Industry experts estimate the total market for hotel/restaurant equipment in Ecuador in 2011 to be $52 million. Imports are estimated at $26 million. Domestic production accounts for 60 percent of the total market. The import market is divided as follows: $12 million for food equipment; $8 million for OS&E; and $6 million for FF&E.
The hotel/restaurant industry is reactivating and is expected to grow in response to public sector investment in schools and hospitals, including the San Francisco and the Ambato hospitals representing an estimated $1.5 million business opportunity; as well as private sector investment in at least five new major hotel projects including construction of the Sonesta, Windham, Holiday Inn, City, and Marriott Residence in Guayaquil, representing an estimated $2.5 million business opportunity for kitchen and laundry equipment. Private and public investment is also expected in mining and oil camp sites, representing a business opportunity of $1.2 million. Another growth factor is the replacement of obsolete equipment and supplies.
The Ecuadorian hotel/restaurant market has been affected by the aggressive marketing techniques employed by U.S. suppliers after an economic crisis in 2000. Many new distributors, with limited experience and ties to installation, repair, and maintenance services entered the market, putting pressure on the established incumbents.
The U.S. dominates the import market with a 40 percent market share. Third-country competitors are Italy, Brazil, and China with 12 percent each, France and Colombia with 6 percent each, Mexico with 4 percent, Spain and Germany with 3 percent each, Turkey with 1 percent, and others accounting for 1 percent. Italy is preferred for ice cream machines, cooking equipment, coffee machines, washers, and exhibition equipment; Brazil supplies food equipment, FF&E, and OS&E; China stands out for small machines, food processing equipment, refrigeration, and OS&E; France supplies tableware; Mexico supplies stoves and refrigeration equipment; Colombia is strong in dishware; Spain is strong in stoves, refrigeration equipment, juicers, and operating materials; Germany is known for state-of-the-art ovens; and Turkey is known for dishware.
Domestic production is strong in refrigeration (cold rooms), stoves, kitchen metal furniture ($13 million per year), wooden furniture ($17 million per year), and fixtures for decoration ($1 million)
Best prospects are:
For food equipment – food machines, stoves, mixers, slicers, refrigerators, dishwashers
For OS&E – small wares, dinnerware, flatware, glassware
For FF&E – carpets, wallpaper, furniture, lamps, decorating supplies
End users include hotels, restaurants, military and oil camps, schools, hospitals, churches, catering services, and franchise chains. Fifty-five percent belong to the private sector and 45 percent to the public sector. Of all franchises present in the market, 34 percent are hotel/restaurant franchises, 90 percent of which are from the U.S. Equipment renovation of several franchise chains will provide a good business opportunity during the remainder of the year.
We strongly recommended that a local representative or distributor be utilized to assist with local requirements and relations. Business in Ecuador is mostly conducted through agents and distributors who will assist in promoting/retaining the product in the market. When appointing a local distributor, U.S. firms should seek counsel from an Ecuadorian law firm to ensure that their distribution agreements give them appropriate protection. It is advisable to appoint non-exclusive representatives for a limited period of time and to include an arbitration clause as a means to resolve any disputes that may arise. The U.S. dollar is Ecuador’s official currency. Typical terms of sale are either a down payment or advance cash payments. Payment terms for distributors are usually 60 days from the invoicing date. In the case of a long-standing relationship, individual payment plans and schedules are more flexible. Most distributors cover the whole country and use their own sales forces.
Vitrified ceramic products must comply with INEN (Ecuadorian Standards Institute) Standard 010 (cracking enamel test) and Standard 1-804 (certificate of conformity by INEN approved laboratories). Refrigeration equipment (HS 841829 and 841850) must comply with INEN Regulations 9 and 35 (energy efficiency). In order to participate in public tenders, suppliers must register with the Public Contracting Institute (INCOP) at www.compraspublicas.gov.ec. As per the Public Contracting Law, domestic products are given preference over imported ones. Capital remittances abroad are subject to a 2 percent tax.