Amusement Parks Industry: Brazil to Invest in Amusement Parks

Interview with Alain Baldacci, President of SINDEPAT (Integrated System of Amusement Parks and Tourist Attractions)

What is your overall assessment of the tourism industry in Brazil?

Brazil is a very large country with many different cultural regions, many festivities, great nature, unbelievable places to be visited… We have the Rainforest, the Iguaçu Falls, but also 5000 miles of beaches and other things like this. Therefore, Brazil is a very unique country with a very high diversity of things to be seen. Its potential is enormous.

On the other hand, we are a bit far away from the major market, which comes mostly from Europe and the United States. In order to counterbalance those distances, we have a big opportunity, which lies in the 2014 World Football Cup being held here in Brazil, and also the Olympic Games in 2016. Those two events will definitely reshape Brazilian tourism around the world. Because of that, we are very optimistic about potential growth of the tourism industry in the years to come.

What are some of the pitfalls that you expect on the way? Despite the tourism that those two events will bring, is there any way to keep the numbers high once they are over? Is it sustainable?

That is how the government and the companies that deal with tourism are working. Brazil is a very unique country, so what we are going to do is boost other countries’ awareness of Brazil. After people get to know it, we believe that it will leave a lasting impression on them, making them want to come back. That is how we are going to make it sustainable. We have a good product; it is not just about the events, and after the event is gone we don’t have anything else to offer anymore. We are still one of the best nations in the world and we will still have much to give subsequently.

In your opinion, what might be the challenges to face in the future before you achieve these goals?

There are infrastructure issues for sure, but the government is currently addressing those. They are especially in transportation, the airport system, traveling inside Brazil… We also need to get people prepared to greet those international travelers and meet their needs – that goes for hotels, theme parks, taxis and so on. That is a big challenge, because the numbers are great and the country is big. We need to prepare the full country, not just the cities hosting these events. The World Cup is going to be hosted in 12 different cities, which are a few miles apart from each other. But because those issues are currently being addressed by the government and the private sector, we are confident that we will be able to deliver two good events and that we’ll be working on behalf of Brazil to maintain a good image towards tourists.

Can you present SINDEPAT to us? What do you represent, what is this entity?

SINDEPAT is a union, an association of companies and entrepreneurships that deal with theme parks, water parks and other tourist attractions of the private sector. We include 18 major sites of that nature in Brazil that are run professionally with international standards and that are located in fixed locations and geared to the local and foreign tourism. We work on several issues to promote those parks and to boost the market for them. That is our main purpose.

The following information is taken from your website. Driven by current economic opportunities and a good governance of Brazilian tourism, theme parks and attractions provide investments of 14 million dollars. The investment plan until 2015 is based on 3 pillars: 1) secure, less expensive financing and credit lines, 2) facilities for the import of equipment, and 3) new marketing and promotional campaigns. Can you speak a little about this ambitious investment plan? What is your strategy? How are you going to promote the parks and secure financing?

Actually, we are talking about around 400 million dollars in the next few years, maybe even more, as this is but a very conservative estimation. Brazil does not have an industry of amusement rides and equipment, or many factories, when it comes to roller-coasters, giant wheels and similar products, so we have to import them from other countries, mainly from Europe, Asia and the United States. The taxes on those products are very high. SINDEPAT is working with the government to reduce those taxes a little bit, in order to make it more economically feasible for entrepreneurs. This is going very well, and we expect that in a few months or a few years, those changes will come.

This promises substantial growth for Brazil. If we take the United States as an example: there are about 300 million tickets sold each year, which means almost one ticket per person that lives there. Of course, this includes foreign visitors and some people who go more than once in the year, but overall, that is more than the number of tickets sold for every sports competitions and games put together. In Brazil, we are still at an initial point, with 300 million people living here. However, we have neither rough winters, nor earthquakes or hurricanes… We do not have bad weather at all; we have a tropical climate. Also, the population is very young, so the people like to party and go out.

We have all the ingredients to develop this industry. If one day we reach the same average as the United States, we could have the same amount of tickets sold in Brazilian theme parks. Right now, we only have 12 million, so that gives you an idea of the potential for growth. It is a very lucrative industry and a very good industry to invest in, because people like to have fun and spend time with their family. A proof of that: in Orlando, Florida, the third largest group of visitors comes from Brazil.

Does the Brazilian consumer have the purchasing power to do this? What are the guarantees that the Brazilians traveling to the United States for the theme parks will choose Brazil instead?

This is why we are not yet at the same point. We do not have the same purchasing power as the United States; we have half of it, or as little as a quarter. Even if we had 50 million people going to theme parks, it would be a lot less, and we are still far from that number with 12 million. At SINDEPAT, we have 18 entrepreneurships, 18 companies that are affiliated, whereas in the United States, there are more than 500 water parks and more than 800 theme parks. There is still a very big difference, even if we consider the factors you mentioned.

Of course, there are other challenges, but that is the main one. The fact that Brazilians are ranked third largest group of visitors to theme parks in the United States says a lot about their interest in that type of attraction. Just because they are going to the States today doesn’t mean that they will not come here or that they will stop going there. I think they will go to both, but more often here, because it will be closer to them; maybe every month, instead of once every few years. Also, other countries of South America will come to Brazil, because we have the best theme parks around.

What is your vision for theme parks? It’s true that the World Cup and the Olympics may promote this industry, as tourists will be coming and might want to go to theme parks and other attractions. Time seems to be against you to develop this sector.

Well, time is always against everybody. One’s lifetime is too short for them to do everything they want to do. The tourism industry in Brazil is slowly recovering, making up for the last two decades’ worth of lost time and promoting itself very well. Time is short for new projects, but we still have time in the two years to come. For the World Cup, some will come for three weeks, some will come for 10 days, but they will watch two games, maybe? That will leave them ample spare time to do something else, and theme parks will be a very good option for them. We will promote our theme parks abroad in prevision of 2014, for the football fans who will come with their families.

In terms of investment, it is true that it is a huge opportunity. How can an investor contribute to this success story? What are the means available for them?

Brazil is very open to foreign investments. If we take the automobile industry as an example, all the car manufacturers of the world have plants in Brazil. Also, all the major electronic brands of the world are present in the country. The same goes for major hotel chains. It is only a matter of wishing to take part in this growth. SINDEPAT can help those potential investors who are interested. We have all the statistics; we can show them the performance of Brazilian theme parks. They can create partnerships with those companies and grow them, build new parks with experts, bring experts from abroad to achieve that… There are many opportunities for them. This is the best time to invest in a niche that does not have much competition yet. In 10 years from now, it might be different.

Can you mention a few attractive investment possibilities for foreign investors?

There are none in particular, but there is a list that SINDEPAT can provide to those investors. They can contribute in many existing projects. Many regions in Brazil do not currently have anything at all. Minas Gerais, for one, is a region of almost 20 million people. It is a huge amount of people that do not have any option of leisure of this kind. There is also the south of Brazil. Even Brasilia, the capital. After all, in Washington, there are several theme parks to serve the population, but there are none in Brasilia. There are many opportunities, whether it is to work on existing ones and promoting new ones in regions that are in a need for this kind of leisure.

What do you see as the largest challenge for investors? Maybe there is a lot of corruption with the governmental entities or problems with acquiring of land?

That is a challenge to expect when investing in another country: lack of knowledge of that country’s market. That is a major challenge with which SINDEPAT can provide help, to honestly direct their actions and find trustworthy, professional partners for them to work with. There is no need to work with the government. The legislation in Brazil is very open, as it is a democracy. If you come with your capital and register it in the central bank, you can run as a Brazilian company. You don’t need a local partner and there are no limitations on investment. Corruption issues have nothing to do with our industry at all. It is just as anywhere in the world.

What is your dream and what are your expectations? What do you feel is really going to happen?

Our dream is to see Brazil on the same level as the United States in the theme park industry, which is to sell an average of one ticket a year per person. What we want foreigners to know is that the media – not economic or business or specific kinds, but the general media –, likes to promote bad news. Unfortunately, that is a reality all over the world, and I know as a Brazilian that travels a lot that sometimes other countries have distorted ideas of Brazil. They are afraid of the crime rate, the corruption and many other things that are highly promoted by the media outside. Large corporations do not care about those things and come anyway, because the business environment is very strong.

In the last five years, Brazil has shown the world that it knows how to manage the economics of a country. Investors are afraid of what they do not know, and they are easily impressed and influenced by bad news that are not necessarily false, but that are not completely true either. Many countries in the world have corruption, security, environment problems, but they are not as highlighted as Brazil. I do not know why this is so, but we are no different than other countries, where similar things happen. I have lived here since birth, I have my own business and I have not had any major problems. Investors tend to misunderstand what they see in newspapers, which has nothing to do with business, which is not the real picture. The real picture is much better than what the regular press lets on. We are counting on the World Cup and the Olympics to show the world just that.

Can you say a word or two about the future of amusement parks industry?

The future is bright. This experience of enjoying a day at the park with friends and family is becoming more and more important, in a society that is breaking down. It is a unique place where everyone can go and enjoy an exciting experience with their loved ones. Everything about going down in a rollercoaster at 150 km/h at a height of 300 feet, doing revolutions, backdrops, pitfalls, loops… Everything makes this a magic world, a magic day. I do not know anyone who has been to a theme park and did not like it or whose memories did not last forever. It is a bright future, thus, and I would really like to invite people around the world to get to know Brazilian theme parks and water parks.