Brazil Tourism Report Q3 2012

The Brazil tourism report examines the significant long-term potential currently being offered by the local tourism industry, but flags short-term concerns about the lack of adequate airport infrastructure posing a challenge to the future development of air travel within the country.

The report also analyses the growth and risk management strategies being employed by some of the leading players in the Brazilian tourism sector (airlines and hotel chains), as they seek to maximise the tremendous growth opportunities being offered by the local market at the present time.

With Brazil hosting the football World Cup in 2014 and the Olympic Games being held in Rio de Janeiro in 2016, BMI believes tourist arrivals will continue to grow strongly in the years ahead.

This quarter, BMI has upgraded its forecasts for tourist arrivals to 38% growth over 2012-2016, to 8.45mn. Over the same period, we now expect tourism receipts to increase by 60%, to total nearly US$12.5bn by end-2016.

Looking at preliminary indications for the current year, 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 11.8% year-on-year (yo- y) over the first two months of 2012 to 1.75mn. Domestic disembarkations were also on an upward trajectory, rising by 9.7% y-o-y over January and February, to 13.7mn. 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 shows the overall trend in tourism is positive in the early months of 2012, which will benefit airlines and hotels operating within Brazil.

Over the last quarter, BMI has revised the following forecasts/views:

BMI has revised up its estimates for tourism arrivals and tourist receipts over our forecast period to 2016, with the country set to receive a boost from hosting the World Cup and Olympic Games over the coming five years.

BMI has for the first time included a new accommodation data table in its Brazil tourism report, which underlines the clear growth potential being offered by the local hotel market over the coming five years.

We welcome the successful awarding of operating licences in São Paulo-Guarulhos, Viracopos- Campinas and Brasilia airports to private companies, but caution that years of underinvestment in airport infrastructure may not be fully addressed in the period before 2014.