Brazilian Overview Monthly Report - MAR 2024

MAIN FACTS

In 2023, the Brazilian economy grew 2.9%, according to IBGE’s disclosure, a variation nearly equal to the 3% in the previous year. It is, indeed, a good result for the country in a first analysis. Nevertheless, when verifying the performance more comprehensively, a scenario with severe limitations for Brazil’s stronger and long-term advance is evident.

In the manufacturing standpoint, the agribusiness was the great highlight with a 15.1% progress; however, it was concentrated in the 1st quarter with a 20.9% rise, given the record grain harvest and the increased agricultural commodities’ prices. The following three quarters were defined by reductions, which influenced the general GDP on having two quarters with stability.

On the demand’s aspect, there was a 3.1% growth in families’ consumption and 1.7% in the government’s consumption. Indeed, an improved job market, a relatively more moderate inflation, and the decrease in interest rates have contributed to the advancement in Brazilians’ buying power. And the current government has a clear signalization of an increase in expenses. There’s an analysis line in which the rise in public expenses is positive. Nonetheless, it’s noteworthy the observation that from the 80s on, there was an increase in the tax incidence from 25% to 35% of the GDP, at the same time, the public investment dropped from 5% to nearly 1%. In other words, the expenses’ upscaling isn’t being destined to investments, but to the administrative machinery defrayal and mandatory expenses.

In this direction, another attention point regarding the GDP’s result is the 3% downturn

in investments, decreasing to 16.5% of the GDP, in face of the 17.8% in the previous year. And to worsen it, the savings account rate in relation to the GDP has also reduced from 15.8% to 15.4%. Just to have an idea, in the emerging countries, the investment rate is between 25 and 30% of the GDP, way above the Brazilian threshold.

And with low internal savings, if Brazil wishes to increase its investments, it will have to get funds abroad, raising the level of risk due to the currency fluctuations.

For now, the real economy is showing a positive performance . The retail trade, for example, advanced 4.1% in January compared to the same period in 2023, with a highlight to the drugstores (7.1%), and supermarkets (6.4%). When the analysis is broadened to other segments, involving part of the wholesales, the vehicle sector continues to expand, with an 11.9% increase within the month, a lot due to the entrance of new players into the market such as the Chinese BYD.

The manufacturing industry hit the ground running this year and points out a 3.6% annual growth, driven by both the extractive segment (6.5%) and the transformation sector (3.1%).

Services registered a 4.5% increase in January, with all the 5 analyzed groups by IBGE growing in relation to the same month last year. Tourism, specifically, according to data by FecomercioSP, wrapped up the year with R$ 190 billion in revenues, a rise of 7.8%.

This more positive picture regarding the economic activities is a reflex of a more favorable employment, income, and credit combination. The unemployment rate comes in a series of downturns, from 8.4% to 7.6%, in a year period. In the inflation

aspect, in the 12-month accumulation, the variation up to January this year was at 4.50%, in face of the 5.77% within the same time window by January 2023. In relation to the credit, the economy’s basic interest rate descended from 11.75% to the current 10.75% a year, with this last cut at COPOM’s meeting in mid-March.

The remaining concern is regarding the mismatch between the offer and demand. On the one hand, the crescent increase in families’ and the government’s expenditures. On the other hand, the downturn in investments, which would foster an increase in the aggregate offer. The result should be seen in a low economic growth and in pressure on prices and on the interest rate.

IMPORTANT FACTS:

This scenario of a fall in investments is very much connected to the country’s current government’s management. Which doesn’t have a cut in expenses on its horizon, but the rise in expenses without the adequate certainty of an income’s increase. Actually, there’s an intense pursuit to raise the tax collection, also going through measures to cease PERSE, the essential program that helped to rebuild the event sector from the pandemic, with legal forecast by 2027. Therefore, this is the moment’s great bottleneck, the fiscal uncertainties in the country, which could alter the course of highly relevant variables for the investment decision such as the debt, the inflation, and the interest. Of course that growing 2.9% is positive, but it’s important to analyze this performance’s quality, and for the moment, it is bad.

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Due to El Niño, the estimation of the Brazilian crop has been falling on each evaluation. Now, according to IBGE, 301 million tons are estimated for this year, a downturn of 4.7% in relation to 2023’s data (315.4 M/t).

FEBRUARY/2024

The food and beverage group has pushed the inflation since the end of last year, stemming from the climate issues that affect the production and the harvest. Between January and February, the increase was 2.34%, nearly twice as much as the 1.25% general variation.

· In January of this year, 180 thousand formal job positions were created in the country, twice as much as the number seen in the same period in 2023, with a highlight to the 81 thousand new jobs in the service segment.

According to data by ALAGEV, the corporate travel sector got R$ 118.7 billion last year, an 11.3% increase. This result is linked, evidently, to the increase in demand, however there is a portion that is influenced by the rise in prices of tourism services, especially of flight tickets.

Legend: Green, Red and BlackThe data get better, worse and equal than the previous month.

CONFIDENCE INDEXES:

The Consumer Confidence Index (ICC) is growing once again and reached 138.2 points in February, the highest threshold in 5 years. In the comparison with January, there was an advancement of 3.7% and increases 7.3% in the annual counterbalance. The combination of a more heated job market, the relatively lower inflation, and a drop in the interest rate continues to be positive. The consumers in São Paulo are also looking at the country more promisingly, so that in the upcoming 12 months, they will be experiencing better moments.

The Trade Entrepreneur Confidence Index (ICEC) pointed to a slight increase of 2% in February when compared to January. Nonetheless, the 110.2 points seen in this second month are still 1.9% below the one registered a year before. There is a discrepancy in the magnitude and in the tendency when compared to the consumer’s data. Which can be explained, in part, by the high costs faced by the retailers, which have been a great obstacle in the improvement of results.

Note: The ICC and ICEC vary from 0 to 200. From a 100 to 200 points, it is considered an optimistic threshold, and below 100 points, a pessimistic one.

Although the indexes are from the city of São Paulo, they follow a tendency 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

March was the month of the Forum PANROTAS’ 21st edition, which gathered, in the WTC Event Center in São Paulo, beyond 2 thousand leaderships in Tourism. The event brought many insights about the trends in Tourism, and also original research and studies to help the industry plan for the upcoming months and years. Tourism within Brazil continues to be hot, fueled by the desire for vacations, family trips, and special events (Madonna’s concert on Copacabana Beach, on May 4th, in Rio de Janeiro, is already packing hotels and making airlines add extra flights to the city).

Check out some 2024 Forum PANROTAS’ highlights below:

1. Brazil is the country that most grows in searches for trips on the internet. Data platform Similarweb – specialized in capturing insights from the digital audience –, brought an important revelation to the public: searches from internauts from Brazil had the web’s greatest increase between February 2023, and January 2024. The country occupies the 7th place in the list of countries that most carry out searches – The United States heads this ranking.

Among the most visited websites by Brazilian internauts, Booking, Tripadvisor, Latam Airlines and Airbnb, in this order, are the companies that most generate searches.

In the past year, Brazil’s Travel and Tourism

websites received 2.8 billion visits, with an average of 53 million single visitors. This number of visits in Brazil equates to approximately 34% of the country’s adult population, which, according to Similarweb, demonstrates large interest from people in Brazil in exploring Tourism options.

The company also listed four trends from the collected data in Brazil:

• Google Flights consolidates as one of the main flight browsers, getting 1.2 billion monthly clicks in its research results.

• Local national Tourism is hot due to the increase in flight tickets. It’s possible to see a growth in demand for services related to local Tourism.

• Travel and hotel browsers are expanding their service range.

• International trips. The upturn in the interest for international trips reflected on the visits’ increase for airline companies such as Iberia, Copa Airlines and Tap Air Portugal.

2. Rio de Janeiro, Gramado and Maceió are at the top of the 10 most searched leisure destinations. During the event, Omnibees (technology platform for hotel reservations), presented 2023 hotel business’ data and forecast for this year. Last year, the 10 most sought leisure destinations in Brazil regarding nights of accommodation were, from the 1st to the 10th places: Rio de Janeiro, Gramado, Maceió, Porto Seguro, Foz do Iguaçu,

Ipojuca, Natal, Florianópolis, Fortaleza, and Búzios.

For corporate travel, São Paulo leads the ranking, followed by Rio de Janeiro, Curitiba, Belo Horizonte, Brasília, Salvador, Porto Alegre, Recife, Campinas, and Goiânia.

3. The issue with the lack of airplanes and parts for maintenance keeps giving headaches to the national airline companies. In the panel with Brazil’s three main airlines’ CEOs – John Rodgerson, of Azul, Celso Ferrer, of Gol, and Jerome Cadier, of Latam – they affirmed that, for the sector to grow, it’s necessary to approach the hurdles in engines and airplanes’ production chain, as well as reaching public politics for aviation in Brazil. The constrained demand will keep pushing prices up. There isn’t any prediction for a substantial increase in the international offer, with the domestic offer likely to grow less than 10%.

4. A survey carried out by TRVL Lab (partnership between PANROTAS and Mapie Consulting), and sponsorship by Trend Viagens, mapped five profiles of corporate travelers. Businesswomen are in the spotlight, who took from two to four trips in the past 12 months and consider that the excessive red tape when booking business trips is one of the main faced issues. As for the young travelers, ranging between 18 and 29 years old, make corporate trips lasting from about two to three days, are the profile that most enjoys business trips for leisure and represent the most sensitive

market share to prices. Among the unveiled trends, it was noticed that travelers are encouraged to do hybrid trips, extending the stay in the business destination to enjoy it for leisure as well. However, they are used to doing so only sometimes or rarely. Another finding is that, although companies allow their employees to work from anywhere (anywhere office), the majority works only sometimes or rarely in the remote format.

5. Luxury trips are the segment that most grows among different generations. Even with the increase in air fares, purchases of luxury trips keep being high, the specialists from ILTM Latin America, Primetour, FFTravels and Superviagem pointed out. According to Maurice Padovani, executive director of Primetour, what changes are only the consumption habits, given that the luxury market travelers have different profiles, life stages and financial maturity levels. Therefore, they continue to travel, even with the price oscillations in tickets. In relation to the destinations, Asia is hyped among affluent travelers. This was the last region to open after the pandemic and attracts people who are seeking novelties both regarding locations and distinguished experiences.

6. The Argentine tourists’ behavior has changed, and Brazil should pay attention to that. In a panel that counted with the participation of Aldo Leone, CEO of Agaxtur; Diego Garcia, executive-director of CVC Corp in Argentina; Gonzalo Romero, general director of Air Europa in Brazil and the company’s country manager

in Argentina; and Maria Laura Pierini, promotion manager of Visit Buenos Aires, it was highlighted that, after the pandemic, the behavior of the Argentine travelers changed.

For Romero, the Argentine tourists are currently much more centered on experiences, and seek traveling for different motivations, such as following concerts, bachelor parties, honeymoon or to celebrate birthdays in large groups. Brazil is one of the main chosen destinations by the Argentines, with a highlight to Rio de Janeiro and the beaches in the Northeast. According to Garcia, Brazil is still the main emitter to Argentina.

7. Sustainability already affects the way tourists move and travel by car. In relation to transportation during trips, it was mentioned in a sustainability panel, by Pablo Toledo, CMO of the Chinese car manufacturer BYD, that the use of electric cars has been rising, but that the first steps for this trend to be effective are the awareness and the preparation of travel agents, so that the rent of this type of vehicle doesn’t become an issue for clients. According to Toledo, we are in a transition moment, and in the company, the most sold cars currently are hybrids, which reinforces the tendency even more.

THE LARGEST COMPANIES

During the Forum PANROTAS, the company disclosed its annual ranking with Tourism’s largest distribution companies (with suppliers or companies that didn’t want to disclose their 2023 total sales not entering the list).

CHECK OUT BRAZIL’S TOP 20:

1 – CVC CORP

CVC CORP IS BRAZI’S LARGEST TRAVEL DISTRIBUTOR

R$ 11,1 bilhões (sales in BRAZIL)

Main brands: CVC Viagens, Trend Viagens, Rextur Advance, Visual, Experimento

2 – DECOLAR

DESPEGAR/DECOLAR IS LATIN AMERICA’S LARGEST IN SALES

R$ 10,5 billion (sales in BRAZIL)

Main brands: Decolar, HotelDo, Viajanet, Koin

3 – BEFLY

R$ 10.2 billion

Brands: Flytour Business Travel, Flytour Consolidadora, Queensberry, Qualitours, Vai Voando and STB

4 – CONFIANÇA GROUP

R$ 3.5 billion

5 – COPASTUR

R$ 2.5 billion

6 – MONDEE

R$ 2 billion

R$ 1.3 billion from Orinter

R$ 692 million from Interep

7 – BRT GROUP

R$ 1,98 billion

8 – SAKURA GROUP

R$ 1,9 billion

9 – KONTIK GROUP

R$ 1,74 billion

10 – ANCORADOURO GROUP

R$ 1.45 billion

R$ 120 million from Mondiale by Ancoradouro R$ 85 million from Blue

11 – SKYTEAM

R$ 1,31 billion

12 – CWT

R$ 1,28 billion

13 – BCD Travel

R$ 1,25 billion

14 – FRT

R$ 1 billion

R$ 550 million from FRT Operator

R$ 502 million from FRT Consolidator

15 – TP GROUP R$ 870 million

16 – AVIPAM R$ 855 million

17 – CNT R$ 798 million ( R$ 640 million, only air transportatio )

18 – VOETUR R$ 743 million

19 – BEST BUY R$ 710 million

20 – ABREU

R$ 503 million

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