Tour and travel industry professionals have been nearly unanimous in their belief that the Brazilian market is ready for a rebound—for instance, Orlando-based Jay Santos, managing director USA for the Brazilian operator Grupo Trend, told an industry conference two weeks ago that he was “bullish” on Brazil for 2017—for several reasons:
First, while arrivals to the USA from Brazil are expected to decline significantly this year, many observers point to the decline as a result of the political trauma the nation has experienced this year—due to the impeachment and removal of a president and scandals involving Petrobras, the nation’s semi-public, multination energy corporation.
Second, a downward spiral in the currency exchange rate, which hit a low point last February when the Brazilian real sunk to $0.25 against the dollar, seems to have been checked, and the real is back at about $0.30—a 16 percent recovery from its low point. (See chart below)
Third, a major challenge to travel abroad has disappeared. 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 percent by the time other charges are incorporated) to 25 percent (a de facto 33 percent). By March, the Brazilian Congress and then-President
Fourth, Brazilians have kept traveling and kept spending when they have traveled, but they have spent less. Confirmation of this came with the recent release from Visa Performance Solutions, a consulting firm of the global financial institution, which conducted a study on the consumption profile of Brazilians in their international purchases.
In the survey, which collected transactional data from the company’s payment network between 2013 and 2015, Visa noted that, despite continuing to consume, travelers have changed their purchasing priorities. “Consumer behavior has changed. He/she did not stop spending, what changed was his/her profile of purchase.” Said Rodrigo Santoro, director of Visa Performance Solutions in Brazil. The study also revealed that, in addition to changing their priorities in spending, they’ve also changed their destination priorities.
Most significant is the change in spending on clothing by Brazilians. When the Inbound Report interviewed shopping center executives in the Orlando area in the summer of 2015, we learned that Brazilians were shopping less for clothing—which used to be their number one purchase while on vacation. No more. The new top five categories of spending are in the following table.
Other points of interest from the Visa survey include the following:
—Brazilian spending abroad is concentrated in the United States and Canada (46 percent), despite a high drop in transaction volume.
—The top four destinations, all in the United States—Orlando, Miami, New York and Las Vegas—alone accumulate an incredible 20 percent of total spending.
—Orlando, Miami, New York and Las Vegas are the leading cities which, Santoro says, are “very stable” and that changes in ranking are not expected in future surveys.
—Santiago, the capital of Chile, emerges as the fifth city with the largest flow of expenses of Brazilians around the world, surpassing Fort Lauderdale, Florida.