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.