Hotel performance grows in Brazil and shows optimistic signs for 2019

Improved occupancy rate has boosted the market.

August 19, 2019

The performance of Brazilian hotels in 2018 showed a 4.7% growth in RevPAR after three years of decline, according to the survey Lodging Industry in Numbers 2019 conducted by JLL real estate consultancy. The small recovery of the economy and the result of the presidential elections fostered an increase of 4.1% in the average occupation rate, rising from 56.5% in 2017 to 58.9% last year.

This performance had a positive impact on the Operating Profit (GOP), which rose from 23.3% of Total Revenue in 2017 to 26.0% of Total Revenue in 2018. The business segment continues to drive hotel occupancy demand, reaching approximately 75% representativeness.

Average daily rates grew 0.8%, signaling a slight recovery in the market. For Ricardo Mader, Hotels and Hospitality Managing Director at JLL, this trend should be confirmed for the coming years. "Hotels wagered on the fall in the price of daily rates to ensure occupation in the midset of the crisis. In 2018, we had a timid but important recovery, which signals that the market is in increased demand," he stated.

São Paulo, Fortaleza, Recife, Brasília and Belo Horizonte were the cities with the most significant improvement in performance, with growth ranging from 13% to 16% in RevPAR. The positive highlight was the city of Belo Horizonte, where the RevPAR grew 33%, while Rio de Janeiro had negative results, with a decrease of 13%.

Perspectives for 2019

According to Mader, the market may remain optimistic. "The year 2019 began with the hotel market maintaining the trend of improvement, with a good occupancy rate and an increase in average daily rates. Up to 2021, the segment should remain buoyant, with a recovery in demand and a significant increase in transactions," he stated.

According to JLL's research, the fall in interest rates accompanied by imminent approval of the Social Security Reform and the expected Taxation Reform should create an even more positive business environment, further motivating investors to seek investment alternatives and assuming a greater risk in the search for better returns.

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