When Charles E. Wilson, the one-time president and CEO of General Motors, was being questioned by U.S. Senators during a confirmation hearing back in 1953 about whether his stock holdings in the auto manufacturing company might create a conflict of interest should he become Secretary of Defense, Wilson responded, indicating that he did not think so because “What’s good for General Motors is good for the country.” While the exact contest of the comment lessened the bluntness of the remark, it became a staple of discussion and debate ever since.
And so it goes with the special status of CVC, the largest tour operator/travel agency/travel company in Brazil (and Latin America), where the tourism industry is crucial to the economic health of the country.
CVC is experiencing some challenging times of late, and so is Brazil, as both try to survive and prosper midst the coronavirus-triggered global pandemic that is wreaking havoc and devastation on the country and the company. Through coverage of the industry in the trade news media (especially the publication PANROTAS), one is able to appreciate—and be concerned about the condition of both. Some points to keep in mind as we wait and prepare for the travel and tourism at CVC and in Brazil to re-start.
—Brazil is the world’s fifth-largest country by area and the sixth most populous, with an estimated 213 million people. (For purposes of comparison, the U.S. is number three in population, with 328 million people, and is the fourth largest in size). Proportionately, Brazil and the USA have suffered about the same in terms of coronavirus cases, with each nation having about 2.4 percent of its population reporting cases of the virus.
—The Tourism Economics Research Group at the University of São Paulo reported that the sector lost 384 thousand formal jobs in 2020, an amount that corresponds to 45 percent of the total vacancies closed in the Brazilian economy until August. Tourism accounted for almost half of the total job loss in the Brazilian economy, even though it accounts for only 4 percent of the country’s signed portfolios.
—In relative terms, the most impacted activity was that of the travel agency. The 20,000 vacancies closed at branches and operators represent 29 percent of the total formal jobs that existed in the segment at the beginning of the year
—Prior to the pandemic, CVC had about 1,336 “brick-and-mortar” agencies throughout Brazil. The latest estimate is that there are 1,200—about a 10 percent reduction. This is important to know, as such agencies drive the retail sales that are expected to help keep CVC afloat until regional travel within South America and long-haul international travel to North America, Europe and Asia return. As of now, there is simply not enough lift capacity or routes active to drive a recovery to these destinations.
—One consequence is that, in recent months, CVC has been going through a restructuring of its sales and marketing operations at its major brands, which include CVC, RexturAdvance, Grupo Trend, Submario Viagens, Experimento InterCambio Cultural, and Visual Turismo. Aside from CVC itself, Americans who work the Brazilian market are probably most familiar with Grupo Trend, the Orlando-based receptive tour operator. Those who follow the news on job availability and departures have seen a steady stream of layoffs and furloughs. (However, those who checked last weekend’s issue of PANROTAS would have notice openings for seven mid-level jobs in the tourism industry.)
Physical stores drive the bulk of CVC’s sales on domestic travel in and around Brazil. There are already around 1,200 franchises operating, compared to approximately 1,336 in the pre-pandemic. Few are restricted due to the pandemic and, according to Andrade, the number of franchises that closed the doors definitely does not reach 10 percent.
Quick Summary: What the numbers and developments detailed about show that the travel and tourism industry in Brazil has taken a heavy hit. Right now, its condition is in stasis, waiting and preparing and knowing that what is good for CVC is good for Brazil.