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Brazil’s Building Binge

With the World Cup in full swing, Brazil is already looking ahead to hundreds of new hotels for 2016 Olympics and beyond.

Tuesday, June 24, 2014
Mr. Jim Merritt
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When it comes to hotel construction, Brazil might just as well change its national chant from Oé, Oé, Oé to “build, baby, build.”

With 408 hotels currently in the pipeline for a total of 69,000 new guest rooms, the current World Cup host is fourth in the world in terms of hotel construction. The building boom is expected to continue as Brazil -- with a population of 200 million, the largest nation in South America -- prepares to host the 2016 Summer Olympics in Rio de Janeiro.

In short, there may still be an awful lot of coffee in Brazil, but what the country really needs now are new hotel rooms.

“Brazil is largely under-hoteled on the grand scale if we compare a country’s population vs. hotels,” says Bruce Ford, senior vice president and director of global business development for Lodging Econometrics. “It’s also lacking many major brands that are so dominant in the U.S,” he adds.

One measure of the shortage: private homeowners have been able to cash in big-time by renting their homes to visitors who have come to watch 32 teams battle to the World Cup finals on July 13.

“In Brazil, the demand is so extreme that we had a few people that do home exchanges, who because the prices were so sky high felt it was more advantageous to them to rent,” says Ed Kushins, CEO of HomeExchange.com.

To accommodate the two major sports events, Brazil has spent $11-billion dollars on infrastructure including public transportation, stadiums and roads. (On the downside, protests have occurred daily over spending that sum in a nation with a wide gap between its affluent and disadvantaged citizens.)

In addition, Ford says, “There has been a wave of (hotel) openings, but there will be more because the Olympics will likely draw more visitors than the World Cup will.” According to Lodging Econometrics, 42 new hotels opened in Brazil with 6,496 rooms in 2012; 36 new hotels with 5,791 rooms in 2013; and 16 new hotels with 2,249 rooms opened so far this year. Sixty more are expected to open this year.

Marriott International is among the major brands with hotels in the construction pipeline. Craig S. Smith, president of The Caribbean and Latin America for Marriott International, says "Demand in Brazil is particularly strong with the attention from the 2014 World Cup and the 2016 Olympics, and we see great potential for investments in developing hotel projects in the country.”

Smith adds, “We are in the planning process to introduce our new Fairfield by Marriott and Courtyard by Marriott designs for Brazil as well as introducing our AC by Marriott brand from Spain in Rio de Janeiro in 2015." Their 378-room AC Hotel is scheduled to open next year in Rio de Janeiro, while a 160-room Fairfield Inn is slated in 2016 for Curitiba, and a 158-room Courtyard by Marriott in 2017, also in Curitiba.

Another major player, Starwood has opened three new hotels in Brazil including the Sheraton Vitoria Hotel in 2012, Sheraton da Bahia in Salvador in 2013, and in June, the Sheraton Reserva do Paiva, near Recife. It’s working to introduce its remaining seven brands (including W, Aloft, Luxury Collection and St. Regis), says Roberto Amorim, vice president of Acquisitions & Development, Brazil.

Amorim says Brazil is “a priority market for Starwood. With its sheer size, natural beauty, and relative under penetration, we hope Brazil will be a terrific source of growth, particularly for the luxury brands.”

He adds, “While we recognize the importance of the World Cup and the Olympics as worldwide sporting events that put the country in the spotlight, we have a long-term vision for Brazil.”

Hilton Worldwide is also seeking to add to its Brazil portfolio, which includes the 503-room Hilton São Paulo Morumbi, and the 361-room Hilton Belem.

“There is a need for hotels in key cities, particularly in secondary cities,” says Tom Potter, area vice president, Central and South America, Hilton Worldwide. Their pipeline includes the Hilton Barra, Rio de Janeiro with 298 rooms, scheduled for a year-end opening; and the Hilton Garden Inn São Jose do Rio Preto, with 132 rooms, scheduled for 2017.

Credit
Mr. Jim Merritt
Associate Editor
Hotel Interactive Editorial Division
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