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Chile's recent free trade agreement with the European Union, as well as its pending deal with the United States, seems to have propelled a bustle of business activity, bringing with it a tide of visitors. Foreign hotel chains are scrambling to get the beds made and towels folded for the expected executives.

Travel from Europe and United States had declined precipitously, dropping nearly 18% and 19% respectively during 2002, according to the country's tourism body, Sernatur. But first-quarter 2003 numbers on travelers to Chile from Europe jumped 38% compared to the previous year to nearly 95,000, while U.S. visitors increased by just over 3% to more than 53,000 visitors.

Hotel 'chains are moving to increase the 4,000 rooms available in Santiago. In June, five-star U.S. luxury hotel The Ritz-Carlton began to check in guests at its US$45 million facility in the capital city, while France's Accor will spend $13 million to open a midrange hotel in December 2003. With the United States in the last stages of a free trade accord with Chile, hotel chains are giddy about a possible second round of overflow business travelers--many of whom tend to stay and see the sights.

"Chile in itself is a country but, from a marketing perspective, it is a brand" says Eric Pfeifer, president of the International Hotel and Restaurant Association and a former hotelier with hotel franchiser Cendant Group. "It is competing for tourist dollars with countries like Mexico and Costa Rica."

Big-name hotels are banking on their brands to attract the bulk of the new travelers, particularly to high-end business clients. "Most of the travelers that stay in five-star hotels are here on business," says James Hughes, general manager at The Ritz-Carlton Santiago. Price and quality are the answer, Hughes says. Rates at The Ritz-Carlton's only South American hotel are significantly lower than what the chain charges back home.