As World Cup closes, Brazil's hotels come into focus

Brazil's deafening defeat at the hands of Germany may, in fact, have been the least of the country's problems. Yes, the spectre of Brazil's soccer stadiums will remain, white elephants as they have been compared to by media. What also remains are the hotels, built and opened in time for the World Cup and upcoming Olympic games. So, how did the hotel industry fare during the World Cup month and what can we expect for the Olympics?

Last month, Forbes wrote about how Rio de Janeiro was actually cutting hotel prices; problem was, vacant rooms were scarce. Bloomberg reported that Brazil’s consumer price inflation slowed less than expected in June, as the World Cup boosted the cost of hotel stays and airline flights.

Inflation as measured by the benchmark IPCA index slowed to 0.40 percent from 0.46 percent in May. Annual inflation quickened to 6.52 percent, versus a forecast of 6.51 percent.

Travel prices were behind the surprising jump in inflation in the first two weeks of June, with blame going to FIFA, Forbes wrote. Higher prices at the start of the year took many Brazilians out of the market and that’s made hotel companies readjust their prices in order to bring them back.

“FIFA and some anxious fans began booking flights and hotels way before they even knew where the host cities would be,” Valter Patriani, a VP at CVC, told Forbes. He told Estado de São Paulo newspaper over the weekend that prices rose due to FIFA fanatics looking for rooms at the end of last year. Not only were hotels booked and costing as much as a Manhattan hotel after Thanksgiving, but flights from New York to São Paulo, generally under $1,200 round trip, were going for over $2,000 in the fourth quarter of 2013.

Then there were rumors of corruption, by the one agency that was supposed to be above board. Raymond Whelan, director of Zurich-based Match Hospitality AG, and head of the World Cup's hospitality provider, was under suspicion for not only selling World Cup tickets illegally, but the agency is also under investigation in Brazil for violating consumer-protection and antitrust laws. The company sells hospitality packages, including hotel rooms, and officials have accused it of driving up prices.

"Whelan is responsible for the high prices of hotels in Rio de Janeiro during the World Cup," Rio de Janeiro state tourism secretary Claudio Magnavita said.

Match denied the charge, saying room rates are set by hotel owners and other tourism stakeholders.

Brazil's hotel industry saw occupancy fall in 2013 by 3 percent to 65 percent, with average daily rates falling 0.5 percent versus the 7.7 percent growth in 2012, HVS figures say.

Even just ahead of the World Cup, preparing suitable accommodation was problematic in Brazil, as 4Hoteliers reports, citing The Washington Post, which wrote that in the beginning of the year many of the hotels that could have or should have been used during the World Cup never got built to completion.

Now, with the Olympic Games imminent, several hotel should be open in time. To name a few: Trump Rio, a 13-story, 171-guestroom hotel is expected to open in Rio de Janeiro in time for the games. Downtown Rio‘s Porta Maravilha is expected to open two Holiday Inns, one with 244 rooms, and another 350-rooms. A Hyatt Place is also expected to open the first of nine hotels across Brazil in time for the summer games.

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