HVS Market Report Trends and Opportunities Brazil – By Diogo Canteras (PDF Download)

This article analyzes hospitality markets in six major Brazilian cities – São Paulo, Rio de Janeiro, Belo Horizonte, Curitiba, Porto Alegre and Salvador – discussing key performance indicators in 2014 vis-à-vis past years.

2014 in Retrospect 
In the last edition of Brazil: Trends and Opportunities, we asserted that the perspectives for 2014 were uncertain, and that only one thing was certain: there would be lots of excitement. On this point, we hit the jackpot. It is hard to believe all that has occurred. 
The World Cup came and went without any major problems, but its impact on tourism and hospitality in Brazil was fleeting, and its legacy was a little frustrating. Beyond the renovation of a few airports and modernization of part of the hospitality infrastructure, probably the most lasting milestone of the Cup was the 7 x 1 that Brazil suffered at the hands of Germany. 
The presidential elections were everything but dull. Beginning with the shocking death of candidate Eduardo Campos, continuing through the emergence and decline of Marina Silva, and ending with Dilma Rousseff’s narrow victory by over Aécio Neves in a run-off election, the presidential dispute seems like a script for a Hollywood film. 
Operation Lava Jato dominated all the Brazilian and international newscasts, exposing, live and in color, the entrails of the national political system. And what we learned was not pleasant! If that was not enough, we suffered through the worst drought in the last decades: the lack of water, the threat of rationing andthe risk of energy blackouts. It definitely has been a festival of emotions. 
From an economic point of view, the news was as discouraging as the Brazilian national team’s performance. Similarly, or ironically, the initial prognosis turned into hard realities: 
Initial forecasts of GNP growth between 1.5% and 2% turned into zero growth; 
Inflation reached the ceiling of the stated goals, even somewhat tempered by fiscal subsidies; Petrobrás investment plans postponed or cancelled;
The exchange rate closed the year at almost R$ 2.70 to the dollar; 
Heavy deficits in public debt, even though partially financed by direct foreign investment. 
The complicated political-economic situation effected the hospitality market in a limited fashion. In many cities, higher prices during the World Cup helped elevate the annual average daily rates. Openings of new hotels, on the other hand, were responsible for the decrease in room occupancy in half the cities that participated in this year’s Trends and Opportunities. 
Year-end results showed that five out of six cities increased RevPAR. Salvador, still suffering from low levels of occupancy (57%), but on the road to recovery, registered an excellent increase of 6.8%. In the other of the metropolitan areas, the evolution of RevPAR was far more timid (between 1% and 4%). The exception to the norm was Belo Horizonte, where an avalanche of new rooms resulted in an alarming drop of 18%! 
Given the excitement, however, it seems fair to say that these results should be commemorated.
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