Buenos Aries News: Tax Incentives Announced for the Construction and Renovation of Hotels in the City.

(Source: Buenos Aries Ciudad)

An increase in international air connections, the new convention centre and a sustained growth in demand present opportunities to expand the city's hotel offering. Measures aim to boost competitivity as the city predicts an additional 43,000 international visitors.

The Buenos Aires city government has announced a bill with fiscal incentives that aim to boost the city’s hotel industry. The measures will benefit both those who construct new hotels and those who refurbish or expand existing establishments.

Ministerial cabinet chief Felipe Miguel said: “923,700 new seats a year have been generated for Buenos Aires thanks to the national government’s commercial air policy. The city is positioning itself as one of the best destinations in the world both for tourism and international events. Every visitor to Buenos Aires generates work: renting accommodation, taking taxis, going to the theatre, and this work is work for Porteños, the city’s people, which is why its important to encourage what is a strategic sector for the city.”

Buenos Aires expects to receive increased numbers of international visitors in 2018 and 2019. Flight reservations made in the first semester of 2018 to travel to Buenos Aires between July 2018 and June 2019 from the main international departure cities show an increase of 30%.

The Buenos Aires city government, meanwhile, has seen a rise of 25% in reservations to travel in the period July-December 2018 compared to the previous year. Reservations from Auckland and Sydney increased 94%; followed by London (+76%), Frankfurt (+39%), Bogotá (+23%), Madrid (+17%) and the USA (+16%). At the same time, the hotel occupancy rate has shown a sustained increase, reaching the highest level in 7 years (58%) between January and April 2918.

The city tourist board estimates that based on current predictions, the city will need more hotel beds, while big data studies show opportunities to improve competition in the hotel sector at a regional level.

Fernando Straface, General Secretary for International Relations, said: “Thanks to improved air connections, the world is increasingly choosing Buenos Aires as a destination. We have a historic opportunity for tourism in the city. To consolidate the development of the sector in the long term, we need fiscal incentives that will also generate employment in the tourism sector. Colombia and Uruguay, for example, have implemented aggressive approaches to promoting the sector, with very successful results.”

Gonzalo Robredo, President of the Buenos Aires City Tourist Board, said: “We have the opportunity to position the city as the most visited in the southern hemisphere. To achieve that, it’s necessary to improve infrastructure and added value in the city’s hotel offering. Incentives for the sector are something that’s been pending since the 1970s and are fundamental for the improvement of competitivity.”

The project

The Buenos Aires City government considers that hotel construction and renovation generates employment both during and after the work and also regenerates the area in which a hotel is located. Therefore the draft law presented by the city intends to:

● Benefit those who construct a new hotel establishment or carry out significant renovation or expansion (there will be a minimum investment) with a fiscal credit applicable against the payment of income tax during the first ten years after the authorisation of the credit.

● The credit facility will be a percentage of the investment made – 10% in the case of new constructions, with an additional 2% or 5% in certain zones of the city; and 40% in the case of refurbishment for SMEs, and an additional 10% for establishments historic protected areas (APHs).

● To speed up investment, the programme will last five years.

Robredo said: “We expect investments of US$ 570 million before 2025, resulting in 1,400 new permanent jobs in hotels, more indirect employment, as well as that generated by the construction itself

The Project is being promoted by investBA and the city tourist board.

The city expects to see an increase in visitor numbers.

Between January and May, international visits to the city by air increased 3.4%: with the arrival of 796,000 tourists – 26,000 more than in 2017. The money spent also increased 5.2%, reaching US$25 million more than in 2017.

One of the major factors has been the increase in the number of international air connections, and in the forthcoming months there will be new flights from Zurich and Los Angeles, with the potential to bring an extra 38,700 tourists per year. The new connection with the US’s west coast links Buenos Aires with regions that boat high purchasing power, and also offer an important means of connection with the Asian market.

This will see a potential 430,000 new international visitors per year (+20%) and increased expenditure of US$ 380 million (+19%).

The growth in tourism is excellent news for the city’s development, which will see the number of international visitors continue to increase and generate economic impact. One of the highest-spending segments is the MICE tourism sector, in which Buenos Aires is the leading destination in the Americas and 11th placed in the world according to the International Congress and Convention Association (ICCA) ranking. In 2017 a new Exhibitions and Conventions Center opened offering a major new site for large events.