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Central & South America Hotel Demand Jumps in Q-1

Central & South America Hotel Demand Jumps in Q-1

Vacation News » Vacation & Leisure Real Estate Edition | By Michael Gerrity | April 21, 2010 9:30 AM ET



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Elizabeth Randall

London-based STR Global reported today that hotel demand has returned to key Central and South American destinations during the first two months of this year.

Improvement in hotel demand, in terms of occupancy, tends to precede changes in average daily rate (ADR). This is good news for the region's hoteliers who shared tough market conditions during the last year as the global recession, the H1N1 (swine flu) virus and the recent Chilean earthquake dominated the headlines.

"We are predicting a year of recovery rather than growth", said Elizabeth Randall, managing director of STR Global. "This is especially true for Brazil, which is ramping up for the 2014 FIFA World Cup and the 2016 Olympics and Paralympics."

Rio de Janeiro, Brazil, was the only city of the seven reviewed cities to report monthly demand growth last year. Buenos Aires, Argentina (October 2009), Mexico City, Mexico (November 2009), and Sao Paulo, Brazil (December 2009), started to report demand growth during the last quarter of 2009. Panama City, Panama, San Jose, Costa Rica, and Santiago, Chile, saw demand improving only during the first two months this year.  

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The returning demand boosted occupancy levels in most destinations. Only Panama City (-3 percent) and San Jose (-2 percent) reported occupancy declines compared with the first two months last year. The increasing supply of hotel rooms in these two markets partly influenced this trend. Panama City (+8 percent) and San Jose (+5 percent) showed the highest supply increases of the seven cities for the first two months of 2010.

ADR continue to be under pressure with only Rio de Janeiro (+17 percent) and Sao Paulo (+28 percent) reporting growth in terms of U.S. Dollar. The appreciating Brazilian Real influenced the ADR growth as the exchange rate altered (e.g. from 2.37 Real to the Dollar in February 2009 to 1.86 Real to the Dollar in February 2010 (Source: Oanda.com).

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