Hotels in the city of Lima achieved the best performance in South America in the first half of 2015, according to the study published by HVS/HotelInvest in association with STR-Global. The South American Market Pulse, released on Wednesday August 5, shows that RevPAR (revenue per available room) of the hotels in that city grew by 1.6, compared to the same period of 2014.
Hotels in the other cities analyzed by HVS/HotelInvest had more modest results than those achieved during the first half of 2014. Market Pulse indicators show a fall in occupancy and/or average rate and consequently in RevPAR.
"Although the current results are not the best, from 2016 a more favorable economic scenario is expected and several countries in the region have good prospects for the medium and long term. Prospective investors should take this into account when evaluating their projects in the region", says Cristiano Vasques, Managing Director of HVS South America and Partner and Director of HotelInvest.
At a regional level, the drop in RevPAR was 25.1%, mainly explained by a sharp decline in rate and a moderate contraction in occupancy.
The main reasons for the decline in occupancy are the economic slowdown and the increase in hotel supply. Regarding rates, the decrease was due to a more competitive market as a result of increased supply, the reduction in growth, the impact of the devaluation of local currencies and, in the case of Brazil, the FIFA World Cup that affected the comparison between the semesters.
"With the appreciation of the US dollar property acquisition opportunities may arise in the region", says Cristiano Vasques.
“While the economy of the region will present a moderate growth in 2015, the hotel outlook in several cities shows encouraging prospects, with occupancy rates of around 70% and pressure of demand in many segments”, concludes Fernanda L'Hopital, Associate Director of HVS South America.
Argentina – Buenos Aires
Buenos Aires experienced a drop of 2.7% in RevPAR during the first half of 2015.
In a context of virtually no economic growth and devaluation of the local currency, and with a relatively stable hotel supply, the Buenos Aires market recorded a slight increase in occupancy and a contraction in the average daily rate during the first half of 2015, compared to the same period of the previous year.
In the local market, the Luxury and Upper Upscale segments registered the highest growth in occupancy but paradoxically the biggest decline in average rate.
Brazil – Rio de Janeiro and São Paulo
Of the cities analyzed, Rio de Janeiro and São Paulo suffered the most significant declines in RevPAR, 40.7% and 27.9% respectively, and average rate during the first half of 2015.
It is important to notice that both cities hosted the FIFA World Cup in the 1H 2014, achieving high levels of demand and rates during that period, which inflates the basis of comparison between 2015 and 2014.
During the first half of 2015, hotels in Rio de Janeiro and São Paulo were also influenced by what happened on the national level, being affected by the economic downturn and the devaluation of the local currency. The latter factor had a significant impact given the high level of rates set in local currency.
Of the cities analyzed, Rio de Janeiro was the most affected, suffering the biggest declines in occupancy and average rate. This situation is explained by the FIFA World Cup, the worsening economic conditions and the fact that Rio de Janeiro was the city that concentrated the largest number of openings, primarily in Barra de Tijuca, which increased the competitiveness in the market.
With an unchanged supply, São Paulo experienced a moderate decline in occupancy, which indicates that the decrease in RevPAR was mainly influenced by the rate.
The Luxury and Upper Upscale segments of São Paulo were the ones with the lowest drop in occupancy but paradoxically those who suffered the largest declines in average rate.
Chile - Santiago
Santiago showed a contraction of 9.8% in RevPAR in the first half of 2015.
During 2014 and the first half of 2015 there were several hotel openings in Santiago which increased the competitiveness of the market causing a drop in the average rate during the 1H 2015, compared to the same period of 2014. Santiago managed to soften this fall thanks to the good performance achieved in June, when it hosted the America's Cup Soccer Competition.
The sporting event boosted demand and had a strong impact on June’s performance, softening the fall in demand of the early months of 2015. However, it could not reverse the trend and the market showed a moderate decline in occupancy in relation to the same period of the previous year. It is important to note that during the first half of 2014 Santiago hosted several important events which are held only during even years and positively affect the demand in the city.
Colombia - Bogotá
Bogota experienced a 15.8% drop in RevPAR during the first half of 2015.
Bogota continued showing additions to supply, driven largely by the exemption from income tax for hotels developed until 31 December 2017. However, the improvement in occupancy in Bogota denotes the strength of the market, which gradually absorbs the significant increase in supply.
The fact that Colombia is one of the countries with the highest economic growth in the region, as well as a voluminous corporate tourism and exchange situation, helped boost national and international tourism turning Bogota into the city with the highest growth in demand, among those included in Market Pulse.
While the city showed a slight increase in occupancy, RevPAR experienced a decline due to a drop in the average rate explained by the pressure of the new supply and the devaluation of the local currency.
Ecuador - Quito
Quito recorded a drop of 5.3% in RevPAR during the first half of 2015.
The city felt the impact of a slowdown in the economy, which affected demand and caused a drop in occupancy compared to the same period of 2014. This fall mainly explains the decrease in RevPAR. The average rate also suffered a retraction but much lower than the one in occupancy.
It is important to notice that Quito is one of the leading cities of the region in terms of occupancy, with levels close to 70%.
Perú - Lima
Lima presents the best performance among the cities analyzed, being the only one with a positive change in RevPAR, + 1.6%, during the first half of 2015.
With a slight upturn in the Peruvian economy, demand continued to grow, albeit at a more moderate pace, managing to surpass the growth in supply.
With a relatively stable supply, Lima was the leader in occupancy during the 1H 2015 exceeding 70%.
Of the cities analyzed, the Peruvian capital was the only one that managed to increase its rate in US dollars, but at very moderate levels.
Uruguay - Montevideo
Montevideo registered a fall of 6.2% in RevPAR during the first half of 2015.
The country's economic slowdown affected hotel demand, causing a fall in occupancy over the same period of last year. This fall is what mainly explains the decline in RevPAR.
The average market rate suffered a slight retraction.
South American Market Pulse Data
The South American Market Pulse used an extensive database composed mostly by STR Global data and supplemented by internal records of HVS, HotelInvest and information provided by third parties.
The analyses were based on the performance of 51,845 rooms belonging to the main hotels in each city. Semester comparisons use the same sample base, unless there are new openings or significant changes in segmentation. The sample is statistically significant and reflects the trends and evolution of the respective markets.
For more information please contact:
South America:
HVS
Fernanda L’Hopital
Phone: +54 11 5263-0402
Email: flhopital@hvs.com
Global:
Juie Mobar
HVS Marketing
Phone: +1 561 908 3493
Email: marketing@hvs.com