Brazil Tourism Report Q2 2012
Published: March 2012 No. of Pages: 65 Price: US$530
BMI remains highly positive about the outlook for Brazil’s tourism industry in 2012.
International disembarkations, which are released monthly by the Ministry of Tourism and serve as a
proxy for tourist arrivals in the absence of this data being released by the ministry in a timely fashion,
show an increase of 13.95% year-on-year (y-o-y) over 2011 to 9,005,165. There was notably strong
growth in April of 35% yo-y to 703,652 international disembarkations. Domestic disembarkations were
also on an upwards trajectory, rising by 15.81% y-o-y over 2011 to 79mn.
The disembarkation data from the Ministry of Tourism covers all arrivals, including business, leisure
or people visiting family and friends. However, whatever the purpose of travel, the data show the overall
trend in tourism is positive, which will benefit airlines and hotels operating within Brazil.
For 2011, preliminary indications from the Ministry of Tourism are that an estimated total of 5.54mn
foreign tourists visited Brazil, which would be a new record for Brazilian tourism. In 2011, foreign
tourists spent US$6.78bn in Brazil, an increase of 14.5% y-o-y, very much in line with BMI’s forecast of
US$6.72bn for the year. The strongest months for tourism receipts in 2011 were April (US$630mn),
August (US$605mn) and December (US$650mn).
With Brazil hosting the football World Cup in 2014 and then the Olympic Games being in Rio de Janeiro
in 2016, BMI believes tourist arrivals will continue to grow strongly in the years ahead. BMI forecasts
21.5% growth in tourist arrivals through to 2015, reaching over 6.73mn tourists. Over the same period,
we also expect tourism receipts to increase by 25.6% to total over US$8.52bn.
LATAM Airlines Group Takes To The Skies
In December 2011, the merger between Brazilian airline TAM and Chile’s LAN, which was first
proposed in August 2010, was finalised after approval from Brazil’s anti-trust authority (CADE) and the
merger received the support of both airlines’ shareholders.
The only conditions set out the Brazilian and Chilean anti-trust authorities were: a reduction in flights in
and out of Lima, Peru; a reduction in the amount of Santiago-São Paulo flights operated by LATAM
(LAN and TAM have over 80% market share); and asking LATAM to choose which international
alliance to join. LAN is part of oneworld and TAM is part of the Star Alliance. There has been no
indication as to which alliance LATAM will seek to join, according to local media reports.
In January 2012, the airlines announced a revised estimate of the cost savings expected to be achieved
through the merger. LAN and TAM now predict the synergies could increase annual operating income by
US$600-700mn, which is a significant increase on the original estimate of US$400mn in synergies
announced in August 2010.
Breaking down the headline figure, the companies said around 40% of total synergies will come from
increased revenue from LATAM Airlines’ passenger business, 20% from increased revenues from the
cargo business and 40% from cost savings across both airlines.
BMI believes the merger of the two airlines, which will create the world’s third-largest carrier, will be
positive for the Latin American tourism industry as it should lower costs for passengers as a result of cost
synergies and economies of scale.
Airport Privatisation Takes A Step Forward Brazil is prioritising investment in airport infrastructure as it
prepares to host the 2014 World Cup and then the 2016 Olympics. In recent years, Brazil’s commercial
airport administrator, Empresa Brasileira de Infraestrutura Aeroportuária (Infraero), has implemented a
BRL3.8bn (US$2.44bn) programme toupgrade the country’s airport infrastructure.
In February 2012, the government was scheduled to auction off airports in São Paulo, Campinas and
Brasilia as part of plans to boost capacity and meet rising air travel demand. The bidding prices will
reportedly start at US$1.84bn for Guarulhos, US$812mn for Campinas and US$315.2mn for Brasília.
The winning bidders will take a 51% stake in each airport, with Infraero holding the remaining 49%.
Infraero will also maintain a right of veto on any future decisions taken by the airport joint venture
partners. Mercopress reported in October 2011 that the winning bidder for São Paulo’s Guarulhos
Airport will be charged 10% of gross revenue over a 20-year operating contract. Bidders for Viracopos-
Campinas Airport will have to bid at least BRL521mn and look to pay out 5% of gross revenue over a
30-year operating contract. Brasilia’s concession will last for 25 years.
Among the interested parties reportedly bidding for these airports are a Spanish consortium of airport
operator AENA and infrastructure developer OHL Concesiones, German airport operator Fraport and
French company Aéroports de Paris. Indian company GMR Infrastructure said that it decided not to
enter the bidding process but it might consider entering a second round of airport auctions scheduled for
mid-2012. BMI will discuss the outcome of the airport auctions in the next quarterly report.
Brazil Tourism Market
Table of Contents
Executive Summary . 5
SWOT Analysis . 7
Brazil Tourism Industry SWOT .. 7
Brazil Political SWOT ... 8
Brazil Economic SWOT . 9
Brazil Business Environment SWOT .. 9
Industry Forecast Scenario ... 10
Arrivals . 10
Table: Arrivals, 2008-2015 .. 10
Expenditure ... 11
Table: Tourist Expenditure And Economic Impact, 2008-2015 ... 11
Inbound Tourism ... 11
Table: Inbound Tourism, 2008-2015 ... 12
Outbound Tourism 13
Table: Outbound Tourism, 2008-2015 . 14
Market Overview – Travel .. 15
Airports . 16
Global Oil Products Price Outlook ... 18
Market Overview – Hospitality .. 24
Accommodation Developments . 25
Budget Hotels ... 26
Business Environment Outlook 27
Table: Latin America Travel And Tourism Business Environment Ratings.. 27
BMI’s Regional Security Ratings .. 27
Table: Latin America Security Ratings 28
Table: Latin America State Vulnerability To Terrorism Ratings.. 28
Brazil’s Security Risk Ratings ... 29
Latin America Security Overview . 30
Strategic Outlook For The 2010s . 30
Latin America In A Global Context.. 31
Challenges And Threats To Security 31
Role Of Outside Powers ... 45
Key Factors To Consider In The 2010s 47
Global Assumptions .. 50
Table: Global Assumptions, 2010-2016 ... 50
Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y) ... 51
Table: Developed Market Exchange Rates, 2011-2013 ... 51
Table: Emerging Market Exchange Rates, 2010-2013 . 52
Developed States ... 52
Table: Developed States Real GDP Growth, 2010-2013 . 53
Emerging Markets. 53
Table: Emerging Markets Real GDP Growth. 2010-2013 ... 54
Consensus . 55
Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%) 55
Company Profiles ... 56
Brazil Hospitality Group.. 56
Gol Transportes Aéreos ... 57
TAM Linhas Aéreas . 59
BMI Methodology ... 61
How We Generate Our Industry Forecasts ... 61
Tourism Industry .. 61
Tourism Ratings – Methodology .. 62
Table: Tourism Business Environment Indicators ... 63
Table: Weighting of Components . 64