Tour and Travel Industry Indicators also Positive: For the first time since the economy of Brazil crashed into its deepest and longest recession ever in the middle of 2015, there are some positive, though tentative, numbers which suggest that the nation’s economy, including its tour and travel industry, is in recovery.
What makes a recovery? To quote Ed Dolan, a blogger for EconoMonitor, “The logical way to start … would be to cite an official definition of ‘economic recovery,’ but it turns out there isn’t one. The Business Cycle Dating Committee of the National Bureau of Economic Research, which is the group that calls the economy’s cyclical turning points, does not use the term ‘recovery’ at all. In the committee’s words, ‘a recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak.’ That leaves no room anywhere for ‘recovery.’”
It is clear that the economic crisis—Brazilians refer to the economic situation simply as “The Crisis”—has taken its toll on the ability of many traveling Brazilians to visit the United States during the recession.
The Latest Numbers: The most recent quarterly data, for Q3 2017, show the following.
—The revenue of tourism companies revenues grow 4.3% in 3Q17 compared to the same period in 2016.
—Two thirds (66 percent) of the companies show the intention of making new investments in 2017.
—The most significant increases were in the segments of parks and tourist attractions (+ 11.4 percent), air transport (+ 11.2 percent), operators (+ 10. percent) and travel agencies (+ 9.3 percent).
—Of the companies that intend to invest part of the revenues, 15.2 percent are receptive, followed by events (8.1 percent), lodging (5.2 percent) and air transportation (4.7 percent).
—Overall, GDP closed the third quarter of 2017 with a rise of 0.1 percent compared to the second quarter, in the seasonally adjusted series. Compared to the third quarter of last year, GDP growth was 1.4 percent. (Even so, GDP accumulated in the last four quarters, however, remains negative, closing at 0.2 percent in relation to the immediately preceding four quarters.)
What the data suggest is that, should Q4 show a second consecutive quarter of GDP growth, it appears that the Brazilian economy will have entered a period of recovery—even if the U.S. National Bureau of Economic Research doesn’t use the term.
A Speculative Note: Should the Brazilian economy—and the performance of its tour and travel industry—have bottomed out, and should it be in a recovery mode, one winner is CVC, the largest tour operator/travel agency in the country, which will be well positioned to benefit. While a number of tour and travel businesses shut down or curtailed their operations during The Crisis, CVC made acquisitions and launched a campaign at the beginning of 2016 to build a 100 news agency stores a year through 2018. According to the latest reports, the company has built 200 new stores (It now has 1,200 nationwide) with a 100 to go. All of the new stores were built in less-populated or rural parts of the country, as CVC pushed to get the country’s residents to travel domestically, while awaiting better conditions to push for outbound international travel, for which it is already the industry leader.