“Hotel Apartments Offer Great Investment Opportunity in North-East Brazil” says Grupo Arrey

Interview with Manuel Arrey Oliver, President of Arrey Group

Why did your company come to Piauí instead of going to São Paulo or any other city?

We were specialized in tanning. Piauí didn’t have any big industry in this segment, and it was a goat, ram and ox (cow) skin producer. For us it was a great opportunity 30 years ago.

What were some of the challenges and difficulties you experienced 30 years ago? Has the business environment improved or is it still the same as before?

At first we thought about exporting raw-material, first skins, then shrimp, etc. We thought only about creating exporting industries. In 1998 and 1999 we exported 100% of our products. The local market in Piauí and in Brazil itself was very small.

In the last few years, with the changes in Government, with the economic change and the currency stabilization, we were no longer as competitive in exports as before.

We were able to modify our structure to the local market. We reduced, in some cases, the production and we assembled a distribution company. We have placed our products in several big supermarkets in many towns. It was a commercial change, a change in habits, a change in products presentation; it wasn’t an easy transaction.

Which are the difficulties to export your products from Pauí?

We export via the Fortaleza harbour, which is at one night distance (500 km). In terms of logistics I see no problem for us to export. Plus, the Fortaleza harbour has been growing and the frequency of ships is higher than before.

What are the advantages you of being here, instead of being in another region in Brazil or in any other part of the World?

We process the raw-material produced locally. We process, for example, carnauba wax, which has high relevance in the export numbers.

Are you thinking about drawing Brazilian or foreign investment to reinforce your own industry? Which will be your strategy for the next 3 years?

We own 4 hotels and we’ll open a new one that will probably be the beginning of a series of hotels. We are thinking about building 10 hotels with 200 apartments each, which are economic (3 stars). It’s an investment of around 400 million Brazilian Reals. These hotels will be built in 10 towns close to Teresina: São Luíz, Fortaleza, Sobral, etc. We’re also thinking about building a hospital. For all that, we are going to draw investment for 50% of the capital which can be Brazilian or foreign.

Our growth in the next 5 to 6 years will be focused on the hotel services and building, and not so much on the industrial sector. We can only grow in the industrial sector when we can export again, and that can only happen when the market and the currency allows it.

What about the building sector? Do you build for yourself or do you build for others too?

I build apartments to resell and, in the case of the hotels and the hospital, we build to be managed by us.

As the president of a company, what is your biggest challenge?

What is harder to do is to be adapted to a country that has changed 4 or 5 times in the last 15 to 20 years. The currency changed, the political system changed, the judicial system changed.

The Europeans are feeling that today, because in 30 or 40 years Europe didn’t change; Europe improved and now there are a few changes. These changes that you, the Europeans are experiencing now, which I understand, because I’m European too, happened in Brazil 4 or 5 times in 20 years.

These changes are expensive economically, but also emotionally. When you came here, you’re going to have to be as good and adaptable as the others and deal with all changes in the commercial and industrial sectors.