As work continues on what will be Cuenca’s largest hotel, a Sheraton Hotel at Mall del Rio, other hotel owners complain that the market is saturated.
Although Cuenca officials say the city is in dire need of more high-end hotel rooms, the local hotel association says that there are too many rooms already and that most local hotel owners are having trouble making ends meet.
The association is even blaming Cuenca’s expats for the problem, saying that some foreigners are renting out apartments and houses on a daily basis, competing with hotels.
The new Sheraton, which owners say will be classed as a four- or five-star facility, is being built adjacent to Mall del Rio. The 11-story, 37,000 square foot hotel will have 120 rooms and include conference facilities on the lower floors. It joins the Oro Verde Hotel on Av. Ordoñez Lasso in being able to accommodate groups of up to 500 for conferences and other special events.
The Sheraton, part of the GHL Hotels international chain, is being built by Grupo Gerardo Ortiz, owners of Mall del Rio.
Although he says he recognizes the need for the new hotel, Juan Pablo Vanegas, president of the Hotel Association of Azuay, says that the city’s hotel owners are hurting financially from an overload of rooms. “Even though tourism is growing, the growth in the number of rooms available is growing even more rapidly,” he says. “Cuenca is over-saturated with hotels.”
Part of the problem, Vanegas says, are “informal” hotels and the growing practice of citizens renting out rooms and apartments to tourists and visitors. He says he believes that a number of foreign residents, mostly North Americans, are involved in the practice and is calling on a crackdown. “The informal hotels and rentals of private residences are a big problem in Cuenca,” says Vanegas. “They do not pay taxes and compete unfairly with hotel owners who must follow the rules. What they are doing is illegal.”
The association says informal hotels and those renting out residences on a daily basis can be identified from website advertisements and on local posting services such as GringoTree and Gringo Post.
Hotel Association board of directors member Tania Sarmiento, says that the majority of Cuenca’s formal hotels operate at full capacity only four or five times a year and are forced to lay off and then rehire workers on a seasonal basis. “Most of the year, many of the smaller hotels and hostals have only three or four guests a night,” she says.
Another association member, Monica Delgado, suggests that those considering opening a hotel in Cuenca should conduct a feasibility study before getting into the business. “When prospective owners see the reality, I think they will decide not to go into the business.”
A check of Cuenca real estate and rental agencies found none that rent by the day, or even by the week. “This is probably done on an informal basis but I don’t think it happens enough to affect hotels,” says Graciela Quinde, who operates a local rental agency that works primarily with foreign clients. “Most rentals have a year’s lease and even those rented to visitors are for a minimum of two or three months,” she adds.
A hostal owner in Cuenca’s historic district, who asked not to be identified, agrees with Delgano and Quinde, and says the problem is the result of too many people going into the hotel business. “If they took a hard look at the market they would realize that, economically, it’s not a good bet,” he said. “I think it’s silly to blame people who rent out their apartments.”
In addition to the Sheraton, two other mid-rise hotels are completing construction in the area of the football stadium, just east of Av. Solvano.
Owners of the Sheraton say the hotel should be completed in the fourth quarter of 2015.
Photo caption: Design for the new Cuenca Sheraton Hotel.