Brazil’s tourism industry was performing like an economic sector in a budding recovery in the first quarter of 2018, then came the impact of the closure of Avianca Brazil and loss of its passenger seats; tighter credit interest rates; and a decline in the value of the dollar. In its just-issued report on the third quarter of 2019, the Brazilian travel trade news publisher made it clear that the industry is now focused on 2020 as it seeks to hold onto whatever gains it has made in this bumpy year. Following are excerpts from the Brazilian Overview Monthly Report from PANROTAS, the authoritative travel trade news source, with some additional items from INBOUND.
—The industry showed a slight recovery in September, 1.1 percent compared to the same month last year. However, in the year to date, the sector is negative 1.4 percent. With more and cheaper credit, the trend is for a stronger recovering of the sector in 2020. This seems to be in accord with the thinking regarding inbound travel to the USA by the U.S. Department of Commerce’s National Travel & Tourism Office (NTTO), which is estimating that 2019 will finish with a zero percent increase in visitation from Brazil vs. 2018. For next year, NTTO is forecasting that traffic from Brazil to the USA will increase by 2 percent.
—For Brazil to re-charge its economy, it needs to have the confidence of its people. Toward that end, the Consumer Confidence Index (ICC) of the city of São Paulo was close to stable in October with 111.8 points, only 0.3 percent less than the previous month. However, compared to October 2018, the ICC increased 3.6 percent as a result of low inflation and interest rates and a better labor market. The Retail Businessmen Confidence Index (ICEC) of the city of São Paulo registered 118.4 points in October, an increase of 2.7 percent compared to September. This is an important barometer indicating that traders will probably buy more from their suppliers in anticipation of more positive year-end sales
—in September, the international demand of Brazilian airlines dropped 7.6 percent and supply decreased 12.2 percent, showing the impact of the exit of Avianca Brazil from the market and flight cuts especially to the United States. In the month, 694,000 paid passengers were carried on international flights, indicating a 9.2 percent contraction compared to the same period of 2018. In the year, however, demand grew 3.5 percent and supply increased 1.3 percent compared to the same period last year.
Highlights from CVC, Brazil’s Largest Travel Company: Back in the 1950s Charles Erwin Wilson, the president and CEO of General Motors, is reported to have said “What’s good for General Motors is good for the country.” This might be the case for CVC, Brazil’s largest travel company, whose economic health is another barometer for measuring Brazil’s economy.
—In the first nine months of the year, booking for tickets reached 11.5 billion reais ($2.74 billion—a growth of 18.8 percent over 2018). Including Argentina, sales reached 12.6 billion reais ($3.005 billion), with a growth of almost 3 percent. The company reached 1,377 CVC Operadora stores and 65 Experimento (CVC’s educational tour operator brand) stores, and will probably have 1,400 stores by the end of this year.
—For CVC, problems such as the high price of airline tickets, the high exchange rate (dollar and real), oil spills in northeastern Brazil and planes withdrawn from the market led to a drop in the leisure sector, according to the company. The situation isn’t expected to normalize until early 2020, when all aircraft withdrawn from the market should return.
—CVC also revealed that it had to change the price of products due to the aggressiveness of some competitors, especially in the sale of travel packages. To stay competitive, it had to cut prices and also invest more in marketing: 18.7 million reais ($445.6 million) from January to September, an increase of 13.4 percent over 2018.