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Reuters/Sergio Moraes
Empty beds ahead?
HOTEL HURDLES

Brazil built too many hotel rooms (again)

By Leslie Josephs

Brazil is facing yet another Olympic hurdle: Filling the thousands of hotel rooms it just built once the games have ended.

Rio de Janeiro had 27,137 hotel rooms in June, 37% more than it did four years ago, according to hotel-research firm STR. The real lodging stock could be even higher because those figures don’t include hostels, Airbnb offerings and some smaller properties.

That means that when all the tears of athletic victory and defeat have dried, Brazil will have a glut of hotel rooms on its hands, a problem it has already been facing for the last two years, in the wake of the country’s building spree for 2014 World Cup.

Occupancy rates of Brazil’s hotels averaged nearly 62% in June 2014, and close to 82% in Rio de Janeiro. (The World Cup ran from June 12-July 13 of that year.) In June 2016, occupancy rates were 52% and 44%, respectively, for the country and city, according to STR data.

After years of growth, Brazil’s tourism sector has begun to flag. International tourist arrivals fell last year for the first time since 2009, according to the Brazilian Tourism Ministry. Fears over Zika virus certainly aren’t making the country more inviting.

 

Brazil is also in the middle of its worst recession in decades. That’s a major problem for a country where 94% of tourism spending is generated by domestic travel. That amount will likely decline 1.4% this year, according to the World Travel and Tourism Council, a trade group.

Meanwhile, Rio de Janeiro’s race to build suitable lodging for the games hasn’t gone smoothly. Several delegations have complained about the quality of athletes’ lodging during the games, whose official kickoff is Friday. The US Olympic basketball teams are staying on a luxury cruise ship, docked in the Port of Rio.

The hotel glut isn’t just in Rio. Brazil as a whole had 235,288 hotel rooms as of June, STR data shows, up 12% from four years ago, so travelers’ appetite for travel in the country will be put to the test after the games end.

Yet Brazil’s government is counting on the games to be a big win for the country. It even turned to love motels in the host city to accommodate an influx of Olympic tourists, offering tax breaks if owners adapted their rooms for tourists. After the closing ceremony, these motels may have to return to their core market.