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Brazil Tourism Report Q1 2012
Business Monitor International, Nov 2011, Pages: 52
Business Monitor International's 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.
BMI remains highly positive about the outlook for Brazil’s tourism industry in 2012. International disembarkations, which are released monthly by the Ministry of Tourism and serve as a proxy for tourist arrivals in the absence of this data being released by the ministry in a timely fashion, show an increase of 15.9% year-on-year (y-o-y) over 9M11 to 6,735,083. April had notably strong growth rates, up by 35% yo- y to 703,652 international disembarkations. Domestic disembarkations are also on an upwards trajectory, rising by 18.7% y-o-y over 9M11 to 58.8mn.
The disembarkation data from the Ministry of Tourism covers all arrivals, including business, leisure or people visiting family and friends. However, whatever the purpose of travel, the data clearly show that the overall trend in tourism is positive, which will benefit airlines and hotels operating within Brazil.
For 2011, preliminary indications from the Ministry of Tourism are that a total of 5.5mn foreign tourists will visit Brazil, marking a new record for Brazilian tourism. With Brazil hosting the football World Cup in 2014 and then the Olympic Games in Rio de Janeiro in 2016, BMI believes tourist arrivals will continue to grow strongly in the years ahead.
BMI forecasts 21.5% growth in tourist arrivals through to 2015, reaching over 6.73mn tourists. Over the same period, BMI also expect tourism receipts to increase by 35.4% to total over US$9bn. LAN-TAM Merger Expected To Be Complete By Q112
In September 2011, Chile’s antitrust court approved the planned merger between Brazilian airline TAM and Chile’s LAN, which was first proposed in August 2010. This just leaves Brazil’s antitrust authority to approve the merger, which must also be supported by both airlines’ shareholders.
In October 2011, TAM said the merged LATAM Airlines Group should be established near the end of Q112, subject to final regulatory and shareholder approval.
BMI believes the merger of the two airlines should be positive for the Latin American tourism industry as it should lower costs for passengers as a result of cost synergies and economies of scale. The new airline will be one of the three leading airlines in the world in terms of market value and offer services on 280 aircraft to more than 115 destinations worldwide, according to TAM.
Hotel Industry Investment Remains Strong
Investment is surging in Brazil’s hotel sector, as chains aim to increase capacity ahead of the World Cup and the Olympics. According to research by international hotel consultancy STR Global, Brazil only had a national hotel supply of 172,561 rooms in July 2011, a figure that seems very low for a country with a population of over 190mn. Even with a reported 3,928 rooms under construction in September 2011, it is clear that Brazil remains underserved by hotels, ahead of a multi-year period that will include 600,000 visitors entering the country for the 2014 World Cup alone, according to the Brazilian government.
Although the government has been providing tax incentives to hotel developers, according to STR Global, many obstacles, including legal, building and environmental requirements, are preventing the hotel industry from developing at a faster pace.
However, the opportunities for hoteliers seeking to enter the Brazilian marketplace are clear. In September 2011, Hotel News Now reported that Brazilian revenue per available room (RevPAR) increased by 34.7% in January-July 2011, taking it to US$96.71. The average daily rate rose by 28.2% to US$141.76 over the same period.
Unlike other countries, in Brazil independent hotels account for about 80% of the market, with only 20% linked to multinational chains. This can cause difficulties for tourists seeking to judge the reliability of ratings and services on offer.
In a key development for the Brazilian hotel industry, the national hotel classification system was revamped in June 2011. The Brazilian System for the Qualification of Accommodation Options (SBClass) will use 1-5 star ratings to identify categories of accommodation. Only hotels and accommodation establishments that have registered and qualified with the Ministry of Tourism will be able to use the new voluntary rating system.
BMI believes the development of a national classification system, which is based on international standards and has been developed following research of several other countries’ rating systems, will be a great help to the evolution of the Brazilian hospitality industry, enabling tourists to be better informed about the standard of accommodation available across the country. This will particularly be welcomed by the many thousands of tourists visiting the country for the World Cup and the Olympic Games.
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