Theme parks are key instruments for the development of a region, since they attract tourists not only to the park, but to the region that surrounds them. In this article we will take a look at the growing sector of theme parks in Brazil.
Theme parks have existed in Brazil since the middle of the 1980s, but as investments were not sufficient they were unattractive and outdated. This sector only started to grow in Brazil between 1995 and 1999, when the BNDES, Banco Nacional de Desenvolvimento Econômico e Social, granted financing for them, in addition to some tax exemptions.
As BRL had the same exchange rate as the USD at the time, theme parks tried to stabilize themselves in Brazil. However, following the devaluation of the BRL in 1999, they could not pay their debts and it became difficult to maintain the growth of the sector, since all technology and equipment installed in the parks were not made in Brazil.
After a slow start, the Brazilian theme parks sector has grown to become one the world’s most important, only behind the United States. Brazil now has 27 theme parks, which attracted over 12 million tourists in 2012, accounting for almost BRL 1,5 billion in revenue.
The sector has been experiencing steady growth over the last few years: 8% since the beginning of the 1990s, with special attention to the period between 2008 and 2013, which recorded a growth of over 15%, according to data from the Sindepat, the Integrated System of Theme Parks and Tourist Attractions. The sector itself is pretty optimistic, with 73% of all theme parks expecting to grow in revenue in the third quarter of 2014.
The theme parks sector is presenting the highest growth in the tourism industry. The sector reported a 15,8% yearly growth from the second quarter of 2013 to the second quarter of 2014. This growth is due to higher investments made in the sector and wider promotion of tourist attractions, mainly because of the Brazil 2014 World Cup and the Rio 2016 Olympic Games, events that attract tourists to Brazil. It is worth mentioning that theme parks are planning on investing 9% of their total revenue in employee training, infrastructure and marketing.
During the high season between January and February 2013, the leisure and entertainment sector hired more than 18.000 temporary workers, most of them working in theme parks or in facilities related to them. For every direct job generated by the theme park sector in Brazil, another 11 indirect jobs are generated in the transport, food supplier, packing, chemical products and other industries.
Who's currently investing in theme parks?
Investments in theme parks play a key role in maintaining their market position. Theme parks in the United States are known for their technologically advanced attractions which is gradually renewed. The theme parks sector is an extremely dynamic market which lives on the renewal of its attractiveness.
Currently, the managers of theme parks are the ones investing in this sector. But, as the Brazilian Ministry of Tourism is perceiving their increasing power to attract tourists, it reassured, in September 2014, its promise to help the sector, including tourism activities in the Plano Brasil Maior, a program designed to increase the international competitiveness of some national sectors. Among other benefits, Plano Brasil Maior grants theme parks a reduction in electricity tariffs, reduced duties on imports of equipment and reduction of payroll taxes.
Sindepat estimate that BRL 400 million will be invested in theme parks between 2011 to 2015, four times more than what was invested between 2008 and 2011.
Current market forecasts for theme parks in Brazil is good. In 2010 they were classified as permanent structures focused on tourism, thus being included in the Lei Geral do Turismo, which grants some tax benefits. One year later in 2011, theme parks were included in the Plano Brasil Maior, which intends to increase the international competitiveness of this sector. Moreover, if the plea of theme parks for the exemption of taxes on the import of equipment and technology is granted, Sindepat estimate an additional investment of around BRL 2 billion over a five-year period, starting in 2015. Also, 56 400 new jobs could be created.
These tax benefits are extremely important for the sector, since there is no Brazilian industry that can supply equipment to the sector. So, almost all the equipment and technology used in the parks must be imported. For example Beach Park, Latin America’s top water park, has imported 80% of its attractions and those that were not imported used technology developed abroad.
One of the alternatives for further increasing the attractiveness of theme parks in Brazil would be to create “park clusters”. Imitating Disneyland in Orlando could be rewarding for theme parks, since they would not be competing directly with each other as they would offer different attractions. In Brazil, a similar initiative was the creation of two theme parks located close to each other, the Wet 'n Wild and Hopi Hari, 70 km away from São Paulo.
Another alternative would be the creation of a theme park in a location where the flow of tourists is already high, preferably on the coast. In Brazil, Beto Carrero World in Santa Catarina state and Beach Park in Ceará state has successfully done so.
On the other hand, increased competition, the rise in operational costs and shortages of qualified workforce are considered major constraints to the expansion of the theme park sector in Brazil.
Regional distribution and seasonality
There are several theme parks generally well distributed in Brazil, concentrating mainly on the regional attractiveness of their location. The only region that does not have a theme park is the Northern region. Apart from that, theme parks are located:
- Near big cities like São Paulo - Wet ’n Wild and Hopi Hari
- In the mountains - Alpen Park in Rio Grande do Sul state
- In hot springs - Di Roma Acqua Park in Goiás state
- Near beaches - Beach Park in Ceará state and Beto Carrero World in Santa Catarina state
Theme parks in Brazil are generally open all year, but during low season - which varies according to the location of the park - it may be closed for specific days in the middle of the week, where the low demand does not justify the operational costs. Their main target audience are students and higher income families, as theme parks are still considered to be rather costly.