Foreign spending drops to the worst level in 17 years; tourism sector fears Brazil’s isolation

RIO DE JANEIRO, BRAZIL – The perception is that the increase of infections and deaths associated with the delay in vaccination tends to leave the country out of the international itineraries for a longer period than initially expected.

Companies that work with tourism in Brazil have already accounted for heavy losses with the pandemic, and now they fear for the future. The perception is that the increase in infections and deaths associated with the delay in vaccination tends to leave the country out of the international itineraries for a longer period than the one initially predicted.

According to a survey by the CNC (National Confederation of Trade of Goods, Services, and Tourism), obtained first hand by the report, the new coronavirus’s pandemic will lead to the closure of 35,500 establishments in the tourism sector in 2020. This is the largest annual loss since the 2016 crisis when 44,900 establishments closed their doors.
The number of jobs lost was even higher.

According to the Caged (Cadastro Geral de Empregados e Desempregados), which accounts for formal jobs, last year alone, the sector closed 397,000 formal jobs. The number is equivalent to a shrinkage of 12.8% of the labor force in tourism.

The survey shows that establishments are being closed in a generalized way all over the country, but the biggest losses were concentrated in São Paulo (10,900), Minas Gerais (4.1), Rio de Janeiro (3,700), and Paraná (2,600).

Bars, restaurants, and similar ones had the biggest losses -retraction 28,610 in the year-, followed by hotels, inns, and similar, that registered the closing of 3,040 points.

The entire sector chain was affected. There are records of business closures in the segments of travel agencies, road transport (-1,390), cultural and leisure services (-1,020), and car rental companies (-0,200).

The pandemic resurgence this year, with record cases and collapse in health, coupled with the government’s difficulty in implementing a large-scale vaccination program, added a problem – the estrangement of foreign tourists. The outlook is that Brazil will take longer than other countries to enter the global tourist circuit.

Fabio Bentes, CNC economist and responsible for the research, evaluates that 2021 is already another lost year for Brazilian tourism in relation to revenue generation. According to him, it is unfeasible that the sector can outline a consistent recovery this year.

“The situation of tourism is a shortage. All the sales and employment indicators show that the tourism sector is the most affected by the pandemic. If commerce has restrictions, imagine tourism,” he says.

“This year, for example, there is no way to think about international tourism. There is only national tourism, and even then, very limited because of the cities’ restrictions and blockades. There is no point in marketing. The sector will not get off the ground in the short term”, says Bentes.

The economist affirms that the sector needs emergency measures that can, at this moment, relieve the fixed costs of the businesses that are stuck waiting for the control of the pandemic.

“The re-edition of the MP do BEm [with cuts in working hours and salaries, besides the suspension of contracts] would help reduce costs, but there also needs to be a deferment of federal and municipal taxes, such as ISS,” he says. “Another point would be to strengthen the Fungetur fund, which encompasses micro and small companies in the sector.”

As the tourism sector is branched, the uncertainty also affects businesses such as exchange bureaus. According to ABRACAM (Brazilian Foreign Exchange Association), which accounts for 3,400 currency exchange correspondents, the sector closed from March 2020 to February 2021 about 35% of exchange stores, laid off about 30% of employees has no prospects for improvement for 2021.

The CEO of the entity, Kelly Massaro, says that the sector has survived with new businesses, such as money remittances abroad.

“We don’t expect a resumption in the short term, precisely because the vaccine will be the new passport,” she says. “We will receive foreigners close to zero here this year, either because of border issues or the fear to enter Brazil, and the rebound effect is worth it: there will be a restriction for our access to other countries in the short term.”

According to CNC data, between March and December 2020, foreign tourist spending in Brazil was R$113.4 (US$20 billion), a drop of 80% compared to the same period in 2019.

The negative result was also noticed in January this year, when, according to the confederation, these tourists’ spending in Brazil was R$269 million, a drop of 60% compared to January 2020.

The cities that received the most foreign flow in 2019, the most recent data available, according to Embratur, the Brazilian International Tourism Promotion Agency, are Rio de Janeiro, followed by Florianópolis, Foz do Iguaçu, São Paulo, and Armação dos Búzios.

The pandemic has also impacted Embratur’s activity.

Since May 2020, the agency has been working with the Ministry of Tourism to promote domestic tourism. This determination lasts for six months after the end of the public calamity period, which lasted in the country until December last year.

In a note, Embratur informed that, due to the legal rule, it would only be able to resume its activities to promote Brazilian tourism abroad in July 2021.

According to Embratur, because of the second wave of coronavirus cases in the world and the imposition of stricter travel restrictions by countries, the resumption of international tourism to Brazil will depend on the reopening of borders and the gradual return of tourists’ confidence.

According to the Statistical Yearbook of Tourism, the foreigners who came most to Brazil by air in 2019 are mainly from South America, followed by Europe and North America -590,500 from the United States.

On average, Brazil received 6 million foreign tourists before the pandemic per year, a number considered low, according to entities that operate in the sector. According to Alfredo Lopes, president of Hotéis Rio, the city’s lodging facilities union, and an advisor to the state’s hotel association, international tourism in the country’s most touristic city is paralyzed.

“The presence of foreign tourists in Rio today is close to zero. There are practically only people who come here for some specific business or family meetings,” he says.

Lopes says that this year the sector will sustain itself with revenues from domestic tourism.

“Brazil is living off the domestic market, which is also weak. With the delay in vaccination, there is a concern that Brazil will become isolated from the world. We will only be free of this when 85% of the population is vaccinated.

The vice-president of the Commercial and Business Association of Búzios, Rodrigo Sobral, affirms that in the sanitary crisis, tourists’ profile in the city has changed. Instead of receiving Argentineans and Chileans, the city has survived with Brazilian tourists’ expenses who went to the city to do home office.

“We have been receiving Brazilians of high purchasing power who have been renting houses for seasons of 6 months to 1 year in the region. Regions of Búzios, like João Fernandes, which receive more foreigners, have suffered more”, he says.

According to the tourism secretary of Bahia, the state received, before the pandemic, about 500,000 foreign tourists per year, either by direct flights or having other states as entry gates. The cities most sought after by foreigners are Salvador and Porto Seguro.

“In the first three months of 2020, the movement in Salvador airport was 55,000 passengers, and in this period Porto Seguro received 6,983 people from international flights. From April until today, there were no flights of international origin at the airport in that city,” says the secretariat in a statement.

From April to August last year, flights were suspended in the capital of Bahia. This year, with the resurgence of the new coronavirus in the country, there were 1954 landings in January and only 152 in February.

A similar situation is experienced in the state of Santa Catarina. According to data from the tourism secretary, passengers’ flow in the summer season at the airports of Florianópolis, Jaguaruna, Chapecó, and Lages dropped 41% in relation to the same period last year.

In the capital Florianópolis, there was a 60% drop in the movement of passengers arriving in the city by intercity, interstate, and international routes.

Source: Folhapress