Post on 15-Jul-2015
Brazil Market Study
July 2014
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Table of Contents
Conclusions .............................................................................................................................. 3
Market overview ....................................................................................................................... 4
Social cultural notes ................................................................................................................. 5
Market characteristics............................................................................................................. 6
General behavior ............................................................................................................ 6
Online travel market ..................................................................................................... 10
Retail travel ..................................................................................................................... 11
Business travel .................................................................................................................. 14
Leisure travel .................................................................................................................... 17
Luxury travel..................................................................................................................... 23
Market potential and opportunities ..................................................................................... 26
Risks and challenges ............................................................................................................. 27
Conclusions and recommendations .................................................................................... 28
Brazil Market St udy
July 2014
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Brazil Market Study
July 2014
Conclusions
1) Baseline and benchmark industry and comp set data
Establish baseline, share, growth rate and KPI’s. Carry out secondary analysis and
benchmarking using STR, TC, other third party and internal data sources and reports.
Primary analysis and interviews with key demand side players from targeted segments.
2) Localize and personalize the product/service value proposition
The Brazilian business culture relies heavily on the development of strong personal
relationships to drive sales. Companies that do not invest time in developing these
relationships will struggle
Provide truly unique travel opportunities/experiences and a personalized customer
journey. Localize value proposition and materials, target and personalize
communications. Develop/service key accounts in local language.
3) Develop the local sales presence
A local office & dedicated presence or local presence through qualified general sales
agent or distributor, is key to success
Providing support to the local office through one-to-one meetings with potential
partners & participate in local trade shows/networking events makes a big difference.
4) Re-segment the market to create a niche
Focus on key player programs : TMC regional preferred programs, MICE programs,
Luxury lifestyle programs, Luxury tour operator programs, Luxury lifestyle OTA’s
Inclusion in corporate programs - target top 20 corporate
5) Elevate a localized, integrated online and offline presence
Localize value proposition, targeted and personalized sales messaging and promotions
- advance purchase, long stay, multi –itinerary, calendar sensitive
Target marketing to females, 60+ above, luxury lifestyle and growing middle class.
Develop theme based campaigns that inc shopping, music/dance and food.
6) Plan and optimize
Prepare budget and make commitment - Develop KPI’s, decide on approach, tightly
segment, prioritize/target, harmonize lead and pipeline management provide clear
negotiating parameters and develop key accounts.
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Brazil Market Study
July 2014
Market Overview - Macro Factors
Brazil covers a total area of over 8.5M sq km and has a population of over 200M.
Time difference from UTC of -3, the currency is Reals (BRL).
Language is Portuguese and there are no significant local dialects. English is the foreign
language most used by the business community in Brazil. Brazilian travel professionals
have a low proficiency in English language, but are able to use online booking tools
and the GDS.
Normal commercial business hours are 9am to 6pm
Brazil is the largest national economy in Latin America,the world's seventh largest
economy at market exchange rates, and the seventh largest in purchasing power
parity (PPP), according to the IMF and the World Bank. Brazil is expected to be one of
the largest consumer markets and a leading global economy by the year 2020. Brazilian
consumers are becoming more sophisticated, which is expected to boost demand for
services and high quality products
Macro economic landscape is moderate - GDP: $2.4 trillion (2013 est.)
GDP growth in 2013 was 2.3 % and 2014/5 forecast is 2 %. The travel business is
growing at 10% and accounts for 3.7% GDP in 2014. The most recent forecast
was reduced by the government to 1.6 % and by private banks to 1%.
Brazil has a mixed economy with abundant natural resources. The Brazilian economy
has been predicted to become one of the five largest in the world in the decades to
come.
Brazil's diversified economy includes agriculture, industry, and a wide range of services.
• Industry from automobiles, steel and petrochemicals to computers, aircraft, and
consumer durables— accounts for 31% of GDP. Industry is highly concentrated in
metropolitan São Paulo, Rio de Janeiro, Campinas, Porto Alegre, and Belo
Horizonte.
• Agriculture and allied sectors like forestry, logging and fishing account for 5.1% of
GDP. Brazil is one of the largest producer of oranges, coffee, sugar cane,
cassava and sisal, soybeans and papayas.
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Brazil Market Study
July 2014
Social/Cultural Notes
There is a never-before-seen confidence amongst both younger and older consumers
in Brazil, as well as an interest in exploring international destinations, more and better
access to credit, and a wealthy and expanding middle class. For the first time this new
class of consumers is beginning to include, luxury and international travel in their
lifestyles.
Polarized demographic changes in the Brazilian population are significantly impacting
consumer behavior. The number of departures will continue to rise driven by strong
growth over 60 years and younger consumers between 25 and 34 years old.
Brazilians over the age of 60 will expand to 30 million by 2020, and reach 60 million by
2050. Aside from having a great deal of leisure time on their hands, even during the low
season, older consumers tend to have higher spending power compared with younger
consumers. Targeting this consumer segment will be key to boost future spending.
Brazil has a growing middle class population, with easy access to credit which is
boosting demand for travel and luxury goods. Targeting this consumer segment will be
key to boost future spending.
The disparity of income levels between the urban rich of Brazil and the rural poor
continues to widen.
Other notes
The Brazilian business culture relies heavily on the development of strong personal
relationships, in most cases hotel companies should invest time developing in personal
relationships with customers/partners.
Brazilians in full-time employment normally have one month of paid holiday per year, in
addition to public holidays.
Many Brazilian companies cease operations between Christmas and New Year's Day,
and give these days off to their employees.
Many Brazilians enjoy gambling; however, gambling in Brazil is not legal which presents
an opportunity for international casino activity.
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
General outbound traveler behavior notes
Air is the primary mode of transport, accounting for 80% of departures. Due to Brazil's
massive size, travelling to other countries by land involves long journeys for all but those
living near the country’s borders.
Forecast for all air transport passengers (domestic and outbound), of 100M passengers
in 2013, rising to 125M by 2017, and growth accelerating from 4% to 10%, reflects the
increased investment in airport infrastructure.
Outbound traffic distribution shows an increase of 28%, with 7M Brazilians travelling
abroad. There has been a 5% increase in traffic to Central America & Caribbean, 10%
for US destinations (approximately 15% of share) & stable share to Europe, a decrease
for South America. This reflects the country's growing economic influence. This is
forecast to grow steadily forecasting close to 10M Brazilian outbound tourists per yr by
2017.
By 2016 travelers to the U.S. will top close to 3M (Table 1) 75% leisure and 25% business,
well above the 1M visitors to Argentina, the second largest market followed by Uruguay,
and European countries such as Spain, Italy, Germany and the UK. Asia is also
becoming an emerging tourism destination for Brazilians.
Table 1: Outbound Business Mix Forecast through 2016
‘000 trips 2011 2012 2013 2014 2015 2016
Business Air Arrivals from Brazil 309.9 360.1 404.6 457.5 527.9 563.6
Leisure Air Arrivals from Brazil 1,187.10 1,383.90 1,593.40 1,747.50 2,041.10 2,247.40
Total Arrivals 1,497.00 1,744.00 1,998.00 2,205.00 2,569.00 2,811.00
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
By 2016, travelers to the U.S. from Brazil will top close to 3M U.S. arrivals per year, Brazilian
travelers rank fourth in terms of per capita spending among the top 10 foreign
nationalities visiting the U.S.
Such is the economic impact of Brazilians in the U.S., that the U.S. Travel Association and
the U.S. Chamber of Commerce started lobbying Washington to allow Brazilians to
travel to the U.S. without a visa and stay for up to 90 days without obtaining a non-
immigrant visitor visa. President Obama signed an Executive Order in January 2012 and
announced a number of initiatives aimed at increasing arrivals to the U.S. The
Department of State has enhanced the processing of non-immigrant visas from Brazil. In
addition, a new pilot program and rule change for visa processing was announced by
the Departments of State and of Homeland Security, which allows consulates to waive
interviews for very low-risk applicants, such as those renewing non-immigrant visas, or
younger and older first-time applicants.
There were 438K visas issued to Brazilians May YTD 2014 over 6% over previous year.
The U.S. government took another step towards opening the U.S. for business by signing
an open skies agreement with Brazil, which immediately removed pricing restrictions
and limits on the routes served between the countries. This will be fully operational by
October 2015, meaning the end of restrictions on flight capacity and frequency
between the two countries.
This has led to an expansion in flights. Following the TAM merger, LATAM expanded its
flight frequency to New York via Rio de Janeiro and Orlando via Guarulhos (São Paulo).
It has increased its flight frequency from Miami to Belo Horizonte and Brasília to a daily
service.
International destinations such as Buenos Aires, Florida and New York are ranked high in
popularity amongst middle class consumers. Miami, as a huge gateway city, has been
a key beneficiary of this trend, welcoming 15% more Brazilian visitors than in the previous
year. As a result, hotels are hiring Portuguese-speaking employees, offering concierge
services and even helping with visas to attract these much-coveted visitors.
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
The U.S. is and will remain, a shopping paradise for Brazilians. With high import tariffs at
home, foreign goods are significantly cheaper abroad and as a result many goods are
half the price that they are in Brazil. Many Brazilians travel to shop, purchasing consumer
goods, status symbol products and brands often having significant importance back
home. Purchases range from fragrances to electronics.
• The average age of Brazilian visitors to the U.S. is 41, with 55% of them being men.
• Brazilians stay an average of 11 nights in the U.S. and often visit more than one
state.
• Brazilians spend around US$5,000 per trip – the highest among nations
• Brazilians plan their trip three months in advance.
• Not surprisingly, Brazilians are perceived as avid shoppers.
Table 2: Forecast Of Outgoing Tourist Expenditure Against Total: Value 2012-2017
R$ million 2012 2013 2014 2015 2016 2017
USA 8,706.3 8,777.7 8,997.2 9,213.1 9,507.9 9,840.7
Total 43,531.0 43,859.3 45,606.8 47,443.6 49,444.7 51,574.1
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
New York: Currently, Brazilians are the largest tourist spenders in New York City. New
York City set a new record for Brazilian visitors in 2013. Visitors increased by 11% OPY,
reaching 900K.
Miami: As a key point of entry and a city with strong appeal for Brazilians, Miami will
continue to benefit from the Brazilian wave of travelers. Hotels along the strip have
recruited Portuguese speakers to customize the service. Hence, it would be wise to look
at strategies that worked in Florida and adopt them elsewhere.
The Mandarin Oriental Miami has successfully introduced packages tailored to the
specific needs of Brazilian travelers.
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
According to company sources, providing Brazilians with what they call a “more
efficient travel process”, was key to catering to their needs and encouraging repeat
visits. This meant identifying flight arrival and departure times so as to offer alternative
check-in and check-out periods as well as capitalizing on their shopping sprees.
The shopping tourist package, for example, allows guests to go on an exclusive
shopping excursion with a driver. If Brazilian guests decide to rent a car to go shopping,
this is not a problem - the hotel offers a package that includes valet parking and a
complimentary breakfast.
The Trump International Beach Resort in Sunny Isles Beach, Florida, on the other hand,
decided to send its own sales managers to Brazil to enhance business relationships with
local travel agencies. Additionally, it makes sure all of its employees are proficient in
Portuguese as the majority of Brazilians do not speak English.
Hotels located in other cities in the U.S., like Washington D.C. will also benefit from a
larger number of Brazilian arrivals as tourists become more adventurous.
Table 3: Outgoing Tourist Expenditure by Category: Value 2007-2012
R$ million 2007 2008 2009 2010 2011 2012
Accommodation 6,761.8 8,225.1 8,718.5 10,348.7 13,849.5 16,542.0
Entertainment 2,729.7 3,510.7 3,792.6 5,086.1 6,179.0 7,400.3
Excursions 4,407.3 5,617.1 6,081.2 8,091.6 10,298.3 12,315.0
Food 344.5 421.3 479.5 664.7 781.3 980.6
Shopping 450.8 642.0 675.7 953.6 1,207.4 1,642.0
Travel Within Country 980.8 1,203.7 1,416.8 1,936.2 2,201.7 2,964.7
Other Outgoing Tourist
Expenditure
337.0 441.3 632.1 1,817.6 994.3 1,686.9
Outgoing Tourist Expenditure 16,011.8 20,061.1 21,796.3 28,898.5 35,511.5 43,531.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
Online Travel Market
LATAM trails other regions in online penetration.
Brazil and Mexico represent 70% of the total LATAM market and 75% of the online
market.
Brazil still lags behind when it comes to online sales, particularly if compared to the US, it
resembles the U.S. market 10 to 12 yrs ago; however, it has great potential to grow. The
major headwind to the development of online sales in Brazil include security issues, fear
of fraud, the lack of information and low credit limits on credit cards.
Estimates suggest that Brazil had almost 100 million Internet users in 2013, which has
created intense competition and high expectations amongst leading online travel
retailers like Decolar.com, Hotel Urbano and CVC.
Brazil is the world’s fifth largest mobile market.
The Meta-search category, while largely undeveloped is gaining traction in Brazil where
the online space is becoming increasingly competitive. Travel guides, blogs, planning
and review sites are all in the process of claiming their niches in the online travel
landscape.
Despite all this, online travel sales in Brazil, are expected to reach close to R$10 billion in
2013, and is seeing great dynamism as more Brazilians shop online. Online sales are
forecasted to grow by 23% in constant value over the next few years.
To date, online penetration has been dominated by supplier websites, in particularly by
air websites which make up approximately 75% of all supplier website transactions.
Hotel supplier transactions are on the rise following air, and expect to be over 25% of
supplier site transactions by the end of 2014, then eventually followed by tours and
packages.
Although retail travel agencies are increasingly using the Internet and developing state-
of-the-art websites, they are not likely to stop investing in bricks-and-mortar outlets.
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
Retail Travel Market
Retail travel outlets are expected to remain very popular in Brazil, with many customers,
particularly corporate clients, preferring to use a travel agency to book trips.
Overall, travel agencies offer a number of additional and personalized services which
are, culturally, preferred by Brazilians. Hence, sales should maintain their upward trend,
as Brazilians enjoy the comfort and convenience of working with a travel agent.
Brazilians trust and rely upon personal assistance, driven by credit, personal
relationships, destination knowledge/expertise and purchasing leverage.
Travel retail is expected to increase by 14% in constant value terms. International trips
are expected to drive travel retail sales in the upcoming years, mainly due to their lower
prices.
Retail travel agencies and air/hotel consolidators will continue to play important roles
despite the rise in online shopping and bookings. The offline channel also includes retail
department stores some of which have established travel units with strong brand
recognition and customer loyalty.
Table 4: Forecast Departures by Purpose of Visit 2012-2017
'000 trips 2012 2013 2014 2015 2016 2017
Business 2,362.8 2,394.0 2,457.6 2,535.3 2,627.1 2,699.7
Leisure 5,579.5 5,710.4 5,895.8 6,114.7 6,373.0 6,606.4
Departures 7,942.3 8,104.4 8,353.4 8,650.0 9,000.1 9,306.1
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
Table 5: Distribution Landscape - Outbound Numbers are Directional Only
Distribution landscape
FIT, mass-market consolidators, inbound and outbound operators continue to maintain
a strong market position. As the base of outbound travelers continues to grow, the
channel continues to grow relatively quickly compared to other markets (Table 5).
The online OTAs have been able to grow at a rapid rate and have consolidated a lot of
independent leisure travel.
The GDS has experienced slow adoption and maintains a relatively small market share
compared to developed markets, due to the relatively high GDS booking fees and
unattractive hotel pricing. In spite of this, the channel continues to grow as the larger
companies continue to outsource their business to the travel management companies,
who enforce hotel programs and travel policy compliance.
Business through the hotel’s booking engine is playing catch up to the airline sites after a
slow start. Mobile is a giant in waiting. Search is significant, although it remains a
marketing services model versus a transactional model, meta search is playing catch up.
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
Payment methods
A rapidly growing middle class with easy access to credit is also likely to boost future
outbound tourism flows through a new wave of consumerism. International destinations
such as Buenos Aires, Florida and New York are expected to rank high in popularity
amongst middle class consumers.
When travelling abroad, credit card remains the preferred method of payment
amongst Brazilians in 2012, mostly for security reasons. However, on overseas
transactions Brazilians have to pay a 6.8% tax. When purchasing airline tickets and
travel retail products, Brazilians have an incentive to use a credit card, as they have the
ability to pay for purchases in several interest-free installments.
Table 6:
Payment Methods for Outgoing Tourism Spending: % Breakdown 2007-2012
Latin America is characterized by innovative payment landscape which provides a
wide variety of alternative transaction methods for buying products and services. While
travelers can purchase travel services and products using traditional global credit
cards, local and customer cards are also popular. Non-traditional payment touch
points are crucial for conversion.
The intense use of credit cards and the use of installment payments from five to 15
installment periods are needed, as over 80% of travel is purchased in this way. Payment
in installments is an absolute requirement and game changer.
Primary third-party commission providers include - Net Trans, Pegs, WPS, Tacs
% value 2007 2008 2009 2010 2011 2012
Cash 30.9 28.8 28.5 25.7 25.0 25.0
Credit Card 57.3 59.2 60.4 61.9 59.6 59.0
Charge Card 0.6 0.7 1.0 2.2 3.2 3.3
Debit Card 7.0 7.4 7.5 7.6 9.3 9.5
Traveler's Cheques 3.0 2.7 1.4 1.4 1.3 1.3
Prepaid Cards 1.2 1.2 1.2 1.3 1.6 1.9
Total 100.0 100.0 100.0 100.0 100.0 100.0
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Brazil Market Study
July 2014
Market Characteristics – Business Travel
Business travel
Business travel is the largest category within travel retail in Brazil in 2012, with total sales
of R$26 billion. This is directly related to a growing economy. Primary multi-nationals are
in the automotive, aviation, construction and banking segments.
Business travelers comprise 30% of all departures. The increased exposure of Brazil in
international markets has helped to enhance the business activities of Brazilian
companies overseas.
As Brazilian business travelers tend to travel quite frequently, and the distances covered
tend to be quite large, they often prefer to work with a travel retailer in order to avoid
wasting time looking for the best alternatives available in terms of air fares and hotels.
MICE tourism has also recorded stronger penetration, as Brazilian business travelers
increasingly participate in events in international markets during the year.
Table 7: Business Departures: MICE Penetration % Breakdown 2007-2012
'000 trips 2007 2008 2009 2010 2011 2012
MICE 304.2 388.1 332.6 442.7 518.7 590.7
Other Business Travel 1,078.6 1,164.2 1,177.3 1,482.0 1,642.5 1,772.1
Total 1,382.8 1,552.3 1,509.9 1,924.7 2,161.1 2,362.8
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
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Brazil Market Study
July 2014
Market Characteristics – Business Travel
Business Travel: Key Market Players
Top retail accounts: Flytour acquired Amex, 47% of Alatur/HRG acquired by JTB, CWT,
Avipam, previously BCD who will split and go on their own, Maringa Corp (Radius) and
Lufthansa City Center.
Top MICE operators: Maringa Corp(Radius), Alatur, CWT and Nascimento Turismo.
Top 20 outbound corporate accounts: Accenture, Citibank, Embraer, Exxon Mobil, Ford,
General Electric, Goldman Sachs, Google, HP, Johnson and Johnson, JPM logistics,
McKinsey, Microsoft, Monsanto, Novartis, Odebrecht, Petrobras, Roche, Shell and the
U.S. Embassy.
Travel Management Companies: Key Market Players
1) Groupo Flytour (Amex)
Michel Barkoczy, Vice President
+55 (11) 4503-2395, michael@flytour.com.br
www.flytour.com.br
Grupo Flytour, a 100% Brazilian company with over 30 years of operation. Flytour
Viagens became the master licenser of American Express Travel, a move which further
consolidated its competitive position in the Brazilian corporate travel retail market, and
fostered international exposure through the American Express brand.
2) CWT Brasil
Andre Carvalhal, CEO
+55(11) 11 3443-3772, acarvalhal@carlsonwagonlit.com.br
CWT Brasil was the second largest player in travel retail in 2012, a retailer that dedicates
100% of its business in Brazil's corporate clients. Its strong performance in 2012 was
related to the acquisition of Net Tour Viagens e Turismo – a travel retailer based in São
Paulo, established 1995 and has considerable expertise in corporate travel
management and a broad client network in Latin America. The acquisition resulted in a
network of approximately 900 agents who generated over 1.7 million transactions in
2012, with sales of R$1.5 billion. According to company sources, a favorable economic
environment was key to pushing domestic as well as international business travel retail
sales. Its business unit for corporate clients saw its turnover rise by 31%, while the
meetings and events unit grew 10% in 2012.
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Brazil Market Study
July 2014
Market Characteristics – Outbound Travel
3) Alatur (HRG) (Aquired by JTB)
Ricardo Ferreira, VP Development
Marcos Balsamão, Executive Vice President
+55 (11) 3217-6396, marcos.balsamao@alatur.com
alaturjtb.com
4) AVIPAM Travel and Technology
Private company, established in 1947 among the market leaders, with a focus on
corporate travel and ranked in the top five largest TMC's in Brazil.
Avipam has branches in São Paulo, Rio de Janeiro and Macaé.
BCD has been the primary TMC partner since 2007. BCD travel is separating.
5) BCD Travel
BCD will have its own entity in Brazil as of July 2014.
A new joint venture agreement between BCD Travel and its partner in Brazil, positions
the travel management company for growth. With the new agreement, BCD Travel
takes a controlling interest in a newly established Brazilian company.
Doing business as BCD Travel, the new Brazil operation will employ about 300 people.
Investments will result in enhanced service and better data for clients. Call center
infrastructure will be upgraded, a new workflow management implemented, and
training and development improved.
Barbara Blue, BCD Travel - president for Latin America.
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Brazil Market Study
July 2014
Market Characteristics - Leisure Travel
Brazil will see a continuation of the trend away from mass tourism, as a new wave of
consumerism which will drive demand towards more flexible and individual trips,
authenticity, and experiential travel.
Leisure travelers continue to dominate outbound travel in Brazil, with the U.S. being the
most visited destination. The majority of Brazilians travelling abroad were residents of the
country’s Southeast regions, mainly the cities of São Paulo and Rio de Janeiro.
The bulk of Brazilians who visit the U.S. are on leisure trips, according to the U.S.
Department of Commerce. Shopping and dining in restaurants are their favorite
activities, followed by visits to historical places and amusement parks.
Singles continued to lead leisure departures, accounting for 42% of trips, as it became
cheaper for Brazilians to travel abroad. Couples followed singles, accounting for a 23%
share of total trips.
Travel retailers are introducing international package holidays with tempting prices and
reasonable financing options.
Table 8: Leisure Departures by Type 2007-2012
% number of trips 2007 2008 2009 2010 2011 2012
Singles 42.3 42.3 42.5 42.2 42.2 42.3
Couples 23.2 23.2 23.1 23.0 23.0 22.8
Families 15.1 15.1 15.0 15.0 15.0 15.1
Group 18.1 18.1 18.2 18.4 18.4 18.5
Others 1.3 1.3 1.2 1.4 1.4 1.3
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
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Brazil Market Study
July 2014
Market Characteristics - Leisure Travel
Key Market Players
Tour operators and wholesalers: CVC leisure, Flytour, MMT Gap net, TAM Viagens and
Nascimento Turismo
U.S. inbound operators: New World Travel
Inbound wholesalers: Hotel beds, Tourico, Mark Travel, GTA and Kuoni,
Channel manager: HBSI, Rate gain and Easy Yield
Key Market Players – Tour operators
1) CVC Leisure
Leandro Amadeu de Mattos, International Product Manager
+55 (11) 2191-1087, leandromattos@cvc.com.br
www.cvc.com.br
São Paulo based CVC is Latin America’s largest tour operator. CVC is a public
company partly owned by the Carlyle Group, established in 1972 with 1K employees
and 2012 revenues of BRL623.4M. The main goal of Viagens CVC is to reach a larger
number of travelers. The tour operator plans to continue offering the best value
national/international travel packages, and exceptional customer service. CVC targets
all consumer segments and sells a variety of travel retail products, from economy to
luxury. CVC continues to open outlets and launch new products. The goal is to have
1,000 outlets by 2014, and 1,400 by 2015. When it comes to distribution, CVC plans to
gain penetration through independent travel retailers who do not currently sell CVC
products. This is not an easy task; however, as many fear the initiative promotes channel
cannibalization and direct competition. CVC will have to prove the advantages of
dealing directly with a large travel operator and having access to exclusive products
and commission prices.
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Brazil Market Study
July 2014
Market Characteristics - Leisure Travel
2) TAM Viagens
Tam Viagens is part of LATAM Airlines Group S.A., the new name given to LAN Airlines
S.A. as a result of its association with TAM S.A. LATAM Airlines Group S.A., which now
includes LAN Airlines and its affiliates in Peru, Argentina, Colombia and Ecuador, and
LAN Cargo and its affiliates, as well as TAM S.A. and its subsidiaries TAM Linhas Aereas
S.A., including its business units TAM Transportes Aereos del Mercosur S.A., TAM Airlines
(Paraguay) and Multiplus S.A. This association creates one of the largest airline groups in
the world in terms of network connections, providing passenger transport services to
about 150 destinations in 22 countries, and cargo services to about 169 destinations in
27 countries, with a fleet of 310 aircraft. In total, LATAM Airlines Group S.A. has more
than 51,000 employees and its shares are traded in Santiago, as well as on the New
York Stock Exchange in the form of ADRs, and in the São Paulo Stock Exchange in the
form of BDRs.
3) MMT Gapnet
MMTGapnet is part of Gap Net Group and has fourteen offices located in São Paulo,
Campinas, Ribeirão Preto, Rio de Janeiro, Belo Horizonte, Curitiba, Porto Alegre, Brasilia,
Salvador, Natal, São Luís, Fortaleza and Goiânia Victoria. MMT Gapnet also works in
partnership with the travel agent without creating competition. The operator
increasingly invests in technology, offering online that streamlines the sales process for
the wide range of products in destinations in North, Central and South America, the
Caribbean, Europe, exotic destinations, cruises, trains, rental tools and leasing, as well
as Brazilian destinations with the best hotels and resorts. The MMTGapnet is the only
carrier that participates in the Eureka Awards program, which already has over 16,000
participating travel agents throughout Brazil.
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Brazil Market Study
July 2014
Market Characteristics - Leisure Travel
OTA notes
OTA’s are the fastest growing online travel segment with approximately 35% of online
transactions versus 65% supplier websites. OTA landscape consists of regional and local
players.
Key market players
The largest OTA across Latin America is Despegar, accounting for 30% traffic region
wide. Global players Booking.com and Expedia have growth rates in the high double
digits, and between them account for half of the region’s OTA traffic.
Decolar.com, is the largest online travel agency (OTA) in Brazil, it increased sales by 50%
in 2013 compared to 2012. In order to do so, the OTA is diversifying its business away
from airline tickets, which currently account for nearly 70% of transactions online, and is
focusing on travel accommodation, car rental, cruises and dynamic packaging. BTW
Submarino and Viaja net follow. Other growing market players identified by the
channel manager rate gain include MalaPronta and Trend Brazil.
Brazil has seen the emergence of the luxury lifestyle OTA’s – Voyage-Prive and
Quintessentiality.
Social network notes
Growth expectations for social networks in Brazil are high in the short and medium term.
Brazil ranks first in Latin America and fifth in the world in terms of the number of mobile
phone subscriptions and internet users. As a result, the country is one of the fastest
growing social media markets, with an estimated 115 million internet users by 2017
Social media is an attractive channel for brand building and creating visibility for travel
retail companies in Brazil, particularly as technology further converges, intertwining all
media and increasingly blending the offline and online worlds. Brazilian consumers trust
social media posts from friends and family about what to buy, and feel they are good
sources of word-of-mouth information on brand experiences.
Key Market players
Social media sites: Facebook, Orkut, Quepasar prevail
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Brazil Market Study
July 2014
Market Characteristics - Leisure Travel
Key Market Players - Online Travel Agents
1) Despegar.com – owns Decolar.com
Despegar.com is the largest OTA across Latin America accounting for 30% traffic
region-wide. It was established in December 1999 and initially began operating in nine
countries in Latin America and Spain. The initial aim was to prevent travelers from
making long lines at airline counters. Despegar.com currently has a presence in 21
countries in Latin America, USA and Spain.
2) Decolar.com – owned by Despegar.com
Alejandro Goméz Losada, Global Chains & Global Suppliers Manager
+54 (11) 4894-3500, aglosada@despegar.com
www.decolar.com.br
Decolar.com is the largest online travel agency in Brazil, with total sales of R$700 million
in 2012. Its strategy relies heavily on the power of search engines like Google and
Yahoo. According to company sources, 50% of its marketing budget is dedicated to
search engines, given that most travelers use those online tools to decide where to go.
Although value sales for the online travel agency are not available, industry experts
believe they surpass R$500 million. In 2013, Decolar.com aimed to increase sales by
50%. In order to do so, the OTA diversified its business away from airline tickets, which
accounted for nearly 70% of transactions online, and invested in travel
accommodation, car rental, cruises and dynamic packaging.
The niche across all segment package services is 85% leisure. The biggest destinations
in the U.S. are New York City, Miami, Orlando, Los Angeles and San Francisco.
Independent travel packages (two elements, primarily air and hotel) are growing at
35%.
Approach: establish a commercial contract and start thinking of them as a channel
partner.
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Brazil Market Study
July 2014
Market Characteristics - Leisure Travel
3) B2W Submarino
B2W Viagens is also investing to climb up to the top. Comprising three distinct brands –
Submarino Viagens, Americanas Viagens and Shoptime Viagens, B2W Viagens is a
strong competitor offering a wide variety of package holidays, air fares, hotels, cruises,
travel insurance and car rental options in Brazil and abroad, for tourists shopping online.
In 2012, online travel accommodation sales were the highlight for B2WViagens,
recording a 40% increase.
4) ViajaNet
ViajaNet is the fourth largest player in Brazil. Its strategy is based solely on pricing to
attract low income consumers belonging to social classes C and D. This is not an easy
task for an online travel agency, given that its main target market either does not have
access to the Internet or credit card limits high enough to make high value internet
purchases. Therefore, ViajaNet invests heavily in technology to be able to identify
consumers who cannot complete an Internet transaction and follows up with a
telephone call. Results are positive and the online travel agency ended 2012 with R$280
million in sales.
5) Hotel Urbano
Hotel Urbano has been in operation for two years and expects to boost sales by 65%
and add to its portfolio, airline tickets, car rental, city tours and even themed park
tickets, without losing its focus on travel accommodation. Hotel Urbano recorded sales
of R$280M in 2012, with a total of 4,800 hotels in 390 cities available in its database. Also
in 2012, Hotel Urbano opened two physical stores in Rio de Janeiro, and planned to end
2013 with 12 more in Rio de Janeiro and São Paulo. However, the new stores do not
actually sell any packaged holidays. Located in high-end commercial centres, they are
aimed at informing travelers about the company’s products and services available
online. Hotel Urbano planned to end 2013 with total sales of R$450M. Their sales nearly
doubled by moving from an online strategy based simply on audience building through
the use of sponsored stories and page posts with external links, to a much more
targeted approach. According to company sources, the first step taken was to create
demand through low-priced offers and packages tailored to specific audiences. Then,
it started promoting packaged holidays directly at the Facebook newsfeed and
sending e-mails to Facebook users who met certain criteria related to age, city, etc. All
sales were made through the OTA‟s website. It does not sell packaged holidays on
Facebook. Another strategy used to get closer to consumers was the opening of bricks-
and-mortar stores.
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Brazil Market Study
July 2014
Market Characteristics - Luxury Travel
Luxury
Emerging economies will be the key drivers of luxury growth. The BRICs and Gulf
countries are expected to be the drivers of global luxury travel growth over the next five
years, with the number of luxury trips from these countries increasing by 10% a year.
In 2013 the luxury market generated 3B Reals. It temporarily slowed from a growth rate
of 12% to 10% as the currency fluctuated and the economy in general moderated. This
is expected to change in 2014 with growth forecast of 16%.
The São Paulo state and the South of Brazil show great potential to source the luxury
traveler. The luxury market is expanding beyond São Paulo and Rio de Janeiro due to
high consumption rates and strong economic centers.
27% of luxury tourists are between16 and 35 years old.
23% of luxury tourists contracts travel services through international travel agencies.
48% criticized the lack of digital experience in luxury services.
According to inSearch Research, the 2014 profile of the Brazilian luxury tourist shows that
while a high level of comfort, service and exclusivity are still key elements, experiential
travel and sustainability are playing an increasingly important role.
Key Market Players
Virtuoso retail agencies: Agaxtur , Alatur Viagens, Atlanta Empresa, BMP, Class Tour,
Formula Viagens, Fred Tour, GSP Travel, Lespace Tours, Matuete Worldwide, Ouro e
Prata, Paragon, Platel, Primetour, Queensbury, Rio Travel, Tamoyo, TeresaPerez, Travel
Place, Travel Planners and Visa Turismo. Contact details attached.
Other luxury tour operators
1) Designer Tours
Christina Kler, Business Development Executive
+55 (11) 2181-2900 christina.kler@designertours.com.br
www.designertours.com.br
2) Queensberry
Martin Jensen, Owner
+55 11 3217 7100, m.jensen@queensberry.com.br
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Brazil Market Study
July 2014
Market Characteristics – Luxury Travel
Queensberry is a luxury outbound tour operator established in London in 1972. Created
to help and advise Brazilian tourists in the UK, with services in Portuguese, the company
soon found out that it could fly higher. It started by offering individual and unique
programs. With accumulated experience and reputation, they moved their
headquarters to Brazil closer to their customers. Currently the Queensbury business is
99% outbound primarily to the U.S. and Europe, selling their upscale services through a
network of six hundred retail agents to whom they pay 12% commission.
Queensbury sources city center, four and five star hotels direct, and through the Los
Angeles based New World Travel they gross up the net rates by 25%. Passengers
typically pay in five installments.
Queensbury sources 70% to 80% of its business from São Paolo and Rio and the
remainder from the rest of Brazil.
Online luxury travel agencies
1) Quintessentiality
Felipe Villanova, Manager
+55 (11) 3043-4949, felipe.villanova@quintessentially.com
www.quintessentially.com
2) Voyage Prive
0800 887 1138
www.voyage-prive.com.br
Brazil: Virtuoso Agency Contact Details
Key Market Players – Supply Side
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Brazil Market Study
July 2014
Market Characteristics – Luxury Travel
LATAM Airlines
TAM and LAN Airlines complete merger to create the largest airline in Latin America
and one of the largest in the world – LATAM Airlines Group SA. The combined carrier will
be a stronger competitor on long-haul international routes and an ideal alliance
partner. The merger allows for more coordination on routes and pricing, as well as
increasing negotiating power with suppliers. Furthermore, it expands the geographic
presence of both airlines. Initially reaching 150 destinations in 22 countries, the merger
allows for further coordination on routes and pricing, as well as increasing negotiating
power with suppliers. The company has identified four primary growth areas for the
network: Flights from Brazil to Europe/Africa Flights from Lima to North/Central America
New hubs to connect to the US and Europe
Other prevalent airlines
AA, Delta, United – TAM part of LATAM and LAN Chile, US Airways and GOL (low cost)
Prevalent hotel companies
Accor, Marriott, Hyatt, Hilton, Carlson hospitality, Melia and NH Hotels
Key trade shows, hotel associations and networking events
Exhibitions: WTM, ABAV, Gramado South Brazil and GBTA
Luxury events: ILTM Americas – Brazil -Travel week Sao Paulo
Hotel industry associations and networking events:
ABIH - www. abih.com.br
ABIH SP - www.abihsp.com.br
ABIH RIO - www.riodejaneirohotel.com.br/site/br
FOHB - www.fohb.com.br
ABEOC - www.abeoc.org.br
Salão MICE ABEOC in FESTURIS - www.abeoc.org.br/2014/06/cresce-espaco-do-
salao-mice-abeoc-brasil-no-festuris/
Congresso Brasileiro de Empresas e Profissionais de Eventos -
www.abeoc.org.br/2014/04/sao-paulo-recebe-em-dezembro-eventos-brasil-
2014/
Encontro Paranaense de Hospitalidade, March 2014 -
www.revistahoteis.com.br/materias/1-Aconteceu/14989-Palestra-sobre-turismo-
de-luxo-inicia-2o-Encontro-Paranaense-de-Hospitalidade
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Brazil Market Study
July 2014
Market Potential and Opportunities
Market size, consistent growth rates, increasing income-particularly top 5% and
demographics all favor economic growth.
• The increase in the number of Brazilians who can travel overseas, the strength
of the Real, sophistication, high spend, long stays and the advance purchase
profile of Brazilians
• International air transportation in Brazil is developing at a rapid rate, The
convenience and low prices offered by airlines continues to drive increasing
outbound capacity
• The US and in particular Miami and New York are magnets to Brazilians for
business and leisure opportunities exist to adapt/customize to the Brazilian
market
Addressable market is growing
• The travel industry is structured and relatively well defined making it easy to
understand and address
• Geographic segments: SAO/RIO and other states outlying territories growing
traffic potential
• Demographic segments: Brazil has a growing middle class population,
wealthy aging segment which is boosting demand for travel and luxury
goods
• Channels of distribution are evolving enabling channel planning
• Market responds well to pricing revisions, packaging and promotion strategies
Internet penetration and mobile usage have lead to direct traveler channels growing
rapidly, presenting an opportunity for growing the business in low cost channels through
digital marketing and social media.
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Brazil Market Study
July 2014
Risks and Challenges
At risk economics
Mitigate by focusing on the luxury segment, the rich will continue to travel irrespective
of economic conditions. Take small inventory positions across multiple players.
• Slow down of Brazilian economy - GDP 2014 forecast 2.0%
• Currency variation with local currency devaluation, increasing prices,
interest/taxes increase impacting the cost of sales and commission levels
• Rising fuel prices are an ongoing concern for airlines
• A run-up in household debt levels in recent quarters, as well as an increase in
public sector banks lending to consumers
• The inability of successive governments to implement successful economic
reforms, such as an overhaul of the tax system, which places a heavy burden on
business and industry, and reform of the inflexible labor market.
• Government elections in the fall of 2014
Established competitors
Mitigate by developing a local presence and focusing customer development around
key market players servicing upscale customers.
• Established trade channel partnerships
• Entrenched competition
• Destination: European union market lifting visa restrictions and moving to
open skies agreement
• Entrenched brands: Concentration of competitors and brands: Accor,
Hilton, Marriott and loyalty to Hispanic brands i.e. NH
Marketing
Mitigate by localizing and targeting marketing approach
• Trade front-line professionals are limited to local language
• Suppliers provide back-end incentives plus marketing funds
• Sales coverage - lack of Brazil and outlying territories sales coverage
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Brazil Market Study
July 2014
Conclusions and Recommendations
The Brazilian business culture relies heavily on the development of strong personal
relationships. In most cases hotel companies should invest time developing in personal
relationships with customers/partners.
Being first to the market provides a significant and sustained market-share advantage
over later entrants.
Sales planning recommendations
1. Analyze and benchmark industry/comp set data
a. Establish baseline, market share and growth rate
YOY Revenue/ transaction numbers Brazil outbound
Advance purchase, Length of stay, Average daily rate
By channel - GDS, IDS, Direct connects Voice, FIT, Booking engine
By key account
Corporate/Leisure mix YOY
Identify Brazilian repeaters
b. Evaluate existing program participation – contrast against key market
players
Regional/local TMC/consortia programs - specific to Brazil or
LATAM
Leisure programs - Tour operators, wholesalers and OTA’s
Luxury programs – On and offline
c. Localized promotions/Incentives
LATAM/Brazil specific - Nature of and timing
d. Participation in trade shows/networking events
e. PR and other marketing activity
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Brazil Market Study
July 2014
Conclusions and Recommendations 2. Adapt and localize the Product/Service value proposition
a. Service tactics
Localize, target and personalize communications
Adapt all marketing materials to Portuguese
Develop/service key accounts in local language
Develop strong personal relationships with key players
Recruit Portuguese speakers at the hotel front desk/reservations
b. Product tactics
Provide truly unique travel opportunities/experiences and a
personalized customer journey
Select hotels in central locations near to shopping district and malls
Provide competitive pricing
Develop packages – that include shopping value, music/dance
themes
A 2/3 month advance purchase plan
Stay sensitive pricing incentives - Min stay 3 nights
Include full breakfast – Eating in main restaurant
Provide free WIFI
Late check out - Flights typically leave at 10p
Fix the advanced Real exchange rates
Enable payment in installments
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Brazil Market Study
July 2014
Conclusions and Recommendations3. Develop local sales presence
a. Develop a presence through personal local office or through qualified
general sales agent or distributor
b. Support the local presence through regular visits to Brazil - meet one-on-
one with existing/prospective customers
c. Target the trade in the country’s Southeast regions, mainly first tier cities of
São Paulo and Rio de Janeiro and second tier Brasilia and Porto Alegre
d. Participate in local/regional trade shows
4. Re-segment the market and create a luxury niche
Through the primary global, regional and local industry channel partners. Laser
focus on key market players and inclusion in their travel programs. Skim the luxury
traveler.
TMC preferred regional LATAM and local Brazil programs
o Amex/Flytour, CWT, Alatur/JTB, Avipam, BCD Maringa
Corp/ Radius, Lufthansa City Center
Luxury lifestyle programs – Top 20 virtuoso agencies
o Agaxtur, Alatur Viagens, Atlanta Empresa, BMP, Class tour,
Formula Viagens, Fred Tour, GSP Travel, Lespace Tours,
Matuete Worldwide, Ouro e Prata, Paragon, Platel,
Primetour, Queensbury, Rio Travel, Tamoyo, TeresaPerez,
Travel Place, Travel planners Visa Turismo
MICE programs
o Maringa Corp( Radius ), Alatur, CWT, Nascimento Turismo
CWT
Tour operator programs
o CVC leisure, Flytour, MMT Gap net, TAM Viagens,
Nascimento Turismo
o Luxury: Queensbury
o U.S. inbound operators: New World Travel
o Wholesalers: Hotel beds, Tourico, Mark Travel, GTA, Kuoni
OTA
o Despegar/Decolar, BTW Submarino, Viaja net, Hotel
Urbano, MalaPronta and Trend Brazil
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Brazil Market Study
July 2014
Conclusions and Recommendations Luxury lifestyle OTA
Quintessentially, Voyage Prive
Inclusion in corporate programs - targeted top 20 corporate
o Accenture, Citibank, Embraer, Exxon Mobil, Ford, General
Electric, Goldman Sachs, Google, HP, Johnson and
Johnson, JPM logistics, McKinsey, Microsoft, Monsanto,
Novartis, Odebrecht, Petrobras, Roche, Shell, US Embassy
5. Build an integrated off and online presence to the direct customer
a. Localized promotions:
Localized value proposition with targeted and personalized
messaging
Promotions targeting travel habit ie advance purchase, long stay,
multi –itinerary, calendar sensitive, multiple people in party (
Packages targeting type of traveller ie luxury shopping experience
related value adds ,transportation,
Tactical campaign themes : Design, shopping, food, music and
dance(clubs/parties)
Seasonal based themes: Spring break, summer weekends, fall
b. Online channels:
Fully localize the customer proposition online - Digital responsive
user driven web design with less Internal search and navigation
Leisure Target market: Female, 60+ above, luxury lifestyle, growing
middle class, long stay
Emotional - fashion and inspirational features work well and get
engagement
Business target market: SME’s - Art collections, great wine cellars,
best cigar lounges,
Social media integratiion Orkut, Quepasar prevail, Facebook,and
Twitter to the site, Foodie blogs
Newsletter, email ,GDS media, Online)
c. Offline channels:
1. Align messaging across channels and focus PR editorial
activity & press coverage on the following trade editorials
2. Panrota, Brazil Touris, Mercado and events – trade
3. Grupo Companhia – Companhia de Viagem (B2C)
4. Grupo Companhia – Companhia de Viagem (B2C)
d. Develop localized promotions: Advance purchase, multi –itinerary,
calendar sensitive pricing i.e.packages that include value adds
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Brazil Market Study
July 2014
Thank you
Contact: Toby_March@discovertheworld.com +1 682 444 9033