As has been the case each year when NAJ reviews the results of the Listening Tour conducted in the fall by its founder and CEO, Jake Steinman, the early warning antennae of receptive tour operators and U.S. travel suppliers who regularly work country markets gave us a unique—and somewhat unexpected—perspective on what to expect from Brazil, the USA’s top inbound source market from Latin America.
It’s coming back, said participants in the Salon conducted by NAJ several weeks ago in Orlando and attended by key receptives and suppliers based in the area. (Orlando is the most popular USA destination for Brazilians.) That is, Brazil—while it is still mired in what most economic analysts would agree in its worst economic recession in more than a century—is on its way back, even though the most recent data available from the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) show that, from January through April of 2016, arrivals to the USA from Brazil are down 25 percent.
Part of the problem for Brazilian operators in the first quarter of the year was an increase, at the beginning of 2016, in the tax on remittances abroad from 6 percent (an effective 6.38 by the time other charges are incorporated) to 25 percent (a de facto 33 percent). By March, the Brazilian Congress and then-President Dilma Rousseff had passed and signed into law a measure repealing the increase. But the existence of the surtax, if only for a quarter, cut into outbound travel and advance bookings from Brazil for the first half of the year. Salon participants, keen to fluctuations in the levels of shopping and shopping tourists in Central Florida, believe that the absence of the surtax was beginning to have a positive effect on bookings from Brazil.
But beyond the tax issue and NTTO data, there are other numbers that are quantifiable: those of CVC, the largest tour operator and travel agency brand in Brazil and all of South America. Just after NTTO released its data for April 2016 arrivals, CVC said that in addition to the overall growth of its business, year-over-year in September 2016, international sales increased 14.6 percent in the third quarter. against a stable second quarter and a first quarter decrease of 6 percent
The increase, while encouraging for those involved in the Brazilian market, has not necessarily benefited USA destinations and travel suppliers, since many Brazilian international travelers are apparently opting to go to European destinations, such as France in the UK. The Brazilian real trades much stronger against Euro and the pound sterling than it does vs. the U.S. dollar. Regardless, the consensus for the panelists is that the decline in the Brazilian has bottomed out. The inbound tour and travel industry will be able to have a better measure of recovery at the end of this year, as December and January are usually months that contribute the most visitors to the annual total of Brazilians who come to the USA.
Following are some other numbers and actions registered by CVC, recently and during the past year—and remember, some of these are from the trough of the nation’s economic recession—and suggest that CVC and the tour and travel industry professionals in Central Florida know something that many others in the tour and travel industry do not.
—At the close of August 2015, CVC, which is responsible for more than one out of every eight trips booked in Brazil (According to the Brazilian Ministry of Tourism and IPC-Marketing Ltda, CVC and Submarino Viagens accounted for 13.9 percent share of total spending by consumers in the Brazilian leisure travel market in 2015) acquired RexturAdvance, thus entering the corporate travel segment (small and medium-sized companies) and becoming the leading player in the segment; and Submarino Viagens, the latter strengthening CVC’s position in the leisure travel online segment.
—This past February—just as the economic recession was nearing its lowest point—CVC, which already had about 1,000 travel agency/tour operator locations in Brazil, announced that it would begin the addition of 300 new locations at the rate of 100 a year over three years.
—For all of 2015, CVC bookings, excluding its August acquisitions, totaled approximately 5.2 billion reais ($1.6 billion) and 3.8 million passengers.
—CVC’s bookings for 2015 (which was in recession the entire year) bookings, excluding acquisitions, increased by 6.0 percent from 2014.
—For the six-month period ended June 30, 2016, its bookings sold totaled approximately $2.6 billion reais ($807.3 million) and approximately 1.8 million passengers.
—For the first half of 2016, including the bookings sold through RexturAdvance and Submarino Viagens, the company’s consolidated bookings totaled approximately 4.2 billion reais ($1.2 billion).
—The overall business volume for the CVC, which comprises CVC, Rextur Advance and Submarino Viagens, should reach between 9 billion reais and 10 billion reais fo 2016. So far, in the second half of the year, the group did better than it did the first, according to calculations of the travel trade publication PANROTAS in its market reports.
Beyond the Sales and Booking Numbers: There are more data from CVC and, while not all of them show increases, they show steady growth and confidence on the part of the company’s management over the decision to grow CVC in the midst of a recession. There is a logic to this strategy, and published as well as anecdotal accounts explain the strategy thus:
All of the 300 stores that CVC has opened and plans to open in Brazil are located in smaller cities and non-urban parts of the country, where 150 million or so people live. Traditionally, the core international market exists among the more than 50 million people living in Brazil’s major provinces and cities in the nation’s Southeast.
For the locations of the new stores, leases are cheaper than they are in larger cities. Also, the new locations are building brand loyalty among the populations they serve, most of whom have never dealt with a travel agency before. And for bottom-line purposes, these locations helped customers who have traveled locally or within Brazil during the recession.
Complementing its decision to increase B2C connections with consumers, earlier this year CVC announced that it would forego having a booth at all trade shows in Brazil this year. The company decided that, while it has “much affection for these fairs, (it) decided to invest in exclusive CVC events this year in regional meetings where travel agents will meet our customers to talk about sales, destination, seasons …”
Finally, in a most meaningful endorsement of CVC’s current business plan, the company’s board of directors has announced that executives Luiz Eduardo Falco, (left, above) CEO and Valter Patriani (right, above), vice president of sales and marketing, the architects of the stronger B2C strategy, renewed their contracts with CVC for over three years and stay until 2019.
