Located next to the state of Bahia, famous for its string of popular holiday resorts, the Brazilian state of Alagoas has long been in the shadow of its neighbour. However, Alagoas is now actively seeking investment for a number of planned hotels and luxury resorts as it looks to develop its pristine, untouched coastline and tap into the potentially lucrative tourism market.

Alagoas state governor Teotonio Vilela Filho says: “The state’s tourism has never been as effective as [it has been] in the past two years. This leap was only possible with the support of the federal and local government, and solid investment policies which we have promoted, together with national and international partners.

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“Hotel investments have been a success, and we predict a total of 29 established hospitality ventures by 2011, four of which have already been inaugurated, and five will begin to operate this year.”

Brazil’s push to develop its tourist industry began about five years ago when the government created the ministry of tourism. The tourist trade has become the fifth largest source of foreign income for the country, not far behind its car export industry. In 2006, the country reported a record number of tourists who spent a total of $4.3bn, a 12% gain on 2005 and 116% higher than in 2002.

Alagoas is a major part of the tourism ministry’s 2007-2010 National Tourism Plan, a project that seeks to seize on the growth in the industry and take it further. It is primarily aimed at the domestic tourist market but will eventually expand to target foreign visitors. The hope is that by developing the tourist industry, the rest of Brazil will benefit from related job creation and investment. Brazil’s government has estimated that by 2010, the venture will create 1.7 million jobs and increase the number of trips to the country by 2.17 million.

For Alagoas itself, the programme will mean more investment in tourism and basic infrastructure. For example, the 30-kilometre (km) AL-101 highway, which runs along the sandy and largely undeveloped coastline from the state’s capital, Maceio, to Barra de Sao Miguel, will be entirely refurbished by next year. Sanitation projects in the areas between the beaches of Pajucara and Jacarecica are also under way.

 

Investors unsure

However, not everyone is convinced that the plan will work, both for Alagoas and other remote north-eastern Brazilian states. Many investors who toured Alagoas in a government-sponsored visit in March hinted that any move on their part was at least two years away.

The overwhelming problem for them is a lack of infrastructure. Alagoas is ranked as Brazil’s poorest state (as well as being considered one of the most corrupt), and as a result has not had the funds to repair its crumbling roads or build new ones. But the main infrastructure flaw for potential investors has been the lack of direct flights to Maceio. Foreign and even domestic tourists have difficulty getting to Maceio as there is no connection in either Rio de Janeiro, São Paulo or Salvador. Furthermore, there are no plans for the creation of a rail network that would connect the major Brazilian cities to the region.

Jean-Claude Baumgarten, president of the World Travel and Tourism Council, says: “I had a tour of the coastline in a helicopter and it was fantastic. I saw a long, long line of beaches and beautiful sea. So the potential is here.

“Here you have the beginning of a domestic market, but for an international market you need more air access. That’s key. We will have a difficult time getting people here because of this.”

However, this problem is not lost on local politicians, investors and developers. They recently lobbied the Brazilian government for an increase in spending on infrastructure, with an emphasis on more flights. The results of that meeting have yet to bear any fruit, but there is confidence that the government will help. Locals also point out that years ago, people considered that turning Bali, a remote Pacific island, into a luxury tourism destination would never work, but today it has some of the world’s largest and most successful resorts.

 

Getting connected

Hermano Goncalvez de Souza Carvalho, director of the financing and promotion department for the ministry of tourism, says: “We are trying to get more flights to the north-east, and those would come from the bigger Brazilian cities. After those flights come, we’ll try to attract foreign airlines to come to Maceio and to other smaller cities in the region.”

Despite the economic downturn and the likelihood that many investors will be more cautious, Mr Carvalho is not overly concerned that progress in Alagoas will be impeded. He says: “We’ve had a lot of crises before. This is not the last one, and there will be more. So what I tell outside investors is they have to know exactly what they want out of an investment in Brazil. They have to identify what they want to do, what they hope to achieve, and how long they would like to be invested. Then they can decide if the investment is right for them or not.”

 

Accelerating growth

One programme in particular that is giving the local politicians and developers encouragement is the Programa de Aceleracao do Crescimento (PAC), which translates as ‘growth acceleration programme’. This venture has set forth a series of actions, goals and investments for infrastructure. By pushing for lower taxes it aims to attract private investment and it will also seek to cut bureaucracy and thereby enhance the quality of public spending. The programme will also include an effort to expand the availability of credit, particularly for projects related to housing and infrastructure.

In four years’ time, the aim of PAC is to build and renovate up to 42,000km of roads and 2518km of railroads. It has also pinpointed 12 seaports and 20 airports for expansion and improvement, but it is not known if Maceio will be one of them. In total, it is expected that the PAC’s investments will equal 503.9bn reais ($230bn).