The exposure from the FIFA 2014 World Cup and 2016 Olympic Games, coupled with hundreds of large scale investment projects across the country, are expected to result in outsized growth in hotel development opportunities throughout Brazil in the next decade, according to a new report from Jones Lang LaSalle (JLL).
The white paper, “Economic Transformation Drives Latin America’s Lodging Industry,” outlines sustained economic stability and decades of pent-up demand in Brazil, which are transforming the nation into a more decentralized, services-oriented country characterized by an increasingly affluent and mobile population. All of these factors equate to nearly 193,000 new hotel rooms that will be required to meet demand in the country before 2022, according to JLL’s paper.
The largest growth in hotel room demand is in the emerging towns, secondary and tertiary cities where almost 80,000 rooms — or 42% of the total 192,700 rooms — are expected. The world’s largest iron mine will potentially bring some 30,000 new jobs to the small town of Paraupebas, for example, and the impact of this project alone is projected to require a 300% increase to the current supply of hotel rooms in the area.
In addition to mining developments, Brazil has committed upwards of US$679 billion to more than 250 power generation and transportation projects, including US$75 billion in the development of oil production in the Campos Basin, located offshore between Santos and Rio de Janeiro.
“The future of Brazil’s lodging industry is inextricably linked to its overall economic growth, as well as domestic leisure and commercial demand,” said Ricardo Mader, executive vice president of JLL’s Hotels & Hospitality Group in Brazil. “As such, its outlook is contingent upon continued progression, expansion of the middle class and ongoing improvements in infrastructure.”