Brazil’s hospitality industry is growing
Hotels in Brazil have always had a lot going for them. Pristine beaches, world-famous landmarks and an all-year-round warm climate lead to millions of foreign visitors flocking to the country each year.
This, compounded with increasing domestic demand and strong economic growth, means that the hospitality industry in Brazil is practically booming.
The average room rate in Brazil climbed by 10.4 per cent in 2009, the highest growth rate seen in any large country in the world at a time when many nations were still in recession, according to a report by Jones Lang LaSalle.
Looking at more than 340 hotels and resorts in Brazil – the largest sample ever used in the report – Jones Lang LaSalle concluded that significant growth is likely to be seen in the Brazilian hotel market in the next three years.
Some 93 per cent of hotels in the country are not affiliated with a major brand, although, as foreign interest in Brazil grows, the number of chains present in the country is likely to increase.
More than 150 developments were said to be underway in the country, which will create a total of 24,147 additional rooms. But the sheer size of the market in Brazil means that this only represents an overall increase of 5.5 per cent.
Manuela Gorni, senior vice president for Jones Lang LaSalle Hotels in Sao Paulo, explained: "We expect a new hotel development and investment cycle to gain traction in Brazil, as the country prepares for the Fifa Soccer World Cup to be hosted in 12 cities across the country in 2014 and the Summer Olympic Games in Rio de Janeiro in 2016."
Brazil didn't manage to escape completely unscathed from the recession. Room occupancy rates were down by 1.4 percentage points in 2009, but Jones Lang LaSalle said this was "far outweighed" by the average daily room rate increase.
"This resulted in revenue per available room (RevPAR) growth to R$ 112 (£42) – the highest RevPAR in Brazil's history," said Ricardo Mader, executive vice president for Jones Lang LaSalle Hotels in Sao Paulo.
"Across the 15 hotels we asset manage across Brazil, we have already been observing double-digit RevPAR growth thus far in 2010."
Enthusiasm from the hotel industry about investment in Brazil was also seen at the recent VII International Real Estate and Tourism Investment Meeting, held by the Association of Real Estate and Tourism Development of Brazil (ADIT).
Hotel chains Starwood Hotels, Accor Hospitality, Hyatt International and Hilton Hotels all declared their intention to invest in the country during the event.
Starwood said it plans to develop properties in all the major Brazilian state capitals, as well as attract investors to work on joint projects in the country, describing Brazil as the "apple of Starwood's eye".
Julio Gavinho, director of development for Hyatt, named precise figures for the number of hotels that they plan to develop in Brazil.
"Brazil has a great economic potential and a market ready for hotel brands. In this country's good moment [sic] , and through studies that indicated a lack of hotel brands in Brazil, we from Hyatt are interested in building 50 hotels in Brazil in the next ten years," he explained.
It's not just the anticipated extra visitors that are attracting hotel chains to Brazil; many claim that they are planning to establish a presence in the country over the long term.
Inward tourism arrivals, which were already at 7.2 million in 2008, are expected to increase to 9.2 million by the year 2014. Strong domestic demand also means that Brazil is cushioned somewhat against outside economic forces – part of the reason that it exited recession so quickly.
With such positive signs, those looking to invest in overseas accommodation could do well place their money in property in Brazil.