For the first time since 2011, the demand for hotels in South America outpaced the supply of hotels in the area in summer 2017. But in 2018, occupancy rates slightly declined. What caused occupancy in Central and South America to rise so quickly? And what changed in summer 2018, exposing the first signs of growth coming to a pause?
First, let’s look at the increased performance.
2017 South America Occupancy Statistics
- South America occupancy increased 2.2% to 55.9%
- South America average daily rate increased 0.5%
- South America revenue per increased 2.7%
- Buenos Aires occupancy increased 57.4%
- Buenos Aires average daily rate increased 16.1%
- Brazil and Colombia boasted high performances in summer 2018
- Brazil reported its highest Q2 occupancy since 2015
- Colombia saw its business remain consistent with travelers booking accommodations for stays during the week
What allowed the growth success?
A variety of factors have been contributing to the growth of occupancy in the regions.
Chile and Colombia show high occupancy midweek, implying a greater portion of traveling happening on behalf of workers. Several South American cities are becoming hotspots for business gatherings, conferences and meetings, attracting more visitors to the area midweek for work purposes.
Business and leisure
In some South America cities, such as Buenos Aires (Argentina), occupancy is even across all seven days of the week, reflecting a balance of travel for work and for leisure. As travel increases to Argentina, statistics will reveal how hoteliers respond to, grow with and benefit from increased occupancy.
Tourism Economics reported a seven percent growth in international traveler visiting South America in 2017, which according to STR director Patricia Boo, was higher than the growth reported in North America, the Caribbean or Central America.
Decline of the Argentinian Peso
STR suggests the 50 percent devaluation of the Argentinian Peso is responsible for the city’s consistent and steady increase of average daily rates.
World Cup and Olympics Brazil
The 2014 World Cup and 2016 Summer Olympics took place in Brazil, so imaginable, it spiked occupancy and travel the country. However, as the flood of World Cup tourism to Brazil has settled, holistic views of the continent show an overall and steady increase in occupancy.
What does the occupancy demand mean for South America hoteliers?
A demand growing more quickly than a supply does not mean that travelers are finding themselves without available accommodations, but that tourism and travel are returning to South America at a time when the market did not predict and prepare for the upturn.
Now, let’s look at why the occupancy growth declined in summer 2018.
While some countries, such as Brazil, continued to see growth in 2018, other countries, such as Peru, saw a pause or a decline in occupancy growth.
What is causing the decline?
As occupancy increased in 2017, some room rates in Central and South America spiked, causing the demand to drop while the supply remained the same.
What does a decline in growth mean for the overall growth in occupancy for Central and South America hoteliers?
As demand for rooms increased throughout Central and South America, the markets responded with some uncertainty by increasing prices. The increase in rates is just one variable that might have caused growth to slow this summer. While these travel regions experienced the first pause in growth in summer 2018 since summer 2017, travel and occupancy are still expected to remain high, and possibly receive a different response from hoteliers and tourism providers.
Understanding current travel and booking trends helps inform you of the best times and places to book client travel. Staying up to date with current supply and demand is as important a successful concierge booking as is knowing the latest food and entertainment favorites.
Get more information on the latest hotelier boom in Central and South America and to understand how to incorporate these findings into your business by reaching out to our team at Southern Hospitality.