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Brazil – Still a top destination even in recession times

Thursday, June 22, 2017

Brazil – Still a top destination even in recession times

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August 5, 2009 by  
Filed under Brazil, Destination, Economy

Brazil is known for its Carnival, beautiful beaches, soccer and the caipirinha. But beyond being a wonderful country with inumerous places to be explored, Brazil has been showing that is also a strong and rising economy. There are many articles talking about the country’s potential, such as Standard & Poor’s upgrade in Brazil’s rating – moving it up to investment grade – but I think the article below can give a better picture of what is actually happening. In a time where the travel industry across the globe is facing many challenges, Brazil’s tourism industry had positive growth rates in the last months.

While travelers may not be as happy with prices steady or going up, they will certainly gain from this positive environment: hotels and the government are more likely to invest in the country, large international chains will want to expand their coverage, raising the standards and stimulating competition, jsut to name a couple of benefits. And this becomes a cycle: better services & infrastructure drives more business, that allows more investments and yatta yatta yatta… so it’s time to put the Brazilian beaches on the top of your travel list!

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Brazilian Hotels Raise Prices as Rio Lures Tourists in Downturn

By Nadja Brandt

Aug. 4 (Bloomberg) — Accor SA, Marriott International Inc. and independent hotel operators in Brazil raised average daily rates by 5.5 percent in the first half to the highest since 2005 as destinations including Rio de Janeiro lured travelers.

Rates in Rio, the beach city known for Carnival parties and samba music, climbed 12 percent from a year earlier in local currency, according to Smith Travel Research Inc. data. Occupancy rose 5.6 percent even as it fell 7 percent nationwide.

The global recession has sapped hotel-room demand in most regions. Occupancy in the U.S. sank 11 percent and rates slid 8.7 percent in the first half, Smith Travel’s data show. In Europe, occupancy declined 9.8 percent and rates tumbled 24 percent, when measured in U.S. dollars.

“Brazil is a good market,” Marriott Chief Financial Officer Carl Berquist said last week in an interview. “Travel there is driven a lot by local demand and has therefore done well. It has held up better than many others.”

Latin America’s biggest economy is rebounding from its worst recession in 19 years, benefiting from domestic demand because of record low borrowing costs, tax cuts and increased government spending. Gross domestic product will expand 4 percent in 2010, the Organization for Economic Cooperation and Development said in a July 14 report.

Daily rates in Brazil are up 17 percent since mid-2006, when they began recovering.

One of the Few

A standard room at Accor’s Sofitel Rio de Janeiro on Copacabana Beach was priced last weekend at $308.73 a night, according to the company’s Web site. A premier suite was quoted at $1,065.11.

“There are only a few countries that have positive rate growth right now,” Jan Freitag, vice president at Hendersonville, Tennessee-based Smith Travel Research, said in an interview. “Larger metropolitan areas in Brazil are doing relatively better than other major city centers around the globe. It may be an indicator of strength in emerging markets.”

Brazil’s hotel business is led by independent owners. Twelve percent of the country’s hotels are affiliated with an international or national brand, Gregory Rumpel, executive vice president at Jones Lang LaSalle Hotels, said in an interview last week.

Outside Interest

Foreign travelers and hotel operators are gaining interest in the country.

Brazil’s ranking among South American travel destinations rose to third this summer, behind Colombia and Peru, from fourth a year ago, Genevieve Shaw Brown, senior editor at Web site Travelocity, said in an e-mail.

About 124 hotel building projects are underway, most of them affiliated with a brand, according to a LaSalle Hotels report released today. LaSalle Hotels’s parent is Jones Lang LaSalle Inc., the second-largest publicly traded commercial real estate broker.

“We’ll start to see more larger-scale, 150-rooms-plus, hotels that will be mostly run by large international brands,” Rumpel said. “The number of rooms in Brazil in the next five years will be evenly split between international brands and local independents.”

Biggest Chains

Accor, the French company that is the largest international operator in Brazil, runs 133 hotels with 22,510 rooms in the country, according to the LaSalle report. Intercontinental Hotels Group Plc, based in Windsor, England, has five hotels with 2,006 rooms and Bethesda, Maryland-based Marriott oversees three hotels with 804 rooms. Hilton Hotels Corp. manages two hotels with 846 rooms in the country and has a third under construction.

“Hilton has plans to continue growing in Brazil, and is evaluating several markets at this time,” Karla Visconti, a company spokeswoman, said in an e-mail.

Brazil’s government needs to take measures “to stem further increases” in spending that led to a record budget deficit in the first half, the OECD said in July.

The country presents obstacles as well as investment opportunities, according to Rumpel.

Brazil’s distance from the U.S. and Europe, a scarcity of acquisition financing and “lagging” infrastructure has slowed international investor interest, he said. Brazilians’ preferences may be another hindrance.

“Brazilians are loyal,” Rumpel said. “They like to consider their own brands their own homegrown heroes. They are initially a little resistant to some of the U.S. and Europeans – – but only initially.”

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

Last Updated: August 4, 2009 00:01 EDT

Source: Bloomberg

 

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