A study assembled by JLL in partnership with the Brazilian Hotel Operators Forum (FOHB), the “Lodging Industry in Numbers” reports that RevPAR for Brazilian urban hotels and condo hotels increased moderately for the 10th consecutive year in 2014.
Despite continued growth, findings based on data collected from more than 460 hotels, resorts, and condo hotels suggest that last year’s RevPAR increase was less than in previous years.
Contributing to the sector’s slackened growth, Brazil’s national room count—which now amounts to an estimated 500,212 rooms—has grown by 7.9 percent over the past year. This overall increase in the regional hotel supply has caused lower occupancy rates across the board. In 2014, total occupation fell by one percentage point to 64.9 percent.
While ADR has superseded inflation in recent years, the opposite was true in 2014 when inflation soared to 5.9 percent, and ADR fell 2.9 percent.
“Ever since May, we have seen indicators that are worse than in the same period last year,” says FOHB president Manuel Gama. “However, we have also noted that the chains continue to be optimistic about the medium- and long-term outlook, and we maintain our forecast of having more than 400 new developments through 2020, implying an additional 75,000 rooms in hotel chains in Brazil.”
This slight economic setback was offset by capital garnered during the FIFA World Cup soccer tournament last year and by a decrease in value of Brazil’s currency that led to an increase in national tourism and acquisitions. During this time, resort revenue grew by 33.4 percent.
Last year, private equity funds also completed the largest transactions ever made in Brazil, with the purchase of Atlantica Hotels by Quantum; the purchase of 70 percent of Brazil Hospitality Group (BHG) by GTIS; and the development of more than 20 hotels under the Zii brand by the HSI fund.
“These transactions demonstrate that Brazil is still on the radar for long-term investments and that the country’s hotel industry has great potential and offers investors several opportunities,” says Ricardo Mader, managing director of JLL’s Hotels & Hospitality Group for the Americas region.
Brazil’s economy did not fare well in the first half of 2015, and JLL expects that this will cause RevPAR to fall for the first time in ten years. However, the impending 2016 Summer Olympics may help to improve hotel performance.
