Investing in the Brazil Hotel Market

CBRE Brazil, in partnership with STR, conducted the webinar "Expert Roundtable - Investing in the Hotel Market in Brazil: Perspectives and Opportunities”, hosted by Mauricio Rusca (Senior Investment Manager at CBRE Brasil), Renata Eng (Hotel Investment Consultant at CBRE Brasil) and Patrícia Boo (LatAm Director at STR).

In addition to discussing global performance indicators in hospitality industry, the event addressed the performance of specific Brazilian regions and cities, market segments, revenue representation and future offer.

Some of the main information highlighted were:                         

·       Repressed demand for the tourism market and the return of travel, focusing on national destinations, especially due to government restrictions generated by COVID-19;

·       GOP (Gross Operating Profit) margin: despite the drop in absolute values, there is a variation with less impact on the representativeness of the index;

·       About 2% of the hotel offer remains closed, even with the removal of occupancy limitations and the gradual resumption of domestic travel. Most closed hotels are hotels undergoing renovation and changing their brand positioning;

·       Leisure markets performing up to 60% more than in 2019 and surpassing the current results of the corporate market, which remains up to 40% below pre-pandemic rates;

·       The difference in the performance of independent hotels, national operators and international operators. The first are located mainly in leisure markets and the others have developed over the years in the main corporate capitals of the country;

·       Reduction in the time period between making the reservation and the date of accommodation;

·       A survey carried out by STR with travelers that identified the change in the preference for the choice of means of accommodation, which currently stand out: short-term rental and small hotels;

·       The resumption of new projects under development in the country and the drop in project abandonment.

STR estimates that the gradual recovery will take place in a phased manner, the first being the domestic leisure tourism market (2022), international leisure tourism (2023), national corporate tourism (2023) and lastly, international corporate tourism (2024), although any restrictions may change market recovery estimates. It is noteworthy that the domestic leisure market, since 2021, has not only surpassed the levels of 2019, but it has been pricing strategically, the main key factor to maximize profitability.