Page 38 - TFWA World Exhibit 2022 Special Edition

INSIDER

Slow recovery in Latam to gather pace in the fourth quarter
John Gallagher reports from Buenos Aires

Latin America’s major economies way from the 4.3 million traffic recorded October is still uncertain. Former President
are still waiting to see real improvement in 2019. Lula continues to lead in the opinion polls
following the COVID-19 pandemic. Passenger numbers on ferries over current incumbent Jair Bolsonaro, and
The outbreak of hostilities in Ukraine in connecting Buenos Aires with Montevideo most commentators now expect Lula to win
February 2022 put a brake on the fledgling and Colonia de Sacramento are also down. the first round with Bolsonaro in second
recovery with all business segments About 276,000 passengers embarked place. This would lead to a final round of
showing little growth in the first half of the or disembarked at Montevideo between voting between the two on the last Sunday
year - the travel retail category has been no January and July, down from 363,000 in October.
exception. for the same period in 2019. Meanwhile, Argentina is suffering from even
Until very recently, most countries in approximately 755,200 passengers went higher inflation, which shows no sign of
the continent had some travel restriction in through Colonia, down from 1.049 million abating. INDEC, the Argentine statistics
place; the need to present PCRs or other pre-pandemic. office, reported monthly inflation for
tests along with vaccination certificates and Ferry numbers for the full year are August at 7% with the annualized rate
mobility passes has led to a sharp decline harder to predict. The Argentine middle confirmed at 78%, up from figures of
in tourist and business travelers. Domestic classes are big fans of the Uruguay resort of around 50% at the start of the year.
aviation has recovered more quickly than Punta del Este and the ferry companies rely Analysts say that inflation will get worse
international, especially in the last three on solid high season figures in December, before it gets better, and the real rate could
months, and traffic figures in Brazil and January, and February. However, with get close to 100% before the end of the
Argentina are now close to pre pandemic current high inflation rates in Argentina year. The government also now admits that
levels – good news for duty-paid stores combined with the difficulty to buy foreign the rate will reach 100% later in 2022, and
selling to local passengers. currency, potential visitors to Uruguay may has declared its intent to bring inflation
But airport duty free shop operators be forced to spend their vacations at home. down to 60% in 2023. With electricity and
have had a tougher time and a longer wait In an interesting note, the ferry companies gas prices due to rise in the next few weeks
to see positive figures. are already offering promotional fares on along with other public services, the only
International passenger numbers still high season departures. uncertainty is whether the 100% figure will
lag far behind the 2019 figures. Argentine Low economic growth and high be reached before year end or at the start of
traffic numbers published in August show inflation have been instrumental in putting the new year.
that passenger movements for the month the brakes on the Argentine and the On a slightly more positive note,
were still down 32.2% on the same month Brazilian economies. Buoyant economies exchange rates have stabilized since the
in 2019. Not good, but a huge improvement in both countries are synonymous with appointment in August of Sergio Massa as
over July (-37.4%) and June (-42.2%). good news for the continent’s duty free Minister of Finance, with the official rate
Many airlines have announced increased business and the travel retail community is now at 141/142 pesos to the US Dollar. As
schedules for Q4, but arrivals for the hoping that one of the big two will turn the Massa has fulfilled commitments with the
entire year are still expected to be down corner shortly. IMF and renegotiated other debt payments,
by at least 30%. The Argentine recovery In recent months, Brazil has had some the grey market rate has come down
is further suffering as the government is success in fighting back against inflation from 335 Pesos in July to 270 in early
actively discouraging foreign travel with and the latest figures published in early September.
restrictions on the purchase of dollars and September indicate an annual rate of Travel retail sales over the next three
other foreign currencies and penalizing the 8.7%, the first single digit figure recorded months will be interesting to analyze in
use of credit cards overseas. since June 2021. Nevertheless, economic Latin America. More airline passengers
Brazil’s international traffic has also growth is still lower than the government and more ferry passengers will mean more
suffered and although traffic is beginning would like with commentators predicting a sales. Shopping China has reported a very
to recover, numbers will still be down on 1.5% growth rate for 2022. The exchange strong Black Friday promotion at the
pre-pandemic statistics. The country’s rate has also settled around the 5.20/5.25 beginning of September. London Supply
biggest airport, Sao Paulo Guarulhos, Brazilian Real per dollar compared to says that visitor numbers at their flagship
reached 5.68 million passengers for the closer to 5.50 earlier in the year and this store in Puerto Iguazu continue to rise.
first seven months of the year, down from new currency stability has been positive Uruguayan border store operators comment
8.77 million in 2019. Rio de Janeiro Galeão for border stores in Brazil, Paraguay, and that Brazilian visitors are coming back
reached 1.28 million passengers for the Uruguay. in bigger numbers. Let’s hope that these
same period and airport managers hope to The outcome of Brazil’s forthcoming small snippets are the sign of a sustained
reach 2 million for the full year, still a long Presidential elections taking place in recovery.

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