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Who and What Is Killing Tourism in Brazil?

Brazilian tourism My wife and I have been engaged in the hospitality & tourism industry in Brazil for 14+ years. Principally we have been involved with inbound international tourism, hospitality and accommodation in Rio de Janeiro. Annually we receive several hundred people from all over the world, principally from Europe, North America, and a small but trending increase from Oceania, Asia, Middle East and Africa.

At a time when the opportunities for tourism would seem to be the best in years for Brazil, with major tourism events including the 2014 World Cup and the 2016 Olympic Games, we find that, overall, international tourism to Brazil has some serious challenges and impediments to growth.

There are several reasons for these impediments and limits to growth, some of which can be controlled, some of them not.

First there is economics. The recent depreciation of the euro, US dollar and British pound against the Brazilian real has meant that the three largest inbound tourist groups by geography are finding Brazil no longer as affordable as it once was.

This has particularly hard hit the price sensitive youth hostel/back packer market, but also the middle market of demographics; those in the late 20s and 30s and even families. Retired income travelers are also looking very carefully at where to spend their travel budgets.

Secondly, there is the issue of visas for many citizens visiting Brazil. I think everyone understands the basis for reciprocity in visa related travel. It has historically been logical and fair up until a point. But with unemployment at 9.5% in the USA & current exchange rates, and Brazil having such a low level of unemployment, the desire for Brazilians to enter the USA for work illegally is surely minimal at present.

Other changes in laws in the USA would also seem to be sufficient deterrent to working in the USA illegally. Forcing inbound tourists from G20 countries to get visas is just another bureaucratic barrier & cost to travel. This really looks like cutting off your nose to spite your face.

Third, and perhaps a popular (deserved?) target is the international airports in Brazil. It is really hard to find a sympathetic reason to defend Infraero, the airports owners, operators and their current conditions.

Terminal 1 at Rio’s Tom Jobim Galeão Airport has been a disgrace of work-in-progress for several years now (I recently experienced an animal or bird in the roof of Terminal 1 defecating on my shoes while waiting to collect my bags).

São Paulo/Guarulhos Airport is more suited to a COUNTRY of 3-4 million people rather than a CITY of 20 million people. The domestic airport of Congonhas has a history of fatal accidents stretching back 50 years. The best thing that can be said for Congonhas is it provides some form of adrenaline experience, like bungee jumping or hang gliding.

The Brasília airport is “quaint” to put a kind word on it. Medium-long term, Brazil’s airports will prove to be a major constraint on tourism unless capacity, amenities, airport processing time are dramatically improved.

(Rumor has it that “Breaking & Losing Luggage” has been asked to be classified as an Olympic sport for 2016 by Infraero baggage handlers.)

Fourth, look to where middle class Brazilians spend their vacations! Why would a Brazilian vacation domestically, if when he/she travels abroad they save probably 2000-3000 reais each on the purchase of electronics goods, clothes, etc purchased in WalChinamart in the USA?

Brazilians now are the highest spending per capita tourists in the US, and for good reason, it is so much cheaper to shop in the USA than in Brazil. The high import duties and taxes on everything that is imported into Brazil, means for most families, a once a year trip to the shopping malls of Miami or New York is cost justifiable, airfare included; and while they are there, give the children a Disneyland experience.

There are a couple of other factors that are not helping much either.

Take for instance the “Lei Seca”. No one can fault the good intentions of this law, and the need to educate about the consequences of alcohol and driving at high speed. Having said this, I always maintain that it is VELOCITY that kills, not the alcohol. But a consequence of this zero tolerance law is that the only way you can go to a restaurant and have a share a bottle of wine with your wife and then go home is via taxi, walk, or public transport.

And sometimes that is not worth it, or practical (try getting a taxi in Rio during a thunderstorm). So as a consequence, restaurants all over Rio are going through a very hard time; revenue is down, and wagers of restaurant have increased dramatically, with little or no change in productivity. Why bother with all this, when you can cook for yourself at home and get what you want?

In addition, a typical meal for 2 people in Rio, including a bottle of wine will set you back 200-250 reais (e.g. Porcão Rio is now 90 reais +10% per head just for the buffet, excluding drinks and desert).

If you then convert that into dollars (US$ 160), you can see you would be able to have a truly outstanding gastronomic experience in New York for the same amount of money. Along Avenida Atlântica in Rio, several landmark restaurants in prime locations have closed in recent months.

I have spoken to several restaurant owners and they are all of the same opinion; they need to reduce the labor content of their restaurant and move to more self service buffet style, and increase revenue as material input (meat, vegetables, etc) have increased so much. People including tourists are dining out less, or spending less on what they can afford.

Labor laws in Brazil remain draconian. Tourism almost by definition is seasonal with peaks and low seasons, and requires seasonal labor and a flexible work force. Even within a season, occupancy at hotels can vary dramatically from day to day (literally 0 to 100% occupancy turnover per day). But Brazilian labor laws, penalty rates, and rates of pay have far outstripped inflation with very little if any productivity increase or flexibility. 

Many small and family owned Hotel/Bed & Breakfast businesses could easily accommodate 50% more staff if we had the flexibility to have people work when there is work, and have people not work when there is no work. Instead what happens is management and existing full time labor pick up the extra work load during peak season. That may be good for some people, but it does nothing to entice management to take on more staff.

Language still remains a huge challenge for tourists. Mountains of language school work still to be done here for staff working in tourism. And let me be the first to defend the language of Portuguese; it is a beautiful language, so romantic, rhythmic, rich, colorful, descriptive and historic.

I would prefer to hear someone sing in Portuguese to English any day. But the reality is, English is the dominant first or second language for most people, especially tourists. This probably will only be resolved generationally by some interesting web based technology helping to resolve and accelerate education in this area.

Finally, I want to mention “customer service”, and this can be a touchy topic but so important to tourism industry. I have experienced both ends of the spectrum of service in Brazil. When service in Brazil is good, it is really good. Some consistently good examples include HortaFruti green grocery stores and Zona Sul supermarkets.

I only wish these 2 shops were on the tourist trail! I will refrain from discussing the other end of the spectrum of service as I am of the opinion that bad service can only last so long before consumers vote with their feet. But in the middle of the spectrum of customer service is a large gray area and a gap between expectation and reality.

On one side is the supplier of the service; a waiter, a chef, a bank employee, a travel agent, a tour guide, a hotel owner/operator, etc. On the other a tourist. Frequently the expectations do not align, and for a very good reason; one party has experienced service in several countries, and has a basis for comparison, the other party has largely not had this basis for comparison.

And for this, the management of the employees needs to be held accountable, not the employees themselves. Management all too often does not want to be engaged at the front line, simply because they do not have the skills, training or the cross cultural awareness and experience to deal with these situations. Just leave the poor front line staff to muddle through and give a mixed service experience.

Several countries have mastered the art of repeat tourism, France, Italy, Thailand to name a few. These countries frequently have tourists that have been 2,3,4, or more times to visit them.

Brazil has the diversity and scale to offer this type of repeat experience, where tourists will venture to Brazil several times to see its natural beauty, history, culture, music, art, ecology, vibrancy, etc. But all too often, the first experience is proving to be the last experience and the reasons are :

* Cost : Brazil is no longer seen as an affordable destination. Exchange rates and local taxation are choking the life out of the hospitality industry.

* Inconvenience (Visa hassles, bureaucratic nightmare at airports, slowness).

* Inconsistent service quality.

Brazil has the ingredients for an amazing tourist industry, but the foundations at the moment need a lot of work.

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