World Cup hotels costlier than Olympics in Brazil

Hotel rooms are expected to cost almost 50 percent more in Rio

de Janeiro during the upcoming World Cup soccer tournament than

when the city will host the 2016 Olympics, in part because

organizer 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 organizing

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 organizing 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.

”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 percent of the hotels in Rio. Now it’s just

reselling the packages.”

Other analysts said the price difference also reflected local

fervor 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 $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 $310, according to Rio’s Olympic bid document used to win the

Games.

In August, Brazil’s tourism agency Embratur asked FIFA and hotel

operators to negotiate lower prices for the World Cup. The request

came after one study showed that some room rates would run up to

500 percent higher in some hotels offered by MATCH.

Then in October, the Brazilian government said it would

investigate whether MATCH was involved in ”cartel” practices

leading to hotel price hikes.

As yet, the government’s tourism agency has taken no action even

though the World Cup is less than six months away and many hotels

are already sold out.

”The federal government is watchful of the prices charged by

hotels during the World Cup and will mobilize all available means

to prevent any abuse,” the Sports Ministry said in a

statement.

MATCH, which is also FIFA’s agency for selling tickets to the

World Cup matches, has repeatedly denied any wrongdoing and said it

could not explain the difference in expected hotel costs between

the World Cup and Olympics.

”We are not in a position to comment with respect to hotel

accommodation for the Olympic Games as we do not know at all what

kind of arrangements may have been made or what conditions may have

been imposed,” MATCH said in a statement.

The company said it’s primarily responsible for contracting and

delivering accommodation for the FIFA community, including its

officials, delegates, guests and staff. It also sells rooms to

FIFA’s commercial affiliates, the media and hospitality customers.

Rooms are offered to the general public through the FIFA website

operated and maintained by MATCH.

FIFA and MATCH this month were each fined more than $200,000 by

consumer rights officials because of alleged ticket irregularities

at a Confederations Cup venue, and prosecutors still want the

entities to pay nearly $2 million in damages for allegedly not

providing the seats that fans paid for during the warm-up

tournament this year.

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