Hoteliers in Brazil are ready for Thursday’s kickoff of the World Cup, with eyes to future growth and opportunities in the country.

　　Hoteliers in Brazil are gearing up for the start of the 2014 FIFA World Cup on Thursday, and sources said the hotel industry is right on track to meet the demand for the mega event—and beyond to the Olympics in 2016.

　　Arturo Garcia Rosa, president of HVS Argentina and senior partner of HVS Global Hospitality Services, said Brazil’s hotel industry will be ready for the kickoff, noting the importance of the event for the country.

　　“The World Cup will be more important than the Olympics because the World Cup goes all over the country,” he said, whereas the Summer Olympics will take place in Rio de Janeiro.

　　The World Cup takes place in 12 host cities: Manaus; Fortaleza; Natal; Recife; Salvador; Cuiaba; Brasilia; Belo Horizonte; Curitiba; Porto Alegre; Sao Paulo; and Rio de Janeiro.

　　Some cities will see more action than others, particularly Rio de Janeiro and Sao Paulo, which respectively host the final and opening games, according to Ricardo Mader, executive VP of advisory and asset management services for the Americas region of JLL’s Hotels & Hospitality Group.

　　Tom Potter, area VP of operations for Central and South America at Hilton Worldwide Holdings, agreed.

　　“Sao Paulo and Rio de Janeiro have very strong demand at all price levels, partly as a generational change of hotel facilities, as well as growth of economic activity over the past decade,” he said via email.

　　But Mader said the hotels in Rio de Janeiro have the most to gain from the World Cup, adding that hotels in the city are sold out during the tournament. Also, major FIFA sponsors have chosen Rio de Janeiro as the headquarters for where their guests will stay, he said.

　　“Rio will be full for 40 days,” he said, adding the media center for the event also is located in the city.

　　The second media center is in Sao Paulo, which has the largest inventory of hotel rooms, Mader said.

　　According to STR Global, sister company of Hotel News Now, Rio de Janeiro has 138 hotels with 19,458 rooms. Twelve hotels with 2,858 rooms are under construction. Sao Paulo has 234 hotels with 36,996 rooms. Two hotels with 410 rooms are under construction.

　　Demanding rates

　　As with any mega event, hotel rates will feel some impact due to increased demand, according to sources.

　　“Rates were negotiated over a year ago for the key cities, and in particular for game nights, most of the inventory will have been taken up,” Potter said. “Other than in Rio, where most of the organization is taking place, and where occupancy levels are extremely high, off the peak dates, rates should be very reasonable.”

　　For Brazil, average daily rate during the first four months of the year was 285.83 Brazilian real ($128.05), and revenue per available room was $175.51 real ($78.63), according to STR Global. Occupancy for Brazil clocked in at 61.4%.

　　“Without a doubt, the World Cup will create peak demand. The reality is it really only affects host cities,” said Javier Rosenberg, COO for Radisson in the Americas and executive VP of owned and managed hotels in the Americas for Carlson Rezidor Hotel Group, which at the beginning of June opened the 292-room Radisson Hotel Barra, Rio de Janeiro.

　　According to a recent TripAdvisor analysis, hotel prices in Brazilian host cities are up 120% during the past year. Rio de Janeiro is the most expensive city among the 12 hosts, with hotel rates up 100% at $444.74, according to TripAdvisor. According to STR Global, ADR through April for the city was 488.70 real ($218.94), while RevPAR was 354.55 real ($158.84).

　　What’s next?

　　Officials from South Africa recently warned those in Brazil that the economic benefits failed to live up to the hype when they hosted the World Cup four years ago, according to reports. And with the Summer Olympics on the horizon for Rio de Janeiro in two years, is there any concern history will repeat itself?

　　“There are some questions about hosting the (World Cup) games in 12 cities,” Mader said. “We should have done it in eight cities, maybe 10 maximum.”

　　He said in at least two of the host cities, Manaus and Cuiaba, stadiums are being built that will become “white elephants” because they will not be used much in the future. But generally, he said nothing negative will come from the aftermath of the World Cup.

　　Mader and Garcia also said infrastructure work, such as airport renovations, is slow to be completed in some cities.

　　But “nothing special was done because of the (World Cup) games,” Mader said. “Everything that is being built is a necessity already.” He said the economy has grown within the past eight years. In the past six years, more than 40 million people have moved to middle-class status.

　　Rosenberg said he doesn’t foresee a big decrease in occupancy after the World Cup, adding there are strong foundations in place to support the strength of the hotel industry up to the Olympics. Like Mader, he said the growing middle class and infrastructure supports steady occupancy rates.

　　Potter said sustaining occupancy depends on location and hotel positioning. For instance, he said there are indications that business in Sao Paulo will rapidly pick up after the World Cup.

　　“You have to consider that June and early July will be very slow business months, and the industry will be keen to get back to regular production after the World Cup,” he said.

　　Rosenberg pointed to continued opportunity for brands in Brazil. He said 75% of hotel inventory is independent or locally branded.

　　“That speaks to the opportunities that international brands with international safety and security standards and international quality standards have in the country,” he said.