Tourism sector approaches pre-pandemic levels

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The sector was one of the most affected by the global pandemic (José Fernando Ogura/AEN)

After suffering severe impacts from the Covid-19 virus in recent years, the tourism industry is expected to return to pre-crisis revenue levels by the start of the following year. So, it is likely that small and micro businesses operating in the sector will attain a degree of stability during the first quarter of 2023. By the year’s second quarter, they will see a steady increase and surpass revenue from the prior period.

The data form part of research conducted by Sebrae in collaboration with Fundacao Getulio Vargas (FGV) on the elements that affect the competitiveness of the Brazilian tourism industry, a small lodging business, business tourism, and other events. The latter should gain from the recovery in economic activity following Covid-19.

The sector of tourism has been one of the most affected sectors since the start of one of the most devastating health crises. In the aftermath, small and micro-sized businesses make up 97% of all companies in this sector and have suffered losses of over 20% of their earnings.

invoicingBrazilian tourism made R$1 18.3 billion last month, according to the Tourism Council of the Federation of Trade in Goods, Services, and Tourism of the State of Sao Paulo (FecomercioSP) announced this week. As per the Federation, this translates to a growth of 32.1 percent compared to the same time last year. The increase was influenced by the summer holidays. But, compared to the year before the covid-19 pandemic, the revenue was down 2.

The sector responsible for the increase in July’s tourism was air transportation, which grew 86.8 percent year-on-year. It was followed by accommodation, food services (22 percent), leisure, and cultural and sporting activities ( 18.8 percent).

In absolute terms, the aviation sector made up R$1 6.2 billion of the sector’s total revenues. However, the food and lodging services made R$1 5.2 billion. The land transport sector consisted of interstate, intercity, and international tourist trains, adding approximately R$2. 2.9 billion.

Then came the segments of car rental agencies, agents, and travel agents (revenue in the range of R$2.27 billion in July); tour operators (R$ 2.7 billion during July) as well as cultural, recreational, or sports events (R1.27 billion); sports, cultural, and recreational activities (R 1.27 billion) and water transport (R 49.3 million). Again, this is based on information taken from Agencia Brasil and Sebrae.

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Brazilian swaps out international flights exchanges for national
The Sebrae president Sebrae, Carlos Melles, says that the first recovery period will be prompted mainly by the rising travel and tourism within Brazil and a decreased demand triggered by the pandemic.

“Many Brazilians are replacing international travel with domestic. Alongside the increase in the dollar, the declining buying power of families, and the ongoing international war between Russia and Ukraine, Brazilians are more eager to experience the wonders of their country. So, it’s the perfect moment for small companies to be prepared,” says Melles.

The president also states that to make the most of the rise in tourist demand, small-scale business owners must be aware of changes and trends in the behavior of consumers during the outbreak. “Entrepreneurs need to understand that they must be aligned with the market movement and assess what is necessary to adapt and ensure the sustainability of the business, including to meet future demand,” he states.

The study suggests that the return of the tourism industry is not a perfect match for all the activities within the industry. Industries like accommodation, air transportation, and mobile rental of property are more likely to recover over other segments and increase demand gradually because the restrictions of the epidemic were eased. However, the recreational, cultural, transportation, and sports are the most affected and will require longer to get back to the pre-crisis levels.

The study conducted by Sebrae and FGV notes that although accommodation facilities are an element of the team of people with realistic expectations for the 2023 summer, they need to be aware of the need for cost control, mainly because they require credit to cover the time frame.

“By the nature of hosting, the hosting industry is expensive to manage. Even if a business has a small number of guests, it’s still essential to pay energy and labor costs, such as. This puts quite a bit on the costs of a hotel or an inn as opposed to a company that sells products and can keep it in stock,” explained the director of Sebrae.

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