Destination report: Latin America

WHAT ARE YOUR FIRST THOUGHTS about business travel to Latin America? “It’s expensive and it’s a long way,” possibly. Maybe followed by: “Needs must,” because 600 million-plus people, a US$6 trillion economy, a growing middle class and a huge demand for new infrastructure and technology make it an attractive region, from Bogota to Buenos Aries, Caracas to Curitiba.

Certainly Brazil’s magical BRIC (the developing economies of Brazil, Russia, India and China) status attracts British businesses looking to leverage themselves in emerging markets. Then there are the energy and natural resource sectors. Opportunities beyond the south Atlantic are certainly in abundance.

Yet with the Latin American economies looking likely to grow by less than 2 per cent this year means that executives are having to work those trips hard in order to make the 5,000-mile or more journey worth the corporate spend.

Brazil, Argentina and Venezuela are now in the midst of varying shades of recession. Even high-octane economies like Chile and Peru have slowed down; while growth in Mexico has yet to materialise. Central American markets remain small and fragmented, while the commodity boom that lifted the region for more than a decade is also fading.

Proceed with caution

Therefore, the consensus among travel buyers is that spending on trips to Latin America must be approached with caution. This is reflected by figures from the International Air Transport Association (IATA), which states that air travel “trade volumes have made no progress this year”. British Airways and Iberia, who fly to 16 destinations in the region, aren’t planning more routes either. “Our offer is enough to meet the demand from Europe to Latin America,” says a BA spokesman.

“There are still relatively few direct flights from the UK to some spots specifically in South America compared to other global regions; also, tickets are expensive,” says Kurston Hannaford-Jane, production manager at Two Four Media, as she organises a crew to fly to Santiago, Chile, for a television shoot. “It’s either travel through Madrid, the US via Miami, or Brazil.”

Analyse the figures and you’ll find just over half of passengers flew point-to-point from the UK to South America, according to aviation analysts OAG, and this proportion remains relatively unchanged from year-to-year. So direct flights are not part of many travel plans, to the chagrin of executives.

“Madrid remains the largest transfer point from the UK,” says John Grant, executive vice-president of OAG. “In 2013 some 117,000 travellers used the airport as a hub – that’s the equivalent of around 360 passengers a day in each direction, or about two Iberia scheduled service loads every day. Paris-Charles de Gaulle and Lisbon are also popular transit points, Lisbon most noticeably for traffic for Brazil.”

Luckily, only 4 per cent of British travellers have to go through Miami now to head south, most of which are on American Airlines flights. You still have to clear immigration here, and despite a new immigration hall, transit times can still be up to three hours. Looking forwards flights direct or via a hub aren’t going to get any cheaper.  “Air prices among all key countries in the Latin American region will rise in 2015,” says Andre Carvalhal Rosa, regional general manager for Carlson Wagonlit Travel (CWT). “We expect prices in Brazil will increase by 3.5 per cent as capacity normalises and business travel demand picks up pace. Argentina and Venezuela, plagued by runaway inflation, will see airfare spikes of 6 and 7 per cent respectively next year. Mexico will also see increases of 2.5 per cent, given more competition among carriers.”

Yet there are some developments helping buyers like Hannaford-Jane. In late March, the Brazilian carrier TAM joined the Oneworld alliance, alongside full member LAN Airlines, consolidating the group’s presence in Latin America. TAM adds 45 Brazilian destinations to the network, and its hub in Sao Paulo now doubles up as Oneworld’s operations base in the southern hemisphere.

“LATAM Airlines has now finalised its merger between TAM and LAN to become the biggest airline in the region and one of the most important carriers in the world in terms of network connections,” explains Susan Lancaster, director of global partner relationships at HRG. “The airline will cover services to about 150 destinations in
22 countries.”

Burgeoning Brazil

Brazil remains the number one powerhouse as far as corporate travel in Latin America is concerned. It is also the largest and fastest-growing airline market in the region, and the third-largest in the world, second only to China and the US.

You would think it was plain sailing for such a large and advanced market, yet travel management here can present some real obstacles. “Access to content is an issue – most domestic airlines in Brazil are not on the GDSs [global distribution systems]. The same is true with accommodation – 40 per cent of the hotel stock is in private ownership and, again, this is not on the GDS,” explains Liliana Moreira, commercial manager at LTN Brasil travel consultants.

Many hotels and their owners prefer to work directly with clients – bookings are still generally made via email and telephone. Therefore, online bookings are not as widespread as you might expect, and trust, relationships and formal requests are the norm. This is partly due to the prevalence of independent hotels in Latin America. “But this will change as  the hotel chains start to acquire properties in the region,” says Gerardo Tejado, Latin America general manager at American Express Global Business Travel.

Another factor is safety: British and European companies have increased their focus on traveller security in addition to policy compliance. FCM Travel Solutions’ regional network leader, Maren Hanschke, says: “Currently, Venezuela, El Salvador and Mexico are considered to be countries of high risk. Companies need to make sure their travellers are fully prepared.”

Sporting chances

Some areas of Latin America are currently going through major redevelopment. Try getting a hotel room in Sao Paulo or Rio de Janeiro, even after this year’s
World Cup – despite new hotels opening, it can be a big issue. “Occupancy rates run at some of the highest in the region, so getting rooms is a challenge for business travellers and we still have the Olympics to contend with in two years’ time,” says Paul East, chief operating officer at Wings Travel Management.

Certainly those who buy and manage business travel are looking for more investment to meet the demand of the international executive. “There is long-term growth in the region, and the infrastructure needs to be developed to meet demand,” says Hillgate Travel marketing manager Julian Munsey. “Although infrastructure development is increasing, investment is low at only 1.7 per cent of GDP, with only Africa investing less. However, the region is now attracting outside investment, especially from China.”

The general consensus is that Latin America is in a state of flux. It is a disparate region – what applies in Brazil certainly doesn’t in Nicaragua. In the near future a lot will depend on infrastructure investments, in hotels, air networks, airports and ground transportation. This is reliant on economic growth, which is lukewarm at the moment. One thing’s for certain: buying business travel in this region takes a fair level of knowledge and forward planning – but with experience, it can be mastered.

Latin America Business Travel pointers

BRAZIL: The continued weakness of the Brazilian Real means that prices paid for hotels are down in the country’s two largest cities, Sao Paulo and Rio de Janeiro. Hotel capacity and occupancy have grown as a result of the World Cup this year.

COLOMBIA: The country has seen a boom in business travellers. Official figures from Colombia’s Ministry of Commerce, Industry and Tourism saw a 51 per cent increase in 2013 over the previous year. By the end of 2014 nearly 7,000 new hotel rooms will be in place, a massive rise of nearly 30 per cent.

PANAMA: Hilton launched its first hotel in Panama City in August. Panama’s Tocumen International Airport is now a major regional hub (it is often referred to as the ‘Hub of the Americas’). This airport has been undergoing a multiple-stage expansion.

MEXICO: Popular for the automotive industry. The country is a business travel hotspot for clients due to the rise of investment
and development.

Buyer’s view

• Plan well in advance
and ensure that your travel management company is presenting you with all of the options, especially bearing in mind the intricacies of travel to
the region.

• Many of the airlines and hotels operate outside the GDS; but, as a travel buyer, you should still be given these options since it will offer you convenience and savings.

• When travelling in Latin America there is still a need to be culturally aware. What applies in Chile doesn’t wash in Brazil. The region is steeped in tradition and local customs.

KURSTON Hannaford-Jane, production manager and travel buyer at Two Four Media

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