Rio 2016 - One year until the Olympic Games
During the opening week of August, Rio de Janeiro celebrated one year until the 2016 Summer Olympics with an array of sporting and cultural events that provided a taste of the excitement that will flood the city late next summer. In August and September 2016, Rio de Janeiro will become the first South American city to host the Olympic and Paralympic Games. For the hospitality industry in the market, the one-year-to-go milestone is an exciting and challenging time. It is difficult to predict what the demand for the Olympic Games will be, as the number of visitors is typically overestimated and hotel expectations are always high.
STR Global will provide an analysis of the best data available in the industry by looking at the supply and demand for the four previous Summer Olympics.
Time period, Olympics Host Locations
Supply % Change, Olympics Host Locations, YTD
Looking at supply and demand in previous Olympic host cities, Sydney, Athens and London show a supply increase of less than 5% before, during and after the Olympic year. Athens had less than 50% of the capacity reported in Sydney and did not build many new hotels. Cruises were chartered to berth in Piraeus. In contrast, Beijing embarked in a building program to cater to business demand.
- Occupancy in Sydney during the Olympic year was 72%, almost 5% less than the previous year. Athens increased occupancy 6% to 60% in 2004. Despite the increase in occupancy, the games drew less than half of the attendees of the Sydney games due to the publicity of unpreparedness, uneasiness over security and news releases regarding major investment in security measures.
- In 2008, Beijing reached year-to-date occupancy of 55%, a decrease of 19% compared to 2007. The substantial increase in capacity, economic situation in the world and stringent visa regimes in response to protest concerns were some of the reasons for the decline in occupancy.
- In Rio de Janeiro, the increase in supply for year-to-date August 2015 was 6.8% compared to same period in 2014. This has led to lower occupancy levels at around 64%, a decrease of 11.5% when compared with last year. In 2014, despite the FIFA World Cup, year-to-date occupancy still decreased 3.6%. In addition, an official partnership between Airbnb and the Rio 2016 Organizing Committee to provide the official alternative -accommodations service could contribute to the challenges hotels will face.
Demand % Change, Olympics Host Locations, YTD
Sydney and Beijing experienced negative variances in demand during the Olympic year, showing decreases of 1% and 5.5%, respectively. Both are long-haul destinations for international markets, whereas Athens and London are destinations easily reached.In London, demand increased 2.7% during the Olympic year, and occupancy decreased 1.8%. London is a major destination without the Olympics, and this shows that major events displace tourists (attendees are drawn to the event, not the city) who might think the city will be crowded and too expensive. News that the Brazilian government is looking to approve visa waivers for foreigners during the Olympic year could help to encourage the demand drawn by the event and ultimately adjust occupancy levels during the Olympic year. Brazil currency devaluation could be another factor for increased tourism in the country.