From Rio de Janeiro’s beaches to the breathtaking Iguaçu Falls, Brazil is a land that lends itself well to tourism. Or so it would seem. Each year, Brazil attracts just 6 million tourists – and most of them come from our neighboring countries. And while the world is now traversing the globe like never before, Brazil has not joined in on the party. Our tourism industry has been stagnating since the late 1990s.
Despite being blessed with some of the world’s most diverse ecosystems, Brazil attracts fewer tourists than Miami alone. Even the Eiffel Tower upper deck draws more people than Latin America’s largest country. Why is this?
Paulo Rabello de Castro, president of Brazil’s National Development Bank, has an explanation. Using data from the Brazilian Institute for Geography and Statistics (IBGE) and Rio de Janeiro’s Public Security Institute (ISP), Castro claimed that security problems have a devastating effect on tourism. Castro argued that increased violence in post-Olympic Rio, combined with the continued effects of the economic crisis, has led to a fall in investments and job losses within the sector. “The issue of tourism is linked to security. The issue began to take on a federal dimension,” he says. “I think we’re still losing the game.”
Rio de Janeiro in particular, with its postcard vistas and service-heavy economy, is already feeling the effects of a slump from the tourism industry. However, general competitiveness seems to be harming the industry more than security issues. Research from the World Economic Forum’s (WEF) annual World Tourism Competitiveness Index, published in April, actually showed that the industry has been slowly growing over the last decade. In 2007, the WEF ranked Brazil’s tourism industry 59th out of 136 in the world, while today it sits at 27th.
Low competitiveness hurts tourism in Brazil
While the WEF doesn’t exactly give Brazil’s public security situation glowing reviews – we were ranked at 106th – it does maintain that a lack of competitiveness posed a greater threat to the industry. The report assesses that “over the past two years, the security and business contexts have worsened further, counterbalancing the positive effects of increased price competitiveness”.
Among the WEF’s concerns are a deteriorating business environment due to legal inefficiency, red tape and high taxes, along with the cost of maintaining qualified labor, customer care personnel, and a lack of government investment in the sector. The WEF also advocates for greater protection for Brazil’s biodiversity, which would protect some of the country’s most appealing destinations.
“While some efforts have been made to reduce particulate matter emissions and to curb deforestation, progress made in 2014 has been neutralized by resumption in logging activity in 2015,” the report notes. “At the same time the stringency of environmental standards has declined recently, suggesting that more has to be done to protect the assets that primarily drive tourists into the country.”
The government hasn’t done its part
During Luiz Inácio Lula da Silva’s presidency, Brazil enjoyed an unparalleled era of positive notoriety. While Lula benefited from the commodity boom of the last decade, he also made serious efforts to increase Brazil’s soft power. And for the first time in history, the country had a multi-year tourism plan in place. But Lula’s drive was discontinued by his successor, Dilma Rousseff.
During the Lula years, Brazil was given the right to host the 2016 Olympics and the World Cup in 2014. But the country didn’t do its branding homework, trusting that the games alone would prompt tourists to flock to our cities. For the Olympics, the only impactful action taken was the temporary suspension of visa requirements for tourists coming from Australia, Japan, Canada, and the United States. But even that was met with resistance from the government.
While the Ministry of Tourism is fighting to loosen visa policies – which would make it easier for tourists to come – the Ministry of Foreign Affairs believes that Brazil’s visa regulations should continue to be reciprocal. It means that Brazil requires tourist visas from countries where Brazilians are required to have one.
“Facilitating travel measures such as with visa waivers can generate up to a 25 percent increase in the flow of destinations involved,” said Marx Beltrão, Brazil’s Minister of Tourism, earlier this year. “We projected revenues of up to $450 million with this measure within two years.”
Crime remains a concern
But within Rio de Janeiro, rather than across the whole industry, tourism sector professionals are particularly worried about what rising crime might do to businesses. A study from the National Confederation of Merchandise, Services, and Tourism (CNC), published in July this year, revealed some worrying implications from tourism’s decline in Brazil’s typical hotspot.
The study shows that Rio’s tourism sector recorded losses of R$320 million over the first four months of 2017, in comparison to the same period in 2016. This represents a 42 percent decline and has had a serious impact on both revenues and employment across the state. Bars and restaurants had the most significant losses, while transport and travel agencies also recorded large declines in revenue.
The CNC believes that this is related to Rio’s spike in crime rates. For each 10 percent increase in crime, the study estimates that the gross revenue of companies in the tourism sector declines by an average of 1.8 percent. Moreover, the CNC argues, losses for businesses catering to tourists, including restaurants, bars, and car rental agencies, are most affected by the increases in crime.
While tourists are often not the direct victims of crime, the CNC’s research says, increases in crime decrease confidence in public security and influence tourists’ decisions when it comes to planning trips. “Violence affects tourism because it dilutes the image of Rio de Janeiro, and Brazilians themselves do not want to visit Rio anymore,” says Alexandre Sampaio, the Council’s head of tourism and hospitality. “This is a perverse reality, amplified by the economic crisis of the country and the state. And the impact of tourism … is reflected in more than 50 segments of the economy.”
And the decline is crippling local industries, according to unemployment statistics from Rio’s General Register of Employed and Unemployed (CAGED). Over the first five months of 2017, Brazil registered a cumulative loss of 8,833 formal jobs within the sector – 75 percent more than in the same period during 2016. While some losses might be expected in the year following the Rio 2016 Olympic Games, those within the industry believe that security is the root cause of local industry decline.
“Security is the basis of everything,” Orlando Diniz, president of Rio state’s business federation, told the audience at BNDES’s conference. “With security, we will have more companies, more jobs, more taxes being paid and more revenue.”