Brazilian stand out in challenging global hotel market. Thursday, 24th September 2009 Source : Jones Lang LaSalle Hotels

While the global hotel market is struggling to regain footing amid a challenging economic climate, Brazilian hotels, a stand-out in the market, hit a record year of revenue per available room (RevPAR) performance.

The firm’s one-of-a-kind report provides a detailed performance analysis of more than 300 Brazilian hotels, condo hotels and resorts during 2008, additionally revealing that departmental profits marked an increase in 2008 with resorts at the forefront of the gains.

“Over the past four years, Brazilian RevPAR growth averaged 9 percent annually, outstripping the country’s GDP growth which grew on average by 5 percent per year,” said Ricardo Mader, executive vice president for Jones Lang LaSalle Hotels in São Paulo. “During 2008, properties in the survey sample achieved their highest-ever RevPAR, up 7 percent from the previous year to a total of BRL 104,” said Mader.

Exposed to the global economic crisis, occupancy rates are marking a drop across all Brazilian hotel segments this year. However, due in part to exchange rate conversions, average daily rates are expected to maintain similar growth trends as evidenced over the past two years. Economic forecasts call for Brazil to suffer considerably less and for a shorter duration than most of the world’s mature markets.

“If the current growth estimates of the Brazilian economy for the second half of 2009 are achieved, RevPAR is set to record positive growth during the year,” said Manuela Gorni, senior vice president for Jones Lang LaSalle Hotels in São Paulo.

“Due to increased top-line performance, the surveyed hotels’ gross operating profit (GOP) showed a significant increase, climbing to 28 percent of gross revenues, up from 26 percent in 2007,” said Clay Dickinson, executive vice president for Jones Lang LaSalle Hotels.

The report’s operating profit analysis reveals that departmental profit increased across the board, but resorts were at the forefront of the increases, with total departmental profit margins at resorts rising 15 percent over the previous year. “This increase is led by profitability increases in the rooms department and was due to aggressive management of expenses and the impact that exchange rates had on property revenue, which was significant during the peak tourist season in 2008,” said Dickinson.

Approximately 87 percent of hotels in Brazil, representing 60 percent of the country’s room stock, are unaffiliated with a major international or domestic brand. However, the proportion of branded hotels is on the rise as the market continues to be sought after by foreign investors.

Jones Lang LaSalle Hotels has tracked approximately 124 hotel projects that are underway throughout Brazil, the majority of which will be affiliated with a hotel brand. “A total of 18,073 new rooms are expected to enter the hotel market by 2012,” said Gregory Rumpel, executive vice president for Jones Lang LaSalle Hotels.

“Additionally, we expect a new hotel development cycle to start to gain traction in Brazil, concentrated in a number of the 12 cities chosen to host the FIFA Soccer World Cup in 2014,” said Rumpel.