Brazil Sees Hotel Growth Multiply Before Games

BRASILIA, BRAZIL-The country’s planned hosting of global sporting events such as the World Cup in 2014 and the Olympic Games in 2016 have pushed hotel projects back to pre-recession figures, according to a first quarter report by Lodging Econometrics. The Portsmouth, NH-based firm says Brazil’s total hotel development pipeline is at 177 projects and almost 30,000 rooms, the world’s fourth largest based on total pipeline room count.

Patrick Ford, president of the firm that measures the hotel industry, tells GlobeSt.com that the games will allow Brazil to enter the world stage much the same way the Olympic Games in China in 2008. “This will be a tremendous coup for Brazil, and is now greatly boosting the intensity for growth,” Ford says.

The country has already had its appreciation from global investors. Commercial property experts such as Sam Zell have crowed about Brazil’s exploding middle class and potential spending ability for the past two years. The country leads the hotel boom in Latin America, almost doubling room development counts in Mexico, which has suffered from economic woes and crime problems.

Construction Pipeline by Region - Year over Year

In the first quarter, Ford says the total hotel construction pipeline in South America increased for a fifth consecutive quarter to 517 projects by April, a 14% increase from Q1 2010. Brazil’s count increased by 40% from a year ago, and includes projects such as eight Accor-branded hotels now under development in the country.

There are still challenges to building in Brazil, Ford says. “It’s a developing country, not a developed country,” he says. “The transportation and municipal infrastructures are not as well developed as other countries, such as in China’s major cities. The government process of approvals is slow and ponderous, leading to concerns about whether the country will be ready for the games. Fortunately, there’s a pretty good lead time from where they are right now.”