Bankruptcy of Brazil’s Second Largest Tour Operator Sends Chills throughout Distribution
The news from several months ago that a major Brazilian tour operator, Nascimento Turismo, had declared bankruptcy was just one thread in the fabric of a story that went beyond the more than $6 million the operator reportedly owed creditors—at least half of which is owed to U.S.-based receptive tour operators—when the news became public. Other factors include:
—The impact of the strong U.S. dollar vs. the weak Brazilian real, as the latter dropped in value by some 40 percent from the first week of October 2014 to the first week of October 2015;
–Its size, which did not protect Nascimento, a company founded in 1961 and had 350 employees with offices in São Paulo, Santos, Sorocaba, Belo Horizonte, Brasilia and Rio de Janeiro;
—The impracticality of the period of due diligence, which left suppliers and receptives with the belief that CVC, the company that indicated it was going to acquire Nascimento, would do so, only to suddenly withdraw its bid;
—The danger of the practice of Brazilian operators covering the cost of a holiday purchased by consumers who then pay for the experience in parcelized segments following the vacation over periods of 10 to 12 months, as well as the fuzzy line between operators and agencies in Brazil, which are sometimes located in the same office; and
—The absence of protection for Brazilian travelers who do pay the full amount for their travel.
On its face, the bankruptcy of the operator had mostly to do with the collapse of the Brazilian economy and the currency exchange rate–which is what the company’s top officers, Eduardo Nascimento and his son, Plinio, told the Brazilian trade journal, Panrotas, in an interview.
Tour products are sold to Brazilian travel agencies and consumers in Brazilian reales. But the operator has to pay for U.S. product in U.S. dollars. This meant that—depending on when they purchased their room allotments, airline seats and the other elements of a tour package from U.S. receptive tour operators or suppliers—the Nascimentos owed at least 20 percent more than the price of the product they sold the Brazilian travelers.
While word of the precarious situation of Nascimento was likely well known within the small tour operator community of Brazil—the annual report of Panrotas includes the company in its list of the 90 major tour operators in the country, all of whom are members of Associação Brasileira das Operadoras de Turismo (BRAZTOA), which generates 90 percent of all outbound travel from Brazil—it did not sound any alarms, as most of the other operators were dealing with the same situation.
Moreover, CVC, the largest travel company in Brazil—even though it is majority owned by the Washington-based Carlyle Group, a global venture capital firm–had indicated that it was set to acquire Nascimento, and the company was in a six-month period of due diligence. This fact was sufficiently encouraging to those receptives in the USA who continued to sell product to the company. Nascimento continued to buy product in U.S. dollars only to sell it for a loss to agencies and customers who paid for it in rapidly depreciating Brazilian reales. Apparently, when CVC discovered the operator’s debt had ballooned, it cancelled out and instead acquired two other companies in neighboring Peru. Eduardo Nascimento told Panrotas that the reason for CVC’s departure from the deal was the number of employees (350), which CVC believed were too many for the company.
Regardless of the reason, when CVC indicated that it was no longer interested in Nascimento, the company had to shut down. According to Panrotas, a Brazilian court has established Nascimento’s unpaid debt at more than $6 million. One U.S. US-based receptive indicated that they were owed $275,000 and another told INBOUND they were owed nearly $2 million. Account receivable insurance, which is readily available for European countries, is difficult, if not impossible, to find for Latin American countries.
In another follow-up, the president of Braztoa, Magna Nassar, and the CEO of the organization, Monica Samia, used the occasion of the just concluded ABAV conference (Sept. 24-26 in São Paulo) to announce the launch of an insurance program which will ensure that consumers receive compensation in case of cancellation of travel, and failed tour companies, as well as businesses such as airlines, operators and suppliers abroad—or even business scams. Under the program, the cost of paying for the coverage (up to 10,000 reales, or, currently, $2,500) will be included in all Braztoa associated packages. “The example of Nascimento Turismo is currently the best business card for insurance,” noted Panrotas.
Also, In a related development Oswaldo Freitas, who had been Nascimento Turismo’s USA product manager, has accepted a position as is the new regional director of sales for Latin America, JTB Americas manager for JTB’s Brazilian operation, which is based in São Paulo.
(The Nascimentos have reportedly launched an online B2C website, but we were unable to locate it prior to the posting of this article.)
A Chinese Hiccup? Report Indicates China Tourism will Decrease in 2015 but Resume Growth in 2016 and Beyond
According to a recent report from Fung Business Intelligence Centre and China Luxury Advisors, China’s outbound traveler numbers are still growing—despite some recent indications that rate of growth of actual travel and bookings had decreased from the point it was a year ago—and are still likely to double by their numbers by 2020 to 234 million passengers (from 100 million-plus last year.)
More important to those focusing on the shopping, tourist Chinese visitor spending overseas is expected to jump to $229 billion, an increase of 23 percent over a year ago. And by 2020, their total overseas spending is expected to reach $422 billion, the report said.
Analysts at HSBC predict, however, that travel will not bounce back this year, and will not likely attract all the luxury shoppers who have held back. Still, when tourism to Hong Kong dropped, close to 60 percent of China’s outbound trips were to Hong Kong and Macau, according to HSBC. In the table below the U.S., a long-haul destination, compares favorably to any other long-haul destination.
For a list of countries and regions where travelers spend most, check out the chart below:
Google Searches Reveal What UK Travelers Want
The latest monthly report by Greenlight profiles search behavior for the UK’s online holidays sector. It analyzes which websites, advertisers and brands were most visible in the Google UK natural search and paid media listings, when consumers searched for Holiday-related terms. The key findings from its report for July 2015 show that:
—In July, 7.5 million searches were made by consumers searching for holiday-related terms on Google UK.
—The search term ‘cheap holidays’ was queried 823,000 times, accounting for 11 percent of all searches made for the sector.
—Queries for generic keywords accounted for 50 percent of all searches made for the sector.
Percentage breakdown of searches made for each subsector:
—travelsupermarket.com was the most visible website in the Natural Search listings, achieving a 68 percent share of voice.
—lowcostholidays.com was the most visible advertiser in the Paid Media space, achieving a 63 percent share of voice.
—travelsupermarket.com ranked at the top of our Integrated Search league table, as it achieved a dominant share of voice.
Natural Search and Paid Media Listing
Category Number and Percentage of Whole
Domestic destinations 875,620 (12%)
Long-haul destinations 1,119,220 (15%)
Short-haul destinations 1,741,690 (23%)
Generic 3,763,770 (50%)
Natural Search—Holidays: Overall
In July 2015, 7.5 million searches were made by consumers searching for holiday-related keywords. The table below shows which websites were most visible in the Natural Search listings on Google UK for the 4,794 keywords analyzed.
Search Term Number Percentage of Whole
cheap holidays 823,000 11%
Holidays 450,000 16%
last minute holidays 368,000 5%
all inclusive holidays 201,000 3%
last minute holiday 135,000 2%
last minute holiday deals 135,000 2%
city breaks 110,000 1%
Holiday 110,000 1%
weekend breaks 90,500 1%
sun holidays 90,500 1%
other keywords 4,987,300 66%
The 20 Most Visible Sites
Holidays—Generic: 3.7 Million Searches
In July 2015, 3.7 million searches were made by consumers searching for generic-related keywords. The table below shows which websites were most visible in the Natural Search listings on Google UK for the 919 keywords analyzed.
Top 10 Search Terms
Search Term Number Percentage of Whole
cheap holidays 823,000 22%
Holidays 450,000 12%
last minute holidays 368,000 10%
all inclusive holidays 201,000 5%
last minute holiday deals 135,000 4%
last minute holiday 135,000 4%
holiday 110,000 3%
city breaks 110,000 3%
sun holidays 90,500 2%
cheap all inclusive holidays 90,500 2%
other keywords 1,250,770 33%
Top 10 Search Terms
Search Term Number Percentage of Whole
weekend breaks uk 60,500 7%
uk holidays 27,100 3%
last minute holidays uk 27,100 3%
holiday parks uk 22,200 3%
last minute uk breaks 14,000 2%
family holidays uk 12,100 1%
caravan holidays in com. 9,900 1%
cheap uk holidays 9,900 1%
cheap weekend breaks 8,100 1%
caravan holidays uk 8,100 1%
other keywords 675,820 77%
The 20 Most Visible Websites
Natural Search—Holidays: Long-Haul Destinations
In July 2015, 1.1 million searches were made by consumers searching for long-haul destination-related keywords. The table below shows which websites were most visible in the Natural Search listings on Google UK for the 1,039 keywords analyzed.
Search Term Number Percentage of Whole
florida holidays 49,500 4%
new york holidays 40,500 4%
dubai holidays 40,500 4%
mexico holidays 33,100 3%
tunisia holidays 33,100 3%
cuba holidays 33,100 3%
caribbean holidays 27,100 2%
thailand holidays 27,100 2%
las vegas holidays 27,100 2%
maldives holiday 22,200 2%
other keywords 785,920 70%
The 20 Most Visible Websites
Das (re)Boot: Tui and DER Touristik Rebrand and Restructure
Germany’s largest and third-largest tour operators—Tui and DER Touristik, respectively—are proceeding apace with their previously announced plans to unify a brand (Tui) and to restructure following a major acquisition (DER Touristik).
In the first phase of the Tui’s international rebrand, the company announced that the Dutch travel operation Arke, had changed its name to Tui. Already well-known in Germany, where it is the largest tour operator, the Tui name will gradually replace the large tour operator brands, continuing with France in 2015, followed by Belgium, the Nordics and the UK in the next two years.
“Creating an internationally unified branding will enable us to offer our customers a consistent holiday experience,” said Erik Friemut, a member of the Tui Group’s executive committee, adding “A unified global brand will also significantly enhance our competitiveness in the important online segment and help us modernize our brand. Our Dutch colleagues have implemented the rebranding campaign within a very short period of time, and we are very proud of what they have achieved. They will now be the blueprint for the other European markets.”
DER Touristik, meanwhile, is organizing as a holding company with an international management board, and is divided into three regions covering 14 European countries, and with three central units. This follows the recent acquisition of Kuoni tour operator businesses in Europe. Schematically the new organization looks like this:
DER Touristik’s Three Regions
|Central Europe Region||Northern Europe Region||Eastern Europe Region|
|Covers businesses in Germany, Austria and Switzerland, to be managed by René Herzog.||Covers Scandinavia/Finland, the UK and Benelux, to be managed by LeifVase Larsen.||Covers the Czech Republic, Slovakia, Poland and Hungaryremains under management of Ferid Nasr.|
At the three units, Michael Kimmer is CEO, destination management and hotels, with responsibility for expanding the worldwide destination activities. Chief transformation officer Dirk Tietz will head IT and corporate development, while a chief financial officer for the group remains to be appointed.
CEO Sören Hartmann, who will run the overall group, said the DER Touristik Group would be “lean” and would “act fast” and emphasized that the companies in the local markets would remain independent and be led by their existing management team.
NEW AND INTERESTING PRODUCT
Oh Boy! High Times in South Dakota as Sioux Tribe Opens Nation’s First Marijuana Resort: Just 10 months after the U.S. Justice Department gave Native American tribes the authority to legalize marijuana on reservations, the Santee Sioux tribe in southeastern South Dakota plans to open a marijuana resort in Flandreau, S.D.—a remote location about six miles east of the border with Minnesota. The small tribe—it has a population of 400—already operates a casino small hotel and buffalo ranch in the area.
According to an AP article, Santee Sioux leaders sell their own pot in a smoking lounge that includes a nightclub, arcade games, bar and food service, and eventually, slot machines and an outdoor music venue. There are still some questions to be resolved. That is, will visitors have to register in order to buy or smoke marijuana and how much will those who live on the reservation be allowed to possess or transport. There is already a large marijuana growing area on the reservation.
Tribal leaders have already resolved some important questions for visitors to the lounge: Customers will be able to purchase a gram of marijuana in the lounge, likely for between $10 to $15. Customers will be able to buy up to one gram of usable marijuana or marijuana product, or one-tenth of a gram of marijuana concentrate per two-hour period with no more than two purchases in a day. For more information, visit www.santeesioux.com. To review a copy of the tribe’s 29-page marijuana control law, go to: http://www.santeesioux.com/documents/fsst_marijuana_control_ordinance_title_29.pdf
Bob Gilbert Forms Partnership to Create “China Ready Partners” Launches: The new brand is a collaboration of David Huang’s Chinese Host Inc., which was founded in 2000 and is a leading Chinese operator in the Western USA hosting over one million Chinese travelers since 2011, and Francis Hung’s Hung & Kit (Holdings) Ltd. (H&K), a privately held company established by Hung in 1994, and is a leading consultation and representation company for major international travel name brands in China. Their new brand, China Ready Partners, offers a North America- based travel operation, full service representation in China, a booking engine and supplier training, as well as a transportation division.
Las Vegas-based Bob Gilbert, a long-time tour and travel industry veteran who has held senior positions at a number of travel industry organizations including Choice Hotels, Best Western International and Delaware North, has been named to lead the newly formed China Ready Partners brand in North America. For more information, contact Gilbert via [email protected] or visit the company’s website at www.chdestination.com.
In Pursuit of Chinese FIT’s, Bicycle Adventures, an active travel company, is launching two unique 10-day bicycle tours of Southern California specifically for Chinese speakers. The tours, which depart from San Diego and Los Angeles, are led by Joshua Samuel Brown, a travel writer and lifelong cyclist who is fluent in Mandarin. The tours cover 55 miles a day while cruising scenic routes along the Pacific Coast and into the San Bernardino Mountains. Planned departures for 2016 are Sept. 29 and Nov. 17; spring departures may be added. For more information, visit: http://bicycleadventures.com/destinations/california-bike-tours/Southern-California-Bike-Tour—NEW!
Atlanta Gets Museum of Fashion: On Oct. 3 the Savannah College of Art and Design (SCAD) opened its new fashion museum at its Atlanta campus. The new museum adds 10,000 square feet—a public gallery space, a fashion conservation lab and a media library for educational film and digital presentations—to the existing 27,000 square feet of academic studio space SCAD has dedicated to fashion and fashion marketing and management students.
The inaugural exhibition, Oscar de la Renta, celebrates the house of the late Oscar de la Renta; the Atlanta presentation will feature garments from the mid-1960s through the present, including gowns on loan from former first lady Laura Bush and dresses worn by Taylor Swift and Oprah Winfrey, in addition to select garments by Oscar de la Renta’s new creative director Peter Copping. The exhibition also includes the film “Ovation for Oscar,” which premiered at the Marché du Film at the Cannes Film Festival. Admission to the museum is free. For more information, visit www.scad.edu.
New Tree Hoppers Attraction Brings Out the Inner Tarzan in All of Us: A new adventure attraction has opened in Dade City, Fla.—it is about 40 miles northeast of Tampa—for travelers who enjoy climbing, zip lining and other related activities. Tree Hoppers is spread out over 60 acres and it is has eight courses and more than one hundred different elements like platforms, ladders and ropes for people to use to get from one obstacle to the next. In addition to zip lining, there are rope course elements, climbing elements, free fall elements and tunneling elements. Benjamin Nagengast, who operates Tree Hoppers, says that it is “a great family experience and perfect for groups.” For more information, visit: www.treehoppers.com, or call 813.381.5400.
Brits Staying Away from Islamic Countries in Droves This Winter
Will the U.S. realize the benefit of schadenfreude? Will fearful or skittish Brits forsake holiday spots in Europe, the Middle East and northern Africa for the USA? A new Travelzoo survey indicates that half of British travelers are avoiding traditionally popular winter sun hotspots in favor of “safer” destinations as a result of terror attacks and the migrant crisis. Specifically, the survey of 2,000 UK adults showed that:
—More than half (54 percent) surveyed blamed recent terrorist attacks and the migrant crisis for decreasing their willingness to travel abroad.
—Fifty one percent said it was the immigrant crises now affecting Europe for reducing their willingness.
—The traditionally popular winter destinations of Tunisia, Morocco, Egypt, Greece and Thailand are now the places that UK consumers are most afraid to visit.
—Britons felt most secure travelling to the Canary Islands, the Caribbean and Australia for a winter sun holiday this year.
—Over the next 12 months they felt most confident about booking Italy, Spain, France, Portugal and the U.S.
—More than half (54 percent) of those surveyed said the Tunisia terrorist attack alone had put them off booking a holiday anywhere abroad. (On 26 June 2015, an Islamic terror attack occurred at the tourist resort at Port El Kantaoui in Tunisia, resulted in the death of 38, 30 of whom were British. The UK government issued a ban on all but essential travel to the country; it is estimated that 300,000 tourists due to travel to the country immediately cancelled their visits.)
—Just 1 percent said they would consider visiting Tunisia, even if the travel ban were lifted.
—The research also showed 75 percent of respondents were now actively avoiding Islamic countries as holiday destinations.
—Seventy-three percent said the migrant crisis had put them off travelling through the Channel Tunnel or by Eurostar.
—Travelzoo managing director Richard Singer said the survey showed that personal safety was now a key factor in holiday choice. In the past, he observed, “It was all about price; now safety is right up there.”
HODGE PODGE—Shifts, Shakeups and Occasional Nice News from the Tour and Travel Industry
Veronique Hubert, chief operating officer and co-owner of the New York City-based teamamerica receptive tour operation, has announced the appointment of a new team member: Laurent Devon Hubert, her baby boy, born on June 4th. Hubert, who also has a daughter who is a freshman at the University of Southern California, tells the Inbound Report that she and the new recruit are doing fine.
U.S.-headquartered Collette has appointed its first ever UK managing director—Carl Burrows, formerly of Explore. The expanded role was created following the departure of UK general manager Peter Traynor who left the business last week. Part of Burrows’ role will be to raise awareness of Collette in the UK market. Christian Leibl-Cote, vice president of service & international business, said the new role had been created to give the UK more autonomy.
Leger Holidays has appointed former Tony Wheble as managing director. Wheble is the former chief executive of James Villas and TV Travel Shop managing director. Wheble joined James Villas as managing director before acquiring the business in a management buyout. He sold the business to Wyndham Worldwide in 2011.
Elaine Moulder has left her post as director of marketing for Sweet Magnolia Tours and launched her own business, Brilliant Adventures, a full service tour operator offering planning and management services for U.S. and Canadian destinations. Before her nearly four years with Sweet Magnolia Tours, Moulder served for more than four years at the Student & Youth Travel Association (SYTA).
Frank Rosenberger has joined Tui Group, where he is responsible for the group’s overall strategy. The 47-year-old will also be a member of the group executive committee. He joins the company from Vodafon. He was previously group technology products and services director with responsibility for the international development of new business areas.
Christian Bärwind, Google’s head of travel in Germany, is leaving the e-commerce giant and will take over as head of online travel group Comvel, which runs the Weg.de and Ferien.de portals, next January. Comvel is owned by TV broadcaster ProSieben SAT 1 group, which aims to expand its tourism activities.
Andreas Lambeck, formerly Alltours‘ head of e-commerce, has joined the FTI Group as head of the travel television firm Sonnenklar TV. He replaces Andreas Eickelkamp who was promoted in June to the FTI group management team with responsibility for Sonnenklar, dynamic operator Big Xtra and several other units.
Travelzoo has announced the appointment of Holger Bartel as global CEO and the appointment of Vivian Hong as president, Asia Pacific effective January 1, 2016, as well as the appointment of Mike Stitt as president, North America effective October 1, 2015. The company’s current CEO, Chris Loughlin, will leave on December 31, 2015 at his own request to pursue other opportunities. Bartel, 48, who is the chairman of Travelzoo’s board of directors since 2010, was CEO from 2008 to 2010. Vivian Hong, 42, joined Travelzoo Asia Pacific in 2011. She currently oversees Travelzoo in China, Hong Kong and Taiwan. Stitt, 35, joined Travelzoo in 2004. Most recently, Stitt oversaw Travelzoo’s local and entertainment categories and publishing and product planning in North America.
Dawn Airey, former Channel 5 chief executive, has been named senior independent director at Thomas Cook. Airey, who was most recently Yahoo‘s Europe, Middle East and Africa senior vice president, replaces Carl Symon who announced his decision to leave the group in June.
Carlos M. Tait, director of travel industry sales, Latin America and the Caribbean for the Greater Miami CVB, passed away suddenly on Sept. 30 in Miami. Tait, a well-known and highly respected travel and tourism industry professional, had more than 25 years of experience with American Airlines prior to joining the bureau in 2013. His knowledge and experience in the international arena along with his well-established relationships in Latin America and the Caribbean were extensive and highly admired.