Rio 2016: Hotels see sharp upturn in revenue during Olympics

Rio 2016: Hotels see sharp upturn in revenue during Olympics

Rio de Janeiro’s hotel industry saw a substantially larger impact as host of the 2016 Olympics than London in 2012 and Beijing in 2008, according to data from STR.

During the month of August, Rio de Janeiro hotels posted a 199.2 per cent surge in average daily rate to BRL1,250.

That rate spike, coupled with a 26.6 per cent increase in occupancy to 76.0 per cent, led to a 278.6 per cent increase in revenue per available room to BRL949.84.

Beijing experienced a 184.2 per cent RevPAR increase in 2008, which was mainly due to a 250.1 per cent boost in ADR as occupancy actually declined 18.8 per cent.

In London, RevPAR increased 44.4 per cent due solely to an increase in ADR, as the market’s occupancy was nearly flat during the 2012 Olympics.

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Prior to the 2016 games, Rio de Janeiro hotels struggled to maintain occupancy levels, affected by considerable supply growth, fear over the Zika virus and ongoing political issues.

The market’s 47 per cent absolute occupancy level during the second quarter of 2016 was the lowest quarter two occupancy level for the market since 2002.

The year-over-year performance increases for Rio de Janeiro during the Olympics also came off of a low comparison base in 2015.

“The real challenge for Rio lies ahead now that there are 23 per cent more rooms in the market than a year ago,” said Patricia Boo, STR area director for Central and South America.

“This is a much different and less stable market than London and Beijing.

“While the Olympics performance lift for Rio was higher, the post-Olympics challenges will also be greater.

“The year after the 2012 Olympics, London experienced a six per cent increase in demand, likely in part due to the attention the city received during the Olympics.

“Rio will need that and more to counteract the spike in supply.”