Hotel Bauen on Callao by Corrientes (Photo: Sam Verhaert)
This month, one of the most iconic businesses in Buenos Aires returned to the media spotlight. Hotel Bauen – a 20-storey high-rise in the centre of the city – was the scene of street protests that brought traffic to a standstill. Why? The hotel is one of the hundreds of companies that were bankrupted in the aftermath of the 2001 crisis, abandoned by their owners but then brought back to life by the people who had worked there.
Nine years since the workers recovered the hotel, the building is at the centre of a courtroom tug-of-war over its rightful ownership. On April 19th another court date took place and supporters filled the streets around the hotel in a showing of solidarity. The battle for Bauen is heating up once again. It is plucky workers against big business -and the outcome is far from assured.
An Intricate Story
The history of the hotel is as mythical as it is murky. It was built during the military dictatorship’s beautifying of Buenos Aires in the run-up to the 1978 World Cup. Located in the centre of town – Callao and Corrientes – it was a shiny jewel in the city’s crown; one of only two five-star hotels in the capital.
Hotel Bauen's dance floor at the ready (Photo: Sam Verhaert)
It opened its doors in May 1978, with 250 rooms, boasting conference rooms, a swimming pool, a theatre and a disco. Bauen S.A., run by Marcelo Iurcovich owned the hotel. He had strong ties to the government in the 1970s and built the hotel with loans from the National Development Bank (BANADE).
The hotel enjoyed several years of prosperity and then in the 1990s it embarked on a trajectory typical of the dying moments of the 20th century in Argentina. In 1997 Iurcovich sold the hotel to the Chilean company Solari S.A. who managed the business during the crash. On the 28th of December 2001 the hotel closed and the employees joined the ranks of millions of Argentines out of work.
On the 21st of March 2003, a small group of former employees, supported by the National Movement of Recuperated Businesses (MNER), broke into the building and started the remarkable journey to bring the hotel back into working order. Nine years on, the 160 workers run Bauen as a cooperative and are in a constant fight with the courts.
Old Buildings with Old Furniture
Since 2003, the workers have run the hotel on a shoestring. “Because we aren’t legal owners, we can’t go to the bank and ask for a loan, because they won’t give it to us.” Marcelo Ruarte, the hotel’s press officer, is one of the most recognisable figures in the Bauen Cooperative. He has been working at the hotel for over 30 years. “We don’t think about trying to compete with the Sheraton and the Hyatt, we have a lot of disadvantages – the recuperated businesses are old buildings with old furniture.”
Hotel Bauen room with twin beds (Photo: Beatrice Murch)
For a conventional customer, this issue is difficult to ignore. A quick glance at the hotel’s online reviews reveals a less-than glowing report. “Dirty, old, dark, cockroaches in the bedroom… I recommend that you don’t waste your time or money in this hotel,” one user of the holiday review website Tripadvisor.com writes. “The hotel lobby resembles a train station, the lifts don’t work; the AC is broken; the furniture is in tatters, it’s loud and the windows that look onto the street don’t have double glazing,” writes another.
The list of the problems goes on, but the staff is well aware of the hotel’s shortcomings. Because they don’t have any legal rights in the building it is impossible to get investment, and without investment, the process of rebuilding the hotel – which was gutted by Solari S.A. in its bankruptcy – is painfully slow. “In the United States, companies have millions of dollars of subsidies, here we don’t have anything,” Arminda Palacios, the oldest worker in the cooperative, explains. “Everything that has been done here, has been done off the backs of our own work – it is an enormous sacrifice.”
The cooperative can only invest a percentage of the income that the business brings in; it has no capital. “At times they [the workers] were reinvesting up to 90% of the income back in the hotel and only taking home 10%” Fabian Pierucci, Bauen’s resident economist, explains. Progress is incremental and there are no guarantees that the workers investment – $6m over 9 years – will ever be repaid or recognised. “A lot of people are proud of us and what we’ve achieved but it’s us who have to keep working just to be able to survive, but this is bankrupting us,” cooperative member Maria Lavalle says.
Legality versus Legitimacy
On the 20th June 2007, the cooperative received an official eviction notice but the workers are defiant that they will not give up the hotel. “How are we going to give the hotel back to the businessman who shut it down in the first place?” Ruarte asks. “This isn’t ours legally. Legitimately it is ours but those are two different things.”
Hotel Bauen cooperative employees protest in 2006 in front of Buenos Aires City Hall. (Photo: Olmo Calvo Rodriguez)
The court battle over ownership of the building is Dickensian in its complexity and shows no signs of being resolved soon. The Bauen group – headed by Marcelo Iurcovich – constructed the hotel with the aid of several million dollars of state loans from the now defunct BANADE. These loans have never been paid back in full to the state. Solari S.A. then bought the hotel in 1997 with a down payment of 10% and, according to Fabian Pierucci, the company did not pay much more before it went bankrupt. Iurcovich took ownership of the hotel once again and then in 2004 sold it to Mercoteles, the company currently claiming ownership.
This diluted notion of ownership is at the core of the court proceedings. The people at the cooperative believe that so many people have “bought” the building without paying for it that the state – who made the initial loan for its construction in the 1970s – should expropriate it. There has been a trial running for over 30 years between Iurcovich and BANADE over the repayment of the loan but it is still to be concluded.
The Bauen Cooperative is also crying foul play, claiming Iurcovich’s enterprises have not kept everything above board. “After lots of investigation, it is a possibility that they bankrupted it so they could come back with a company with a different name and wash away a lot of debt,” Pierucci claims, “Common practice in Argentine capitalism.” He also doubts the legitimacy of Mercoteles: “This company Mercoteles is made up of Iurcovich family members and commercial associates. This business never existed [before buying the hotel]. Kaliman [the recently deceased former director] was clearly the director of a ghost company, he was the straw man for the Iurcovich family.” Hugo Iurcovich, Marcelo’s son, currently runs the company.
Mercoteles were approached to comment for this piece but, despite initially showing interest, were not available for an interview. Mercoteles maintain that they are the legal owners of the hotel and on various occasions they have filed eviction orders against the cooperative. At the recent court hearing on the 19th April, the Iurcovich family lawyer said they would keep all the current staff on if they got back control of the hotel.
Cooperative: A Model for the Future
Both Ruarte and Pierucci admit that the cooperative’s main role was to provide people with employment when the fabric of Argentine society was unravelling. “The cooperative was founded on the ruins of 2001, it was fulfilling a social role which, in that particular moment, even the state couldn’t do.” Pierucci explains. “Every job has a social value that is incalculable.”
Workers and clients enter the Hotel Bauen lobby (Photo: Sam Verhaert)
A huge proportion of their business comes from people who are sympathetic to their cause: members of other collectives, leftwing political groups and “responsible tourists”. Around 40% of the hotel’s custom comes directly from the state; ministries often arrange conferences and rent out their rooms. It is a precarious situation: without the government’s – ideological if not judicial – support, the hotel would surely struggle to survive. “In one way or another, this turns us into captives, captives of the state.” Ruarte said.
Even if the Bauen Cooperative does get what it wants – for the state to take control of the hotel and lease it back to them – there are still question marks about how successful the hotel would be. “We are workers who have recuperated this business, but what calls the shots outside is the capitalist market.” Ruarte comments. Can a hotel run as a cooperative thrive in a capitalist market?
The main criticism of cooperatives is that they are inefficient and they lack the resources to grow their business. All decisions have to be made collectively -a worker remembered the time that she was involved in a 20-hour-long meeting when she worked in a factory run as a collective. Many say that they lack the decisiveness to compete in an unforgiving market.
But as the fallout of the global economic crisis deepens, the cooperative model is becoming increasingly attractive to workers around the world. “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.” Ban Ki-moon, the UN Secretary General, announced this year, bringing in the UN’s International Year of Cooperatives at the beginning of 2012. These days, 99% of Sweden’s dairy production, 95% of Japan’s rice harvest and 60% of Italy’s wine production are all run cooperatively. The Mondragon Corporation, the most successful business group in the Basque Country and one of the most successful in Spain, is also run cooperatively.
The cooperative model is a viable one, but the challenges Bauen faces are by no means negligible. Unless the workers get legal recognition, the logistics of running a cooperative business are low on their list of priorities. The threat of eviction still hangs heavy.
More court hearings are due to take place over the next few months and a favourable outcome for the workers is far from assured. But they are determined and, in a year of high profile national expropriations, Fabian Pierucci is hopeful. “We’re hoping that this time, legitimacy wins.”
What do people think about the Bauen workers’ right to ask for an expropriation and the viability of their business model? Click here to find out.
