Brazil Tourism Puts Good Numbers on the Board

Brazil’s tourism industry has benefited greatly from the announcement of several high profile events to be held in the country. The 2014 FIFA World Cup is set to be a huge draw for visitors and the addition of the 2016 Olympics in Rio de Janeiro will further boost the sector.

In January 2010, the government said it would invest BRL1 million to improve facilities throughout the country ahead of the World Cup.

Inbound visitor numbers had been growing but the industry could benefit from greater stability. While arrivals rose from 4.7 million in 2001 to 7.2 million in 2008, we estimate a fall in that number in 2009 because of the impact on developed countries of the global financial crisis.

The recovery should be relatively quick, with us forecasting that the number of tourist arrivals will increase to 9.2 million by 2014. The size of Brazil means that the tourist industry can rely to a large degree on strong domestic demand. This has partly helped the sector weather the international economic difficulties.

The number of Brazilians looking to travel within their own country and that can afford to do so is growing. According to Brazil’s Tourism Institute (Embratur) president Jeanine Pires, the revenue generated by tourism in 2008 was nearly 17 percent higher than in 2007, which was the best year on record.

Sector growth appears to be building up momentum as the global economy recovers. Brazilian airline GOL reported an increase in year-on-year (y-o-y) growth for January 2010. Compared with January 2009, GOL’s revenues were up by 32.1 percent.

In the hotel sector news has been positive too, with French corporation Accor planning to add nearly 5,000 rooms in Brazil with an investment of about EUR200 million. This will be achieved through expansion of their 20 Formula 1 and Ibis hotels in Brazil throughout 2010. In November 2009, Brazilian flag carrier TAM posted a profit for Q309, boosted by the Brazilian real strengthening against the US dollar and dropping fuel prices, Bloomberg reported.

Political Outlook Over recent years, Brazil has been maneuvering to develop its position as a regional power to rival the US in Latin America. Involvement in issues such as new governments in Haiti and Honduras have helped cement Brazil’s role as a powerbroker. Headline consumer price inflation in Brazil has fallen below 5.0 percent y-o-y, which is positive for the country’s social stability rating, which has risen to 70.0.