Tourism will come back with everything, and there will be no normal ‘new’ for the sector, says CVC – 03/09/2021

The largest tourism company in Brazil and Latin America is already beginning to see in the rearview mirror two crises that almost interrupted a history of nearly half a century: pandemic and accounting problems. According to the president of CVC Corp, Leonel Andrade, the group is coming out of these crises stronger and ready to test new businesses.

The executive says that sales within the country now represent around 90% of what was registered in 2019, before the pandemic. With most of the international borders still closed to Brazilians, the domestic destinations are pulling this sector’s resumption.

Leonel Andrade says that there will not be a “new” normal in tourism. It will be the usual thing, because travel will return to people’s routine, just as it happened after the terrorist attacks in 2001. The executive says that CVC is investing R$ 170 million this year in technology to change the way it operates relates to each customer.

“We will be the first turistech in the country”, says the executive who took over the CVC Corp in April of last year, after six years at Smiles – which became the largest loyalty company in the country during his term.

In this conversation with the UOL, Leonel Andrade also spoke about tax reform and another crisis that hit the company even before the pandemic: accounting errors that would have caused losses to the company -and shareholders- in excess of R$360 million. “The company has open arbitration against some former executives. But in terms of management, current vision, partners and leaders, today everything is renewed”, says Leonel Andrade.

Thanks to shareholders, the company is alive, with cash to honor investments. We have financial capacity and very high distribution capacity.
Leonel Andrade

Below, see the interview with the president of CVC Corp, Leonel Andrade.

UOL: Has the worst impact caused by the pandemic on the tourism sector passed?

Leonel Andrade: As we came from scorched earth, where the sector had negative income, I would say that the current evolution is already great. But we still have a lot to evolve. So, the growth rates that we will have from now on will still be very strong.

Did the second quarter data show any improvement?

June was already a good recovery, after a second wave that was harmful, in March, April and May. June was already a positive sign. And July and August are going strong. In recent weeks, we have already operated domestically with more than 90% of the sales we had in 2019. We see a lot of pent-up demand. In destinations that are open, people are buying.

Despite the international still weak and hampered with the borders of the United States and Argentina closed, we have great expectations with the opening of Portugal on September 1st because the country is the largest port for Brazilians in Europe, representing 35% of our customers on the continent.

Which segments should be decisive for the recovery?

There is a lot of pent-up demand for all social classes and destinations. In the upper class, for example, tourists who currently have few options abroad are getting to know Brazil better. And that favors luxury hotels, on the beach or in the countryside, which are doing very well right now. It was also thinking about this profile that we launched Travel Boutique, with products aimed at high-income consumers and even inserting new partners into our portfolio to reach this niche.

We also see a lot of demand for destinations that have open spaces, with people attentive and concerned with the protocols, which in fact are being followed. And because of this attention to protocols, the consultancy of travel agents at the time of sales has been decisive in this resumption as well, which reinforces the role of our stores.

Will the behavior of tourists be different even after the pandemic?

People can change concerns about sanitation, for example, but I don’t see a new normal in terms of destinations, for example. Tourism will come back with a vengeance.

Of course, some protocols will remain, as were security protocols, which changed forever after the terrorist attacks. But the interest in tourism and travel, that will not change.

CVC Corp had its own turmoil even before the pandemic over governance issues. Is that behind us too?

We have an open arbitration against some former executives, but in terms of management, current vision, partners and leaders, today everything is renewed. From the point of view of both management and organizational culture, CVC is 100% new. Those who make decisions today are not related to what was before.

We had a contribution of R$1.1 billion from shareholders. And in this capitalization process, 80% of these shareholders are new. Thanks to shareholders, the company is alive, with cash to honor investments. We have financial capacity and very high distribution capacity.

Considering all this, what are CVC Corp’s bets?

CVC Corp has the privilege of being complete, with all channels and all services, with 1.2 thousand CVC brand stores, in addition to the operation with 8 thousand branches selling with RexturAdvance, presence in the digital world with Submarino Viagens and in the exchange, with Experimento. So, whatever the market trend, our competitive advantages are more relevant.

So much so that we are getting many exclusive products. CVC is the only sub-agent for the World Cup, for Rock in Rio, in September 2022, for Expo Dubai, from October 2021 to March 2022, in addition to the Formula 1 Brazilian Grand Prix, in November 2021 in São Paulo . We became much more relevant.

What is the focus of investments?

We are making a very big transformation in the group. In the years prior to my arrival, the company made acquisitions of several companies, but did not invest in integration and technology. We changed that. We went from zero to 22 million customers that we can now contact online, following and suggesting trips. We will reach 40 million customers connected to our online systems.

It’s no use having a great app if I don’t know the customer. So, we will be the first turistech. We are investing R$170 million in technology this year. More than the company has done in ten years.

It is an investment on three fronts: data management, with artificial intelligence and algorithms that will follow customers; digital transformation migrating applications to a new platform, which becomes service and content; modernization of stores that will be sustainable and digital.

There will be 15 stores this year and 400 more next year, which will have electronic showcases and the entire online sales process, all integrated with customer applications. With this technology and 40 million connected customers, we can be anything.

Can CVC also be a financial company, operating with an account, card, credit, to serve customers, suppliers and franchisees?

The definition of which paths we are going to follow will be defined over the next few months.

Another issue that concerns the travel industry in Brazil is the Withholding Income Tax (IRRF) for remittances sent abroad, which currently has a rate of 25%. Does this tax harm Brazilian operators?

Potentially, this does harm. We lose competitiveness. It’s a tax on something that has nothing to do with revenue. It is a remittance to pay suppliers outside Brazil. With this tax, we lose competitiveness because the person who buys directly pays the IOF on the card, which is lower than the 25% rate.

Does CVC design hiring?

The CVC ecosystem should grow because stores are starting to hire people and we are also hiring people, for technology companies, data companies, for example. We are important job generators. Every time I send tourists to Ceará, for example, I encourage the employment of various activities. So, the government needs to create a tourism policy, which represents 8% of Brazil’s GDP.

CVC Corp numbers

  • Stores in Brazil: 1,258
  • Independent agencies: 12 thousand
  • Tourists embarked in the 1st half of 2020: 3.1 million
  • Tourists on board 2020: 5.9 million
  • Tourists on board 2019: 13 million
  • Gross revenue 1st semester 2021: BRL 2.7 billion
  • Net revenue 1st half 2021: BRL 240 million