Brazil hotels saw ADR growth of 10.4% in second half of 2009

BRAZIL Brazil’s quick rebound in economic fundamentals in the second half of 2009 resulted in ADR growth of 10.4% for the year, one of the highest growth rates posted by any large country worldwide last year, according to an analysis of more than 340 Brazil hotels by Jones Lang LaSalle Hotels.

While occupancy rates softened by 1.4 percentage points in 2009 for the properties in the survey sample, the decline was far outweighed by the 10.4% percent growth in ADR. This resulted in RevPAR of 112 reais, the highest recorded RevPAR in Brazil’s history.

Overall, gross operational profit GOP of properties in the survey sample declined by 1.1 percentage points in 2009 as companies reduced the number of meetings, events and banquets. But Brazil’s recession was short-lived, and the economy is again on a fast pace of growth. “Across the 15 hotels we asset manage across Brazil, we have already been observing double-digit RevPAR growth thus far in 2010,” says Ricardo Mader, executive vice president for Jones Lang LaSalle Hotels in São Paulo.

Approximately 93% of hotels in Brazil are unaffiliated with an international or domestic brand, representing three-quarters of the country’s current room inventory. However, the proportion of branded hotels is on the rise as the market continues to be evaluated by foreign investors.

According to the firm’s proprietary database, there are currently 153 hotel projects in construction or in an advanced stage of planning that will be affiliated with the main hotel chains present in Brazil. “These development projects encompass 24,147 rooms and are concentrated in the economy and midscale segments,” says Manuela Gorni, senior vice president for Jones Lang LaSalle Hotels in São Paulo.

The impending room supply represents only a 5.5% increase of total existing rooms in the country spread over several years. The current growth in occupancy and ADR, driven by the improvement in the country’s economy, coupled with the relatively tepid increase in the country’s hotel supply, are setting the stage for significant further growth in Brazil hotels’ performance over the next three years.

“We expect a new hotel development and investment cycle to gain traction in Brazil as the country prepares for the FIFA Soccer World Cup to be hosted in 12 cities across the country in 2014 and the Summer Olympic Games in Rio de Janeiro in 2016,” Gorni says.