FIFA World Cup 2014: Doís and Doníts for the Brazil Hotel Industry

By Michael McCartan Managing Director Europe, the Middle East, and Africa, Duetto | March 30, 2014

June 2014 is set to be the most exciting time for Brazil hotel industry as the country hosts the worldís biggest sporting event - the FIFA World Cup. The event which is expected to bring some 600,000 domestic and international tourists - will undoubtedly lead to major boom for the hospitality industry in the country.

According to a study conducted by Embratur, the Brazilian Tourism Board shows that the room rates in Brazil will rise up to five times higher than the normal rates during the World Cup tournament. The average cost for a hotel room in Rio during the football tournament is expected to be around $460, around 50% more than what it would be during Summer Olympics in 2016, as stated by Rio's Olympic bid document. An alarmed Brazil Tourist Board has already asked FIFA to help bring down the hotel room rates.

Has the governing body been right in raising the red flag? Or has the hotel industry justified in increasing the prices thinking itís time for the kill?

Typically, super high rates would be applied immediately with the expectation that people will be desperate enough to book at any rate. Ernst & Young estimates that International tourist arrivals may rise by up to 79% in 2014. The magnitude of having the World Cup in a country, where football is everything, also plays a role in difference in prices. Itís also the simple economics of supply and demand: more fans are expected during the World Cup than the Olympics, and more hotel rooms will be available during the 2016 games because of ongoing construction of new facilities.

Experience from past events suggest there needs to be more strategy behind these rates to better align them with customer expectations as this will help build better relationships with potential customers. A classic case study of how prices can fall dramatically after a major sports event is South Africa, which hosted the last FIFA World Cup in 2010. The country saw its average room rate tumble by 17%, with host cities Cape Town down by 20% and Johannesburg by 13% according to Hotel Price Index by Hotels.com.

How is it going to unfold for the Brazil hotel industry? Is it going to be like Barcelona, where the legacy effect of a mega event like Olympics has been positive? Or is it going to be a repeat show of South Africa? Only time will tell, but here are a few Dos and Doníts for the Brazilian hotel industry.

Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.