Radisson Hotel Group signed two Radisson Hotels in Brazil, in partnership with Atlantica Hotels.
As Radisson was building its estate in the country, Host Hotels & Resorts was selling three of its hotels in Brazil, after performance weakened following the 2016 Olympics in Rio de Janeiro.
Radisson Hotel Group has signed two new properties in Brazil, adding to its portfolio of 14 hotels. Partner Atlantic will develop the hotels in Sao Paulo’s Pinheiros district, and on the coast at Flecheiras.
“We are so proud to continue growing our portfolio with Atlantica Hotels with these fantastic additions,” said Terry Sanders, CDO, Americas, Radisson Hotel Group. “We are focused on growing our presence in Latin America as we continue driving awareness of our incredible brands, allowing more guests to experience our superior hospitality at our exceptional hotels.”
With Radisson deepening its role in Brazil, Host Hotels & Resorts, was thought to be looking for a buyer the JW Marriott Hotel on Copacabana Beach, and an Ibis and Novotel in Rio de Janeiro, making its exit from the country as part of its ongoing strategy to focus on North America.
Jim Risoleo, president & CEO, Host Hotels & Resorts, told analysts last month that the Reit was “divesting non-core assets, including international assets, as well as profitability challenged assets”. Comments made by Risoleo suggested that an approach had been made for the properties, with the CEO saying: “we will be opportunistic in taking assets to market, responding to unsolicited offers. If market opportunities present themselves we will continue to prune. If they don’t, we’re very comfortable with the portfolio we have today. We’re not in any rush to grow the portfolio or shrink the portfolio”.
Accor has been mooted as a buyer, following its first quarter results, at which it described the steady recovery in South America, and particularly in Brazil, where Rio de Janeiro grew strongly, in line with the rest of the country. As a result, revpar rose by 13% for the company in Brazil, mainly driven by prices.
Jean-Jacques Morin, deputy CEO & CFO, Accor, said that while Brazil was recovering, “Rio is still suffering from oversupply and social tension. The gap between the revpar and the management and franchise growth is coming from some hotel renovation and because the hotel remains below incentive level as the business is not fully recovered”.
Accor has targeted 500 hotels in South America by the end of 2020, with 290 hotels already open in Brazil alone.
The country saw performance slip following the spike of the 2016 Olympics, where STR reported that ADR saw close to 200% growth, but showed signs of recovery in the first quarter of this year. STR said that hotel occupancy in Rio de Janeiro rose by 12.2% on the year, to 63.9%, with ADR the highest for an opening quarter since 2016.
The annual Carnival pushed occupancy up 25% and ADR by 30%, which drove a 62.5% increase in revpar for March. STR said that the market was helped by a 2.6% fall in supply, with the company noting that properties had also been closing as a result of an uncertain economic environment.
Last month saw GDP in Brazil fall by 0.2%, its first quarterly contraction since 2016, according to the country’s national statistics agency, with a poor harvest, the collapse of a mining dam hitting iron ore production and a recession in Argentina being blamed.
The beginning of this year saw president Jair Bolsonaro take office, with hopes that he would bring in a number of liberal reforms after appointing businessman Paulo Guedes as economy minister. However, support for issues such as changing pension age has been hard to achieve in the country’s parliament.
Developers maintained their faith, with Brazil seeing the second-largest pipeline in Latin America in the first quarter, after Mexico, according to Lodging Econometrics. The country’s pipeline peaked in Q1 2015 at 453 hotels and 79,431 rooms in preparations for the Olympic Games and in the first quarter stood at 161 hotels and 26,877 rooms.
HA Perspective [by Katherine Doggrell]: When Bolsonaro took over as president in January, there was a nose-holding over his racist and homophobic comments in the hope that he would push through the reforms which the country needed, despite having clearly said throughout his campaign that he knew diddly squat about business. He sought to address this with the appointment of Guedes, who has raised the ire of the career politicians and so the circus continues.
There remains hope that the government will find a way to work in Congress and resurrect the country which was once part of the BRICS, a quintet still, by and large, waiting to emerge. Although enthusiasm for Bolsonaro waned quickly, he is still insistent that the pension reform will be passed by the end of the year, with other changes to follow. Many in the sector are betting on his persuasive abilities.