Four Seasons Hotels and Resorts and Jumeirah Group plan to open their first hotels in Brazil as rising incomes in Latin America’s largest economy and the 2014 World Cup and 2016 Olympic games generate demand.
“The time is right now for us to be entering the Brazilian market,” James Erlacher, senior vice president of development for the Americas at the Dubai-based Jumeirah Group, said in an interview in New York.
Jumeirah’s priority is to operate hotels in Sao Paulo and Rio de Janeiro, Brazil’s biggest cities, and it’s also considering resorts “primarily in the northeast part of the country,” Erlacher said. The Four Seasons expects to reach agreements with developers of three projects in the next 18 months, including hotels in Sao Paulo and Rio and a beach resort, Alinio Azevedo, the chain’s director of development for South America and the Caribbean, said in an interview.
Rio’s victory over Chicago, Madrid and Tokyo to host the 2016 Olympics will help sustain Brazil’s growth by bringing $51.1 billion into the economy through 2027 and adding 120,000 jobs annually in the next seven years, according to a Sao Paulo business school study prepared for the Ministry of Sports. Six straight months of job growth, coupled with tax breaks and record low borrowing costs, is driving up consumer spending in Brazil and helping the economy rebound from a recession faster than most countries.
Jumeirah currently operates only one hotel in the Americas, the Essex House in New York, and is developing a polo-themed resort outside of Buenos Aires as well as resorts in Costa Rica, and Saint Thomas.
Jumeirah views Brazil as a “top-tier” priority, Erlacher said. “Brazil is a healthy robust market with good supply and demand dynamics working in its favor,” he said in the Nov. 17 interview in New York.
The number of Brazilian guests in Toronto-based Four Seasons’ hotels and resorts is rising and its reservation desks are getting calls asking about accommodations in Rio and Sao Paulo, underscoring domestic and overseas demand for its planned hotels, Azevedo said.
“The number one attraction for us is really understanding the wealth creation that has happened in Brazil in the last eight to 10 years,” Azevedo said at a New York event Nov. 17 on investment opportunities in real estate and tourism in Brazil, a country with 192 million people.
Brazil’s Real Gains
Further strengthening of the Brazilian real, which has rallied 34 percent this year against the dollar, the most of any major currency, may drive away foreign visitors before Rio hosts the 2016 Olympics, Tourism Minister Luiz Barreto said Oct. 30 in a Bloomberg Television interview.
The real’s gains have been driven in part by investors buying stocks and bonds on prospects the country is among those emerging fastest from the global financial crisis.
Brazil won an investment-grade rating from Moody’s Investors Service in September, putting it one level above high- yield or junk at all three major ratings companies. Moody’s cited Brazil’s “strong economic and financial resilience” during the worldwide slowdown.
The $1.6 trillion economy grew 1.9 percent in the second quarter from the previous three months, emerging from a recession. Economists surveyed by the central bank Nov. 13 predicted gross domestic product will expand 0.2 percent this year and 5 percent in 2010, according to the median estimate.
The Olympic Games will add 1 percent to gross domestic product in coming years, Finance Minister Guido Mantega said Oct. 4. The 2014 World Cup, which Brazil also will host, will add another 1 percent to GDP, Mantega said.
Brazil’s misery index as measured by the inflation rate plus the unemployment rate, fell to 11.9 percent from 14.1 percent last year. That compares with 17.3 percent for Russia and 19 percent for India. The gross domestic product-weighted index for the eight largest economies is 7.1 percent compared with 10 percent a year earlier, data compiled by Bloomberg show.
“United States and Asia hotel chains who didn’t pay attention to Brazil before, all of them, absolutely all of them are focused on developing in the country,” Felipe Cavalcante, president of the Association for Real Estate and Tourism Development in the Northeast of Brazil, said in an interview at Bloomberg headquarters in New York on Nov. 16. He cited Hyatt Hotels Corp., Marriott International Inc., Hilton Worldwide, Six Senses Resorts and Spas, Amanresorts and Jumeirah.
“The crisis was good to Brazil, that is the truth,” said Cavalcante.
Marriott is interested in Brazil as “it shows enormous potential,” Thomas Marder, a spokesman for the Bethesda, Maryland-based company, said in an e-mail response to questions. Amanresorts, based in Singapore, has “many projects in the planning stage” and has no further information to release at this time, Anjali Nihalchand said in an e-mail.