With destinations as intriguing and diverse as Machu Picchu,
Patagonia, the Amazon rainforest and the Galapagos Islands to vibrant cities
such as Rio de Janeiro, Buenos Aires and Mexico City, Latin America is home to
a active travel industry, attracting both local and international visitors.
According to Phocuswright's Phocal Point database, total gross travel bookings in
the region were worth $60 billion in 2018 and are predicted to increase to $69
billion in 2020 and $78 billion in 2022.
IATA’s 20-year Air Passenger Forecast from October 2018
predicts Latin America will grow by a compound annual growth rate of 3.6%
through 2037, serving a total of 731 million passengers.
That is all good news considering the region’s economic and
political challenges in the past several years.
According to Brazil-based Phocuswright analyst Carolina Sass
de Haro, “We have to consider that the political and economic turmoil that
happens often is just a given. We are used to living like that. Of course it
does affect tourism and everything, but you see entrepreneurship and the
industry moving despite what is happening with the political and economic
Brazil, the region’s largest country, is still feeling the
effects of a severe recession that began in 2014, yet in the midst of that, it
has hosted major international events - the World Cup in 2014 and the Olympics
For 2019 through 2022, Phocuswright predicts an average of
6% total gross booking growth in Brazil, while online gross bookings will
increase an average of 10%, reaching 48% penetration in 2022.
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“This strength is due in part to the characteristics of the
Brazilian traveler. Tech savvy and quick to adopt new technologies, Brazilian
leisure travelers have shifted to online booking more rapidly than their
counterparts elsewhere in Latin America, and Brazil's online travel penetration
is the highest in the region,” says Phocuswright’s Brazilian Digital Traveler
Brazil and Mexico together represent 71% of Latin
America’s total and online travel markets, but the development of infrastructure and consumer adoption of mobile
technology is not just happening in those countries.
According to the Economic Commission for Latin America and the
Caribbean, the number of households across the region connected to the internet
grew by 103% between 2010 and 2016. And
there is still substantial room for growth.
The GSMA, a global association for the
mobile industry, reports 68% of the population across Latin America and
the Caribbean was connected to a mobile network in 2018, and that number will
increase to 74% by 2025, closing the gap on the developed market average
(87%). And it predicts smartphones will account for 78% of the mobile
connection in the region by 2025.
As internet penetration and smartphone adoption increases,
online travel activity throughout the region also grows. Phocuswright says
online accounted for 37% of all bookings in Latin America in 2018, but that
number will increase to 43% by 2021.
“We still have a lot of presence of traditional tour
operators for first-time travelers, but then as they get a little bit used to
travel, by the second or the third time, they’re going online, and they book
through the online travel agencies and with the airlines,” Sass de Haro says.
“But the new generations, they are digital already. No
matter what income level they have, they are not going to buy from the traditional
To understand the habits and preferences of these travelers,
Expedia Group Media Solutions surveyed 1,000 people each from Argentina, Brazil
and Mexico who had booked online travel in the past year for its 2018 Latin
American Travel & Tourism Trends study.
The survey found these travelers take an average of four
trips per year, and their average leisure trip length is 10 days - more than
other countries surveyed including the United States, the United Kingdom,
Germany, France, China and Australia.
But despite taking multiple trips per year, six in 10 Latin
American travelers have not selected a destination when they first decide to travel.
Expedia Group Media Solutions’ director for Latin America,
Ana Paradela, says this is an opportunity for brands to attract these travelers
by sharing relevant content on multiple platforms.
In Brazil you can buy a pair of shoes in five installments. It is cultural in our region that people pay in installments.
Luis Carlos Vargas - Travelport
“They are open to inspiration and ideas,” she says.
“What drives the decision? Activities and experiences get to
the heart of what drives us to travel, and deals and value appeal to the head. The
heart usually wins when it comes to travel ... but incorporating deals and value
messaging will make the decision even easier.”
Whether sharing inspirational photos
and blogs to appeal to the heart, or budget-focused promotions to appeal to the
head, Paradela says social media is a critical component of an effective
In We Are Social and Hootsuite’s Global
Digital 2019 report, four Latin American countries rank in the top 10 worldwide
for “time per day spent using the internet” – Brazil is second on the list (nine
hours, 29 minutes) following by Colombia (ranking fourth), Argentina (seventh)
and Mexico (ninth). All are well above the worldwide average of six hours, 42
Social is particularly
effective for attracting Latin Americans identified as Gen Z and millennials.
The Expedia Group Media Solutions
study found 91% of Gen Z and 89% of millennials say they are influenced by
deals, pictures and content they see on social media.
The opportunity to reach these
travelers on mobile is greatest once they are in-destination: The survey found
70% of all Latin American travelers use their smartphones during travel.
While the majority are traveling
domestically - Paradela notes, “many of these are very large, beautiful
countries that have a lot to offer” - cross-border trips are growing in
popularity, in part spurred by the develop of budget airlines.
“We are seeing a big development of
low-cost carriers in Argentina, Chile, Colombia and Mexico, with some substantial
participation in terms of share,” says Luis Carlos Vargas, Travelport’s regional
director for Latin America.
“This is good because it helps the
market to expand. There is an indication that the market is not fully covered
or not yet fully explored.”
According to the Latin American and
Caribbean Air Transport Association, passenger traffic in the region grew 7.1%
in February year-over-year, with airlines carrying more than 1.5 million
additional passengers compared to February 2018.
Expedia’s survey found planes are
the preferred mode of transportation across all generations of survey
respondents, and hotels are the preferred type of lodging, following by staying
with family and friends.
One of the region’s unique characteristics is the popularity
of paying in installments, a trend that began decades ago and persists today in
many countries and across all types of consumer purchases.
"In Brazil, you can buy a pair of shoes in five installments.
It is cultural in our region that people pay in installments,” Vargas says.
“So people willing to travel, they are looking at how much I
can cope with per month if I wish to travel. And because the average wage is
not high, they have a limited credit on their credit card to spend. However, if
they can split the total cost of travel to eight or 10 installments, then it
is good to go and they can afford to travel.”
An October 2018 report from Brazilian financial group EBANX found
that 43% of Brazilian travelers opted to pay for their trips in six to 12
monthly installments, and 13% paid in two to five installments.
report states: “Without this solution, the economic landscape of these emergent
economies would dramatically reduce the purchase options of this population. This is also the reason why you need to think
of installments as an essential path for a successful expansion to Latin America.
Guaranteeing that all connected Latin Americans have access to your products
and conditions to buy them is the first step to success.”
Sass de Haro says this is one area that can give homegrown
brands an advantage.
“Installments is a big part of Latin American life for
everything, and that is also true for travel. That is a challenge to the giants
like Expedia and Booking because they don’t offer that, but when you go through
the regional OTAs they offer that,” she says.
Another issue facing the tourism industry in general is the
need to improve infrastructure and security. Across the vast landscape spanning
from Mexico down to the southern tip of Argentina, some of the most interesting
destinations are in remote regions outside the urban centers.
“When you are talking about the Amazon or the Atacama Desert
- everything takes a lot of effort. You have to fly to the main cities, take a
connection, another three or four hours by car, the roads are not great. You
really need to want to go there because it can be a hassle,” Sass de Haro says.
“Also safety issues. Not all places in Latin America women
can travel alone, for instance. But I think it’s improving everywhere, and since
the region is improving the quality of life for its own citizens, that is
helping to interest tourists, too.”