Brazil risks own goal with high World Cup prices

Published December 3, 2013
Brazil's media have been quick to highlight clogged airports, poor transport links, thousands of kilometers (miles) between venues and soaring prices. -File photo
Brazil's media have been quick to highlight clogged airports, poor transport links, thousands of kilometers (miles) between venues and soaring prices. -File photo

RIO DE JANEIRO: Eyeing a massive boost to tourism and prestige, Brazil hoped it had won the jackpot in earning the right to host the next World Cup and summer Olympics.

But in a country racing to upgrade sagging infrastructure, some analysts say eye-watering prices could hit tourism hard -- and long-term.

“Brazil is going to price itself out of the market,” if it overcharges fans for accommodation and transport, said economics professor Wolfgang Maennig, who has closely studied the impact of major sports events on host economies.

Maennig pointed to dozens of hotels asking up to four times their normal rates for next year's World Cup while Brazilian marketing firm Mundi highlighted airline price hikes of up to 1,000 percent.

That led President Dilma Rousseff in October to set up a price-monitoring panel, with Flavio Dino, president of state tourism board Embratur, commenting: “The problem is what happens post 2016 (after the Rio Olympics). Brazil must not be seen as a pricy destination or we shall kill the golden goose for decades.”

Hamburg University's Maennig said Brazil was slipping into a price trap.

“They are risking making similar mistakes to (2010 hosts) South Africa,”where “unrealistic demand expectations pushed up prices and a Competition Commission watchdog acted too late”.

Maennig cautioned against expecting a tourism revenue glut amid reports that fans in countries such as neighboring Argentina, expected to come in numbers, may simply fly in and out again on match day to avoid hotels.

He predicts many non-football tourists will likely avoid Brazil next June and subtracting their numbers will mean a net influx of much less than the 600,000 foreign visitors officially expected.

“Even at Germany 2006 ... there were only 100,000 or so extra visitors who stayed overnight,” says Maennig, warning sport is not a means of promoting economic growth.

Brazil's media have been quick to highlight clogged airports, poor transport links, thousands of kilometers (miles) between venues and soaring prices.

“Prices in Brazil shock Europeans,” noted Estado de Sao Paulo newspaper last month after fan organizations in England, Germany and Belgium indicated concern at World Cup packages topping $10,000.

Brazil earlier this year cheered a 168 percent hike in tourist receipts over a decade.

But a recent Embratur study showed Rio is now the world's third most expensive city for hotels with average rack prices of $246.71 (187 euros, compared with $245.82 in New York and $196.17 in Paris.

Tourism remains under-developed with barely six million visitors a year -- around the same number visit the Eiffel Tower in Paris.

Cripplingly high domestic flights also hit the domestic market.

A 2001 law allows Brazilian airlines to set fares freely -- but some Rio flights to Sao Paulo, just an hour away, on World Cup opening day June 12 will cost ten times the normal fare.

“That's almost the same as going to New York,” fretted the Folha de Sao Paulo daily.

Daniel Pla, marketing expert and professor at Brazil's Getulio Vargas Foundation, explains why.

“Domestic travel is very expensive because there is a (near) monopoly with just two big airlines, TAM and Gol. That puts a brake on tourism,” says Pla.

A Brazilian World Cup may have an emotional pull on fans.

But some recent would-be visitors have already voted with their feet, a European Parliament delegation skipping last year's Rio+20 U.N. conference to protest hotel prices of $800 a night.

Some 20,000 foreigners attended last June's Confederations Cup marred by widespread street protests over the combined estimated $26-billion cost of hosting the World Cup and the Rio Olympics in 2016.

Ten thousand England fans traveled to South Africa, but although 2014 ticket enquiries have topped 100,000, Mark Perryman of LondonEnglandFans says many will think again when they tot up the cost.

Perryman told Britain's Daily Telegraph that organizers “need to have a word with their hoteliers because the impression -- rightly or wrongly -- that is coming across is that prices are rocketing.”

FIFA's accommodation agency MATCH has bought up blocks of hotel nights for clients but a spokesman told AFP that “a significant proportion of our efforts in Brazil have been spent on trying to secure fair prices and reasonable terms from our partner hotels.”

Though MATCH said that goal was generally achieved, “this does not make Brazil the most affordable tourist destination, for it is not.”



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