranking. ("Chile," 1994," Library of Congress Country Studies) They have also, more to the point from the Hilton's point-of-view, made the country more attractive for tourists.

Chile's beautiful and varied landscape additionally means that the nation offers many opportunities for scenic and adventure travel. Adventure travel for Baby Boomer tourists with time on their hands, or younger people who wish to challenge themselves in ways they do not experience in their everyday lives is growing increasingly popular. Such opportunities abound in Chile, many famous parks and natural wonders, such as Torres del Paine, as well as the Andes Mountains. ("Welcome to Chile," 2006, Geographia)

Plan for the Hilton

The investment plan in Chile for the Hilton Corporation would ideally be dual-pronged. First of all, there should be a plan to target the burgeoning business travel that is likely to rise in the coming years in Chile. The Hilton could offer its traditional luxurious hotels, designed to provide comfort for the accidental tourist or business traveler. The population's familiarity and Westernization, given the nation's long-standing business relationships with North America and Europe would allow hotels to offer amenities attractive to international tourists, such as hotel staff that were fluent in a number of languages, for example, as well as the opportunity to take advantage of Hilton's traditional rewards programs for business travelers, as described on its corporate website. (Official Website, 2006) younger or more adventuresome clientele, however, could provide a new venture for the Hilton in Chile. As persons, who might have spurned Chile before, such as idealistic young people, might return to travel to the nation now that the government is undergoing such substantial reformations, adventure travel is another growing industry that the Hilton Corporation should explore in the future. The Hilton could create a series of reasonably priced hotels, targeted at younger tourists or Baby Boomers desiring to explore less trafficked regions of the world, along such popular destination routes as the Andes, the many scenic parks of Chile, and other areas where persons could explore during the day, and then return to the relative, moderately priced comfort of the hotel at night. These hotels could offer a balance between adventure and 'roughing it,' as well as enable tourists to connect with one another after a busy, hard day of sightseeing under possibly difficult conditions.

One final possible advantage offered by Chile would be another new development in the travel industry, which is community-service oriented travel. The Hilton Corporation could work with the Chilean government to create programs whereby travelers could help provide assistance to certain needy populations and areas of the region, possibly even in areas not traditionally known of by tourists. This would satisfy a potential desire for adventure in the hearts of many tourists, but combine it with a spirit of learning and community service.

Conclusion

Given the Chilean government's new desire to address historical inequities in the nation, and its relatively strong economy and currency which would mitigate some of the risks in embarking upon these new ventures, Chile offers itself as a nation not simply of scenic beauty, but of attractive investment opportunities. The nation and the region are changing, and so is the hospitality industry. Because of its varied nature, offering a site for local business as well as a potential place for adventure travel or 'off the beaten path' personal enrichment, Chile offers a wealth of unusual investment opportunities for the Hilton Corporation.

Also, the dollars-and-cents, or 'numbers' of Chile have been encouraging, regarding the nation's inflation rate, and the stability it offers regarding its government, its infrastructure, and its currency. Moreover, for all of its political difficulties, the nation has never been closed off to foreign investment and other cultures, and thus offers a local population, a newly willing government, and a host of local businesspersons eager rather than hostile to a foreign corporation desiring to bring the nation into its already multinational outreach.