Tourism Industry Foresees Revenue Loss During 2014 World Cup

11/25/2013 - 08h41

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MARIANA BARBOSA

FROM SÃO PAULO

The year of the Cup will not be the salvation of airlines, which embitter losses in the billions and should register zero growth this year. Because of the World Cup, companies estimate lower revenues and lower demand in domestic air traffic in 2014.

"The business traveler who buys tickets two days before paying full fare will disappear during this period," says the president of Abear (Brazilian Association of Airline Companies), Eduardo Sanovicz.

The business and corporate events sector represents over 65% of the demand for air transport. The fear is that there is a substitution for the demand. In the business traveler's place will be the sports tourist, who paid less for tickets.

The companies say it is too early to forecast by how much the number of passengers will drop, but their negative forecast is based on the demand in previous World Cups.

In Germany, the Berlin airport saw passenger traffic shrink 18% in 2006, when the country hosted the Cup. Within two years, however, the amount of passenger traffic not only recuperated, but it also jumped.

But in South Africa, the World Cup was not even able to recover the loss of passengers with the global financial crisis. The number of passengers in 2010 moving through Johannesburg, the main gateway to the country, was lower than in 2008.

There, the effect of the international exposition of the destination during the World Cup had not yet been felt. The number of passengers in 2012 (18.6 million) was similar to that of 2008.

In the long run, companies are optimistic and expect an increase in the flow of tourists because of Brazil's exposure in the international media. These mixed feelings regarding the effects of the World Cup is also felt in other tourism segments, like the hotel market.

After the euphoria of investments, the Forum of Brazil Hotel Operators is already talking about the risks of special offers in seven host cities: Belo Horizonte, Brasília, Cuiabá, Manaus, Salvador, Porto Alegre and Recife.

The entity also reduced the cumulative growth forecast for demand during the period of 2012 to 2015, from 18% to 16%.

Studies on sporting events show that the positive effect of investment takes place two years earlier. "It's early to predict the impact on the economy. Production rate should increase before the Cup, with many companies anticipating production to compensate for the month when they will be stopped," says Frederico Turolla, partner at Pezco Consulting and professor at ESPM.

"If the World Cup was three years ago, it would have exploded with benefits for Brazil. But today, as the image is not up to snuff, the result shouldn't be so positive," he adds.

The country's performance at the games should also influence the impact on the economy in 2014, as more holidays will be given if Brazil advances in the tournament.

Translated by JILL LANGLOIS

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