It is difficult to find many people who would not fancy the idea of a holiday in Brazil. But in global terms, considering the country’s size, variety, climate and considerable appeal, not that many actually visit. Brazil receives about 5 million international visitors a year – a third of the number Mexico attracts and a 10th of that of Spain.
There are hopes, however, that Brazil’s status as the host country for the 2014 World Cup (and the 2016 Olympics) will boost visitor numbers across the 12 cities hosting the FIFA football tournament, especially in the beautiful but poor north-east of the country. The topic was a hot one at the Nordeste Invest 2010 conference held in Ponta Negra, in Brazil’s Natal metro region, in May.
“Our target is to have 10 million foreign visitors a year before the World Cup,” says Laercio Lemos, general co-ordinator of finance and investment promotion at Brazil’s Ministry of Tourism. “These events in 2014 and 2016 can show the image of the country to the world, and for a very long time. If we don’t reach the visitor target, we will be very close.”
Brazilian officials are careful to insist at the same time that the tourism and investment potential of the north-east is strong, irrespective of the World Cup, and investors taking a long-term view can see that.
“Hotels are not being built because of the World Cup. The World Cup is just one month,” says Hermano G de Souza Cavalho, director of finance and investment promotion at the ministry. “Certainly, we expect thousands of new tourists for the event, but the investments are going on anyway. There are plans to add 42,000 new hotel beds in the north-east – a growth rate of 9% per year, whereas previously it was growing at 4% to 5%.”
A study conducted by hotel consultancy specialists HVS Consulting & Valuation and real estate service firm Newmark Knight Frank predicted that more than 7200 new units for second residences and more than 7600 new rooms in resorts and hotels will also be built in Brazil by 2014. In the next six years, the north-east will receive another 4000 rooms, 310 of them luxury. The study pointed to 80 other projects in the north-east, 12 in operation and the rest under construction, licensing or planning. A total of 78,000 units was announced.
French hotel group Accor, which has been in Brazil for more than 30 years and operates six hotel brands in the country, has 12 hotels in the north-east already and 16 under development, mainly under its Ibis and Formule1 chains. Its CEO for Latin America, Roland de Bonadona, says the World Cup has little practical effect on its expansion plans in Brazil, about which the company is bullish with or without the event.
“The World Cup means special pressure on the hotel sector: such an event normally leads to overcapacity during it and the industry needs three to four years to reach that level again,” he says. “We think Brazil will have a normal growth profile for the next few years. The 12 host cities are the main 12 cities anyway, and half of our development will be in these cities. The event will make things a bit better but not drastically different.”
Maybe the month-long football event is not the only – or even the main – reason for this building boom, but it does focus minds on the needs of the tourism sector and the inadequacies of existing infrastructure and provides an impetus for completing long-stalled plans.
“We were lucky that the city in which we are building a development was selected for the World Cup,” says Miguel Hernandez, CEO of Proactiva Asset Management. “There were delays happening, but now we have dates, we have commitments… I do not think it would have happened otherwise.”
A useful sense of urgency is among the benefits the event can bring to the north-east, if handled properly.
“We see the World Cup as a tool for development through which we can reduce regional inequalities – and while the north-east is growing rapidly, it must take full advantage of this opportunity. The event can also help us improve our international image, diversify exports as well as boost tourism to the north-east,” says Jose Sydriao, director of development management for Brazil’s Banco do Nordeste.
But the pressure is on, not only to capitalise on the spotlight the tournament will focus on an oft-overlooked part of Brazil, but also to get the needed infrastructure in place in time.
“Now it’s a race against time – everything needs to be done yesterday,” says Fernando Fernandes, secretary of state for 2014 World Cup issues for the Brazilian government. “We have to think for the country; we can’t think about politics. All the cities have to get their projects ready.”
That is easier said than done in a country that, as Mr Fernandes and other officials admit, lacks a propensity for planning.
“We don’t have a culture of project planning and realisation. That doesn’t mean the stadiums won’t get built – it’s just something to overcome,” says Joao Alberto Viol, president of the Syndicate of Architecture and Engineering.
Private companies working on some of the projects say they are waiting for tax breaks that they were promised but have not yet been passed by the government.
“There’s a lot to do to get infrastructure ready for 2014 – taking the plans from paper to actual projects in three or so years,” agrees Alexandre Borborema, manager of corporate finance at PricewaterhouseCoopers in Brazil. “We are talking about $50bn worth of projects in 12 cities. As a comparison, Germany did $12bn worth of projects [when it hosted the 2006 World Cup]. Completing these projects requires a huge amount of planning, organisation and integration.”
The general feeling, however – at least at Nordeste Invest – is that the deadlines will be met, simply because the other option is no option at all.
“We have to do the projects in a hurry, yes, but we have to do the projects,” says Mr Viol. “If we have good projects, we’ll have good infrastructure. If we don’t, it’s no use.”