A recent report from Brazil’s Central Bank for the year 2015 confirmed what travel suppliers in the United States and in other key international destinations favored by travelers from Brazil have reported for the past year to the Inbound Report: They cut their overseas spending dramatically. The nation’s Central Bank said that Brazilians spent 32.1 percent less overseas (the USA is the number one destination for Brazilians traveling overseas) in 2015, for a total of $17.357 billion, the lowest volume since 2010.
And unless the Brazilian Congress takes action to reverse a measure implemented last month by the central government—it applied a 25 percent tax on tourism services paid abroad, meaning that tour operators and travel agents booking hotels and packages overseas will have to charge their clients an additional 25 percent levy—the situation will likely get worse.
“It’s not Rocket Science.” For much of last year, especially at last June’s IPW in Orlando (there, we visited two major shopping mall favorites of Brazilian travelers and spoke with tour operators and journalists who covered the market), last September’s La Cita de Las Americas trade show in Boca Raton, Fla. and last November at NAJ’s RTO Summit East in Orlando, the Inbound Report has heard report after report of how Brazilians are spending less on shopping. One receptive tour operator told us that, while travelers from Brazil were still shopping, “they’re only putting one shopping bag in the overhead bins instead of two.”
Actually, from the perspective of Brazilians, they are spending the same amount of Brazilian reais—it’s just that the currency is worth much less. As one reader wrote in a Rio Times article on the decline in spending: “To put it another way, Brazilian tourists are spending the same amount abroad, but their money is worth 50% less so they have the same number of reais available to spend, but it buys half the dollars/Euros/Pounds or whatever that it did a year ago. It’s not rocket science.”
Here is a table cataloging the decline of the real against the U.S. dollar over the past year-and-a-half.
The Dwindling Power of the Real
Brazilian Real : U.S. Dollar
Last 18 Months, by Quarter
| Month/Year | Value of Real |
|---|---|
| Aug-14 | $0.44 |
| Nov-14 | $0.38 |
| Feb-15 | $0.35 |
| May-15 | $0.34 |
| Aug-15 | $0.29 |
| Nov-15 | $0.26 |
| 15-Feb | $0.25 |
| Rate recorded on 15th of each month | |
| Source: Xe.com; prepared by Inbound Report |
For a table showing a two-year history of the real-dollar currency exchange rate, visit:
http://www.xe.com/currencycharts/?from=BRL&to=USD&view=2Y
Outlook Remains Bleak: In addition to the 25 percent tax on international tour products, the Brazilian economy is in the midst of a recession. In December, economic activity fell 0.5 percent over the previous month in seasonally-adjusted terms, according to the Central Bank’s monthly indicator for economic activity. This compares to November’s revised 0.6 percent decline. This print marked the tenth consecutive month of decline as the economy remains in recession.
