HD Talks

BRIC BY BRIC

Posted by on February 12, 2014 in The Economy

I’m new to Hospitality Design magazine, but I’ve worked in the hospitality industry before—and I even had a brief stint at a financial trade publication. Although these are different in a lot of ways, there is some overlap. The hotel industry is certainly interested in developing new areas, and the financial sector is always looking for new places to invest. Whether bullish or bearish, both industries are focused on going global.

During my hospitality tenure, we couldn’t go a day without  talking about how to cover the every-expanding BRIC countries—Brazil, Russia, India, and China. If you were a hotel company, you were building—and building a lot—in one if not all of those countries. And for good reason.

While the U.S. economy was tanking, these regions were on the opposite trajectory. If you were going to develop a hotel, you’d be doing it in the BRIC countries. In fact, we just covered most of these developing destinations in our January/February issue, looking at Africa, China, Turkey, Dubai, and Southern India.

Although these areas may seem immune to the shifting economic landscape, that may be changing. While perusing the New York Times wedding announcements, I came across an article that stated “recent turmoil in these [BRIC] and similar markets has produced a rival expression: the Fragile Five. The new name, as coined by a little-known research analyst at Morgan Stanley last summer, identifies Turkey, Brazil, India, South Africa and Indonesia as economies that have become too dependent on skittish foreign investment to finance their growth ambitions.

“The term has caught on in large degree because it highlights the strains that occur when countries place too much emphasis on stoking fast rates of economic growth. The new catchphrase also raises pressing questions about not just the BRICs but about emerging markets in general.”

It doesn’t sound good on paper, but it may be a little dramatic.

Indeed, there are myriad challenges for investors and developers when exploring these new areas: a lack of infrastructure, fledgling economic growth, unstable governments, etc. Even if developers and investors can look past these issues in the short term, the long term is less certain, especially when a hotel takes years to come to fruition. Only last year, protests erupted in Brazil and Turkey. And Russia has struggled to present a $51-billion Winter Olympics in a positive light as hotels in Sochi faced accommodation issues: toxic water, doors without handles, and privacy problems. Not even a shirtless Putin can help.

Yet, I’m optimistic about these regions that in a lot of ways are seeking reform, outside investor money and want to promote their areas for tourism, especially business travel. For developers and investors, these areas are the final frontier in a lot of ways. Take a look at our industry news from yesterday. “Europe is back in a big way, with the strongest numbers we’ve seen in years,” says Arabella Bowen, editor in chief of Fodor’s Travel. “A number of great events and cultural happenings, like Ireland’s The Gathering, as well as terrific travel values in countries like Spain have helped put a spotlight on travel to the continent.”

The closest I’ve come to being a global traveler is visiting Epcot Center when I was 9, so as someone eager to see the world outside of Disney World, I’m willing to look past some of these issues. And that’s the promise developers and investors see in these regions. They know these untapped markets with breathtaking terrain and an abundance of natural resources tempt travelers who are eager to cut their teeth (and spend money) on something exciting and new.

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