Mega-events Boost Short-Term Rentals in Latin America

The travel industry in Latin America has generated over $165 billion in 2017, with a compound average growth rate of -2% between 2012 and 2017. This industry walks hand in hand with the economic activity.  If the GDP performance slows down, the travel industry performance will slow down as well.

This fact is connected to the consumer’s available income and to the way it affects how much they are willing to spend to travel. However, even though it has been going through a rough patch in the last years, the travel industry in Latin America has experienced some interesting movements. For example, the arrival of players like Airbnb that has revolutionized the way that Latin-American people choose where to stay when planning their vacations.

Source: Euromonitor International

In the last five years, there has been an increase in inbound arrivals to the region driven by mega-events like the Summer Olympics Games in Rio de Janeiro in 2016 and the FIFA World Cup,  also in Brazil, in 2014. Even with an average increase of 6% per year in the number of travelers arriving in Latin-American destinations between 2012 and 2017, it was not enough to keep the travel activity busy during that period. The reason for this is mainly the fact that, even though there has been an increase in the number of international tourists in Latin-American destinations, they did not plan to spend much money there. The FIFA World Cup was an example of this because many international travelers went to Brazil without even knowing where they would stay or for how long.

However, some industries were encouraged by this situation, like short-term rentals with Airbnb as their main player. In a setting with foreigners willing to spend little money, the category showed strong growth rates of 53% per year between 2012 and 2017, much higher than hotels, with a 0.5% drop per year. In 2017, the short-term rentals category generated $85.5 billion.

Source: Euromonitor International

In this period, Latin America received many tourists from other continents, like North America and Europe, who were used to using less traditional lodging alternatives and helped to insert them into Latin-American tourists’ mentality as a valid alternative to be considered when planning vacations. Consequently, the fast-paced growth of short-term rentals was established in the region.  Moreover, Airbnb supports its business model on the premise of being able to offer to travelers a more authentic travel experience in relation to staying in traditional hotels.

In the next years, players like Airbnb are expected to continue guiding the strong performance of the short-term rentals category. This movement will be sustained by the fact that consumers will continue to seek cheaper lodging options and by the strength of the travel experience of living “like a local.”

 

Download today our report presented at WTM Latin America 2018: http://go.euromonitor.com/event-2018-world-travel-market-latam.html