Hotels are among the leading asset class for investment in Brazil, according to Jones Lang LaSalle Hotels’ research report Investment case for Brazil.

Published: 04 Jun 2009

Hotels are among the leading asset class for investment in Brazil, according to Jones Lang LaSalle Hotels’ research report Investment case for Brazil.

It has been highlighted that Brazil’s economy, while exposed to the global financial crisis, is forecast to suffer less and for a shorter duration than most of the world’s mature economies. The country is attracting investor attention generated by its long-term growth potential.

In contrast to the majority of hotel markets across North America and Europe which are suffering double-digit revenue per available room (RevPAR) declines, hotels in Brazil are better positioned to weather the challenging economy.

“The devaluation of the Brazilian real (BRL) since September 2008 has prompted a favourable dichotomy for Brazilian hotels: it’s more expensive for Brazilians to travel abroad, while it’s less expensive for incoming foreigners. Thus, the country’s resort hotels have seen a boost in occupancy. Upper-tier urban properties that denominate their rates in U.S. dollars are also seeing a positive impact from the devaluation, because operators can now collect more BRLs per dollar earned,” said Ricardo Mader, executive vice president for Jones Lang LaSalle Hotels, based in São Paulo.

“With these factors, plus the low supply of institutional quality hotels in many markets, we forecast average RevPAR in Brazil to continue to grow throughout 2009, albeit at a slower rate than in 2008,” said Mader.

Brazil has a very favourable medium to long-term outlook for hotel fundamentals, with much of the demand being driven by the emerging middle class. Middle class households now represent 52 percent of Brazilian households, up from 42 percent in 2004. The number of upper class households too has grown, now accounting for 16 percent of the population.

Just 12 percent of hotels in Brazil are affiliated with an international or national hotel brand, highlighting the opportunity for the development of branded hotels, the report added.