Four Seasons Hotels Inc., the closely held hotel management group building its first two luxury lodgings in Brazil, is planning as many as three more properties in the country as demand for high-end services rises.
Talks to add locations in Rio de Janeiro and Brasilia are expected to conclude as soon as early 2014 and a second site in Sao Paulo could follow later, according to Four Seasons. The expansion comes after the Toronto-based company joined Iron House Real Estate, the development arm of Grupo Cornelio Brennand, to start construction next year on a hotel in Sao Paulo and a resort at Reserva do Paiva in Pernambuco state.
“The consumer market for luxury tourism in Brazil has grown a lot,” said Alinio Azevedo, the company’s Latin America and the Caribbean development director. “We are very optimistic for the potential in this market.”
Adding rooms in Brazil will allow Four Seasons to take advantage of growth among high-net-worth individuals, whose ranks swelled 26 percent from 2008 to 2012, according to the World Wealth Report, compiled by Capgemini Financial Services and RBC Wealth Management. Brazil is the third-largest country ranked by high-net-worth individual wealth, behind the U.S and Japan, according to Capgemini.
Rio is an important market for Four Seasons, Azevedo said in an interview by phone from Miami. The company is focusing on the south zone where neighborhoods like Leblon have apartments selling for 12,974 reais ($5,543) per square meter.
Four Seasons plans to probably buy an existing asset, Azevedo said. The company is “closely monitoring” the iconic Hotel Gloria in Rio, which is being sold by former billionaire Eike Batista. Veja magazine reported in August that the Switzerland-based investment fund Acron AG is probably planning to buy the hotel for 225 million reais.
While high taxes affect development and operational costs in Brazil, Azevedo said he foresees hotel development taking off as real estate investors move away from the boom of building and selling residential and commercial assets, and toward longer-term investments such as hotels.
“The market is evolving,” Azevedo said. Credit from national banks “makes it financially more appealing to build hotels.”
Globally, the luxury segment is recovering, Azevedo said, with 2014 looking to be the strongest year since the 2007 peak.