Number 50 - november-december /2024
MAIN FACTS
In recent economic events in Brazil, the Central Bank, through its Monetary Policy Council (COPOM), decided to increase the interest rate again, which went from 10.75% to 11.25% per year at the November meeting. In December, there was a more aggressive advance, with the BC raising the base rate to 12.25%.
The “fire” that the Central Bank is trying to fight is inflation, which has exceeded the ceiling established by the National Monetary Council, of 4.50%. In the accumulated 12 months up to October, the variation was 4.76%, according to the IBGE, driven by the sharp increase in meat and electricity prices, the cost of which increased due to the change to the red tariff flag – level 2, the highest level.
Regarding this last point, there is some good news: with the return of heavier rains, especially in the areas of the main hydroelectric plants, there was some relief in the system, and in November, ANEEL decided to return to the yellow tariff flag, which should contribute to lower inflation in November and less pressure in the following months.
Attention is currently turning to meat, which rose 5.81% in October alone. The off-season period, after a record number of cattle slaughters, reduced supply to consumers and skyrocketed the price of arroba, which jumped from R$230 to over R$330 in less than two months. Thus, the trend is for pressure on the food and beverage group in inflation to continue in the coming months.
The real exchange rate went from R$5.60 to fluctuate around R$5.80 and reached R$6 in November and December. After the election of US President Donald Trump, there was a global strengthening of the dollar, impacting the real.
Another issue that is making it difficult for the real to appreciate and combat inflation is the Brazilian government’s lack of fiscal balance. Despite record revenue, public accounts have been in the red, generating uncertainty for business owners. An announcement about possible cuts for 2025 is expected in the coming weeks, but for now, concerns persist. These challenges reduce optimism about Brazil’s long-term performance. However, in the short term, the economy is showing signs of recovery, with all sectors growing strongly. Retail trade, for example, grew 3.9% in September, year-on-year. The highlight was the vehicle segment, with an increase of 18%, driven by improvements in the household budget, higher employment, real income gains and greater ease in obtaining credit.
Industry recorded growth of 3.4% in September in the annual comparison, driven by the manufacturing sector.
Services had an average increase of 2.9% in the same period, with almost all activities surpassing the performance of September 2023. Tourism, in particular, grew 4.5% in September and has accumulated a 5.2% increase in the year, according to FecomercioSP. Revenues for the month and the accumulated total from January to September are the highest in the historical
series, which began in 2011.
An important basis for the economic recovery is the combination of strong employment, real income gains and greater access to credit. The unemployment rate fell to 6.4% in the 3rd quarter, the lowest level in the historical series for the period. Regarding income, DIEESE reported that almost 90% of salary adjustment negotiations in September exceeded inflation. As for credit, the reduction in defaults and interest rates compared to last year favored its expansion among families.
Although the Central Bank has signaled another interest rate hike, the effects of this policy will only be felt in the medium term,
IMPORTANT FACTS:
1
The granting of credit for vehicle acquisition grew 30% in the quarter ended in September, compared to the same period last year, after inflation was discounted. The Guarantee Framework, which allows banks to repossess vehicles after default, brought more security to the expansion of credit.
comparable to the maneuver of an ocean liner, which cannot make sharp turns. Thus, even with the intention of cooling the economy to contain inflation, the robust employment and income data should hold up until the middle of next year.
The year 2024 should close with growth close to 3%, starting 2025 with strong economic activity, but with a tendency to slow down in the second half of the year. Since it is a preelection period, an additional stimulus to the economy is possible with an increase in public spending. However, this will worsen uncertainties about the fiscal balance and put pressure on interest rates, resulting in a scenario of difficult balance.
2
The IBGE released the first forecast for the 2025 harvest, with a forecast increase of 5.8%, reaching 311 million tons, driven by soybeans (+10.9%) and first-crop corn (+9.1%).
3
According to the National Confederation of Commerce (CNC), more than 190 thousand families may be impacted by the betting market, potentially reducing commercial activity by up to 11.2%, with an estimated loss of R$ 117 billion.
CONFIDENCE INDEXES:
The Consumer Confidence Index (ICC) fell 1.8% in October, returning to 121 points. In the annual comparison, the drop is 8.9%. The increase in meat prices has a strong impact on family budgets, reducing confidence, even with the drop in energy costs.
The Business Confidence Index (ICEC) rose 1.2% in October compared to September, but fell 1.1% in the annual comparison. Despite retail sales being at record levels, business owners face challenges such as rising costs and difficulties in hiring labor, in addition to uncertain prospects for the coming year.
Consumer Confident Index (ICC) and Comerce Businessman (ICEC)
Note: The ICC and ICEC range from 0 to 200. From 100 to 200 points is considered an optimistic level, and below 100 points pessimistic. Although the indicators are from the city of São Paulo, they follow the trend of what is happening in the rest of the country since the city, the largest in Brazil, represents 11% of the national GDP.
TRAVEL AND TOURISM
At the beginning of December, we once again participated as Media Partners in ILTM Cannes, the largest luxury travel fair in the world. And we launched the fourth edition of the ILTM & PANROTAS Annual Luxury Travel Report –Brazil and Latin America Luxury travel continues to be on the rise in Brazil and Latin America, especially to Europe and Asia. Now, companies, destinations and the federal government, via Embratur, are working to position Brazil as a desired destination for international travelers and an area of interest for investors in luxury ventures. Check out some highlights from the ILTM & PANROTAS Report below, which features two new surveys (B2B, with travel agencies, and B2C, with travelers), special analyzes and industry trends for 2025:
• In Brazil, the luxury travel market is estimated by Bain & Company to be worth R$80 billion, and is expected to reach R$130 billion by 2030.
• Only 6% of Brazilian families have a monthly income of more than R$15,000, which shows income concentration and a well-defined and restricted target audience.
• Brazil has around 83,000 millionaires (a number that has fallen due to the devaluation of the real).
• The survey of luxury travelers interviewed 3,284 people, 60% of whom live in the Southeast region.
• 64.5% of them are between 30 and 49 years old and have a monthly income of between R$30,000 and R$50,000.
• Most of these travelers make two to three domestic trips per year (33.87%), four to five (22.11%) or six to eight trips (17%).
• As for international trips, 37.93% said they make two to three trips per year; 8.52% four to five; and 6.29% six to eight trips abroad.
• Upcoming destinations in Brazil:
1 – Rio de Janeiro
2 – Northeast
3 – Fortaleza
4 – São Paulo
• Upcoming destinations in Brazil that you haven’t visited yet:
1 – Lençóis Maranhenses
2 – Fernando de Noronha
3 – Amazonas
4 – Bonito and Jalapão
• Upcoming destinations abroad:
1 – United States
2 – Italy
3 – Portugal
4 – France
5 – Argentina
• Upcoming destinations abroad that you haven’t visited yet:
1 – Italy
2 – Greece
3 – Japan
4 – Egypt
5 – Canada
6 – Paris
7 – Turkey
8 – Dubai
• Main reasons for traveling:
1 – To discover new places
2 – To have fun
3 – To relax and rest
4 – To have memorable experiences
5 – To discover new cultures
6 – To celebrate life and moments
7 – To have unique experiences
• Main niches:
1 – Sun and Beach
2 – Historical and Cultural Tourism
3 – Gastronomic Tourism
4 – Cruises
5 – Nature Tourism
• Where they make their reservations:
1 – 75.87% through a travel agent or consultant: 26.17% through an agency, 25.76% through a trusted professional and 23.94% through a consultant, after researching online
2 – 63.69% directly with suppliers
3 – 55.58% through OTAS
4 – 1.01% other
• Travelers with a monthly income above R$50,000 visit 12 countries and travel in business or premium economy class.
• Generation Z travelers are the ones who most identify as bisexual (7.14%) and seek true purpose and nature tourism.
• In the survey with travel agencies, the bestselling destinations within Brazil were:
1 – Fernando de Noronha and Rio de Janeiro
2 – Trancoso and Bahia
3 – Northeast and Lençóis Maranhenses
4 – São Paulo
5 – Ceará
• And the best-selling international destinations at agencies:
1 – Europe
2 – Italy
3 – France
4 – South Africa
5 – United States
6 – Japan
7 – Asia
8 – Maldives
• And 77% of customers use WhatsApp to talk to travel agents.
• Personalization of experiences and access to authentic and exclusive experiences are features that agency customers seek for their trips.
• 52.63% of travel agencies say they have an excellent relationship with suppliers.
Among the trends pointed out by the agencies:
• Search for exotic and less explored international destinations
• Clients are willing to pay more for personalized and exclusive experiences
• Fewer destinations visited per trip
• Growing focus on experience and well-being
THE ILTM & PANROTAS LUXURY YEARBOOK ALSO INCLUDES:
• List of luxury travel agencies that belong to groups and communities
• Overview of the Brazilian economy
• Trends pointed out by Brazilian players
• Report on well-being trips around the world
• Luxury tourism trends in Latin America, including:
1 – Well-being above all
2 – Recording vacations by professionals (photographers and video makers)
3 – Spontaneous experiences decided on the trip
4 – Emotional connection with clients
Women traveling
Access the full edition, in English and Portuguese, of the ILTM & PANROTAS Yearbook on the PANROTAS Portal, in Digital Editions
And the full text of the two surveys, with Travelers and Travel Agencies, can be found here check at www.trvl.com.br
YEAR-END REVIEW
• A second half of the year with slower sales ends a positive 2024 for Brazilian tourism, with highlights for:
• Travel to the United States and Europe –the regularization of the waiting time for an American visa contributed to this.
• Growth and/or consolidation of the Luxury (exotic destinations included), Sports and Family Travel niches.
• Recovery of CVC Corp, which for the first time in 20 quarters, presented positive results
• Latam’s leadership in domestic aviation, with Gol on track to emerge from Chapter 11 in early 2025 and Azul restructuring its debts with its main creditors.
• New international flights and increased frequencies helped rebuild Brazil’s network to overseas destinations, with highlights such as Costa Rica, Aruba and Cancún (Gol), Munich (Lufthansa), Curaçao (Azul, including a connection to Fort Lauderdale), Casablanca (Royal Air Maroc, returning to Brazil), Los Angeles (more frequencies with Latam and Delta), in addition to increased frequencies from companies such as Copa, Tap, Air France (which opened SalvadorParis), Air Europa, Iberia, British Airways,
American and Delta (these two with their seasonal flights in the Brazilian summer), Azul (to Orlando and Fort Lauderdale), Lufthansa, among others.
• Consolidation of trade events of all sizes, ending the agenda with Festuris, in Gramado, in full recovery of Serra Gaúcha after the closure of Salgado Filho Airport, in Porto Alegre.
• The biggest challenges of the year were: the devaluation of the real (especially in relation to the dollar, which continues at the end of 2024, challenging and delaying, but not ending, plans for new international trips), traveling in a world full of wars and political conflicts, the closure of Porto Alegre Airport and the floods in the South of Brazil, the repercussions of the crises of 123 Milhas and Hurb (which have not yet come to an end), the scare with Gol in Chapter 11 (the company even registered a withdrawal from the trade at the beginning of the year) and the impact of the climate crisis on travel.
Keep investing in travel around Brazil and the world – with safety, flights, structure, added value and personalization. Brazil will continue to grow and Brazilians are more eager to travel than ever.
This report is produced by PANROTAS and FECOMERCIOSP to support your business decisions. The contents are valuable assets to Destinations and Travel Organizations, both domestic as well as international. For further information please contact ri@fecomercio.com.br redacao@panrotas.com.br
