An Influx of Business Wealth in Rio

New York Times, November 10, 2009

RIO DE JANEIRO — On Alexandra Daly’s most recent visit here in May, she was booked into a hotel across the street from the most happening stretch of Ipanema beach. The perk, however, proved irrelevant. Ms. Daly had not bothered to pack a bikini.

“I had nine meetings in one day,” said Ms. Daly, a hedge fund marketer, whose London-based company, AA Advisors, works with about 35 major Brazilian investors. “I don’t even have days like that in New York. When you’re talking about Rio, people think of samba, Sugar Loaf mountain and the beach — not the billion-dollar investment industry.”

The conventional view of Brazil’s two largest cities is that São Paulo, with its banks, commerce and industry, got the brains, while Rio, with miles of crescent-shaped beaches, Carnival revelers and picturesque bay, got the looks. But the truth is that the “Marvelous City,” as Rio is known, is increasingly a serious destination for business travelers.

Brazil’s growing standing among global financiers is one explanation. Poised to become the world’s fifth-largest economy by 2016, the country has emerged from recession virtually unscathed, earning the envy of its Group of 20 cohorts.

São Paulo is the center of the boom. But Rio brings plenty of opportunities to the table, not only with its core oil and natural gas businesses, but also in financial services, technology and telecommunications.

An August 2009 study, “Decision: Rio Investments 2010-2012,” published by the Rio de Janeiro State Federation of Industries, predicted that public and private investment would pump $60.3 billion into the state over the next three years, not counting the additional $14.2 billion budgeted for the 2016 Olympic Games.

“I would dare to say that, probably, we have the biggest concentration of billion dollars in investment per square kilometer in the world,” said Cristiano Prado, the author of the industry federation’s study. “And more will come together with the Olympic Games in the next years.”

Not since 1808, when the Portuguese monarchy sailed into Guanabara Bay, fleeing Lisbon ahead of Napoleon’s army, has Rio seen such a spectacular influx of wealth. And not since 1960, when Rio ceded its capital status to Brasília, setting off an exodus of businesses and a half-century of urban decline, have Cariocas, as Rio’s residents are called, had a reason to believe the wealth would return.

“There is hope that with a government that is more pro-business, more things will happen in Rio,” said Ronaldo Veirano, founding partner of Veirano Advogados, a Rio-based law firm that worked on the federation’s study. “Hotel chains are now thinking seriously about their capacity and authorities are investing in infrastructure. I don’t think Rio will ever be another São Paulo but I think it could recover some of its glamour.”

The most conspicuous hurdle is an epic crime problem that has branded Rio one of the world’s most dangerous cities. On Oct. 17, for example, drug-trafficking gangs inside a favela, or slum, shot down a police helicopter in a series of clashes that left three police officers and at least 23 others dead.

Government leaders are eager to project a different image to the business community. “Clearly, the model we have is Barcelona,” said Felipe Góes, Mayor Eduardo Paes’s secretary of development.

Like the Spanish city, which cleaned up in time to be host for the 1992 Olympics, Rio hopes to reinvent itself for the Games. Presiding over the transformation is the billionaire Eike Batista, a mining magnate whose EBX Group has interests in real estate, energy, oil and tourism.

One of Batista’s pet projects is the deluxe restoration of the venerable Hotel Gloria, a 1920s landmark five minutes from the city center, where two of the largest corporate players in Brazil, Petrobras and Vale, still have their headquarters. The opening of the refurbished hotel is planned for 2011.

Other hoteliers have taken notice. Rio’s grandest property, the 86-year-old Copacabana Palace, introduced its sleek new Bar do Copa in March.

Meanwhile, the two-year-old Hotel Fasano in Ipanema boasts the stylish Baretto-Londra Bar designed by Philippe Starck.

Another newcomer is the year-old Hotel Santa Teresa, set in an acre of gardens in the artsy, hilltop enclave of the same name, just 10 minutes from downtown but far away in atmosphere.