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Brazil: average occupancy falls for the 2nd consecutive year, but maintains healthy levels.
Tuesday, 20th May 2014
Source : HVS
The 2014 edition of Trends and Opportunities Brazil reveals that key performance indicators trended negatively in 2013, though the average occupancy in Brazil continued to remain at healthy levels; above 63%.

 In 2013, average annual occupancy declined 3.0% to 65%, compared to the previous year, while the average room rate dropped 0.5% to BRL 318, a sharp contrast to the 7.7% increase registered in 2012.

Consequently, Revenue per Available Room (RevPAR) decreased by 3.5% (to BRL 208). The drop in room rates is largely attributed to an unfavourable economic scenario, which prevented hotel executives from revising their rates upwards. This coupled with increasing operating costs, in particular payroll expenses, resulted in lower operating margins affecting the valuation of hotels adversely in some cases.
“Market conditions in 2014 continue to be challenging. Room night demand is expected to maintain similar levels as in 2013. However, with minimal additions to room supply in some markets, the pressure on hotel occupancies is anticipated to ease and rooms rates are forecasted to stabilize going forward”, notes Cristiano Vasques, Managing Director, HVS São Paulo and Partner, HotelInvest.
Regional Updates:

Rio de Janeiro (Occupancy: 76%, Average Room Rate: BRL 473, RevPAR: BRL 360): Continuing the trend from 2012, room night demand rose by 3.6%, driven by several major events in the city. However, the opening of a new hotel in Botofogo led to supply pressure in the market resulting in 1.5% drop in city-wide occupancy. Therefore, despite the average room rate increasing slightly (0.6%) in 2013, RevPAR (-0.9%) dropped marginally.

São Paulo (Occupancy: 66%, Average Room Rate: BRL 359, RevPAR: BRL 239): Heavily influenced by the national economic scenario, the São Paulo hotel market recorded a 2.3% decline in occupancy and a marginal increase in average room rate (0.3%), resulting in a RevPAR drop of 2.6% in 2013 compared to the previous year.

Salvador (Occupancy: 55%, Average Room Rate: BRL 210, RevPAR: BRL 116): This city registered the highest increase in room night demand (6.5%) amongst the markets covered in this report. However, as growth in room supply was even higher (14%), occupancy declined 6.5% and average room rate fell 1.9% in 2013 compared to the previous year. Resultantly, RevPAR dropped 8.3%, which could have decelerated further if not for the Confederation Cup in June.

Curitiba (Occupancy: 66%, Average Room Rate: BRL 210, RevPAR: BRL 139): Demonstrating the best hotel market performance of the six major cities in terms of growth, Curitiba witnessed an overall occupancy increase of 2.3%, which coupled with a 2.8% increase in average rate, led to a RevPAR growth of 5.2%. The positive performance is largely attributed to room supply remaining constant with no new hotel opening in 2013.

Porto Alegre (Occupancy: 66%, Average Room Rate: BRL 237, RevPAR: BRL 156): The Gaucho capital, saw room night demand plummet (-5.7%), causing a 5.5% drop in occupancy and a 4% drop in average room rate in 2013.

Belo Horizonte (Occupancy: 64%, Average Room Rate: BRL 238, RevPAR: BRL 152): The Confederation Cup, in June 2013, had a positive impact on room night demand in Belo Horizonte, increasing by 2.9% over that in 2012. However, the opening of new hotels resulted in the occupancy and average room rate declining by 2.1% and 4.7%, respectively. Consequently, RevPAR dropped 6.7% in 2013 in comparison to the previous year.

To view the Trends and Opportunities report please visit:–-brazil-2013-14

About HVS
HVS is the world’s leading consulting and services organization focused on the hotel, mixed-use, shared ownership, gaming, and leisure industries. Established in 1980, the company performs 4500+ assignments each year for hotel and real estate owners, operators, and developers worldwide. HVS principals are regarded as the leading experts in their respective regions of the globe. Through a network of more than 30 offices and 450 professionals, HVS provides an unparalleled range of complementary services for the hospitality industry.
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