Brazil Tourism Report Q1 2010 - Download this market research report

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Brazil Tourism Report Q1 2010
Published on December 2009

                                                                                                               Report Summary

The October 2009 decision by the International Olympic Committee (IOC) to award the 2016 games to Rio de Janeiro is the latest
positive development for the Brazilian tourism industry, which is gradually moving towards realising its enormous potential. The trend
in the number of inbound tourists has been erratic but unquestionably upwards ' arrivals have risen from 4.7mn in 2001 to 7.2mn in
2008. BMI expects a fall in that number in 2009 because of the impact on developed countries of the global financial crisis but the
recovery should be quick. BMI forecasts that the number of tourist arrivals will increase to 9.2mn by 2014.
Unlike most developed countries whose tourism industries have been hit ' even if indirectly ' by the global financial crisis, Brazil has
the advantage of reasonably strong domestic demand. The number of Brazilians who are looking to travel within their own country
and that can afford to do so is growing. According to Brazilian Institute of Tourism (Embratur) president Jeanine Pires, the revenue
generated by tourism in 2008 was nearly 17% higher than in 2007, which was the best year on record. It appears likely that overall
growth will continue through to 2009. The airline Gol Transportes Aéreos raised its market outlook for 2009 in November after posting
a Q3 profit that beat Bloomberg analysts' estimates. Gol forecast a 14% jump in 2009 in domestic traffic, up from an earlier prediction
of 2-4% industry growth.
Other company news has been positive, with Accor developing a network of 20 Formule 1 and Ibis hotels in Brazil by 2010 ' a project
brining nearly 5,000 rooms and total investment of about EUR200mn. In November 2009, Brazilian flag carrier TAM Linhas Aéreas
reported a profit for Q309, boosted by the Brazilian real strengthening against the US dollar and dropping fuel prices, Bloomberg
reported. Hotel das Cataratas, at Iguazu Falls, by Orient-Express Hotels was upgraded in autumn 2009. We see upgrades as signs of
a more general boom in investment in Brazil's tourism infrastructure, which is widely regarded as a factor restraining the industry from
reaching its full potential in the past.
Political Outlook We have upgraded Brazil's short-term political risk rating to 72.1 from 70.8 on the back of falling inflation. Headline
consumer price inflation in Brazil fell below 5.0% year-on-year (y-o-y) for the first time since March 2008. At 4.8% y-o-y, we believe
that this is favourable for the country's social stability rating, which rose to 70.0, from 65.0 in previous reports. We note that should the
inflation rate continue to fall over the coming months we would revise up our short-term political risk rating for the country. Long-Term
Outlook Still Bright While acknowledging the impact of the recession, we remain bullish in the long term regarding the Brazilian
economy. We believe that Brazil's economy has a lot going for it, ranging from an enviable array of commodity resources, such as
soy, sugar, iron ore, steel and hydrocarbons (our Oil and Gas team expects Brazil to become a net exporter of oil by 2011), to a highly
promising consumer segment. We expect the Brazilian consumer to continue to grow in prominence over the coming decade and
bank lending will continue to be a driving force behind Brazil's economic performance, offering more sophisticated financial
instruments to different sectors of the economy, where housing and agricultural loans are still a relatively new phenomenon.
Business Environment With an abundance of agricultural and mineral resources and a government that is actively encouraging of
foreign investment, in our view Brazil is one of Latin America's increasingly attractive places to operate business activities.
Furthermore, President Luiz Inácio Lula da Silva's ambitious infrastructure investment plans should unlock opportunities across all
major sectors, most notably the transport and energy industries. Overregulation, corruption and gang crime are the key threats to the
business environment in Brazil.

                                                                                                                Table of Content

Executive Summary               ....5
SWOT Analysis .7

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Brazil Tourism Industry SWOT                       ... 7
Brazil Political SWOT                8
Brazil Economic SWOT ... 9
Brazil Business Environment SWOT ..... 10
Industry Forecast Scenario ..11
Arrivals      .... 11
Table: Arrivals Data, 2005-2014                       12
Inbound Tourism                 12
Table: Inbound Tourism ' Arrival Of Tourists By Region, 2006-2014                                   .. 13
Table: Arrival Of Tourists At National Borders By Country, 2006-2014                                  ..... 13
Expenditure           ... 14
Table: Expenditure And Economic Impact Data, 2006-2014                                  14
Outbound Tourism                .... 15
Table: Outbound Tourism Data, 2006-2014                               .. 16
Market Overview ' Travel                  17
Commercial Airlines              . 17
Tourism Infrastructure               .... 17
Global Oil Products Price Outlook                      ... 19
Table: Oil Product Price Assumptions, Q108-Q409 (US$/bbl) ... 21
Table: Oil Product Prices, 2007-2014 (US$/bbl)                           . 22
Market Overview ' Hospitality                     ...24
Accommodation              .. 24
Business Environment                 ...26
Tourism Business Environment Ratings                             26
BMI's Security Ratings ... 26
Table: Latin America Security Ratings                       .. 27
Table: Latin America State Vulnerability To Terrorism Index .... 27
Brazil's Security Risk Rating                    ..... 28
Currency Forecast               .....30
Global Assumptions                .33
Table: Global And Regional Real GDP Growth, 2008-2011 (%)                                    33
Table: Global Assumptions, 2008-2014 . 34
Table: Developed Market Exchange Rates, 2008-2011 (average)                                       .... 35
Table: Emerging Market Exchange Rates, 2008-2011 (average) . 36
Company Profiles                37
Accor        . 37
TAM Linhas Aéreas                .. 38
Orient-Express Hotels ..... 39
Gol Transportes Aéreos                   .. 40
ICH Group           .... 41
Hotéis Othon            . 41
Invest Tur Brasil           . 42
Hopi Hari        . 43
BMI Methodology                 44
How We Generate Our Industry Forecasts                            ..... 44
Tourism Industry                44
Tourism Ratings ' Methodology                       ..... 45
Table: Tourism Business Environment Indicators                                .... 46
Table: Weighting of Components                         .... 47
Sources        .... 47

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