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Brazil Tourism Report Q1 2011
Business Monitor International, Jan 2011, Pages: 61
Brazil Tourism Report provides industry professionals and strategists, corporate analysts, tourism associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Brazil's tourism industry.
Brazil is to host both the football World Cup in 2014 and the Olympic Games in 2016, two major events that will both demand first class tourism infrastructure. The combination of these forthcoming events provides a tremendous imperative for Brazil to urgently upgrade its generally substandard infrastructure. Brazil’s tourism infrastructure is regarded as poor on a worldwide setting, with the World Tourism Organisation (UNWTO) ranking it 95th out of 130 countries for ground transport infrastructure, and 58th for ICT infrastructure.
The carrot and stick to improve transport networks in the country imposed by these events should have a large, motivational effect. The fear of failure to cope in front of a world audience will undoubtedly focus time and money on the sector, whereas the associated benefits to the country from creating a meaningful, and lasting impact on transport infrastructure will provide another reason for increased investment. The World Cup is of particular focus as matches will be spread throughout the country. It is estimated that 500,000 football fans will visit Brazil to watch the tournament. Due to the size of the country, each supporter is, on average, likely to need to take 6-14 internal flights. These estimates would double the number of passengers using Brazil’s airport network in 2008. The airport administrator, Infraero, has initiated a BRL3.8bn (US$2.44bn) programme to upgrade the country’s airports after fears that the existing infrastructure could not meet the demands of hosting the World Cup.
Fortunately the economy is in a relatively strong position to support the development work needed. We have revised up our forecasts for Brazilian real GDP growth to 7.2% and 4.5% in 2010 and 2011, respectively (from 6.0% and 3.6% previously), on the back of stronger than anticipated Chinese demand and expansionary credit conditions. Over the medium term these trends, along with Brazil’s massive investment appeal, will shape an impressive growth story. We expect Brazil’s well balanced economy and strong domestic demand outlook to drive annual average economic growth of 5.3% to 2014, considerably higher than the 4.8% average between 2004 and 2008.
The dark side to Brazil, and a major concern for its promotion of the tourism industry, concerns personal safety. According to the Brazilian Association of Bulletproof Manufacturers, more than 7,000 vehicles were armoured for civilian use in Brazil in 2008, up from 1,782 a decade earlier. Indeed, the pace of increase in this sector continued in 2009. Two high profile incidents associated with the 2010 Formula 1 Grand Prix also provided for negative coverage in this arena. One of the drivers, Jensen Button, escaped a carjacking because he was travelling in a bulletproof car with a well trained police driver. One of the pit crews was not so well protected; they were intercepted and robbed.
Security forces launched a major offensive in late November claiming to have taken control of two of the city’s most violent favelas (shanty towns), Complexo de Alemão and Vila Cruzeiro. More than 2,700 police and members of the military took part in the operation. We believe that the latest actions are likely to mark the beginning of a series of government initiatives to counteract the influence of gangs in Brazil’s major cities prior to World Cup and Olympic Games. Despite these efforts, security is likely to remain a key issue over the medium term, and it will continue to weigh on Brazil’s international image. As we expected, Dilma Rousseff has been elected President of Brazil, gaining 56.1% of the second-round vote, ahead of the 43.9% polled by challenger José Serra. The result means Rousseff succeeds her mentor and key supporter, the outgoing president Luiz Inácio Lula da Silva, in January 2011, reinforcing our long-held view that the key outcome of the election will be a broad continuation of the current economic policy mix.
The largest number of tourist arrivals in Brazil comes from neighbouring countries in Latin America, especially Argentina. Arrivals from Europe will account for 36% of visitors in 2010 and a further 14% will come from the United States. It is expected that the growth in numbers will come from areas outside Latin America, which will therefore contribute a declining proportion of the total arrivals, even as the actual numbers increase. Our forecast is that in 2014 tourist numbers from Europe will rise to 3.6mn in 2014, up from 2.4mn in 2010, and the proportion of arrivals from Europe will have risen to 39%. The proportion coming from the United States is expected to remain roughly unchanged.
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