Market Attractiveness of Brazil

Market Attractiveness of Brazil

Brazil is the 10th largest economy with a population of 190 million, an opportunity that can't be ignored. Brazil's hotel industry is becoming increasingly attractive to investors for various reasons. With a boom in the economy, domestic demand for hotels across Brazil is escalating. With the increase in the personal incomes of consumers, more disposable income is available for travel and lodging. More importantly the luxury hotel market in Rio is booming because of the Brazil's thriving economy.

The demand for hotels in Brazil will be on a rise as Brazil is hosting the World Cup and Olympics . These two events are expected to attract a large number of tourists and spectators. A study conducted by Ernst & Young ("A World of Possibility", 2010) on the socio-economic impact of the 2014 World Cup reports that Brazil has a lodging shortfall of approximately 62,000 rooms. This clearly suggests that there is a huge market available for the expansion of hotel industry.

Tourism is a major industry that contributes to Brazil's GDP. Total international and domestic tourism accounted for ~8% of the Brazil's GDP, above Latin America's 5.1%. In 2005, tourists spent substantially on accommodation (32%) followed by shopping and travel (25%). According to Euromonitor International, the Brazil/EU tie-up signed in 2010 is expected to generate 335,000 additional passengers for Brazil ("World Travel Market", 2010). Also, RevPAR, (revenue per available room) which decreased to 8.4% in 2009 saw a huge increase of 34.5% in September 2010. The average daily rate (ADR) increased to USD 110.35, a 22.5% increase from the year 2009, which implies that hotels are able to charge more than before ("A World of Possibility", 2010).

Investing in the hotel industry is a long-term plan that goes beyond the Olympic