Brazil hospitality industry figures could plummet post-World Cup

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Brazil’s hospitality industry can learn from South Africa in 2010 as hotel demand levels could dive after the 2014 World Cup.

“Within the 12 months after the FIFA World Cup four years ago in [South Africa], FIFA world Cup was a dirty word to the [hospitality] industry. A lot of people got badly hurt, or had a very disappointing time versus where they expected to be,” Nikki Foster from PwC told CNBC Africa.

“Particularly to the [temporary] bed and breakfasts and guest houses, many of those actually did suffer and many of them subsequently went out of business. Some have survived and as a consequence of that, have actually now done quite well, but they’ve been through a very stormy period in between.”

Two to three years after 2010, tourist arrivals to South Africa had been picking up significantly, and numerous industries attempted to capitalise from the boom time.

Hotels, bed and breakfasts and other services were thereafter built on the back of the World Cup and its growing tourism numbers.

(WATCH VIDEO: Hotel chains spread across sub-Saharan Africa)

Foster however explained that South Africa’s post-World Cup simmer down was particularly tough as a result of the post-2010 boom time.

“The world [then] went into a global recession. People stopped travelling, so it was almost like a double whammy: you had the FIFA World Cup and a recession, so that when everybody went home from the World Cup, there was no one else coming because everybody couldn’t afford it. Everybody went home with hugely-favourable impressions from South Africa, but unfortunately tough times were ahead,” Foster added.

South Africa’s hospitality industry has nevertheless stabilised, and is seeing a pickup in demand from both domestic and international travellers in the hotel sector.

“The demand is increasing again, unfortunately the supply has stayed relatively stable so that now occupancies are rising, rates can slowly increase and the industry is in a much more favourable position,” said Foster.

(READ MORE: Sub-Saharan Africa’s thriving hotel industry)

Similarly, occupancies in major cities in Brazil are currently over 100 times what they were a year ago in the same period. In the run-up to the football event, Brazil, like South Africa, lowered prices in the industry.

“What Brazil didn’t do [as opposed to South Africa] was go out and build so many hotels and convert so many guest houses. In fact, their market has probably increased in terms of supply but by only about one per cent,” Foster explained.

“Actually, they’ve got fewer rooms to service for the same market, so they can probably push up those prices and may get those higher occupancies because they haven’t gone down the extra supply route.”