May 23 (Bloomberg) -- World Cup soccer fans who showed patience in booking hotel rooms in Brazil now can score discounted deals.
With the month-long tournament set to begin June 12, tour operators who years ago bought blocks of rooms are looking to shed their unused inventory. Match Hospitality, the official partner of soccer governing body FIFA, late last month released unsold rooms it previously had reserved. The result is some World Cup hotel room prices that have dropped to half what they were two years ago.
“It’s just like the stock market or any other market,” said Robert Tuchman, president of sports and entertainment travel company Goviva. “Whenever there’s inventory the prices are going to be low.”
Brazil was awarded the World Cup in 2007, and years ago tour companies began buying blocks of hotel rooms. Some, such as New York-based Goviva, purchased conservatively, hoping to match eventual demand while risking having to pay extra to buy rooms late.
Others, such as Austin, Texas-based Ludus Tours, snatched up rooms aggressively, allowing them to fulfill all client requests while risking excess inventory. With three weeks remaining before the World Cup begins, Ludus says it has sold about 70 percent of its rooms and is looking to sell what it has left.
“We do have a bunch of hotel spots open,” Nathan Goodson, a Ludus vice president, said in a telephone interview. “This is the point where we put people in those rooms at whatever price we can get them at.”
Ludus, which says it has sold about 450 World Cup packages, last week sent an e-mail to customers offering 40 percent to 60 percent discounts on its spare hotel rooms in Rio de Janeiro and Manaus, the Northern city in the Amazon rain forest that will host four group-stage matches, including the U.S. against Portugal on June 22.
“At this point we do take a loss on the rooms, but there is always the possibility to fill them with fans and guests who plan their trip to the World Cup at the last minute,” Goodson said.
Goviva, which says it booked more than 700 trips and expects to reach 1,000 by the time the World Cup concludes, paid on average $500-$600 per night to reserve hotel rooms a few years ago.
“We try to play it where we buy enough pre-inventory and leave some room to know we may not make as big a margin on our later packages, but we’re never going to be sitting there with a hundred rooms and few weeks to go,” Tuchman said in a phone interview. “You can lose a ton of money.”
Switzerland-based Match, which also was FIFA’s official World Cup hospitality partner in South Africa in 2010, signed contracts with more than 800 Brazilian hotels once the country was chosen to host. Under terms of the agreements, it was allowed to return 50 percent of the unsold inventory on Jan. 31 and more rooms on April 30.
Match declined in an e-mail to provide specific figures on how much inventory has been returned.
Hotels are now directly selling rooms, Enrico Fermi, president of ABIH, a group that represents Brazil’s hotel industry, said in a telephone interview.
“The prices are not dramatically lower than those quoted by Match,” he said.
Hotel inventory has increased dramatically in recent weeks, according to Trivago, the largest online hotel search site. Availability for the July 4 quarterfinals in Rio, for example, is now at 41 percent after being 21 percent in early March, Trivago said in an e-mail. Availability for the July 13 final in Rio is at 63 percent, compared to 16 percent in early March.
Some four-star hotels that were booking rooms for $600-$700 per night two years ago can now be booked for about $400, according to John Martin, chief executive officer of Virginia, Beach, Virginia-based tour company Great Atlantic Sports Travel.
“I paid like $300 for some rooms, and now online you can buy the hotel rooms for $125 because a lot of rooms were released by the organizers,” Martin said in a telephone interview. “Every World Cup is like that.”
Staying in two-star Hotel Puma in downtown Rio on July 4, the day the city hosts a quarterfinal match, would cost $113 on Trivago.
Tuchman said it was a “good sign for the consumer” that hotel rooms are now opening up. He believed late orders would allow Ludus, with whom Goviva does business, to eventually sell its inventory.
Hotel room prices haven’t come down for the July 13 final in Rio. Ludus initially projected room costs from $700 to $1,000 per night at four- and five-star hotels, Goodson said. Those rooms are now going for as much as $15,000 per night. Ticket prices for the group stage range from $112-$3,864, according to Viagogo, the largest non-U.S. ticket exchange. The price range for the final on Viagogo’s website is from $4,317 to $50,000.
“One thing I’m absolutely going crazy over is the demand on the finals week,” Goodson said. “Never in my life have I seen prices like this.”
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