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Fast and Furious – Strong Revenue Growth for Brazilian Hotels

Profile Photo By: H L
September 5, 2013

Fast and Furious – Strong Revenue Growth for Brazilian Hotels

Airplane over Ipanema beach in Brazil

Fast and furious like a samba crowd swell at Carnival, Brazilian hotels haven?t missed a beat in the last eight years, maintaining consistent growth. Brazilian Hotel?s revenue per average room (RevPAR) grew another 8.8 percent in 2012 compared with 2011. According to Jones Lang LaSalle?s Lodging Industry in Numbers Brazil 2013 report Brazilian hotels are still on investors ‘hot spot’ list as operating results continue to show gains above inflationary rates, with average gross operating profit (GOP) increasing by 7.9 percent compared with 2011 levels.

?We?re projecting sustained growth in Brazilian hotel performance, as the market remains a favored destination among international travelers. Last year, 5.7 million international visitors came to Brazil, which is 4.5 percent more than we experienced in 2011,? said Ricardo Mader, Executive Vice President of Jones Lang LaSalle?s Hotels & Hospitality Group in Brazil. ?While there are occupancy shifts occurring, the sustained demand coupled with the lack of new hotel development will allow Brazil?s lodging market to hold its competitive advantage.?

Trave?ler Fluctuations Impact Occupancy and Average Daily Rates
While Brazil is viewed as a positive picture overall, the softened economic growth in 2012 had a negative impact on occupancy rates for hotels, which decreased by 5.6 percent from 2011. The cause of the decline varies for each market; but in general, the segments that showed the greatest decrease were group and individual travel. Upward pressure on travel costs from the growing domestic middle class has also spurred a reduction in weekend travel.

Weekday occupancy rates remained high, reaching peaks from Tuesday to Thursday nights in a number of markets, supported mainly by the commercial business sector. This demand compression has enabled significant growth in average daily rates (ADR), which increased 15.2 percent over 2011.

In 2012, travelers found ADR ranging from above R$380 for luxury hotels to below R$220 for economy and limited service properties. The latter showing the least availability with an average of 149 available rooms compared to 231 and 204 in the luxury and midscale properties respectively.

Firm Forecast for Lodging Market
?The performance of hotels in 2013 has shown similar trends to 2012. With a decrease in overall occupancy and a concurrent rise in average daily rates we expect RevPAR to grow modestly by five to seven percent in 2013, slightly less growth than 2012 levels,? said Clay Dickinson, Executive Vice President of Jones Lang LaSalle?s Hotels & Hospitality Group. ?Hotel investment in the short and medium term is expected to continue at a healthy pace in the country.?

The diversification of investors has already broadened, yet the proportion of chain-affiliated hotel rooms in Brazil remains low at less than one third, or 28.1 percent of the total available rooms in the country.

This is the third year Jones Lang LaSalle partnered with FOHB, the Brazilian Forum of Hotel Operators, to provide a comprehensive performance analysis of hotels and condo hotels in the Brazil lodging market. The renewed partnership and the strong results of the joint research come at a moment when the entire tourism industry and supply chain parties are coming together to define market. ?The 26 hotel chain members of FOHB are investing R$7 billion (2012-2015) in the construction of new housing units, thus creating 16,000 new jobs in the Brazil. That?s why we can say that the lodging industry is prepared both for the upcoming major events and after these events have ended,? said FOHB President Roberto Rotter. ?Data from the Lodging Industry in Numbers research has proven to be essential tools for the planning and sustainable development of the industry.?

?Although the findings of this year?s Lodging Industry in Numbers revealed that the slowdown in economic growth has led to slight decreases in occupancy, however, recent depreciation of the Brazilian real against the U.S. dollar could counter balance demand as Brazil becomes more affordable to international business and leisure travelers, while encouraging tourists to travel less abroad,? concluded Manuela Gorni, Senior Vice President of Jones Lang LaSalle?s Hotels & Hospitality Group.

Jones Lang LaSalle?s Hotels & Hospitality Group serves as the hospitality industry?s global leader in real estate services for luxury, upscale, select-service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm?s more than 265 dedicated hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hospitality real estate advisor in the world totaling nearly $25 billion, while also completing approximately 4,000 advisory and valuation assignments. The group?s hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research.

Source Hotel News Resource

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