Brazil in “state of emergency” after destructive storm


Authorities in Brazil has called a state of emergency in its southern state of Santa Catarina following a powerful storm that swept through the south
of the country earlier in the week. Heavy rains in southern Brazil over the last few days have killed two people and forced some 19,000 people to abandon their homes, officials said.

The powerful cyclone had winds up to 120 kmph (75 mph). It made landfall in the tourist town of Santa Catarina on Tuesday evening and moved westwards, to the Argentine border.

According to news-wires, the Brazilian border town of Guaraciaba, with a population of 10,000, was the worst hit by the storm, which damaged 70 percent of its buildings, as well as power lines and communications.

In Santa Catarina, 1,200 people have been isolated in different villages, according to the Santa Catarina’s Civil Defense. While the storm continued through Sunday, dropping as much as 150 mm of rain in southern Santa Catarina, authorities monitor the situation for tourists as well. Despite the pouring rain, tourists hang on.

Brazil’s government may be less worried about the cyclone’s repercussion to tourism numbers. The hotel industry has been faring well despite the global downturn. Hotels are among the leading asset class for investment in Brazil. Brazil’s economy, while exposed to the global financial crisis, is forecast to suffer less and for a shorter duration than most of the world’s mature economies. The country is attracting investor attention generated by its long-term growth potential.

In contrast to the majority of hotel markets across North America and
Europe which are suffering double-digit revenue per available room (RevPAR) declines, hotels in Brazil are better positioned to weather the storm of a challenged global economy.

“International investors had been relatively silent since the economic crisis started impacting Brazil in September 2008, but the country
posted a net capital inflow in April 2009. This is a sign of foreign investors’ renewed interest in the market.

Brazil has a very favorable medium to long-term outlook for hotel fundamentals, with much of the demand being driven by the emerging middle class. Middle class households now represent 52 percent of Brazilian households, up from 42 percent in 2004. The number of upper class households too has grown, now accounting for 16 percent of the population.

Storm or no storm, Brazil’s hotel sector remains strong.