Peru Woos Hotel Investors With Easy Tax Credits and Ready Development Loans

The government of Peru, a western South American republic with a population of 30 million, has launched a campaign to attract foreign hotel investors. The country, one of the smallest on the continent with a land mass of only 497,000 square miles, are offering easy tax credits and quick development loans.

Andina, an online news outlet owned by Peru News Agency in Lima, reports the country's successful mining industry is providing a pipeline for higher incomes, leading to more domestic travelers and a demand for more quality hotel rooms. Peru is following Brazil and Colombia in courting outside capital for its tourism and hospitality industries.

"The government is working to promote tourism because we know it's an activity that creates jobs enormously and also brings investment into the region," according to Claudia Cornejo Mohme, Peru's Deputy Minister of Foreign Trade and Tourism

"The flow of tourism is very positive for us. When we speak about tourist infrastructure, we have a lot of room to grow," the official said.

Previously, many of the hotels in Peru were state-owned and managed by third parties. But today, the country is inviting outside investors to help grow the industry,

According to Luis del Carpio Castro, head of projects, tourism and real estate for Proinversión, a Lima-based private-investment promotion agency, foreign investors who plan to invest  more than $5 million in Peru can receive tax incentives and tax returns even before they complete a total investment transaction or complete a proposed development.

He says current loan interest rates run at about 6% to 6.5% and can extend up to 10 years.  Investment requires 40% to 50% loan to value.