Brazilian tourism operators have lost BRL 3.9 billion between January and March, as 90 percent of trips for leisure were canceled due to the coronavirus. According to one sector representative, these losses amount to 25 percent of the entire sales revenue in 2019. Nearly all companies were affected — for one-third, cancelation rates ranged between 75 and 100 percent of trips as of March. And for 75 operators, half of the trips that were not scrapped altogether have been postponed.
The numbers show a worrisome trend set to spill over into Q3 and Q4 — and even into 2021 — casting more uncertainty around a potential recovery. Covid-19-related losses for late 2020 are estimated at BRL 350 million and BRL 50 million for 2021 and “may increase if the crisis caused by the pandemic lasts longer,” said Braztoa, an association of tour operators.
Survival of the richest
Tourism companies have been looking for alternatives to keep business up and running, with 98 percent slashing operational costs and 75 percent renegotiating values of contracts with third-party suppliers. Making new agreements has been easier with domestic suppliers, with 59 percent of local suppliers agreeing to provide operators with alternative refund options, while the number drops to 40 percent among foreign suppliers.
Meanwhile, 10 percent of employees in the industry were laid off in March, and 45 percent of companies intend to make cuts in April. So far, 78% have reduced salaries and working hours, 74% sent their employees on holidays, 22% granted them paid leave, and 20% suspended job contracts.