STR: Olympics sparked Rio hotel development

Since it was tapped to host the 2016 Summer Olympics, Rio de Janeiro, Brazil, has gained 38 hotels and more than 9,500 hotel rooms, according to STR.

Preliminary figures for July 2016 showed 28,314 rooms in 171 hotels in Rio de Janeiro. When Rio was awarded the games in October 2009, the market had 18,760 rooms in 133 properties.

In addition to preparations for the Summer Olympics, Rio’s hotel supply grew substantially as a result of the 2014 FIFA World Cup. From June 2013 to June 2014, the year leading up to the World Cup, Rio’s hotel room supply increased 5.9 percent to 21,383 rooms. Since that point, Rio’s supply growth has improved by 32.4 percent.

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In the first half of 2016, Rio hotels reported a 9.7-percent decline in occupancy compared with the first half of 2015. In addition, the market’s 47-percent absolute occupancy level during the second quarter of 2016 was the lowest Q2 occupancy level in the market since 2002.

RELATED: Is Brazil a smart investment?

Although fear over the Zika virus and ongoing political issues in Brazil have likely affected the market, STR analysts believe that substantial supply growth has significantly altered the city’s hotel landscape. 

Brazilian officials have estimated that 350,000 to 500,000 tourists will visit Rio for the Olympics. STR analysts expect Rio hotels to see a significant boost in performance during the next several weeks.

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