Brazil prepares to house the hordes

Laercio de Souza of Brazil’s Ministry of Tourism is getting ready for a bonanza. The world is welcome

Rio’s Copacabana Beach already hosts millions of tourists
each year and demand for accommodation is set to soar

Host City: To what extent will Brazil’s tourism be boosted by hosting firstly the World Cup, and secondly the Olympic Games?

De Souza: “The Olympics will showcase Brazil as a very fast growing country that knows how to tackle its problems. The impact on tourism will be immense, since all international investors in tourism have their eyes on Brazil and this is a great opportunity for travellers to form a new image of Brazil. When we hosted the Pan American Games, we demonstrated that despite our problems we know how to organise a big event successfully and we will be a lot better at future ones.

“The World Cup will also have a huge impact on boosting tourism. Brazil is the soccer country that will capture the eye of each and every soccer fan. The Olympics, with its variety of sports, will definitely raise Brazil’s image among sports fans.

“Brazilians know how to celebrate; this is a big industry in Brazil with a very strong economic impact. This is another big attraction for tourists.”

Host City: How many new hotel rooms need to be built, and will there be continued demand for them?

De Souza: “Rio needs about 22,000 new hotel rooms for the Olympics. World Cup host cities will need altogether around 100,000 new rooms. These events alone will not ensure continued demand, but add together everything else that is happening in the country and demand will continue.

“For example, strong international hotel chains are expanding or starting to operate here, bringing with them their expertise and commercial infrastructure to Brazil. New air links are opening and others are also expanding. Economic growth is bringing many new international events to Brazil – we are already the seventh destination for international events in the world.”

Host City: What benefit will hosting these major events have on the people of Brazil?

De Souza: “The main effect on Brazil playing host to major sporting events like the World Cup and the Olympics will be the Government's commitment to increase spending on infrastructure improvements. Better roads, rail, and air routes to towns and cities will make it easier to connect communities of people across the country. Better infrastructure will also increase the attractiveness of towns.

“Construction projects require vast increases in workforce, thus many more of the population will be employed. The related businesses that spring up in preparation for these world-class events also stimulate the economy.

“The government incentives housing program, “My House, My Life,” ensures the provision of affordable housing to address the lack of basic accommodation for low income people, mainly for those without access to credit. The government aims at building more than one million houses in 18 months by offering a reduction of taxes to stimulate demand. However it is estimated that over eight million new homes are needed right now and 35 million will be needed by 2020, so the shortage of social housing will remain a big problem.

“All the host cities of the 2014 World Cup - Natal, Forteleza, Belo Horizonte, Brasilia, Cuaibà, Curitiba, Manaus, Porto Allegre, Recife, Rio de Janeiro, Salvador and São Paulo – will benefit. Natal for example, will boost investments in roads, hotels and public transportation by more than USD 1.6bn. This will attract more foreign investments and the city will see more than 10,000 units of accommodation – both hotel rooms and lettable homes – built over the next couple of years.

“Also, due to Natal’s strategic location on the northeastern tip of Brazil, lots of industry will likely arise in the city’s surrounding area. This will impact the GDP of the region and enhance the economy. Natal already has 27,000 lodges – 2,000 more than Rio.”

Host City: How much will Brazil rely on foreign investment and what should overseas businesses bear in mind?

De Souza: “Brazil will rely heavily on overseas investments in order to help deliver its infrastructure requirements, but we also have our growth acceleration programme which intends to invest USD 400bn in infrastructure by 2011. There has already been an increase in foreign direct investment and we have been breaking records year after year.

“It was recently announced that 73 per cent of stocks offered by PDG Realty, a Cyrela company, have been purchased by foreigners. Likewise, 72.5 per cent of Rossi’s and 73 per cent of Multiplan’s latest offerings were also sold to foreigners.

“Foreign investment is subject to registration at the Central Bank of Brazil, but no preliminary official authorisation is required for the remittances of funds relating to investments in Brazil. Law 4131 of 1962 regulates foreign capital in Brazil: identical treatment and equal conditions as domestic capital which is also guaranteed by the Brazilian constitution. Foreigners are permitted to buy, own and rent real estate in Brazil. According to Brazilian law, Brazilians and foreigners are on an almost equal footing when it comes to property ownership and tenant rights.

“Brazil is now “Investment Grade”; the country has recently achieved investment grade in three agencies of risk classification: Fitch Ratings, Standard & Poor’s and Moody’s. This will certainly increase the investment inflow in Brazil and impact on the country in many positive ways, such as increasing demand and access to credit and reducing interest rates.”

Mr Laercio de Souza is general co-ordinator for investment promotion at the Ministry of Tourism in Brazil.