Brazilian Hotels: Surviving After the Football Fever. By Janelle Dumalaon ~ Weekly Exclusive - Global Views On Recent Trends Monday, 14th July 2014
Exclusive feature: This year’s World Cup has been an unprecedented disappointment to host country Brazil on many levels, chief among them the crushing 7-1 loss to Germany in the semi-finals, which ended hopes of a sixth World Cup title.
However, the football-mad country’s World Cup-related woes do not end there.
The international media have been quick to comment as to how the World Cup has affected prices in Latin America’s largest economy.
An article from the Globe & Mail quotes Instituto Brasileiro de Geografia e Estatistica, saying the annual pace of inflation target is now at 6.52%, as hotel prices and airfares spiked in the World Cup.
The economy has been struggling anyway: Bloomberg reported growth will slow to 1.35% in 2014 from 2013, lower than the Latin American average.
The hotel industry itself saw occupancy fall in 2013 by 3% to 65%, with average daily rates falling 0.5% versus the 7.7% growth in 2012, according to finance and entrepreneurship website Finweek, quoting figures from HVS Global Consulting Services.
Even just ahead of the World Cup, preparing suitable accommodation was problematic in Brazil. The Washington Post reported in the beginning of the year that many of the hotels that could have or should have been used during the World Cup never got built to completion.
Still, although now the World Cup is over, the overblown pricing from the event will remain and it’s having a big impact. The Wall Street Journal reported the World Cup has attracted hundreds of thousands of foreign visitors, but at the detriment of the domestic travel trade, usually booming at this time.
Hotels realizing this phenomenon have since gone out of their way to entice Brazilian residents still wary of expensive travel due to World Cup effects, mainly by slashing prices. But it hasn’t worked yet, said the WSJ.
South Africa did slightly better in its time as a World Cup host in 2010, according to a Huffington Post article on what Brazil could learn from its predecessor. The Huffington Post says while South Africa also found itself post-World Cup with a lot of five-star hotels vacant after the tourist tide ended, it managed to capitalize on the exposure it received as a World Cup destination – tourists are still coming, if not in the concentrated waves in June 2010.
And even though the World Cup is now over, Brazil will be hosting the summer Olympics in 2016 and can now turn its attention to the next big event. Several big names in real estate have already thrown their hats in the ring.
To name a few examples: Trump Rio, a 13-story, 171-guestroom hotel is expected to open in Rio de Janeiro in time for the games. Downtown Rio‘s Porta Maravilha is expected to boast two Holiday Inns, one with 244 rooms, and another 350-rooms.Hyatt Place is also expected to open the first of nine hotels across Brazil in time for the summer games.
These hotels, will however obviously face the cycle all projects specially constructed for special events face – the fight against irrelevance as the original raison d'être fades away.
But these hotels, and the rest of the Brazilian hotel industry, have around one-and-a-half years to prepare. Hopefully the lessons learned from 2014 and the years before will guide them through this process.
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Janelle Dumalaon is a correspondent based in Berlin, Germany. She has a Masters in Cultural Journalism from the University of Arts in Berlin and now works with journalists across the globe as part of international journalism organization, Associated Reporters Abroad (ARA). Janelle believes in traveling light, deviating from itineraries, and trying the street food.
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