Special Report: FT Wealth
Venezuela’s wealthy build their own oasis
For more than a few it seems there is no economic crisis
As food shortages bite, a queue of angry shoppers stretches for blocks around a supermarket in the leafy quarter of Altamira in eastern Caracas. Across the road, though, is a different picture: the Hotel Cayena, built at a cost of $40m, has become a refuge for those who can afford to drink Bollinger’s La Grande Année champagne costing more than $1,000 a bottle.
The price is equivalent to 40 times Venezuela’s minimum monthly wage. Meanwhile, food staples such as cooking oil, sugar, rice and maize flour are increasingly scarce and prices are rising fast.
Buoyed by high oil prices, the previous socialist government established programmes to help the poor, in an attempt to damp the gross inequalities that still exist in Caracas.
Now the economy has collapsed, plunging Venezuela, which has larger oil reserves than Saudi Arabia, into one of the worst crises in its 200-year history. “It may sound like an idyllic place, but the wealthier are permanently preyed upon,” says one successful businessman, who is not just talking about criminals but also the government itself.
Food shortages and inflation are hardly new phenomena but have been worsening steadily. Three decades ago, Venezuela boasted some of Latin America’s highest living standards. During its golden age, Caracas was the envy of neighbouring cities, with its museums and galleries holding the best collections of modern art in the region.
Today, after 17 years of socialist revolution, there is not even toilet paper in the shops and the people are fed up. “No hay” (“there isn’t any” in Spanish) is a commonplace refrain from shopkeepers asked if they have basic items in stock.
But not at the Hotel Cayena. “This is an oasis in the middle of chaos; everything works and you can find everything,” one hotel investor adds, stirring Italian Grana Padano cheese into his mushroom risotto.
“The wealth that was around here before Hugo Chávez came to power is still around but much diminished. The lifestyle of all Venezuelans has plummeted, particularly in the past two years and particularly in the past two months. My wife also struggles every day to get everything we need at home.”
For now, the business of the investor, who wishes to remain anonymous, has escaped the war cry that once resounded across the land. “Oligarchs, tremble” became the mantra of the late President Chávez on launching his socialist revolution in Venezuela. The threat of expropriations led to an exodus of the wealthy to Miami.
Indeed, the “Bolivarian revolution” begun by Chávez, and now pursued by his embattled successor Nicolás Maduro, vowed to take power away from the wealthy. Dubbed escuálidos (squalid) and pelucones (bigwig conservatives), they have been derided by officials for years, yet many have resisted attempts to seize their wealth.
The elegant Caracas Country Club, founded almost a century ago, has 3,000 members, who enjoy manicured lawns, antique chairs and an 18-hole golf course. “It is always full because people feel safe here,” says a veteran member and businessman.
Understandably so. Caracas is one of the world’s deadliest cities; security is frequently rated the top concern for Venezuelans both rich and poor. “The situation is absolutely dramatic,” says a respected Ivy League-educated businessman, who is one of the 240 wealthy neighbours who live in the area surrounding the club’s grounds.
Recently one of his neighbours was kidnapped not far from the many diplomatic residences that dot the area. Like many of his peers, with the money he earns from his company’s local operations he has enough to be chauffeured in an armoured car but not enough to pay for his children’s US university fees.
Despite their grumbles, most of the country’s wealthy live their lives in dollars. As the local currency has plummeted, remaining in Venezuela has become much more affordable.
Yet it is difficult to feel as if you are in the middle of an economic crisis. Late last year, a franchise of the fashionable Buddha-Bar opened in Caracas. At the opening-night party, acrobats tumbled and drummers provided the beat for celebrity DJ Ravin as Taittinger champagne flowed in the packed two-storey restaurant and club. “There are still beautiful people with money who want to enjoy life here,” says the heavily accented Lebanese-Venezuelan businessman who opened the bar.
And indeed there are. At weekends they charter private boats or jets to the white, unspoilt beaches of Los Roques, a Venezuelan archipelago about 130km off the coast that was popular with high-end tourists from Latin America and Europe before the crisis hit. The crystal-clear waters are one of the few luxuries on Venezuela’s Caribbean coastline, much of which is littered with empty beer cans while reggaeton — a combination of Latin music and hip hop and rap — blasts out of loudspeakers.
Yet for many, the blame for some of the country’s woes should be laid at the feet of the so-called government enchufados (plugged-ins). Maladministration has reached such levels that the legislature’s finance commission says that 17 years of Chavismo have led to some $425bn of public money going missing.
Meanwhile, high-end car sales in Venezuela are at their highest level for years: close to the Hotel Cayena, a red 1960 Ferrari is on sale for a mere $300,000.
For more than a few, then, it seems there is no economic crisis. “To many, things are not going that badly here,” says the manager of the car dealership, running his hand over a grey Porsche 911 Targa (price: $210,000).
“Even in the current situation the rich are richer, and there are many newer rich who can afford this.”
Hotel Cayena: an oasis amid the chaos
With its woeful infrastructure and appalling service, Venezuela’s tourism sector is not geared to the international traveller. The economic crisis and currency controls have left hotels in a decrepit state. Moreover, visitors are hardly encouraged by Venezuela having one of the world’s highest murder rates.
Caracas’s Hotel Cayena, the only member in Venezuela of the exclusive Leading Hotels of the World group, was once called an “oasis in the middle of the chaos”. Its views of leafy mountain slopes make the city’s troubles seem far away.
It has played home to presidents, and diplomats and local and foreign business people praise its restaurant, La Sibilla. “We are trying to make something unique here, which is to put Venezuela back on the map,” says Esteban Torbar, the hotelier behind Cayena.
“People change their perception of Venezuela when they enter this hotel. We have broken the paradigm of Venezuela’s bad service,” he adds. “Let alone being the safest hotel here.”
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