Brazil’s Homegrown Tourism Boom

Brazil’s economic boom of the last few years has had significant impacts on the country’s tourism industry. While prices for food, accommodations, and transportation have risen considerably, at the same time, the emergence of a new lower-middle class with more disposable income (and more access to credit) than ever before has resulted in an unprecedented number of Brazilians traveling, both abroad and at home.

Although none of this is news, this week I came across an article [2], by Vincent Bevins, on beyondbrics [3] – an insightful blog devoted to emerging markets – that offered some surprising details about these recent tourism trends.

Surprising Detail Number One: Despite high prices that make it South America’s most expensive travel destination, Brazil’s tourism industry is actually continuing to enjoy robust growth rates (it grew 6.5 percent in 2011). Interestingly, none of this growth is due to foreigners; in the last five years, the number of international vacationers to Brazil has remained stationary. However, during this same period, domestic travel has soared by more than 30 percent (in 2010, Brazilians took 186 million domestic trips compared with 139 million in 2005).

Surprising Detail Number Two: Domestic travelers are responsible for sustaining a whopping 95 percent of Brazil’s tourism industry.

To underscore how disproportionate this ratio is, one need only compare Brazil to neighboring Peru, where, instead of 5 percent, gringos account for close to 30 percent of all spending on tourism.

According to David Scowsill, CEO of the World Travel and Tourism Council [4], the international average ratio is usually around two-thirds domestic spending vs. one-third foreign spending. Scowskil concedes that it’s normal to see figures that are skewed towards homegrown spenders in BRIC countries whose middle classes are expanding. However, he points out that even in China foreigners account for 12 percent of tourism spending.

The upshot is that, for now at least, Brazil’s tourism industry is one of the least international on the planet. This tendency might be worrisome for the Brazilian government, which is investing heavily in attempts to lure a record number of foreigners to the country for high profile events such as the 2014 World Cup and 2016 Olympic Games. However, on the positive side, it can also be seen as a bonus for foreigners who do decide to come to Brazil, but don’t want to run into masses of other gringos while on vacation.