Algodon Brand

I’ve recently been asked to talk a little bit about the name idea for the Algodon, so I’ll do that today. My original goal was to create a brand name of distinction, refinement and elegance- a name which conjures “a clean and pure appreciation for the good life, and a sense of refined culture.” Obviously, that’s a big order. So after much careful thought, we decided to run with the word “Algodon,” which means “cotton” in Spanish. Though my Mississippi grandparents were cotton farmers at the start of the 1900s (“when cotton was king!”), for the most part I initially associated the word with the Cotton Club days of the Roaring 20's, and even that sophisticated glamour so often associated with the 50's "Rat Pack". This was a time when travel and leisure were synonymous with culture and sophistication, and that’s the feeling I was going for. My desire is to make Algodon- both as a brand and as a destination- the modern day equivalent in an active, global lifestyle, and ultimately “a destination where the best elements of the illustrious past and the affluent present meet.” Above I’ve quoted some of the language we used when initially defining our brand identity, and I think the language that we came up with worked really well for us.

Bottom line, the Algodon brand represents a lifestyle. My goal and my company’s goal is to continue seeking out distinguished properties which encapsulate old-world charm and sophistication, and to refurbish them with modern day service, technology, and amenities.

I’ve been asked if I am looking to create a hotel chain. The answer is no. I prefer to think of this as simply a collection of exclusive properties within Argentina, which operate under the Algodon brand. And who knows? From there we may expand into other leading cultural cities of the world. But let’s not get ahead of ourselves…

Formula For Success

As I mentioned in a previous post, Argentina’s booming economy and real estate market are presenting unparalleled investment opportunities every day, and are attracting savvy international investors from all over the world, including us. When approaching the real estate market, we felt that an ideal investment sector for ourselves and our investors would be the hospitality sector. I personally feel that identifying underperforming commercial properties and repositioning them into hotel or mixed-use properties is a formula for success.

Argentina’s uninterrupted property appreciation has roughly seen a 50% increase in real estate values since overcoming its financial crisis in 2002. So it’s logical to me that, while property appreciation alone may be well worth the initial investment, capitalizing on that investment to create an additional primary source of income should be our ultimate goal. A successful luxury boutique hotel such as Algodon Mansion may potentially generate multiple revenue sources from a single piece of property. That’s good news to me.

While the Algodon Mansion will serve as a high-end, private hotel for distinguished guests, we also hope to appeal to the local community with the restaurant, lounge and spa. Our goal in the property’s renewal is to reclaim the old world charm and sophistication of its original 1912 architecture, while at the same time denoting an aesthetic value of modern elegance and functionality. We’re all proud of it. By respecting and maintaining the integrity of the building’s original facade, we believe the finished product will add to the beautification of the neighborhood; attracting a loyal customer base and becoming a travel destination for both the local community and visitors to Buenos Aires.

Next week I’ll talk about the name we’ve chosen for the hotel brand, and how we reached the decision to call our project “Algodon.”

Have a great week!

Algodon Mansion

“Perhaps the most tangible sign of Argentina’s economic recovery, is its booming real estate market, which has transformed Buenos Aires, the capital, into a construction site.” - The Wall Street Journal

I love that quote. Tourism in Argentina is thriving right now, and has been for the last several years. I see it every time I go down there, and my favorite hotels are always almost booked to capacity. Argentina is literally the leading tourism destination in all of Latin America, and had over 4.5 million visitors in 2007. The Argentine Tourism Office says that visitors from the US alone grew more than 35% between 2005 and 2007. I like those numbers! 2.2 million foreigners visited Buenos Aires last year, and Buenos Aires City Tourism Bureau did a study that found foreign tourists prefer four and five star hotels (who doesn’t?), and that 2007 occupancy rates exceeded 85%. Things are looking good for our hotel project.

The mansion we purchased is absolutely amazing. It was previously a private residence and is located at 1647 Montevideo Street in the heart of the embassy and luxury hotel district, Recoleta. The Mansion is a magnificent 20,000 sq/ft estate that was built in 1912. It’s a 5-story building, but we added a subbasement during the renovation, bringing it to 6-stories. The architectural team we decided to use for the renovation is headed by internationally acclaimed architect, Gerhard Heusch. He’s got a great portfolio, and I’ve had the pleasure of seeing some of his past projects in person, including The Grand Havana Room in both New York and LA.

The hotel will feature 10 luxury suites, a 5-story hanging garden, and rooftop pool, spa, and bar. Watching the completion of this project has been a real experience. These days, I get down there to oversee the project just about every other week. One of the highlights for me has been the construction of the rooftop pool. Wow. It’s going to be truly fantastic. The hotel is also going to have a restaurant featuring South American & French-fusion cuisine, a private dining room with a wine cave and humidor, library bar, wine cellar, and an outside dining patio that features an A-framed glass ceiling. This project has become very personal to me, and I have to say that I’m quite proud of it.

With Gerhard’s help (as well as the rest of our incredible work team down there), Algodon Mansion should be opening its doors in December. That’s right around the corner, and we’re all very excited about it. The plan is to have a wonderful New Year’s opening party for our partners and friends. I’m looking forward to it.

I’ll be here next week with more about Algodon Mansion…Gotta go, I have work to do!

Taking Action

During the period leading up to the economic collapse, the Argentine peso was artificially pegged to the dollar on a one-for-one basis. This action artificially inflated the cost for foreigners to visit Buenos Aires and consequently reduced the volume of tourism and the demand for development of additional hotel infrastructure. In recent years, the situation has dramatically reversed - demand has far exceeded the supply of quality hotel and other tourist-oriented facilities, especially in the category of premium intimate properties.

I have spent a lot of time since my first visit to Buenos Aires both studying and focusing on the hotel sector of this rapidly rebounding city. In January 2007, my company InvestProperty Group closed on the purchase of a magnificent old mansion located in Buenos Aires’ most elegant residential neighborhood, Recoleta. This neighborhood is truly unbelievable. It’s like the Beverly Hills of Buenos Aries. It’s known for its broad tree-lined avenues, fashionable boutiques, high-end restaurants, cafés, art galleries, and exquisite French architecture. I can’t go on enough about this place, it’s unquestionably the city’s most cultured neighborhood, and that’s why I thought it would be the ideal location for IPG’s flagship luxury boutique hotel, “Algodon Mansion.”

I’m out of time for today, but I’ll write more about this project in my next entry.

My Trip to Buenos Aires

When I arrived in Buenos Aires in 2003, it was common knowledge that the economy had recently suffered a debilitating blow, that the country had defaulted on its national debt and that the unemployment rate was soaring. Since I am by nature a contrarian, this was part of my motivation for going. Although my expectations were somewhat tamed by media coverage about the economic and social problems, I had hoped to enjoy the city’s charms and the value of its currency which had devalued by about 70% from its previous level. In fact, I was “wowed” to find a vibrant world-class city, full of sophisticated, well-dressed and happy people, historic beautiful neighborhoods with lush green parks and public monuments, wide-open boulevards lined with buildings boasting some of the finest architecture I had ever seen. I was also enthralled with the great shopping… markets…. music…. dancing…. wonderful food, wines and entertainment. I knew then why they call Buenos Aires the Paris of South America, at a third of the price here in the States and an even larger value discrepancy in comparison to the major European cities.

My enchantment with the city prompted my interest to learn more about the local real estate market. The more I learned, the more convinced I became that there was a huge opportunity, that prices were extremely low compared to other leading cities and with the economy and tourism rebounding strongly, many elements of risk had already greatly subsided. I was determined to take action.

But that’s enough for today. Next time I’ll be talking about how my vision has indeed been realized by my companies (InvestProperty Group and DPEC Partners) in the creation of a luxury boutique hotel (“Algodon Mansion”) in Buenos Aires, and then later a very beautiful wine and golf resort (“Algodon Wine Estates”) in San Rafael- the southern heart of Mendoza.

Life is good!