REPORT FROM BRAZIL—The 2014 FIFA World Cup had diverse results on Brazil’s hotel performance.
The country’s traditional leisure destinations made the most of the synergy generated by the high international and domestic tourist inflows. On the other hand, the impact was limited in cities more oriented to the business segment.
The World Cup attracted more than 4 million people in total. Of those people, 75% (approximately 3 million) were Brazilian while the remaining 1 million were international travelers, according to the Ministry of Tourism of Brazil.
The host cities for the events were: Rio de Janeiro, Brasilia, São Paulo, Fortaleza, Belo Horizonte, Porto Alegre, Salvador, Recife, Cuiaba, Manaus, Natal and Curitiba.
Source: Ministry of Tourism – Mtur
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According to the federal government and the Ministry of Tourism, Brazil received tourists from 203 different countries. Most of these tourists (61%) were new to the country. In general, 95% of the tourists were satisfied with the reception and the Brazilian tourist destinations and declared an intention to return to the country.
Source: Federal Government /Ministry of Tourism – Mtur
The impact in beach destinations was reflected positively in the occupancy of most resorts. During the same period of 2013, the average occupancy for the segment was 39.5%; during the World Cup, occupancy reached 47.5%, according to information reported in Revista online Hotelnews Magazine.
Source: Revista online Hotelnews Magazine
São Paulo and Rio de Janeiro drew 55% of the total roomnights sold in the host cities during the World Cup, according to the Brazilian Hotel Operators Forum. In addition to serving as the main airport hubs of the country, they are the most relevant cities in economic terms and have the largest and most diversified hotel supply in Brazil. Many tourists used São Paulo and Rio de Janeiro as “base camps” during the World Cup before venturing to other host cities.
Source: Brazilian Hotel Operators Forum – FOHB
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Rio de Janeiro, Fortaleza and São Paulo saw the smallest variance between match day demand and occupancy during the rest of the World Cup.
Source: Brazilian Hotel Operators Forum – FOHB
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Limitations on the impact
In general, the impact of the World Cup on the hotel industry in the host cities can be assessed in two dimensions:
1. the direct and immediate impact generated on the hotel demand in the host cities during June through July (when the World Cup took place); and
2. the indirect impact the World Cup had on hotel performance during the first half of 2014.
In the first case (month-to-month comparison, June 2013 versus June 2014), most of the host cities reported a positive impact (increase in occupancy). Rio de Janeiro, Salvador, Porto Alegre and Manaus were the destinations where growth was higher. However, São Paulo (which has the largest supply in Brazil) and Brazil overall (including the cities that did not host any match) presented a slight drop off. Specifically in the case of São Paulo, the decrease was significant (-10%).
Source: Brazilian Hotel Operators Forum – FOHB
Displaced demand from business and the meetings, incentives, conventions and exhibitions segments negatively affected the rest of the (non-host) cities of Brazil, which reported occupancy decreases during the World Cup. Occupancy for the country as whole was down 2% during June 2014 compared to June 2013, according to the Brazilian Hotel Operators Forum.
Source: Brazilian Hotel Operators Forum – FOHB
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The second dimension of the analysis, which examines performance during the first half of the year, provides a more negative scenario.
São Paulo, Rio de Janeiro, Belo Horizonte, Brasília and Manaus all reported occupancy decreases during the first half of the year.
Source: Brazilian Hotel Operators Forum – FOHB
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The growth experienced by most of the host cities during the World Cup was limited by the drop off (slight in some cases, significant in others) in the average occupancy in the months prior to the World Cup.
Consequently, the impact of the World Cup on hotel performance was limited, yet positive. This impact could be considered more significant when assessed annually regarding the part of hotel demand generated by the business and MICE segments, which might generate activity during the second semester of 2014.
Mariano Carrizo is head of Horwath HTL’s Brazil office. He also serves as the marketing liaison with Horwath HTL's international marketing team representing the offices in South America. Mariano has led market research studies in Brazil, Argentina, Uruguay, Chile, Peru and Colombia, focusing on the development of strategies to define competitive mixed-use projects that could be interesting for the market in terms of product, finance attractiveness and economic performance.
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