World Cup hotels costlier than Olympics in Brazil

Published: Sunday | December 29, 2013 Comments 0

SAO PAULO (AP):

Hotel rooms are expected to cost almost 50 per cent more in Rio de Janeiro during the upcoming World Cup football tournament than when the city will host the 2016 Olympics, in part because FIFA's official accommodations agency hasn't set maximum room rates like those promised in Rio's winning bid for the Olympic Games.

FIFA is working with the Swiss company MATCH Services as the official accommodations agency for the World Cup. MATCH signed contracts with the vast majority of hotels in Rio and other cities that will host matches, and offers rooms via FIFA's website at high rates that have prompted an ongoing investigation by the Brazilian government into possible cartel-like practices.

Industry studies, documents from Rio's Olympic organising committee, and an Associated Press review of hotel prices offered by MATCH all show the discrepancy between housing costs for the two big sporting events.

The cost difference between the two big events is in large part a result of the local Olympic organising committee capping hotel prices. But analysts say it's 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 facilities.

Negotiations

"It's normal that having the FIFA agency involved in the negotiations affects the prices," said Alfredo Lopes, president of the association's Rio de Janeiro bureau. "MATCH negotiated all the prices with almost 90 per cent of the hotels in Rio. Now it's just reselling the packages."

Other analysts said the price difference also reflected local fervour for the World Cup.

"What may play a role in the difference in prices is the magnitude of having the World Cup in a country like Brazil, where football is everything," said Gabriela Otto, a hotel industry consultant. "That may attract a lot more people compared to the Olympics, and prices are always linked to supply and demand."

Also playing a role is the expectation that Rio will have nearly 10,000 more hotel rooms in 2016, according to the Brazilian Hotel Industry Association.

"The industry already knows that in 2016 there will be a lot more rooms available in Rio, so the prices likely will have to be adjusted for that," said Flavia Matos, an executive director with the Brazilian Forum of Hotel Operators.

The average cost for a hotel room in Rio during the football tournament is expected to run about US$460, according to the Brazilian government's tourism agency and an AP analysis of prices, while during the Olympics the average maximum rate is estimated at about US$310, according to Rio's Olympic bid document used to win the Games.

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