Despite the challenging global economic climate, Brazil remains on a robust business travel growth track, especially when compared to the U.S. and Europe. The key question is whether Brazil can tackle its travel infrastructure constraints to meet its expanding business travel demand, reports Wellington Costa, president of GBTA Brazil in a new Global Business Travel Association (GBTA) analysis.
“Brazil’s strong economic growth has made it one of the world’s key markets to watch for business travel. This report highlights the major issues in business travel spending and, by extension, in Brazil’s economy, " Costa said. In 2012 Brazilian international outbound business travel grew at twice the rate of domestic travel, GBTA says.
Key Highlights of the GBTA report include:
- Brazilian business travel spending will grow by 9.3 percent in 2012 to $30.1 billion and another 12.6 percent in 2013
- Brazil is on track to overtake South Korea for 8th place in business travel spend world ranking this year
- Organic growth is forecast to drive a 6 percent increase in hotel capacity. Whilst future hotel construction will be incentivized further by the forthcoming World Cup and Olympics, demand will still exceed supply
- GBTA's BTI survey says Brazil is poised to return to a stronger upward trajectory in 2012-2013 on the rising strength of the domestic economy
- Overall Brazilian business travel spending should expand even more rapidly as the global economy recovers
- Brazilian business travel spending is heavily geared to domestic spend (c.80%) but in 2012 growth rates in international outbound travel are twice that of domestic travel
Tad Fordyce, head of global commercial solutions at Visa Inc - a sponsor of the GBTA study - said: “Year after year Brazil has proven to be a formidable contributor to the global tourism economy. In 2011 global travelers spent more than $2.3 billion in Brazil on their Visa cards, an increase of 10 percent over 2010. This natural momentum combined with hosting the 2014 FIFA World Cup and the Rio 2016 Olympic Games is a tremendous opportunity for the burgeoning nation. "
While the Brazilian economy has remained relatively resilient, it has not been immune to the recession in Europe, the slowdown in Chinese growth or the struggling recovery in the U.S. Despite these factors, GBTA forecasts that Brazil’s economy will improve slowly in the second half of 2012. Gathering economic momentum is projected to drive 4.1 percent GDP growth and 12.6 percent growth in business travel spending in 2013. However, this figure has been downgraded from GBTA’s spring forecast of 14.5 percent business travel spending growth.
A lack of adequate capacity and infrastructure is the main drag on even higher rates of business travel growth in Brazil. Airport, hotel, and other travel infrastructure continues to lag increases in demand, particularly in Brazil’s major business hubs, GBTA reports.
This may be set to change with 30,500 new hotel rooms either under construction or in advanced stages of planning – a 6 percent increase in capacity. However, the World Cup in 2014 and Olympics in 2016 will keep supply behind demand for the medium term, GBTA says.
In addition, the Brazilian government has introduced hugely popular policies to stimulate domestic demand and make up for a decline in exports. Household incomes should continue to expand in real terms in 2013 and beyond, and consumption has been further stimulated by a 14 percent increase in the minimum wage.
Costa continued, “The outlook for Brazil is encouraging for both the economy and business travel. The forthcoming elections in Brazil should create conditions for future growth as policies that stimulate domestic demand are set to continue. With travel spend growing in lockstep with this expansion in demand, GBTA is optimistic about the outlook for business travel and the economy as a whole.”
If spending trends continue at current levels, this year Brazil is set to surpass South Korea to become the world’s eighth-largest market for business travel spending. Total business travel spending in Brazil should reach $30.1 billion in 2012, an increase of 9.3 percent from 2011.
Domestic business travel currently contributes 80 percent of this spending, GBTA said. However, in 2012 Brazilian international outbound business travel grew at twice the rate of domestic travel – indicating that as the global economic environment improves, the Brazilian business travel market should expand even more rapidly.