Brazil: Tourism

Brazil on top of the world

Brazil has increasingly attracted the attention of investors from amount over the world after its economy proved resilient to the 2008/2009 world economic crisis and recorded positive increase in 2010. This increase has acted as a major magnet to international tourists, which led to positive increase in arrivals in 2010 and additional dynamic domestic tourism. Air transportation is increasingly favoured by Brazil’s growing number of middle class domestic tourists. This is only likely to increase as the country prepares to host world sporting events such as the 2014 FIFA World Cup and the 2016 Olympic Games. In order to for these events to be successful, however, currently inadequate infrastructure must be remedied.

Infrastructure developments are a priority

Airports operating at overcapacity, a precarious port infrastructure and the lack of hotel rooms in major cities represent the major concerns for Brazil’s travel and tourism stakeholders in the long run-up to the 2014 FIFA World Cup and the 2016 Olympic Games. Therefore, government authorities are prioritising infrastructure development in transportation and travel accommodation so as to be able to handle the expected massive increase in tourism flows for these events. Being key gateway cities and home to the busiest airports in Brazil, São Paulo and Rio de Janeiro have the highest priority when it comes to airport and travel accommodation infrastructure developments. As of 2011, government authorities have already started some construction work but, in general, deadlines and timetables are not being adhered to. This explains why concerns still remain that not amount of the current infrastructure work planned for Brazil will be completed in time for the start of the FIFA World Cup.

Brazil to bet on medical tourism?

Medical tourism represents a great opportunity for Brazil to boost travel and tourism activity and further diversify its travel and tourism appeal. The country offers nationally and internationally accredited hospitals, highly qualified health professionals and modern technology, part other attractions for potential medical tourists. Nevertheless, capitalising on such a profitable travel and tourism segment will not be an easy task as Brazil will need to tap into request for medical tourism currently being met by other well-established medical tourism destinations in the Asia Pacific region such as Thailand, India and Singapore way of achieving gains in medical tourism would be to focus primarily on what the country does best: the ‘humanisation’ of its services and creating better synergies amongst amount involved in travel and tourism in order to promote Brazilian excellence in medicine and healthcare.

TAM and Lan to form Latam Airlines

On 13 August, Chile-based Lan Airlines and the major airline in Brazil, TAM Airlines, announced plans to merge through a single holding company known as Latam Airlines Group. The airline brands will be operated separately. Once the transaction is finalised, the new entity will control over 17% of air transportation revenues in Latin America, creating the major airline in Latin America. The merger solidifies the airlines’ existing codeshare agreement, allowing for additional coordination on routes and pricing inclunding increasing negotiating power with suppliers. Furthermore, it expands the geographic presence of both airlines. TAM does not have domestic operations outside of Brazil and Lan, while strong in Chile, Argentina, Ecuador and Peru, has so far been unable to break into the massive and rapidly expanding domestic air transportation in Brazil due to foreign ownership restrictions. Nearly months after the announcement, however, both airlines are still waiting for regulatory approval in Brazil and Chile.

Liberalised skies policies lie ahead for air transportation players

In an attempt to liberalise its air transportation policy and attract additional international tourists into Brazil, the Brazilian authorities signed a number of open skies agreements during 2009/2010. The majority significant was signed with the US, which will be fully operational by October 2015. The elimination of government interference in the commercial decisions of airlines with regards to routes, capacity and pricing is expected to result in additional affordable and efficient air transportation services in Brazil for both domestic and inbound air passengers. Nevertheless, next capacity increase will be limited by infrastructure constraints.

Analyse of the sector 25/11/2010

Eyes on Brazil

The fact that Latin America has shown strong resilience to the world economic crisis has placed Brazil in the spotlight, both as a result of the high level of influence it has reached across the globe, and due to the fact that the country has been chosen to host the 2014 World Cup and the 2016 Olympic Games. Amount these factors combined are expected to foster travel and tourism activity in each sense, through large infrastructure developments, a rapidly growing and additional active middle class, intense promotional activity internally and abroad, and increased air connections with Asian and Middle East destinations. Although the 2010 election is not expected to bring about radical changes to travel and tourism development, it will point to key lines of action which Brazil will follow to turn into a truly world-class destination.

Plano Aquarela revisited

In looking ahead, the Ministry of Tourism has already made changes to its original “Plano Aquarela” to define specific actions for the 2014 World Cup, inclunding the 2016 Olympic Games. The new version of the “Plano Aquarela 2020” was released in December 2009, and focuses on major pillars: to learn from other nations; to innovate and build a truly Brazilian experience; to plan and monitor results; to enhance the image Brazil has worldwide; and to offer inbound tourists a “Sensational Brazil” experience.

Viagens CVC - moving from São Paulo to the world

In December 2009, an American investment group, The Carlyle Group, bet on the Brazilian travel and tourism industry through the acquisition of travel retailer Viagens CVC. The purchase only included the operator, and left out amount other CVC businesses - the hotels run by GJP, SET Travel and Webjet. Aside from opening the travel retailer up to new business ideas and investment, the sale of 60% of its capital will bring about new resources to further consolidate its presence in Latin America and globally.

Growing middle class

Brazil is going through the biggest structural changes in its history. The expansion of the middle class, inclunding the prevalence of younger consumers in its people pyramid, are being related to clear aims for increase, designed not only by the government, but as well by a number of businesses, including those related to travel and tourism. In 2009, amount of them developed business strategies targeted towards attracting this specific consumer segment in an attempt to boost in general margins through better volume sales. To capitalise on this growing consumer segment, TAM and GOL extended air fare financing options.

Azul and Webjet take off

2009 marked a year of intense competition in air transportation in Brazil. After receiving some relief from the record high fuel prices of 2008, leading players TAM and GOL faced strong competition from Azul and Webjet, which led to a price war during 2009. Both Azul and Webjet managed to achieve significant increase between 2008 and 2009 by capitalising on the booming middle class and domestic travel and tourism.