Travel

About this Report

EXECUTIVE SUMMARY

Travel fails to meet expectations in 2014

Over the review period, the travel industry created high expectations for 2014, when Brazil was to host the FIFA World Cup. Although the mega-event reached the Tourism Ministry’s goals for inbound and domestic flows, demand for services such as lodging was below industry expectations. In addition, the country’s economic slowdown dampened consumer confidence, which was also negatively affected by the political instability caused by the presidential elections in October. Also, the World Cup contributed to a year with a large number of holidays, which also hampered business tourism activities.

Brazil continues to lead online travel in Latin America

Brazil has the largest population in Latin America and one of the world’s largest populations of internet users. Moreover, social media usage is such that the Wall Street Journal named the country the “social media capital of the universe”. Not surprisingly, Brazil continued to lead online travel in Latin America in 2014. However, booking in person remains popular and accounts for a large share of intermediaries sales compared to many countries in Latin America such as Mexico, Colombia and Chile; which indicates that Brazil still has great potential in online travel.

In 2014, weaker demand continued to contribute to consolidation of many segments of the travel industry. In a context of budget- and therefore price-sensitive consumers, large players can rely on economies of scale to grow by gaining share. This was evident in the car rental industry in Brazil, in which Localiza increased share significantly in 2014. Also, large operators were able to perform considerably above the industry average – for example, against a backdrop of volatile exchange rates CVC had the bargaining power to cut fixed-exchange-rate deals with suppliers.

Brazilian tourism received awards and recognition in 2014. The World Cup in Brazil in 2014 was recognised by many as the greatest in the tournament’s history, helped raise the country’s profile as a tourist destination. Brazil received international recognition as a sustainable destination when the international organisation Green Destination included two Brazilian sites in its top 100 sustainable worldwide destinations. The Brazilian hotel Campo & Parque dos Sonhos won two awards for responsible tourism at the world’s largest tourism fair – the World Travel Market in London. Also, multinational online travel agency Skyscanner named Brazil the world’s best emerging destination for 2015.

The years 2015 and 2016 are set to be challenging for the travel industry in Brazil. The economic slowdown in the country is expected to have a direct impact on annual disposable incomes, and political instability is likely to negatively impact consumer confidence. While domestic demand is set to soften in the following years, a change in national economic policy with a fiscal adjustment in 2015 will contribute to a volatile year for exchange rates. This will have a direct impact on outbound trips, since it difficult family’s holidays planning and discourage foreign travel, and on the profitability of industries that have fixed costs in US dollars, such as airlines.

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The Travel in Brazil market research report includes:

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• Detailed segmentation
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• Five year forecasts (of market share, market trends, market growth)
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This industry report originates from Passport, our Travel And Tourism market research database .

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