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Shine on: Santiago, ever the odd city out, looks to become a business-travel magnet.

Santiago doesn't have nearly the business concentration of a Sao Paulo or a Buenos Aires. It's not as close to major markets as Mexico City or any number of Caribbean destinations. It's as far away as any spot on the map and, as many a Chilean would tell you, on the way to nowhere except the South Pole.

Yet major hotel chains are racing to build, a sure sign that--despite natural disadvantages--the Chilean capital is beginning to turn its image around.

Last year, Chile hosted 46 international conferences; only Sao Paulo had more in South America. Even though the figure is not very high, at least by global standards, business tourists pumped more than US$280 million last year into the domestic economy. That figure should climb 14% this year, according to local estimates.

The outlook for business travel in Santiago is strong, and international hotel chains want a slice of the pie, now up to an unheard-of 9,000 rooms. Mexican chain Posadas and global giants such as Hilton and Four Seasons, along with local investors, are planning to open more hotels in the downtown area as well as the up-and-coming E1 Golf financial district, located in the swanky eastern side of the city.

Business executives make up a very valuable segment, especially to the international chains operating in Santiago. "At least 75% of our guests are here on business, and those coming for conferences generate 30% of our occupancy," says James Hughes, general manager of the Ritz-Carlton in Santiago, which opened its doors here just two years ago, becoming the hotel chain's first in South America. "For a variety of reasons, Santiago is the pretty girl in the neighborhood," he says.

There is reason for caution, though. "As with everything, when occupancy rates go up, fares go up. The problem with Santiago is that the opposite occurs, and rates stay very low, even lower than in Sao Paulo or Buenos Aires," Hughes says. The Ritz-Carlton in Santiago is one of the cheapest in its niche, he says.

Also located in the eastern section of the city, and another sign of a booming business-travel market, the four-year-old Espacio Riesco convention center--the biggest and most modern in the country--is bringing in money, good news for its owners, the Tortes Riesco family. "Today we're at around $5 million in annual revenue from leasing, which is an important amount for this type of business and has been very significant to annual growth of between 9% and 12%," says Daniel Amigo, business manager at Espacio Riesco.

To set the tone of the public and private efforts seeking to host more international fairs in Santiago, in May of last year the center inaugurated a 12,000 square meter concrete pavilion with cutting-edge technology, the first of its kind in Santiago. The new unit complements Espacio Riesco's capacity of 10,000 square meters of convention space and 25,000 square meters of open-air space for a variety of activities. The company will tack on another 8,000 square meters of fairgrounds in 2007, says Amigo. "If the business keeps growing and strengthening, we are going to expand at the pace that the market requires," he says. Through 2012, Espacio Riesco has seven international conferences reserved, with attendance levels expected to be between 1,200 to 5,000.

Santiago's admitted lack of cultural events is seen not as a fault but as an opportunity by a group of domestic businesses. The result has been a high-tech amphitheater with the capacity to seat 12,000. "We wanted to create something that didn't exist in Chile. That's why we built Arena Santiago, based on U.S. formats," says Mario Bascunan, general manager of Arena Bicentenario, the consortium that won a 20-year concession to create Arena Santiago out of an old sports complex in Parque O'Higgins, in southern Santiago.

New model. The Chilean government invested $35 million converting 35,000 square meters into the six-level amphitheater, and Arena Bicentenario put up $13 million for installations, scenery, high-tech equipment, audio-visual equipment, climate control and security.

According to Bascunan, Arena Santiago is more than an arena--it's a new business model in Chile. It allows for the co-production of events, and earns money by leasing space for conventions and seminars in four available halls with lighting, sound and security. "The events business and the fairs business are at $16 million a year. We want a part of that, but once primary demand grows," Bascunan says.

The private sector will do its part to promote Santiago, especially hotel operators, says Mauro Magnani, president of Chile's Association of Hoteliers. "Together as a city, we can position ourselves to host important conferences and, as hoteliers, we will see greater benefits by welcoming these people," Magnani says. "That assures us occupancy and allows us to raise our rates." Healthy occupancy rates are key to an industry marked by high operating costs, especially in Chile, where exchange rates over the last few years have jacked up costs associated with hosting a visitor by as much as 30%, Magnani says.

To that end, Chile's Corporation for the Promotion of Tourism (CPT) is off on a new campaign, called "Santiago will surprise you." The target is specifically to capture more corporate travelers, who spend five times the money during a trip than the conventional tourist, according to industry studies.

"One of the objects of this new image is to position Santiago in the international market for business conferences and conventions," says Myriam Gomez, head of the CPT. According to Gomez, Santiago does not have enough nightlife and entertainment and nor is the world familiar with Chilean culture, as is the case in Sao Paulo and Buenos Aires, which gives the city a disadvantage when it comes to business travel.

With the new, international campaign, the CPT and the country's hotel industry are looking to fill this void. "We still have much to do but unlike in other destinations, we have the good fortune to live in a city and country that are both very safe, and add to that efficiency the general character of a regional business center that Santiago is becoming," Gomez says. "We're on a whole other plane."

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Title Annotation:TOURISM
Comment:Shine on: Santiago, ever the odd city out, looks to become a business-travel magnet.(TOURISM)
Author:Coronado, Eduardo
Publication:Latin Trade
Geographic Code:3CHIL
Date:Jul 1, 2006
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