Ferreira e wada corporate mobility in latin america

CORPORATE MOBILITYIN LATIN AMERICA

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CORPORATE MOBILITYIN LATIN AMERICA

A GUIDE TO HAVING A BEST-IN-CLASS

TRAVEL PROGRAM IN THE REGION

TRANSLATION

BUSINESS TRANSLATION SERVICES

RICARDO SOUTO FERREIRA &

ELIZABETH KYOKO WADA

(EDITORS)


Dados Internacionais de Catalogação na Publicação (CIP)(Câmara Brasileira do Livro, SP, Brasil)

Corporate Mobility in Latin America : a guide to having a best-in-class travel program in the region / Ricardo Souto Ferreira & Elizabeth Kyoko Wada (editors.) ; translation Business Translation Services. – São Paulo : Aleph, 2011.

ISBN 978-85-7657-121-6

1. América Latina – Descrição e viagens 2. Turismo 3. Viagens corporativas – Administração4. Via gens corporativas – Guias 5. Turismo de negócios I. Ferreira, Ricardo Souto. II. Wada, Elizabeth Kyoko.

11-10012 CDD-338.479198

Índices para catálogo sistemático:

1. América Latina : Descrição e viagens : Viagens corporativas : Turismo :Economia 338.479198

Copyright © Ricardo Souto Ferreira e Elizabeth Kyoko Wada, 2011

Copyright © Editora Aleph, 2011

COVER: Luiza Franco PROOFREADING: Business Translation Services DESIGN: Neide Siqueira LAYOUT: Join Bureau PUBLISHER: Adriano Fromer Piazzi

No part of this book may be reproduced in any form without permission from thepublisher except for the quotation of brief passages in reviews.

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Contents

Some thoughts about the region ............................................................................................ 7

Presentation ........................................................................................................................ 9

About the authors ................................................................................................................... 13

Corporate Mobility in Latin America ..................................................................................... 17

Chapter 1 – Mexico ................................................................................................................. 23

Chapter 2 – Central America and the Caribbean Region ..................................................... 39

Chapter 3 – Andean Countries ............................................................................................... 59

Chapter 4 – Southern Cone ................................................................................................... 81

Chapter 5 – Brazil ................................................................................................................... 119

Final considerations and the starting point for new refl ections... ........................................ 131

References ........................................................................................................................ 135



Some thoughts

about the region

Dear reader,

Latin America, from Mexico to Argentina and including the Caribbean, is a mas-sive region! And with size comes enormous contrasts. Latin America is an emerging and signifi cant region for HRG. Brazil is the regions’ largest country and the most important market. Rio de Janeiro is home to many corporate headquarters; Sao Paulo, the economic capital and Brasilia, the seat of government, are cosmopolitan cities with sophisticated infrastructures. Mexico and Argentina are also very important markets and home to many regional multinational companies.

Strategically, Latin America enhances the HRG Worldwide Network by meeting the fundamental needs of our customer base in relation to their corporate programs:

• Identifying critical travel program business needs• Aligning local, regional and global program components• Evaluating regional needs for products and services• Aligning local and regional reporting• Aligning operational issues• Applying change management to optimize savings and reduce costs

With a regional network of 15 markets, we are well-positioned to support multi-national, regional and local companies in their consolidation and globalization ef-forts. Due to the need to increase the knowledge about Latin America, we are proud to


8 CORPORATE MOBILITY IN LATIN AMERICA

fully support this book and all the initiatives to promote a better understanding of this wealthy region, and the wonderful people who are ready to welcome you, your execu-tives and your business! In each chapter, you will fi nd contributions from our execu-tives, as we truly believe in sharing knowledge for a better market place.

Best regards,Peter Vargas

HRG Senior Vice President, Latin America and Affi liates


Presentation

Dear Travel Management Professional,

Many years ago I came across a publication that highlighted the complexities of doing business in Asia, country by country. It was not a book on Corporate Travel in Asia, but the concept grabbed me: why not put together, in one book, some relevant facts about the Management of Corporate Travel Programs in Latin America? More than twenty countries, large and small, different languages, dialects, currencies, tax systems, GDS content...

Seven years passed. Good ideas – or the ideas we Love – don’t just go away. Some-where deep in our brains they are being kept on a back burner, improved, and refi ned, just waiting for the right moment!

Countries are so different from each other. Does it make sense to bundle them all under one umbrella called LATAM? Of course it does, as the world becomes increasingly organized into diverse, yet geographically organized regions; Europe, Asia, and so on.

The HRG Network in the region is the inspiration for this publication, a major source of support, the “virtual entity” that allows this book transform itself into a broader Editorial Project, leaving the domain of good ideas to become something real and material. We are present in twenty countries and we meet on a regular basis. De-veloping this publication sounded as our collective contribution to the business com-munity we serve.

I don’t think interest in the region has ever been so great. As traditional key mar-kets send confusing economic signals year after year, as the search for natural resources



become essential, and as certain countries around the region reach solid, stable levels, the region naturally becomes a relevant global player. And naturally, the attention of the world turns increasingly towards us. From a mere 5-6 % of global spend on regular managed travel programs, our importance goes beyond our current size.

A few months ago, I was invited by ACTE to speak at a Webinar called “Region on the Rise: Latin American Business Travel”. To my surprise, more than two hundred professionals were present. More importantly, these delegates were not from the type of companies we traditionally deal with, the so-called FORTUNE companies, but from new, unknown companies; start-up businesses, from all parts of the globe.

This book is aimed at the thousand of corporate travel professionals who are so often asked: “How can we put together a corporate travel program in the Latam region? How can we ensure it is successful? How do we avoid wasting resources? Where are the key lessons to be learned?” Yes, large corporations will benefi t most, but new start-up businesses, small companies that are turning their attention to the region, will also benefi t. Needless to say, our community – the vast community of corporate travel professionals – will also benefi t tremendously!

Not only is the World now looking at us in a different way; we ourselves have started looking at our neighbors and compañeros in a whole different way. We have become increasingly aware of each other and our uniqueness. In the Corporate Di-mension, particularly in Brazil, Argentina and Mexico, large companies become truly multinational, global companies, naturally starting with their neighboring countries.

The HRG Network has made this effort a relevant one. Our strength, our passion, and our knowledge of the region are vast, and we want to share it with as many colleagues as possible.

Instituto Alatur, the non-profi t arm of Grupo Alatur – HRG Network member for Brazil – provided the resources that enabled this Project to take off. Instituto Alatur is deeply committed to projects like this one, providing accurate, relevant information on each of the countries in the region, from a Corporate Travel perspective.

But be warned! The editorial text you are now reading is just the tip of the iceberg.

• This book is only the fi rst step; we are committed to updating it, and improving its scope and relevance, on an annual basis.

• Global news is spreading at a rapidly increasing rate. Nowadays, a year is now too long to wait for updated information. We will therefore be launching a website very soon www.corporatetravelinlatam.com, bringing fresh information all the time.

• A Newsletter will be sent out, informing subscribers of updates to the website: key research, facts, fi gures, etc. Lots of information on the region, country by


PRESENTATION 11

country, at your fi ngertips whenever you need inspiration, quick references and so on. Easy ways to get in touch contact with insiders.

Another key benefi t of this publication is the opportunity to join a community of friends and experts in our region, and cooperate by submitted your ideas. The collec-tive wisdom is far greater than ours; we see our role merely as that of facilitator.

I hope you will fi nd the information contained in this publication useful! As we revise our Project, so many new ideas and wonderful suggestions come to mind! We look forward to receiving yours!

Best regards,Ricardo Souto Ferreira

Executive Vice President – Grupo ALATURHRG Brazil – HRG Worldwide Network Board Member/LATAM



Peter Vargas currently oversees the Latin America Network of HRG (Hogg Robinson Group), one of the world’s premier corporate travel management and international corporate services companies. As Senior Vice President and Regional Manager, he is responsible for the growth and management of the HRG Partner Management Net-work in Latin America. The growth of the network in the region is enabling HRG to respond to corporate customers’ needs and consolidate multinationals regionally. Var-gas’ has extensive experience in Latin America, having worked in various positions over the last twenty years, including Regional Development Manager for Thomas Cook Group, Director at Sabre, and Director of Business Development and Account Manage-ment at WorldTravel BTI. A graduate of the City University of New York, where he earned a Bachelor’s Degree in International Affairs, Vargas also holds a Master’s Degree from New York’s New School for Social Research. [email protected]

Ricardo Souto Ferreira is partner and Executive Vice President of the Grupo Alatur (HRG Brazil) and HRG Worldwide Network Board Member/LATAM. A graduate of the Fundação Getúlio Vargas in São Paulo, where he earned a Bachelor’s Degree and a Master’s Degree in Administration, Ferreira also has a BA in Communication from ESPM. His executive education includes the Executive Development Program at the Wharton School of the University of Pennsylvania. Prior to his current position, Fer-reira has an executive career spanning thirty years, in companies such as Editora Abril, American Express, Belair, Sheraton, Othon Hotels and VASP. Ferreira is an active mem-ber of several associations, and is an MPI board member, always working hard to put the Latin American Region on the worldwide map. [email protected]

about the authors


Elizabeth Kyoko Wada leads the research group Hospitality and Services in Organiza-tions that investigates Corporate Mobility in Latin America and oversees the undergrad-uate programs in Tourism and Hospitality and the postgraduate programs (Masters of Science and Doctorates) of Universidade Anhembi Morumbi, in São Paulo, Brazil, one of the Laureate International Universities. Prior to her current responsibilities, Wada has held executive positions in the lodging industry for 25 years, in companies such as Bour-bon, Sheraton and Meliá, living in Foz do Iguaçu, Rio de Janeiro, São Paulo, Santiago (Chile) and Mexico City. A graduate of the Centro Universitário Iberoamericano, where she earned a Bachelor’s Degree in Tourism, Wada also holds a specialization degree in Marketing (EAESP/FGV), and Master and Doctorate’s degrees in Communication (USP). She serves as president of the MPI Brazil Chapter and of the National Association of Research and Post graduation in Tourism (ANPTUR). [email protected]

Victor Hernández Rodríguez is based in Mexico and has a thorough knowledge of all HRG products. He has designed and delivered specifi c sales plans for clients that in-corporate key functional areas such as acquisition, account implementation, client management, customer service and technology. Hernández acts as HRG Account Man-ager for a large market segment and he has achieved and exceeded trade volume targets for 2005-2006 cycles, as well as helping corporations to obtain important travel ex-pense budget reductions of 10% to 25%, which resulted in the contract renewal for 2007 of his complete portfolio.

Ana Paula Yamashita worked as a consultant at Hospitalidade Consultoria in the ar-eas of employee motivation, customer care and hospital & restaurant implementation projects. She currently teaches the disciplines of Financial and Economics, and is a researcher of Hospitality and Services in Organizations, at the Universidade Anhembi Morumbi, in São Paulo, Brazil, investigating Corporate Mobility in Latin America. A graduate of the Universidade Mackenzie, where she earned a Bachelor’s Degree in Economic Sciences, Yamashita also holds specialization degrees in Hotel Management and Financial Accounting Administration, both from FAAP, and a Master’s Degree in Hospitality from Universidade Anhembi Morumbi. Yamashita is the co-author of the book Gestão Financeira para Meios de Hospedagem. [email protected]

Andréa do Prado Zago is a graduate of the Centro Universitario Newton Paiva, in Belo Horizonte, Brazil, where she earned a Bachelor’s Degree in Tourism. Zago is a re-searcher of Hospitality and Services in Organizations at the Universidade Anhembi Morumbi, in São Paulo, Brazil, investigating Corporate Mobility in Latin America. She received a full scholarship from CAPES to gain her Master’s Degree in Hospital-ity. [email protected]

Jacqueline Hernandez-Biascoechea is the Commercial Director and partner of Rutas Aereas in Costa Rica - HRG Costa Rica and International Meetings and Conventions


Panama, and also HRG Panama. At a early age, in 1990 she founded International Meetings and Conventions in Puerto Rico, the fi rst full-service Incentive House agency in the Caribbean, and eleven years ago, she expanded the business to Costa Rica and lately to Panama. She is responsible for the growth of companies and strategic regional clients in the Central America and Caribbean Region, and also for the regional service center in Costa Rica that handles regional Central America and Caribbean clientele. Hernandez-Biascoechea brings more than 20 years experience in the consulting arena for travel management and MICE in the Central America and Caribbean markets. Her executive and continued education includes Harvard Kennedy School of Government - Strategic Frameworks for Non-profi t organizations; Graduate School of Business, Stanford University, Palo Alto, CA among others. She is recognized as one of the Top ten Business Leaders and Business Women in Puerto Rico. [email protected]

Ricardo de Gil Torres teaches the discipline of Business Administration in the Hospi-tality Industry and is a researcher of Hospitality and Services in Organizations at the Universidade Anhembi Morumbi, in São Paulo, Brazil, investigating Corporate Mobil-ity in Latin America. He earned a Doctorate Degree in Business Administration from Fundação Getulio Vargas (São Paulo – BR) and a B.S. in Chemical Engineering from Universidade Federal Rural do Rio de Janeiro (BR). Prior to joining the academic life, Torres held managerial positions in Brazilian chemical industries and ran his own information brokerage consultancy. Torres’ main fi elds of interest and research include innovation in the hospitality industry and restaurant operations. [email protected]

Josiane Tonelotto currently oversees all the subjects related to the academic activities of Universidade Anhembi Morumbi. As Pro-Rector of Academic Affairs, she is respon-sible for the development, quality control, relationship with the assessment entities and specially the proper education process in more than 100 programs, provided to more than 30,000 students by 800 faculty members. Tonelotto is a researcher of Hos-pitality and Services in Organizations, investigating Corporate Mobility in Latin Amer-ica. She earned a Bachelor’s Degree in Psychology from Universidade São Francisco. Tonelotto also holds Master and Doctorate’s Degrees in Medical Sciences from UNICAMP. [email protected]

Monica Moreira currently acts as HRG Peru Manager, Avantix Group Vice President and APAAI Director (Peruvian Association of IATA Travel Agents). With thirty years of experience in the travel business, Moreira started at Avianca Airlines, then worked in Travel Agencies and Travel Management Companies. Moreira is a graduate of Univer-sity Piura in Peru, where she earned a Bachelor’s Degree in Commercial Direction. She also has a specialization degree in Marketing (Esan) and took the Program on Internet Commerce (AOTS, Japan). [email protected]


Cláudio José Stefanini teaches the discipline of Business Administration and is a re-searcher of Hospitality and Services in Organizations, at the Universidade Anhembi Morumbi in São Paulo, Brazil, investigating Corporate Mobility in Latin America. Ste-fanini earned a Bachelor’s degree in Business Administration from the Faculdade Dom Pedro II; he also holds a postgraduate degree in Strategic Business Management and a Master’s Degree in Business Administration. [email protected]

Mario Andrés Aguirre Maldonado currently acts as Business Manager for Turavión (HRG Chile). Prior to this position, Maldonado held several positions in LAN and was responsible for the implementation of non-air products in the sales offi ces; the call center, and Lan.com in LAN Peru, among other services. He earned a Bachelor’s Degree in Industrial Engineering and a postgraduate degree in Chemical Engineering from Pontifi cia Universidad Católica de Chile. [email protected]

Mercedes Del Castillo joined HRG in December 2004, as Regional Account Manager and was promoted to Corporate Sales Manager a year later. Over the last fi ve years, she has been successfully winning and implementing new accounts, and has also led her Business Manager’s team to retain existing clients. Del Castillo graduated from Busi-ness Administration School at Universidad Católica Argentina (UCA) and, to enhance her competence in marketing, obtained a Higher Degree in Direct and Interactive Mar-keting in 2005 at Universidad de San Andres (UdeSA). Prior to working for HRG, she worked in the areas of Finance and Sales, at Warner Bros. Consumer Products. [email protected]

Roseane Barcellos Marques Sousa teaches Economics and is a researcher of Hospital-ity and Services in Organizations, at the Universidade Anhembi Morumbi in São Paulo, Brazil, investigating Corporate Mobility in Latin America. She earned a Bache-lor’s Degree in Economic Sciences from the Universidade Anhembi Morumbi and a Master’s Degree in Political Economics from the Pontifícia Universidade Católica de São Paulo. Sousa acts as a consultant for ventures in the areas of Tourism and Hospital-ity for Hospitals. [email protected]

Alessandra Mokarzel Passos currently acts as Alatur (HRG Brazil) head of Account Management. Prior to this position, Passos was the Operational Supervisor for McKinsey & Company, in another TMC. She has a Bachelor’s Degree in Tourism form the Univer-sidade de São Paulo and a MBA Degree in Marketing from Universidade Mackenzie.


Corporate Mobility

and Latin America

Elizabeth Kyoko Wada

Ricardo Souto Ferreira

The book is intended as a starting point for discussing corporate mobility, as well as presenting some of the practices in Latin American countries. It is part of a set of actions aimed at disseminating good Business Travel practices, and it will come alive and be made dynamic through the website www.corporatetravelinlatam.com.

The concept of mobility is, in principle, very simple; it denotes the idea of coming and going, together with the necessary means and resources for such actions to occur. The applications, however, involve diverse interpretations.

Scholars of social sciences and geography have addressed the topic, treating it as human mobility, with three forms or lines of analysis: physical mobility, social mobil-ity and work-based mobility.

We stress that Human Mobility is composed of three forms of mobility: physical mo-

bility, work-based mobility and social mobility. We also emphasize that this concept

was developed in light of Marxism, where social and economic development are im-

portant.

In a synopsis of this concept, we should understand that Physical Mobility uses, for its

analysis, the quantifi cation of ebbs and/or fl ows of population fractions, or that of

demographic quantity. These studies are included in various spatial groups (rural-ur-

ban, interurban, interregional or even international or foreign), and can be subdi-

vided according to the timescale in micro-mobility (for pendular movements) and

macro-mobility (for movements of longer duration).



The second form of mobility is Social Mobility and it refers to a vertical movement of

individuals in the classifi cation of social classes. The task of analyzing, interpreting

and comprehending the changes that occur in the population is therefore applied, in

view of the position occupied in this structure.

The third branch of these studies refers to Work-Based Mobility: the main cause that

leads men to fan out in/to practice dispersion in the geographical space. This is the

form of mobility that conveys the formalization of the previous forms: physical and

social mobility. This commoditization of mankind should be seen as a natural fact, as

each individual is endowed with “labor-power”, seen as a commodity in the posses-

sion of the worker that is capable of producing other commodities to serve the inter-

ests of the capitalist. (ROCHA, GUIZZO et al., p. 4)

Another application found is urban mobility, currently associated with sustain-ability and with issues of quality of life in the big cities. Studies focusing on urbaniza-tion, transport systems and modes, carbon emission reduction and alternative means of transport are recurring topics in academic surveys and market research.

The term “mobility” is also used to designate aspects of logistics, such as the inte-grated use of different modes of transport, fl eet management, leasing of aircraft and means of land transport, among others.

The expression “corporate mobility” is encountered as a reference to the manage-ment of mobile communication equipment – cellular phones, smart phones, modems and Wi-Fi contracts.

On a smaller scale, the word appears in the expression “academic mobility” in reference to the movement of academics and teachers between different institutions.

Whatever the approach, mobility takes into account the movements of individu-als and the “TRENDS” (tradition, relationship, expectation, needs, desire and solu-tion) that lead to their occurrence.

To this effect, organizations that have adopted the expression “corporate mobil-ity” lend all the knowledge acquired through the deliberate or forced movements of groups and individuals. The armed forces and the church have valuable records and vast experience of secular practices in the movement of fi ghting forces and peacekeep-ing troops, missionaries, humanitarian aid, monitoring of trade missions, representa-tives and prisoners, i.e. a wide range of situations described throughout history and portrayed in documents, in literature and in the arts.

Since 2007, the ACTE – Association of Corporate Travel Executives – an entity with headquarters in the United States, has repeatedly raised the topic of “Corporate Mobil-ity” in its meetings both in the USA and in Europe. It is clear that the European market,


CORPORATE MOBILITY AND LATIN AMERICA 19

given the diversity of cultures and legislation, was faster to adopt the concept, and there are companies that have already established corporate mobility policies and designated managers to ensure their performance.

Runzheimer International, with head offi ces in the United States, states in a study conducted in 2007:

Corporate mobility is the strategic management approach to removing geography as

a barrier to growth and success. Employee mobility approaches within the typical or-

ganization appear in three to six different areas supporting two key business objec-

tives: enhancing talent management capabilities and/or enabling revenue growth.

Travel by plane, train or automobile and the use of technology tools while outside of

the offi ce (e.g., PDAs, notebooks, tablet PCs) enable employees to be in the place

where they can deliver the highest value. Relocation, international assignment, and

virtual offi ce programs (e.g., telecommuting) expand the geographic talent pool and

enhance an organization’s abilities to fi ll job vacancies and develop and retain talent.

(HARPER, RUNZHEIMER, 2007, p. 2)

In the same study, the authors warn against fragmentation in corporate mobility management:

Who “Owns” Mobility and What Are The Implications?

Joe, a vice president of mobility, works for a national insurance carrier, and either di-

rectly or indirectly, is responsible for all employee mobility programs. At Joe’s com-

pany, a comprehensive employee mobility strategy is a key driver of success. All

departments involved in employee mobility program administration fall under one

umbrella and a consistent and systematic approach is taken in designing plans that

address all aspects of employee mobility.

The example set by Joe’s company is unique. Most organizations assign employee

mobility ownership to several different departments and process owners, resulting in

fragmented management and sub optimized processes. In contrast, the employee

mobility management approach at a consumer products manufacturing company is

quite different. The company’s fl eet and travel manager report to the vice president

of fi nance; the corporate aviation director reports to the vice president of operations;

while international assignments and domestic relocation groups fall under the vice

president of human resources.



Fragmented employee mobility management often leads to ineffi ciencies and unnec-

essary costs in processes ranging from employee communication, vendor manage-

ment, expense management, audit and compliance, to change processing and asset

tracking.

[…] The last thing we want mobility programs to do is generate confusion, aggrava-

tion, frustration and disengagement, but this is often inevitable with a fragmented

management approach.

[…] CEOs seeking new opportunities for cost savings, revenue generating capabilities,

and greater organizational agility must look at how their mobility programs are man-

aged. Leading organizations that have taken the fi rst steps are making signifi cant gains.

(HARPER, RUNZHEIMER, 2007, p. 4)

These considerations require us to reconsider travel management in organiza-tions, in terms of both coverage and functionality. In cities like Buenos Aires, São Paulo or Rio de Janeiro, with airports further away from the centers, savings on air tickets, for example, can be diluted due to expenses on local transport or costs of In-ternet access at hotels and by local telecommunications carriers. Moreover, globaliza-tion has led to a need for travel and contact with destinations like Latin America, with diversifi ed countries, legislation, uses and customs that often differ from the visitor’s countries of origin. Likewise, with the increasing number of Latin Americans moving in and out of the region, needs arise that go far beyond simply reducing certain ex-penses through block bookings with airlines, hotels, and other services in the produc-tive chain of Business Tourism.

Does this require an expansion of the duties of the Travel Manager? The strength-ening of Procurement teams? Where is the integration point of Meeting Managers who constantly deal with customers and opinion leaders, which cannot always be catego-rized in the company’s policies? Which are the rules for incentive travel as a reward for satisfactory performance? In the case of the construction industry, which are the rules and arrangements for transporting, accommodating and maintaining several hundred workers hired for the reconstruction of roads in areas of confl icts or natural disasters? How is it possible to fi nd out and deal with the different demands of travelers, some of whom are more experienced, while others may have rarely ventured beyond their own immediate area?

As in other management processes, after the consolidation of data, establishment of policies and respective compliance rules, assessement of negotiation and of saving, there is a perceptible increase of complexity in operations that are no longer restricted


CORPORATE MOBILITY AND LATIN AMERICA 21

to the trip itself, with new opportunities for improvement, such as the adoption of a more comprehensive concept of corporate mobility.

As regards the region covered in this book – Latin America – which exists due to cultural ties and includes countries of the three Americas, has become politically, so-cially and economically stabilized at different paces, representing a “mystery” to pro-fessionals from other regions, and for those that deal with intra-Latin American affairs. In this book, specifi c chapters are dedicated to Mexico and Brazil, given the dimen-sions of their businesses and the high volumes of travel to these countries; the other countries are grouped together under the sections “Central America and the Carib-bean”, “Andean Countries” and “Southern Cone”.

Two different teams were formed to work on the content of this book: HRG ex-ecutives based in various countries around the region, contributing market data gath-ered internally and from professional bodies and associations; researchers from Universidade Anhembi Morumbi, in São Paulo, Brazil, and members of the research group “Hospitality and Services in Organizations”, who prepare the contextualization of each country. The styles of each group of authors were respected, which explains the differences between chapters.



1

MEXICO

Ana Paula Yamashita

Víctor Hernández Rodríguez

INTRODUCTION

The evolution of transport modes favors greater human mobility, particularly the airline industry that has broken distance barriers, facilitating a greater fl ow of tourism in the world. Such development involving both the supply and the demand of tourism products requires constant upgrading throughout their production chain. Data from the United Nations World Tourism Organization (UNWTO)i, in the fi rst few months of 2011, showed that international tourist arrivals had grown about 5%, consolidating the 7% rebound registered in 2010. According to the April update, of the UNWTO barometer, growth was positive in all world (sub) regions during January and February 2011, with the exception of the Middle East and North Africa. South America and South Asia led growth (both at 15%), followed by Sub-Saharan Africa (13%) and Cen-tral and Eastern Europe (12%). (UNWTO, 2011a)

Economies are becoming increasingly open to relations with other countries, hence it is possible to affi rm that globalizationiiwould not be possible without air transport and that the airline industry would be much less signifi cant without con-comitant global expansion. [...] The basic principle that governs air transport con-sists of bilateral convention based on reciprocity or equivalency according to the agreements covering fares, capacity, frequency, number of carriers and routes fl own. (GRAHAM, 2010)

Business traveliii can be conceptualized as a set of practices and processes related to the articulation of the global economy, but also to culture, behavior, status and even

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leisure mobilities (BEAVERSTOCK et al, 2011, p.3). Such a statement leads to the need to know the individual from the future relationship better, especially when dealing with international travel. While technology encourages remote and virtual interac-tions, face-to-faceiv contact remains essential and crucial in the organizational strategy and should continue to be important in 2015. (BEAVERSTOCK and FAULCON-BRIDGE, 2010, p. 57 and 79).

As soon as companies realized that business travel needed to have its expenditures controlled, since at many companies these can represent the third highest expenditure, after salaries and data processing (information technology), the need for travel man-agement arose. Managed business travel can be understood as the method whereby companies practice guidance and discipline over transport, accommodation, meals and associated expenses incurred by their employees. The corporate travel manage-ment company came into existence to satisfy such a demand for service in the market, and can be defi ned as the teamwork involved at a company to exert adequate and ef-fective control over travel and entertainment expenses. (LANG, 1994)

According to Langv (1994, p.74) for most travel managers, conducting their own negotiation becomes an exhilarating and rewarding part of the process. Yet the greater challenge to deriving meaningful savings from a negotiation effort is maximizing use of airline seats, hotel rooms and rental cars that they have contracted for.

The Mexican Tourism Board (SECTUR) understands Business Tourism as a set of tourist fl ows, where the purpose of the trip is linked to the performance of professional activities, by means of business meetings, and of different purposes and magnitudes. It can be divided into individual business tourism, which involves business travel in-herent to the tourist’s activity, where they move from one city or country to another in order to pursue activities related to their occupation. On the other hand, group tour-ism involves events such as: Conferences, Conventions, Incentives and Exhibitions. (SECTUR, 2011a)

According to the publication of SECTUR Bulletin 11, President Calderón decreed 2011 as the year of tourism in Mexico. Aiming to align all the related sectors in this activity to set actions in motion that allow more tourists to make Mexico their main travel destination. […] Mexico intends to rank among the fi ve countries of greatest importance in tourism and entrepreneurs are already recognizing this potential and committing themselves to combine efforts to leverage this activity. (SECTUR, 2011b)

GENERAL DATA

Mexico has signifi cant political, geographical, economic and social participation when we analyze the region of Latin America and the Caribbean. Thus Table 1 was

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MÉXICO 25

prepared with a selection of data to better present the facts and fi gures that identify this country’s characteristics. However, Figure 1 is presented initially and enables a view of the country and its borders.

Table 1 Data on Mexico

Dimension Country Data

Location North America, bordered by Caribbean Sea and the Gulf of Mexico,

between Belize and the United States, and by the North Pacifi c Ocean,

between Guatemala and the United States

Country name Mexico

Government type Federal Republic

Chief of state Felipe de Jesus Calderon Hinojosa (since 1 December 2006);

Note – the president is both the chief of state and head of government

Capital: Mexico City

Languages Spanish and indigenous languages: Mayan, Nahuatl and others regional

languages

Currency Mexican Peso

Area 1,964,375 sq km

Population 113,724,226 (July 2011 est.). World ranking:11

Major cities – population Mexico City (capital) 19.319 million; Guadalajara 4.338 million; Monterrey

3.838 million; Puebla 2.278 million; Tijuana 1.629 million (2009)

Figure 1 Map of Mexico Source: CIA, 2011

02-cap01.indd 2502-cap01.indd 25 14/09/11 10:3514/09/11 10:35



Urbanization Urban people: 78% of total population (2010) – Note: Mexico City

(19.319 million) is the second-largest urban agglomeration in the

Western Hemisphere, after Sao Paulo (Brazil)

Life expectancy at birth 76.47 years. World ranking: 72

Literacy 86,1%

Climate Varies from tropical to desert

Costline 9,330 km

Natural hazards Tsunamis along the Pacifi c coast, volcanoes and destructive earthquakes

in the center and south, and hurricanes on the Pacifi c, Gulf of Mexico, and

Caribbean coasts. Volcanic activity: Mexico has volcanic activity in the

central-southern part of the country; the volcanoes in Baja California are

mostly dormant; Colima (elev. 3,850m), which erupted in 2010, is Mexico’s

most active volcano and is responsible for causing periodic evacu ations of

nearby villagers; it has been deemed a “Decade Volcano” by the Interna-

tional Association of Volcanology Chemistry of the Earth’s Interior, worthy

of study due to its explosive history and close proximity to human

populations; Popocatepetl (elev. 5,426 m) poses a threat to Mexico City;

other historically active volcanoes include Barcena. Ceboruco, El Chichon,

Michoacan-Guanajuato, Pico de Orizaba, San Martin, Socorro and Tacana.

Natural resources Petroleum, silver, copper, gold, lead, zinc, natural gas, timber.

Geography – note Strategic location on the southern border of the USA; corn (maize), one

of the world’s major grain crops, is thought to have originated in Mexico.

GDP (purchasing

power parity)

$ 1.567 trillion (2010 est.). World ranking: 12.

GDP – real growth rate: 5,5% (2010 est.). World ranking: 61.

GDP – per capita1 (PPP): $ 13,900 (2010 est.). World ranking: 85.

GDP – Breakdown by

sector:

Agriculture: 4.2% / industry: 33.3% / services: 62.5% (2010 est.).

Unemployment rate: 5.6% (2010 est.). World ranking:55

underemployment may be as high as 25%

Population below

poverty line2:

18.2% – note: based on food-based defi nition of poverty. (2008)

1. This entry shows GDP on a purchasing power parity basis divided by population as of 1 July for the same

year. (CIA, 2011)

2. National estimates of the percentage of the population falling bellow the poverty line are based on

surveys of sub-groups, with the results weighted by the number of people in each group. Defi nitions of

poverty vary considerably among nations. For example, rich nations generally use more generous standards

of poverty than poor nations. (CIA, 2011)

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MÉXICO 27


Distribution of family

income – Gini index3:

48.2 (2008). World ranking: 27.

Infl ation rate (consumer

prices):

4,1% of GDP (2010 est.). World ranking: 120.

Exchange rates: Mexican pesos (MXN) per US dolar:

12.687 (2010) – 13.514 (2009)

Telephone system General assessment: adequate telephone service for business and

government; quality is improving and mobile cellular availabitilty is

increasing.

Broadcast media:

Continuation of

Broadcast media

Large number of television stations and more than 1,400 radio stations,

most of which are privately owned; the Televisa group once had a

virtual monopoly over TV broadcasting, but new broadcasting groups

and foreign satellite and cable companies are now operating in the

country (2007).

Internet users 31.02 million (2009) – World ranking: 12

Airports: 1,819 (2010) – World ranking:3

Total with paved runways: 250 and unpaved runways: 1,569.

Railways: 17,166 km – World ranking: 16.

Roadways: 366,095 km – World ranking: 17.

Waterways: 2,900 km (navigable rivers and canals mostly connected with ports on

the country’s east coast) (2010) – World ranking: 33.

Ports and terminals: Altamira, Coatzacoalcos, Lazaro Cardenas, Manzanillo, Salina, Veracruz.

Disputes – international: Abundant rainfall in recent years along much of México-US border

region has ameliorated periodically strained water-sharing arran gements;

the US has intensifi ed security measures to monitor and control legal and

illegal personnel, transport and commodities across its border with

Mexico; Mexico has to deal with thousands of impoverished Guatemalans

and other Central Americans who cross the porous border looking for

work in Mexico and the United States; Belize and Mexico are working to

solve minor border demarcation discrepancies arising from inaccuracies

in the 1898 border treaty.

Source: CIA/USA, 2011.

Mexico was ruled by Spain for three centuries until it gained its independence at the beginning of the 19th century. The devaluation of the peso in 1994 led the economy

3. This index measures the degree of inequality in the distrib ution of family income in a country. […].

(CIA,2011)

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into the worst recession in more than half a century. This was followed by the global crisis of 2008 that brought more problems to the country’s economy and there is also the drug traffi cking issue, where a strong organization of drug dealers has been provok-ing bloody confl icts resulting in thousands of murders since 2007. Despite all the hardships faced by the Mexican people, it is a free market economy with a mixture of both modern and outdated industries and with 78% of the population living in urban areas (CIA, 2011).

Mexico can be considered a populous country with an approximate population of 113,724,226 inhabitants, classifying it as the world’s 11th largest population, with an 86.9% literacy rate. Mexico City (with 19,319 million inhabitants) is the second largest city in Latin America, losing fi rst place to the metropolitan region of São Paulo, in Brazil.

As regards education, The Economistvi (2011) mentions that by Latin American standards, Mexican schools are rather good. According to the Programme for Interna-tional Student Assessment (PISA4) study, an international test of 15-year-olds in read-ing, maths and science, Mexico had the region’s second-best educated children, after Chile. The Organization for Economic Cooperation and Development (OCDE) says that Mexico is well on track to meet maths and reading targets next year that Felipe Calderon5 set in 2007, near the start of his presidentiaRl offi ce.

The Mexican economy is showing signs of recovery having presented growth of 5.5% in its Gross Domestic Product (GDP) in 2010, as opposed to the contraction of 6.5% in 2009. According to the CIA (2011), the GDP fell sharply in 2009 due to the downslide of exports, the price of assets and the downgrading of investments. In com-pensation, the surprising growth of 2010 is related mainly to the growth of exports to the United States, which served to leverage the Mexican economy. In spite of this eco-nomic boom as regards GDP results, the Mexican economy faces infl ation that grew from 3.6% in 2009 to 4.1% in 2010 (estimated data), which places it 66th in the world in infl ation rates.

The report published on July 13, 2011 by the Economic Commission for Latin America and the Caribbean (ECLAC) reinforces the previous comments and indicates the growth prospects as elucidated in the text below:

Latin America and the Caribbean will maintain the recovery that began in the sec-

ond half of 2009, following the international economic crisis, and are poised to

grow 4.7% in 2001 with a strong boost from domestic demand. In these countries,

the fastest growing this year will be Panama (8.5%), together with Argentina (8.3%),

4. Programme for International Student Assessment – PISA.

5. Felipe de Jesus Calderon Hinojosa – President of Mexico since December 2006.

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MÉXICO 29

Haiti (8.0%) and Peru (7.1%). They are followed by Uruguay with 6.8%, Ecuador

(6.4%), Chile (6.3%) and Paraguay (5.7%). At the same time, Brazil and Mexico will

grow by 4.0%, Venezuela by 4.5% and Colombia by 5.3%. [...] In Estudo Econômico

2010-2011, ECLAC warns that the rise in international food and fuel prices, in the

context of growing domestic demand, have given way to the appearance of infl ation-

ary pressures. Consequently, we can note relative toughening of the monetary policy

in several countries from the region, which has widened the gap between domestic

and international interest rates. In a scenario characterized by considerable foreign

liquidity, this situation favors an appreciation of exchange rates in countries from

the region.

Although the occasion appears favorable, there is unceasing government concern in relation to low salaries and the unemployment rate estimate of 5.6% in 2010, which earned the country a 55th place in the world ranking, as well as underemployment above 25% in the same period. These results contribute to a percentage of 18.2% of the population living in poverty, which exemplifi es its situation in relation to social and economic inequalities. Another relevant negative aspect is the unequal income distribution, with income per capita of USD 13,900 (2010 est.), which puts it in 85th place in the world, and a Gini coeffi cient6 of 48.2 (0.482), which is still far from zero – confi rming inadequate income distribution.

Mexico’s port system puts it at an advantage in economic terms, since its vast 9,330 km coastline contributes to exports of tangible products and to tourism devel-opment. In relation to transport, Mexico also has 17,166 km of railway lines, leaving it in 16th place worldwide and number 3 in quantity of airports, with approximately 1,819 across the country.

The ruling administration, realizing the commercial possibilities of its transporta-tion system, has expanded the competition of ports, which generates more benefi ts for business. This competition runs through railways, telecommunications, electricity, dis-tribution of natural gas and airports, which speeds up negotiation processes. The im-provements in the transportation system boost results from the free trade agreement with more than 50 countries including: Guatemala, Honduras, El Salvador, the Euro-pean Community (European Free Trade Area) and Japan. The current administration also obtained support from the opposition and implemented fi scal measures that con-tributed to the country’s economic development.

6. An index close to zero indicates very uniform distribution, while a fi gure close to one shows very unequal

or concentrated distribution. (Mochón, 2007, p. 133)0

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The advantages in relation to the vast coastal area also pose diffi culties for the Mexican people in cases of natural disasters (volcanoes, earthquakes, tsunamis and hurricanes), which in Mexico have the ability to cause alarming damage.

The telephony system appears adequate both for business and for the govern-ment; nevertheless, they are making improvements in the quality of services and mak-ing more lines available for mobile telephony.

Internet users total approximately 31 million (2009), putting the country in 12th place in the world ranking.

The administration continues to face many challenges, including the improve-ment in the public education sector, infrastructure, modernization of labor laws and promotion of private investment in the energy sector. President Calderon established that his priorities would consist of reducing poverty and creating new jobs. (CIA, 2011)

President Calderón declares that tourism in Mexico enjoys national priority in politics and constitutes an essential activity to promote growth and an improvement in standards of living. The sector is the key to promoting targeted regional develop-ment in a sustainable manner (UNWTO, 2011b).

In the article published by Ramos7 (2005) in BuenViaje magazine, business tour-ism is important as it regulates the seasonality of tourism demand, that is, improves off-peak occupancy and contributes to increase the average expenditure per person between 3 to 6 times, in relation to the normal tourist who spends US$427 against US$900 (conventions), US$1,830 (conferences) and US2,250 (incentives). In addi-tion, the fl ow of money left by tourists refl ects on the city, region and state, besides contributing to improve commercial activities and not just service providers. In 2004 this segment grew 7.7% over the previous year. And the credibility and reliability of meeting planners overseas have grown on account of the training programs that they have held to offer a better qualifi ed professional.

According to Ramos (2005), the country has an excellent and unbeatable product, with several destinations; all that needs to be done is to maintain the work pace and to develop a culture of “passion for serving”, to benefi t from successful experiences and learn from mistakes, seeking to identify areas of opportunity. Business tourism has afforded important results in the recent past and offers a very promising future to ev-eryone involved, and with passion, emotion and devotion they will soon be able to see Mexico as number one in international business tourism.

According to the OECD (2011):

7. Gastón Eduardo Ramos San Millán – Director of Tourist Services in Mexico.

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MÉXICO 31

Mexico is recovering strongly from the global recession, helped initially by booming

exports and more recently, by a pick-up in private consumption and investment”. […]

“Mexico has introduced important reforms to strengthen competition and public rev-

enues, said OECD Secretary-General Angel Gurria”. “Now is the time to build on this

momentum and push through reforms in vital areas, such as education, taxes and the

labor market, that will help Mexico realize its full potential.

OECD announced that Mexico came third among the countries that benefi tmost from their tourist activity in 2010, only falling behind Spain and Portugal (ZÓ-CALO, 2011)

Based on the information submitted it is possible to ascertain in advance that Mexico has signifi cant tourism potential and with the necessary economic adjust-ments, plus the improvement of the educational system, should spawn strong devel-opment in the tourist segment in the next few years, which is consistent with the abovementioned targets of President Calderón.

MARKET DATA

Market research indicates that Mexico came in 10th place in the ranking of interna-tional tourist arrivals in 2010, with a fl ow of 22.4 million people. It was the only Latin American country to rank among the world’s top 10 (UNWTO, 2011c). And for the period from January to May 2010 arrivals corresponded to 9,372 million against 9,573 million in 2011, with favorable growth of 2.1%. During this period, tourists coming from Russia, Brazil and China exhibited double-digit increases of 58.1%, 40.9% and 32.8% respectively, according to the SECTUR bulletin (2011c).

UNTWO (2011c) recorded revenue from Mexican international tourism of US$ 11.9 in 2010 billion in comparison with US$ 11.3 billion in 2009 and, nonetheless, there was a downslide from 19th to 23rd place in 2010. On the other hand, expenditures totaled US$ 7.7 billion in 2010, which put it in 31st place. With this data it can be de-duced that the tourism balance brings in signifi cant foreign currency and contributes to the country’s socio-economic development.

According to the data reported by the Bank of Mexico, the average expenditure of all the international visitors in the fi rst fi ve months of the ongoing year was 163 dollars, which represented an increase of 3.2% over the same period of 2010. (SECTUR, 2011c)

SECTURvii (2011d) informed that the number of international tourists who arrived in Mexico in April/2011 was 1 million 895 thousand, which represented an increase of 8.1% in comparison with the same prior-year period. In April, total spending by inter-

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national tourists amounted to one billion, thirty-three thousand dollars, which repre-sented an increase of 3% over the same month of 2010.

The number of available rooms in 2010 was 322,299 units and demand climbed to 326,907 in 2011. The occupancy rates were 52.08% and 51.72% respectively. (SEC-TUR, 2011)

A fact to be considered in the analysis of the demand of the fl ow of tourists arriv-ing in Mexico by air is the number of American tourists that, considering Texans alone, and in the period from January to May 2011, was 1,023,873 tourists on regular fl ights. On the other hand, when we consider the fl ow of tourists from Latin America –Pan-ama is the most statistically signifi cant due to the fl ow of 100,724 tourists, followed by the Colombians, amounting to 64,174 in the same period, then the Peruvians with 60,836, the Cubans with 52,870, the Costa Ricans with 43,610, Brazil with a fl ow of 41,200 tourists, Argentina with 26,832 and El Salvador 21,702, whereas these are the most expressive countries in the region, according to data extracted from the Dirección General de Aeronáutica Civil de la SCT – AERCIV (2011). The analysis of such data en-ables us, for example, to assess promotional campaigns and whether the results are well on target, also contributing to the decision to make new investments that pro-mote the tourism8 supply.

The Mexican government, through the Tourism Secretariat and the Mexican Tour-ism Promotion Board, has boosted promotion work abroad with the purpose of diver-sifying the supply to other nations and becoming less dependent on tourism from the United States. The growth of arrivals by air from abroad, in May 2011, was fairly repre-sentative. In the case of Brazil they represented growth of 42.4%, Russia 30.5%, China 24%, Korea 18.5%, Australia 16.7%, Canada and the United Kingdom 15.8% each one in comparison to the same prior-year period. (SECTUR, 2011e).

The data commented on previously is just part of this process of studying human mobility and travel management. In the specifi c case of the business segment, accord-ing to the Manual9 on Organization and Market Activities of Tourist Destinations pre-pared by SECTUR (2011f), there are other elements to be analyzed together, in order to measure the installed capacity and its competitiveness, such as:

• Hotels – in their supply and fl exibility of function rooms, availability, wireless Internet coverage and speed, business centers and others.

8. Tourism Supply – set of tourist products and services at the disposal of users at the destination deter-

mined for their enjoyment and consumption, providing a travel experience. (Sectur, 2011)9. Marketing Organization and Activities Manual for Tourist Destinations

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MÉXICO 33

• Function rooms – fl exibility in room size, availability, wireless Internet coverage speed, power points (outlets), and others.

• Convention Centers and Fairs – fl exibility in room size, wireless Internet cover-age speed, VIP rooms and others.

• Airports – frequency of fl ights, accessible times, connection with other fl ights, public transportation options and others,

• Carriers – variety and renewal of vehicles, people with the ability to speak foreign languages and others.

• Existence of associations and other important entities for the development of the tourism industry, such as: “Ofi cinas de Convenciones y Visitantes (OCV), or Offi ces of Conventions and Visitors, Tourism Secretariat and Destination Management Companies (DMC’s)”.

• Land transport – public and private to facilitate domestic mobility.

Once such elements have been quantifi ed, conditions are created to defi ne the capacity of the destination and to quantify the tourism cluster. The latter is also called a production complex, and consists of a geographical concentration of companies and institutions that interact with one another to do business. The ties that these compa-nies form can improve the performance, competitiveness and profi tability of those involved in this productive process. (SECTUR, 2011e)

Unfortunately, the data is not yet completely available, much less permanently updated to allow full access to the movements of the segment, but a study10 on 2011 conducted by SECTUR makes it possible to learn a little more about business tourism as concerns conventions and conferences. The average expenditure per Mexican par-ticipant was US$ 1,040 (w/plane) and US$ 686 (without plane); the expenditure of the Americans corresponded to US$ 1,250 (w/plane) and US$ 925 (without plane). Graph 1 below allows us to verify the distribution of expenditures, which evidences air transport with the largest portion, totaling 34%.

On the occasion, the study determined that the supply consisted of 310 hotels and 38 compounds distributed mainly among 34 cities. According to market players, the installed capacity for holding conferences and conventions was suffi cient for the de-mand at that time, yet in cases of large rooms there was a supply defi cit.

The buy factors for American meeting planners are indicated in graph 2 (com-petitiveness analysis). We can thus observe that air accessibility, information, cost and variety of activities were the most material aspects and considered good by buyers. The

10. Strategic Feasibility Survey in Congress and Convention Activities.

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most critical aspects were related to safety, which is still a problem for the country to-day, and urban image. The reliability of services and profi tability, although they have also been regular, were still superior to safety and to urban image.

The SWOT analysis drawn up in the study of 2001, enabled Mexico to identify its strong and weak points. As a strong point it verifi ed air accessibility, varieties of activi-ties and cost of services. The weak points were diagnosed with regards to physical and legal safety, urban image, and reliability of services. The opportunities that presented themselves were related to the low air travel budget, less long distance travel and the interest in new destinations. The threats were investigated in terms of safety, compe-tence, quality and reliability of destinations.

The suggestions that market players from the supply side made to the authorities11 on the occasion, concerned the legalization of casino gambling, repayment of taxes, more training and more promotion. On the demand side: better urban infrastructure, streamlining of customs clearance procedures, improvement of telecommunications and of service providers were required as were more quality and effi ciency, fulfi llment and reliability, inviolable contracts, and safety of facilities.

11. Only the suggestions from the American buyers were mentioned.

Graph 1 Distribution of Expenditures.Source: SECTUR, 2002.

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MÉXICO 35

Graph 2 Competitiveness Analysis.Source: SECTUR, 2002.

Figure 2 SWOT Analysis.Source: SECTUR, 2002.

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The study also presented aspects for the development of demand, such as: re-search on specifi c segments in the North American and Latin American markets, pub-lic relations program for familiarization of the meeting planners with Mexican destinations, to monitor market behavior (benchmarking) of the main competitors: Canada, the US and the Caribbean, systematization of market indicators through OCVs and incentives to the provision of information on hotels and compounds.

Domestic tourism is highly signifi cant for the Mexican economy, since according to SECTUR (2011g) it represents 80% of the total hotel occupancy and 86% of expen-ditures in the sector, yet it does not constitute a study subject of this chapter, and was therefore not explained.

In the market environment analysis the opinion of company principals is impor-tant to evaluate expectations both for the present and for the future; thus the Business Barometer Survey (quarterly) conducted by Delloite (2011), indicates that the threats to Mexico’s economic development are: lack of security as the number one threat fol-lowed by political discord and the economic slowdown in the US. These are followed at a much greater distance by the decrease of oil prices together with infl ation and fi -nally, almost at the same level, are corruption, social confl icts, increase of public defi -cit and wage claims. After a long time executives positively valued all government performance aspects, such as maintenance of low infl ation, infrastructure improve-ments, making the economy grow, improving education and reduction of violence.

And to wrap up this part, what could be better than the words of SECTUR secretary Oralia Rice Rodrígues, mentioned at the LVII Convention of the Mexican Association of Travel Agencies (AMAV), since she declared that it is no time for complacency, as only coordinated work will place Mexico in the position that it deserves as far as tour-ism is concerned. (SECTUR, 2011g) It is when leaders stop just creating goals and start to implement actions that goals are achieved.

FINAL CONSIDERATIONS

Mexico is a country with major growth potential in the business tourism segment, not only due to its geographical dimensions and vast population, but also because of the set of elements that it presents. It stands in the second best position in terms of education in Latin America, which contributes to the professional training of labor, which is crucial in the service sector. It occupied 10th place in the ranking of interna-tional tourist arrivals in 2010. It has 1819 airports, which puts it in 3rd place worldwide. The economy shows signs of recovery with growth of 5.5% of the GDP in 2010. And the government perceives the importance of developing business tourism and pro-motes actions to broadcast the country abroad to increase demands.

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MÉXICO 37

The government has signed new contracts with airliners to operate in the country, which contributes to increase foreign fl ows and to decrease dependence on the United States. Every transaction can be seen from the perspective of the basic principle of eco-nomics: “Do not put all your eggs in one basket”, hence the need for diversifi ed demand.

Business tourism is important due to the creation of small businesses that provide support to the segment through the rendering of diversifi ed services (hotels, inns, res-taurants, stores, taxis, travel agencies, language schools) to meet growing demands.

In 2010 Mexico came in third place among countries that obtain the greatest ben-efi ts from their tourist activity, only losing to Spain and Portugal. Therefore it can be deduced that the development of the sector also increases employability, which can give rise to an improvement in family income whereby the country will be able to generate better income distribution.

The combination of natural, economic, social, market and government elements shows that Mexico should grow and develop in the near future, consequently tourism and its subgroup business tourism, will also achieve projection in the global scenario. Although the threat lies in lack of security as the key factor to be considered for eco-nomic development, followed by political discord and the slowdown of the US econ-omy, the government had its measures approved by entrepreneurs, which paves the way for negotiations between the parties and produces a favorable climate for development.

i. International tourist arrivals grew by close to 5% during the fi rst months of 2011, consolidat-

ing the 7% rebound registered in 2010. According to the April Interim Update of the UNWTO

World Tourism Barometer, growth was positive in all world (sub)regions during January and

February 2011, with the exception of the Middle East and North Africa. South America and

South Asia led growth (both at +15%), followed by Subsaharan Africa (+13%) and Central and

Eastern Europe (+12%).

http://media.unwto.org/en/press-release/2011-05-11/international-tourism-fi rst-results-2011-

confi rm-consolidation-growth

ii. Although it can be diffi cult to determine the direction of cause-effect relationships, globaliza-

tion would simply not be possible without air transportation. Likewise, the airline industry

would be much less signifi cant without concomitant global expansion.[…] The basic principle

of all bilateral is reciprocity or equivalency, the agreements covering fares, capacity, frequency,

number of carriers and routes fl own.

iii. […] Business travel can be conceptualized as a set of practices and processes related to the ar-

ticulation of the global economy, but also to culture, behaviour, status and even leisure mobilities.

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iv. Face-to-face contact remains a crucial organizational strategy of the fi rm. / While technology

is encouraging remote and virtual interactions, face-to-face contact will still continue to be

important in 2015.

v. For most travel managers, conducting the negotiation is the exhilarating and rewarding part

of the process. Yet, the greater challenge to deriving meaningful savings from a negotiating ef-

fort is maximizing the use of the airline seats, hotel rooms, and rental cars that have been hired.

vi. By Latin American standards, Mexico’s schools are good. According to a PISA survey, an in-

ternational test of 15-year-olds in reading, maths and science, Mexico has the region’s second-

best educated children, after Chile. In maths it is improving faster than anywhere else in the

65-country study. The OECD says Mexico is “well on track” to meet maths and reading targets

next year, that were set by Felipe Calderón in 2007, near the start of his presidency.

vii. The Tourist Board informs that the number of overseas tourists who visited our country in

April rose to 1.895 million, equal to an 8.1 percent increase as compared to the same period

last year. Expenditures in April by overseas tourists totaled 1 billion and 33 thousand US dol-

lars, which sum was equal to a 3.0 percent increase over the same month in 2010. Boletín In-

formativo 102/2011. Available at http://www.sectur.gob.mx/es/sectur/Boletin_102

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2

CENTRAL AMERICA AND

THE CARIBBEAN REGION

Andréa do Prado Zago

Elizabeth Kyoko Wada

Jacqueline Hernandez-Biascoechea

Central America and the Caribbean is composed of 33 countries and borders Mexico to the north, Colombia to the south, the Atlantic Ocean to the west and the Pacifi c Ocean to the east. Among the countries from the region, only 7 are continental while 26 are formed by one or more islands.

Figure 1 Political Map of Central America.

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The region is known for the beauty of the beaches of white sands and turquoise blue sea, diversifi ed fl ora and fauna and pleasant climate, especially the Caribbean islands. Many countries from this region are small, in fact some are smaller than cities such as Washington DC, and have tourism as their main activity and the offshore banking sector to attract investments. Traditionally, the region has been known for leisure tourism (some countries focusing more on mass tourism and others on luxury tourism) and, according to World Tourism Organization data (2010), in 2008, 70% of the tourists disembarking in the region were seeking leisure and recreation. But invest-ments in local infrastructure and the tourism structure begin to enable the setup of travel management companies (TMC) and to attract more business tourism, which was represented in 16% in 2008, according to the World Tourism Organization (2010).

All the Central American countries and the Caribbean islands have their own small underlying tectonic plate called the Caribbean plate. It is a place subject to earthquakes since as the tectonic plate is small, many countries are close to the edge. The region is susceptible to hurricanes and tropical storms that mainly take place from July to No-vember. In general it has a mountainous relief and is largely volcanic. The soil is fertile and volcanic ash supplements this fertility, enabling the cultivation of bananas and other fruit, coffee, sugarcane, corn, etc. There are large oil and gas deposits in the region.

Figure 2 Political Map of the Caribbean Region.

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CENTRAL AMERICA AND THE CARIBBEAN REGION 41

Before the arrival of the Europeans the region was populated by several indige-nous tribes, mainly the Arawak and Maya. The European colonization started in Cuba and the region was disputed mostly by Spain, France, the United Kingdom, the Neth-erlands and afterwards by the United States. Today some countries are still dependent on their colonizers. The fi rst economic activities of the region were geared toward ag-riculture, mostly sugarcane. Lots of slaves were brought from Africa for this activity. Nowadays, blacks represent a high percentage of the population of the countries, ex-cept for Costa Rica, which has a white majority.

There are blocks of economic cooperation, development and politics in the re-gion such as CARICON (Caribbean Community), Organization of Western Carib-bean States, ODECA (Organization of Central American States, SICA (Central American Integration System) and ECLAC (Economic Commission for Latin America and the Caribbean).

GENERAL INFORMATION ABOUT EACH COUNTRY

Table 1 General particulars of countries from Central America and theCaribbean Region.

Country Capital Area Population CurrencyOffi cial

Language

Anguilla The Valley 91 km² 15094East Caribbean Dollar

(XCD)English

Antigua and

BarbudaSaint John’s 442,6 km² 87,884

East Caribbean Dollar

(XCD)English

Aruba Oranjestad 180 km² 106,113 Aruban Florin (AWG)Dutch and

Papiamento

Bahamas Nassau 13,880 km² 313,312Bahamian Dollar

(BSD)English

Barbados Bridgetown 430 km² 286,705Barbados Dollar

(BBD)English

Belize Belmopan 22,966 km² 321,115 Belize Dollar (BZD)

English,

Creole and

Spanish

Costa Rica San José 51,100 km² 4,576,562Costa Rican Cólon

(CRC)Spanish

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Language

Cuba Havana 110,860 km² 11,087,330 Cuban Pesos (CUP) Spanish

Curacao Willemstad 444 km² 142,180Netherlands Antilles

Guilder Dutch

Dominica Roseau 751 km² 72,969East Caribbean Dollar

(XCD)English

El Salvador San Salvador 21,041 km² 6,071,774El Salvadoran Cólon

and US Dollar (USD)Spanish

GrenadaSaint

George’s344 km² 108,419


(XCD)English

GuatemalaGuatemala

City108,889 km² 13,824,463 Quetzal (GTQ) Spanish

HaitiPort-Au-

Prince24,750 km² 9,719,932 Gourde (HTG)

French and

Creole

Honduras Tegucigalpa 112,090 km² 8,143,564 Lempira (HNL) Spanish

Cayman

IslandsGeorgetown 264 km² 51,384

Cayman Islands

Dollar English

United States

Virgin Islands

Charlotte

Amalie1,910 km² 109,666 US Dollar (USD) English

British Virgin

IslandsRoad Town 151 km² 25,383 US Dollar (USD) English

Turks and

Caicos IslandsGrand Turk 948 km² 44,819 US Dollar (USD) English

Jamaica Kingston 10,991 km² 2,868,380Jamaican Dollar

(JMD)English

Montserrat Plymouth 102 km² 5,140East Caribbean Dollar

(XCD)English

NavassaWashington

DC5.4 km² Uninhabited US Dollar (USD) English

Nicaragua Managua 130,370 km² 5,666,301 Cordoba (NIO) Spanish

Panama Panamá City 75,420 km² 3,460,462 Balboa (PAB) Spanish

Puerto Rico San Juan 13,790 km² 3,989,133American Dollar

(USD)Spanish

Dominican

Republic

Santo

Domingo48,670 km² 9,956,648

Dominican Peso

(DOP)Spanish

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Language

Saint

Barthelemy Gustavia 21 km² 7,367 Euro French

Saint Kitts and

NevisBasseterre 261 km² 50,314


(XCD)English

Saint Lucia Castries 616 km² 161,557East Caribbean Dollar

(XCD)English

Saint Martin Marigot 54.4 km² 30,615 Euro French

Saint Maarten Philipsburg 34 km² 37,429Netherlands Antilles

Guilder

English and

Dutch

Saint Vincent

and the

Grenadines

Kingstown 389 km² 103,869East Caribbean Dollar

(XCD)

French and

English

Trinidad and

TobagoPort-of-Spain 5,128 km² 1,227,505

Trinidad and Tobago

Dollar (TTD)English

Total 757393.4 km² 82,585,592 – –

Source: CIA, 2011. Adapted by the authors.

ANGUILLA

The main island of Anguilla and some small uninhabited islands belonging to the country are located between the Caribbean Sea and North Atlantic Ocean, to the east of Puerto Rico. The total area of the country that is a British colony is about half the size of the US city of Washington.

With largely rocky terrain featuring slight elevations and few natural resources, the economy is strongly linked to luxury tourism, foreign boats, off-shore banking services and lobster fi shing. The economic growth expectation is related to the development of luxury tourism in the location, which already has various hotels and resorts, including the Altamer Villa Resort, Villa Castles Cove Resort, Temenos Sky Villa, Temenos Mar Villa, Temenos Sand Villa, Cerulean, Coyaba Manor, and Lez Alize.

The predominant religion is Protestantism and ethnically, the people are of Afri-can ancestry with mulatto and white minorities.

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ANTIGUA AND BARBUDA

Both inhabited islands and some small nearby islands that form the country of Antigua and Barbuda are located between the Caribbean Sea and North Atlantic Ocean, to the east of Puerto Rico. The island’s fi rst inhabitants were the Ciboney, in 2400 BC, but the Arawak Indians were the ones that were on the island when Christopher Co-lumbus landed there in 1493. It was initially populated by the Spanish and French, but it was the English that formed a colony in 1667, and today the country is an inde-pendent state within the Commonwealth of Nations.

Tourism is the island’s chief economic activity, representing about 60% of the lo-cal GDP. Agricultural production is focused on the domestic market and limited by the shortage of labor and limited water source.

ARUBA

Located on the Caribbean Sea, to the north of Venezuela, Aruba is an island slightly larger than Washington, DC. It was discovered and conquered by Spain in 1499 and acquired bought by the Dutch in 1636; today they are still responsible for the country’s defense and foreign affairs.

Tourism is the mainstay of Aruba’s small and open economy, together with off-shore banking. According to CIA data (2011), more than 1.5 million tourists visit Aruba per year, with 75% of these from the US.

BAHAMAS

The chain of islands in the North Atlantic Ocean, located to the southeast of Florida and northeast of Cuba, form the Bahamas.

The Bahamas is one of the wealthiest Caribbean countries with an economy heav-ily dependent on tourism and offshore banking. Tourism together with tourism-driven construction and manufacturing accounts for approximately 60% of GDP and directly or indirectly employs half of the archipelago’s workforce, according to CIA data (2011).

Due to its location close to Florida (US), the country is a reference at the trans-shipment point for drugs and illegal immigrants to the United States.

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BARBADOS

Barbados is the furthest east country in the Caribbean, an island in the North At-lantic Ocean to the northeast of Venezuela.

The island was uninhabited when the British fi rst landed there in 1627. The econ-omy remained heavily dependent on the production of sugar, rum and molasses until well into the 20th century. The gradual introduction of political and social reforms in the mid-1940s and 1950s led to the complete independence of Barbados from the United Kingdom in 1966. In the 90s, tourism and manufacturing outrivaled the sugar industry in economic importance. According to CEPAL data (2010), tourism registered recovery of 3% in the period from January to September 2010, after the end of the crisis of 2008, and the majority of the visitors are from Canada and the United States.

BELIZE

Bordered by the Caribbean Sea, Belize (formerly British Honduras) lies between Guatemala and Mexico. The country was inhabited by the Maya until their decline at the end of the fi rst millennium after Christ. The country used to be a British colony and gained its independence in 1981, but Guatemala refused to acknowledge the new nation until 1992.

Tourism became the mainstay of the economy, followed by exports of marine and citrus products, sugarcane, bananas and garments. Oil discoveries in 2006 generated growth of the country’s economy, and slightly reduced its foreign debts. The United States have a considerable impact on local tourism and according to CEPAL (2010), represented 7% of the growth of tourism in 2010.

According to information from CIA (2011), the country is plagued by high rates of unemployment, involvement with drug traffi cking with Mexicans and South Ameri-cans, high crime rates, and one of the highest rates of HIV/AIDS transmission in Cen-tral America.

COSTA RICA

Costa Rica lies between Nicaragua (to the north) and Panama (to the south), bor-dered by the Pacifi c Ocean to the west and by the Caribbean Sea to the east.

The standard of living is relatively high in the country and before the global eco-nomic crisis, Costa Rica recorded stable economic growth which combined with politi-

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cal stability, attracts the highest levels of investment in Latin America. According to CIA data (2011), “the economy contracted 0.7% in 2009, but resumed its growth at more than 3% in 2010. While traditional agricultural exports of bananas, coffee, sugar and beef are still the backbone of the commodity export trade, a variety of industrial prod-ucts and specialized agricultural products have expanded export trading in recent years”.

The greatest diversity of fl ora and fauna in Central America can be found in the country and attracts tourists from many parts of the world, particularly from the US. Cocos Island is one of the highlights and was declared a Natural Heritage of Mankind by Unesco in 1997.

CUBA

The Republic of Cuba is the largest insular country of Central America located between the Caribbean Sea and the North Atlantic Ocean, 150 km from Key West, Florida.

The Spanish colonization ended with the help of the United States in the His-pano-American war in 1898, and in 1902 Cuba gained independence from the US. The corrupt governments were interrupted by a rebellion led by Fidel Castro, who in-stalled the socialist regime in the country and remained in power for almost fi ve de-cades. His resignation as president in 2008 left his younger brother Raul Castro in command of the country. In 1990, after the withdrawal of former Soviet subsidies, the country entered recession. The commercial embargo imposed by the United States against the country since 1962 continues to produce obstacles to the expansion of foreign trade, yet according to CIA data (2011) the economic growth in 2006 was 11%.

Mass tourism is one of the government’s investments for economic development, and makes a major contribution to the generation of income in the country. According to the World Tourism Organization (2010), Cuba has had an increase of 72% in the number of tourists from 2000 to 2009. In the economy, the CEPAL report (2010) declares that tourism is one of the main levers of the 1.9% growth in the country’s economy.

CURAÇAO

The island of Curaçao lies on the Caribbean Sea just 55km to the north of the Venezuelan coast. Colonized by the Dutch, Curaçao together with the neighboring island of Bonaire were the center of the slave trade, suffering an intense impact with the abolition of slavery. The country’s prosperity was restored at the beginning of the

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20th century. Tourism, oil refi ning and offshore banks form the basis of the local econ-omy that has a high yield per capita and good infrastructure compared to other coun-tries from the region.

Curaçao was organized with other countries under Dutch rule with the Nether-lands Antilles, part of the Kingdom of the Netherlands. The Netherlands Antilles were recently dissolved in 2010.

DOMINICA

Located on the Caribbean Sea to the south of Guadalupe, Dominica is known as “the Natural Island of the Caribbean” due to the variety of fl ora and fauna. The volca-nic peaks include the ebullition side, second largest thermally active lake in the world.

The only population of Indians from eastern Caribbean can be found in the coun-try. The economy, which was formerly geared toward agriculture, is affected by hurri-canes such as Dean which hit the island in 2007 and put an end to 20% of the local GDP. To diversify the local economy, the government is investing in tourism, particu-larly ecotourism, and the offshore banking sector.

EL SALVADOR

The smallest country on the Central American region, El Salvador borders on Guatemala to the north and Honduras to the west. The country concentrates a large quantity of volcanoes, some of which are active, with frequent earthquakes and hur-ricanes.

The local economy is concentrated in services and, according to CIA data (2011) “suffered a hard blow with the global recession and the GDP contracted 3.5% in 2009. The economy began to recover slowly in 2010 with an improvement of exports and the number of shipments”. Ecotourism and cultural tourism as well as sun and beach en-joy a prominent position in the country.

GRENADA

Grenada is an island of volcanic origin located between the Caribbean Sea and the Atlantic Ocean, to the north of Trinidad and Tobago.

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Hurricanes such as Ivan (2004) and Emily (2005) destroyed a large portion of lo-cal agriculture and left a huge debt for rebuilding. The current effort is focused on tourism and on the offshore banking sector.

GUATEMALA

The Republic of Guatemala is surrounded by Mexico, Belize, Honduras and El Salvador, having the Pacifi c Ocean to the east. The country has volcanoes and earth-quakes and is susceptible to hurricanes.

The country was dominated by the Maya civilization until the Spanish coloniza-tion. Independence was gained in 1821. Since colonization the country’s economy has been focused on agriculture, mostly coffee, sugar and bananas. The low foreign invest-ment is due to concerns regarding safety, shortage of qualifi ed workers and the pre-carious infrastructure, which contributes to the fact that more than half of the population falls below the poverty line.

HAITI

The Republic of Haiti, which lies to the southwest of Cuba, occupies the western part of Santo Domingo Island, bordering on the Dominican Republic.

The poorest country in the western hemisphere, according to estimated data from CIA (2011), has 80% of its population is living below the poverty line. Its history marked by violence and by natural tragedies such as the 7.0 magnitude earthquake that struck the country on January 12, 2010 and, according to CEOAL data (2010), provoked a 7% regression of GDP.

HONDURAS

The second poorest country in Central America, Honduras, borders on Guate-mala, to the north, El Salvador to the west and Nicaragua to the south.

Agriculture plays an important role in the local economy and was devastated by hurricane Mitch in 1998, leaving a path of destruction in the country. The damage to the economy is also generated by low magnitude earthquakes and fl oods.

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CAYMAN ISLANDS

The Cayman Islands is a British territory located on the Caribbean Sea, 240km to the south of Cuba and 268km to the northwest of Jamaica. The Grand Cayman, Cay-man Brac and Little Cayman islands belong to the country.

The good performance of the local economy and the standard of living similar to that of Switzerland are connected to two main pillars: off-shore fi nancial center and tourism. The absence of direct taxes attracts many companies and according to CIA (2011), as from 2008 more than 93 thousand companies were registered in the coun-try, including about 300 banks and 8000 insurers.

Tourism represents about 70% of the local GDP and is geared toward the luxury market, mainly catering to North American visitors. According to CIA (2011) the ar-rival of tourists exceeded 1.9 million in 2008.

UNITED STATES VIRGIN ISLANDS

The fi rst inhabitants of the Virgin Islands were the Arawak Indians, who were ex-pelled by the Caribs in the 15th century. The European colonization of the islands started with the arrival of Christopher Columbus in 1493. During the 17th century the archipelago was divided into two territories, one British and the other Danish. The part belonging to Denmark (formerly Danish Virgin Islands) was purchased by the US due to the strategic positioning of marine routes to the Panama Canal and was renamed the United States Virgin Islands.

The territory located between the Caribbean Sea and the North Atlantic Ocean, to the east of Puerto Rico, includes three main islands (Saint Thomas, Saint John and Saint Croix) and about fi fty uninhabited islands.

The local economy focuses on tourism, represented by 80% of GDP. There is a huge oil refi nery in Saint Croix that serves the United States market. The agricultural sector is small and suffers damages from storms, severe fl oods and hurricanes.

BRITISH VIRGIN ISLANDS

The British Virgin Islands lie between the Caribbean Sea and the North Atlantic Ocean, to the east of Puerto Rico and forming a sea border with the American Virgin Islands.

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First inhabited by the Arawaks and later by Caribbean Indians, the Virgin Islands were colonized by the Dutch in 1648 then annexed by the English in 1672. The islands were part of the British colony of the Leeward Islands from 1872-1960; their auton-omy was deferred in 1967. The economy is very close to the larger and more populous United States Virgin Islands to the west and the offi cial currency since 1959 has been the US dollar.

The country has one of the most stable and prosperous economies of the Carib-bean, which is highly dependent on tourism (about 45% of the national income). According to CIA data, more than 934 thousand tourists, mostly from the US, visited the islands in 2008. The possibility of offshore registration for companies and the adoption of an insurance act at the end of 1994, which provides reliability coverage with regulated bylaws for criminal offense investigations, make the British Virgin Is-lands attractive to international business.

TURKS AND CAICOS ISLANDS

The Turks and Caicos Islands to the north of Haiti and to the southwest of the Bahamas are British overseas territory.

The basis of the local economy is formed by tourism, fi shing and offshore banking services. The highest demand for tourists is from the US and according to CIA data (2011), the country was responsible for more than three quarters of 175 thousand visitors that arrived in the country in 2004.

JAMAICA

Known for its forests, pleasant climate and music, Jamaica is an insular country located on the Caribbean Sea that lies to the south of Cuba and to the west of Haiti.

Jamaica was discovered by the Europeans in 1494, when after having arrived in the region, Columbus used the island as his family’s property. The English conquered the island in 1670 and transformed it into the world’s largest sugar exporter, relying on many slaves for this purpose. In 1958, Jamaica became a province of an indepen-dent nation formed by other British colonies in the Caribbean (West Indies Federa-tion) and in 1962 it became an independent nation.

The country’s economy is geared toward services representing a total of 60% of GDP. According to CIA data (2011) tourism revenues account for about 10% of GDP, and both arrivals and revenues grew in 2010, an increase of 4% and 6%, respectively.

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Economic growth faces challenges such as high crime and corruption, large scale un-employment and underemployment, and a fast-growing debt in relation to GDP. However, many parts of the country remain safe and are considered an excellent travel destination.

The rich Jamaican culture is characterized by the melting pot of various cultures of the people that have inhabited the island since the very beginning: Arawak Indians, Spanish, Africans, English and other immigrants. The country’s identity is closely linked to the Rastafari movement and to reggae music.

MONTSERRAT

Montserrat is a small island on the Caribbean Sea that lies to the southwest of Puerto Rico and has belonged to the United Kingdom since 1962.

The island is home to the volcanic complex Soufrière Hills, which entered into eruption in July 1995, then in 1997 for the second time, with devastating effects on the country. This is the main reason for concern among the local population, and ac-cording to CIA data (2011), two thirds of the 12 thousand inhabitants have fl ed from the island. The local economy was drastically affected. The United Kingdom launched a triennial aid program for the local economy, but half of the island should remain uninhabitable for some time.

NAVASSA

Navassa is an uninhabited island on the Caribbean Sea located to the west of Haiti that belongs to the United States, which considers it a strategic location as the island lies 160km to the south of the naval base in Guantánamo Bay, Cuba.

In 1998 a scientifi c expedition described the island as a unique reserve of biodi-versity in the Caribbean, making it a National Wildlife Refuge.

NICARAGUA

One of the largest countries in Central America, Nicaragua borders on Costa Rica, Honduras and the Pacifi c Ocean and Caribbean Sea.

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The country is the poorest in Central America and has widespread poverty issues. The economy is based mainly on agriculture, whereas cotton, coffee, sugarcane and fruit are the main products for export.

Earthquakes, active volcanoes, landslides and hurricanes are very common.

PANAMA

The last continental country of Central America, Panama, borders to the north with Costa Rica, to the south with Colombia and is fl anked to the east by the Pacifi c Ocean and to the west by the Caribbean Sea.

The region was intensely disputed by countries, mainly as it contains the Panama Canal, in addition to other services related to the export business, such as the Colón Free Trade Zone, insurance, ports and tourism that correspond to three quarters of the GDP. According to CIA (2011) “economic growth will be boosted by the Panama Canal expansion project, which started in 2007 and is scheduled for conclusion in 2014 at a cost of US$ 5.3 billion – approximately 25% of current GDP. The expansion project is expected to more than double the canal’s capacity”.

Panama’s government offers a discount on taxes and prices to visitors and in ad-dition to other factors encourages the growth of tourism in the country.

PUERTO RICO

Puerto Rico is an autonomous territory of the United States that is located on the Caribbean Sea, to the east of the Dominican Republic and to the west of the Virgin Islands, strategic site of the Mona Passage (shipping route to the Panama Canal). The country’s economy is diversifi ed and according to the CIA (2011), many US companies have invested heavily in the country due to the fi scal incentives. Tourism is an impor-tant part of the economy and a source of local income; according to the CIA (2011) the number of tourist arrivals in 2008 was 3.6 million.

DOMINICAN REPUBLIC

The Dominican Republic is bathed by the Caribbean Sea and by the North Atlan-tic Ocean and occupies two thirds of Saint-Domingue Island, bordering with Haiti to the east.

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The economy of the country, which has one of the highest growth rates, according to CEPAL data (2010), 7% per annum, is based on the service sector, primarily with tourism, free trade zones, telecommunications and agriculture (sugar, tobacco and coffee). According to information from CIA (2011) “the US is the destination for nearly 60% of exports. Remittances from the US amount to about a tenth of GDP, equivalent to almost half of exports and three quarters of tourism revenues”.

SAINT BARTHELEMY

The Caribbean island of Saint Barthelemy (St. Barts) is located to the north of the Leeward Islands and to the east of the United States Virgin Islands. The territory founded by the French belonged to Sweden and was reclaimed by the French in 1878. The economy is based on luxury tourism and on duty-free commerce. The isolated location and the high cost render mass tourism unfeasible.

SAINT KITTS AND NEVIS

The smallest country in the Americas in terms of extension, Saint Kitts and Nevis is located on the Caribbean Sea, between Puerto Rico and Trinidad and Tobago. The local economy is dependent on tourism revenues and the current government seeks to diversify the agricultural sector (formerly focused on sugar) and to stimulate other industries and services. The country’s public debt is one of the highest in the world, equivalent to 185% of GDP (CIA, 2011).

SAINT LUCIA

The insular volcanic island of Saint Lucia lies to the south of Martinique Island and to the north of Trinidad and Tobago. The island, which has already changed hands 14 times, was colonized by the United Kingdom and gained its independence in 1979. The mountainous territory with fertile valleys has the most diverse manufac-turing sector in the Eastern Caribbean and the country’s agricultural production is strong in tropical crops such as bananas, mangos and avocados, although it suffers damage due to hurricanes. However, tourism is its main source of income and of at-traction of investments.

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SAINT MARTIN OR SINT MAARTEN

The smallest land mass in the world to be shared by two countries (its northern part belongs to France and the southern part to the Netherlands) is the island of Saint Martin (Saint-Martin in French and Sint Maarten in Dutch). The insular island located on the Caribbean Sea lies to the west of Puerto Rico, after the United States Virgin Is-lands. Tourism is the main economic activity all over the island and employs 85% of the local workforce, with a dip during the hurricane and cyclone season, from July to November. Agriculture and fi shing are limited and almost all foods, energy resources and manufactured goods are imported. The island has the highest income per capita of the Caribbean.

SAINT VINCENT AND THE GRENADINES

Saint Vincent and the Grenadines is located on the Caribbean Sea, to the north of Trinidad and Tobago. The country that was a United Kingdom colony and gained its independence in 1979 is part of the Commonwealth of Nations. The country’s agricul-ture dominated by banana plantations suffered with the tropical storms of 1994, 1995 and 2002, showing instability. The diversifi cation of activities such as tourism and offshore banking is an attempt to alleviate high unemployment and the excessive for-eign debt, more than 90% of GDP. The local government is investing in infrastructure and the project of an international airport should be concluded in 2011.

TRINIDAD AND TOBAGO

The Republic of Trinidad and Tobago is formed by two main islands (Trinidad and Tobago) located to the northwest of Venezuela, between the Caribbean Sea and Atlan-tic Ocean. The country that gained its independence from the United Kingdom in 1962 is a regional fi nancial center, has one of the most prosperous economies, due mainly to the production of oil and natural gas, and enjoys fame of local excellence for investments. According to CIA data (2011) “economic growth between 2000 and 2007 averaged just over 8%, signifi cantly higher than the regional average of 3.7% for the same period, yet GDP has softened since then and contracted 3.5% in 2009, before rising more than 2% in 2010. The largest natural reservoir of asphalt in the world is located on the southwest side of Trinidad Island. Tourism is in a phase of growth and

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does not yet have expressive economic relevance in the country as it does in the other Caribbean islands.

THE BUSINESS TRAVEL MARKET

Central America and the Caribbean is a region that encompasses small countries, fragmented markets with dissimilar social economics, diverse languages and cultures, distinct currencies and tax laws, multiple regional carrier players, and local and re-gional hotel and car rental players (some in the Caribbean and not in Central America or vice versa). It is a region that offers a wide range of vacation resources for the tour-ism market; beautiful beaches and resorts, rainforests, entertainment with a wide vari-ety of gastronomy, cruises, leisure travel; in the business travel arena it is a developing region, with multiple challenges and great opportunities.

The region as a whole represents BSP sales of over 800 MM in the Caribbean and 500 MM in Central America; both represent more than 1300 MM, a signifi cant fi gure in the business travel segment.

The region has seen economic growth over the last decade, and more multinational corporations are establishing regional operations in Costa Rica and Panama in Central America, and the Dominican Republic and Trinidad and Tobago in the Caribbean.

For most multinationals the Central America and Caribbean region represents an insignifi cant market, in terms of size and volume, compared to other regions. How-ever, it is a region where corporations can take advantage of the regional volume of business and when a corporate travel policy is implemented across the board, the benefi t in savings and compliance will reach unprecedented fi gures. It is diffi cult to implement more than twenty markets but it is feasible. The challenges include dealing with multiple suppliers, standardizing service, drawing up regional contracts, gather-ing data and reporting, point of sale taxes, invoicing, diverse merchant fees with credit cards at point of sale, BSP restrictions and limitations, and currency conversions.

AIR TRANSPORT

Key airlines in the CAC region are Copa, Taca Avianca; Air Jamaica, Liat and Amer-ican Eagle for intra-Caribbean travel, and Delta, United for North America. Other car-riers, such as European carriers Iberia, Lufthansa and KLM operate fl ights from European to the Caribbean and Central America.

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It is important to note that in Central America, Copa has its hub in Panama, while Taca Avianca has two Hubs, one in El Salvador and a second one in Costa Rica. In the Caribbean, Puerto Rico is the hub for American Eagle, which provides service to most of the islands from San Juan. The Dominican Republic is also a major hub for travel to Haiti, Cuba, Jamaica, Barbados, and the West Indies. Trinidad and Tobago plays a key role with the recent takeover merger of Air Jamaica by Caribbean Airlines.

International airline companies:

Taca Avianca, Copa, Caribbean Airlines, Air Jamaica, America Airlines, Delta, United, Continental, KLM and British Airways are the major international carriers op-erating in the region.

Regional airline companies (intra-regional)

Taca Avianca, Copa, Cayman airways, Caribbean Antilles, Bahamas Air, Cape Air and American Eagle handle the intra-regional market.

ACCOMMODATION & HOSPITALITY

During the past fi ve years, hotel chains such as Marriott, Hilton, Sheraton, Hyatt and Sonesta have invested in new hotels for the business travel segment; other local and regional hotel chains are also increasing their offer. Panama is booming with ho-tel and all suite capacities.

In the business travel area, local negotiations are usually better than global con-tracts. Most companies handle hotel reservations separately from the air travel book-ings; assistants make reservations through their local offi ces, this is a practice that is changing more and more; TMC are providing the tools and mechanisms to bring the hotel bookings to a travel program.

CAR RENTAL

All the major car rental companies are well-established in the region, although it is important to note that most car rentals are concessions; not all global contracts will apply. This means local negotiations will need to be carried out.

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MEETINGS AND EVENTS

The region has the capacity and infrastructure for meetings and events. The coun-tries and islands like the Dominican Republic and Puerto Rico offer resorts with con-vention facilities and a service culture that facilitates event and meeting management. In Central America, Panama and Costa Rica are the main markets for this segment, and have the infrastructure to facilitate successful events and meetings.

TRAVEL INSURANCE

Travel assistance and insurance companies in the region are Mapfre Asistencia, Assist Card and Qualitas. The best practice is to negotiate regionally with these com-panies; otherwise differences in pricing will occur.

Credit cards

For business travel BTA, UATP and Airplus are available throughout the region. When using local credit cards beware of the merchant fees in the local markets; these charges vary substantially from one country to another and impact the bottom line of service and management fees.

Technology providers

Amadeus and Sabre are available. Sabre is predominant in the Caribbean and Amadeus and Sabre have an equal share of the Central American market.

OBT (Online Booking Tools) are available in the region: Biz site, Get There, Click Book.

When it comes to technology in the region the most important thing for the travel program is to have a source that can consolidate the data locally and regionally. Not all agencies and TMC have experience with this market, and it is not an easy task for the suppliers in this fi eld. Centralization may work best with some countries; local fulfi llment and regional service should be other choices, depending on the volume of business and the travel patterns of the company.

Considering that in the Caribbean area, most of the intra-regional carriers are not in the GDS, a local service may be the answer, but there is the risk of the lack of data gathering; a solution needs to be tailor-made according to the travel and spending pat-terns of each corporation.

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TMC

All major TMCs have a presence in the region, but not all of them have the infra-structure to service regionally, which means implementing, negotiating, and comply-ing regionally with all the service standards.

Experience and knowledge of the specifi c characteristics of Central America and the Caribbean are crucial for a successful travel program.


In most multi-national corporations, there is a lack of consolidated information when it comes to the volume of travel expenses in the Central American and Carib-bean regions. In most cases, the data about volumes are not reliable, and refl ect only a portion or a segment of the travel activity; this is partly because compared to those of the big markets, the volumes are not signifi cant enough to invest time and effort gathering the correct information from the various travel providers in the region, and partly because the small local providers do not have the means to provide consoli-dated data.

Corporations doing business in the CAC region have a great opportunity for sav-ings if a TMC can provide consolidated services, implement travel policies across the region and have an understanding of the CAD region and expertise with local and re-gional carriers, hotels and car rental companies. The case studies of some clients show that during the fi rst consolidation process in the Central American and Caribbean re-gion, savings soared by 28% fi rst year, maintaining growth of 22% per year for three consecutive years.

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3

ANDEAN COUNTRIES

Mónica Moreira

Josiane Tonelotto

Ricardo de Gil Torres

Bolivia, Colombia, Ecuador, Peru and Venezuela, identifi ed herein as Andean Countries, have the fact that they are traversed by the Andes mountain range as a unit-ing factor and confl icts due to border disputes as a separating factor.

The War of the Pacifi c (1879-1823) in which Chile fought against Bolivia and Peru due to its interest in the saltpeter and guano deposits within the Antofagasta region, resulted in the loss of part of the Peruvian territory to Chile. Bolivia had worse luck in this confl ict, losing, in addition to land, its outlet to the Pacifi c Ocean. This confl ict left the Bolivians with a feeling of resentment that still persists today3. The Bolivian con-stitution declares Bolivia’s “unrenounceable and inalienable right over a sovereign access to the Pacifi c Ocean and its corresponding maritime space” that would come “through peaceful means”2.

In the Chaco War (1932-1935) motivated by the dispute between Bolivia and Paraguay over the newly-discovered oil reserves in the poorly demarcated Chaco re-gion, Bolivia lost another part of its territory with the aggravating factor that, in losing its access to the Paraguay River, it lost its remaining chance to reach the sea.

The Chilean proposal of providing Bolivia with a corridor of access to the Pacifi c Ocean that would extend alongside the border between Chile and Peru is rejected by the latter since this corridor would pass through lands that were originally Peruvian and were incorporated to Chile in the War of the Pacifi c.

Colombia and Venezuela have had border disputes since they were a Spanish colony. Lately the main problem has been the dispute over the Golf of Venezuela and the alleged invasion of Venezuela’s borders by Colombia, in the capture of Colombian

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guerrillas that would fi nd refuge in Venezuelan lands. The same problem also occurs with Peru where Colombian guerrillas also seek refuge.

Bolivia, Chile, Ecuador and Peru signed the Cartagena Agreement, in 1969, creating the Andean Community. By signing the agreement, this group of countries sought to expedite a customs union among them since the Latin American Free Trade Association – LAFTA proved slow and hardly effi cient in this regard. In 1973, Venezuela joined the Andean Community that, suffering from the same problems of ineffi ciency of LAFTA, made little progress toward its goals. In 1976, Chile withdrew from the Andean Com-munity due to economic policy divergences. In 2006, Venezuela withdrew from the Andean Community with the argument that the free trade agreements signed by Peru and Colombia with the United States caused irreparable damage to the community.

The Andean Community, reduced to Bolivia, Colombia, Ecuador and Peru, pro-poses, through the union, to achieve more accelerated, balanced and autonomous de-velopment regarding the formation of the Union of South American Nations – UNASUR.

The table below presents the Human Development Index that measures quality of life and the Gini Index that measures how wealth is distributed.

The Human Development Index (HDI) is a comparative measure used to classify countries according to their “human development”, taking into account: 1. Life expec-tancy at birth, 2. Education index, 3.Index of Mean Years of Studies, 4.Index of Ex-pected Years of Schooling and 5. Index of Income. The Andean Countries, all except for Bolivia, are in the HIGH band of HDI that corresponds to the second quartile of countries in terms of human development. Bolivia is in the MEDIUM band of HDI which corresponds to the third quartile of countries in terms of human development.

The Gini Index is obtained from the comparison between the total accumulated amount of income and the accumulated number of people receiving this income. A Gini Index value of zero represents perfect equality in income distribution, while a value of 100 represents total inequality. In the case of the Andean countries we verifi ed intermediary values which show that in spite of advances made in the quality of life of the population, these occurs unequally.

Table HDI and Gini Index of the Andean Countries

HDI GINI

Bolivia 0.643* 57

Colombia 0.689** 58

Ecuador 0.695*** 49

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ANDEAN COUNTRIES 61

HDI GINI

Peru 0.723*** 48

Venezuela 0.696** 44

Caption: * – 2007; ** – 2006; *** – 2009.Source: United Nations9; World Bank11

BOLIVIA

General Data

The Plurinational State of Bolivia is located in Midwestern South America, occupy-ing an area of 1,098,581 km² and sharing borders with Argentina, Brazil, Chile, Paraguay and Peru. The name Bolivia is a tribute to Simon Bolívar, who fought for the country’s independence. The word Plurinational in the country’s name aims to refl ect the “plural composition” of the Bolivian people, which is composed of several ethnic groups2.

Figure 1 Localization and Map of Bolivia

Source: CIA (2011)3

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In 1825, when it ceased to be a Spanish colony, the Bolivian territory was larger and reached the Pacifi c Ocean. Bolivia lost its coastal region to Chile in the War of the Pacifi c (1879-1823).

Bolivia has two capital cities. Sucre, with around 280 thousand inhabitants is the offi cial capital. However, as the Palacio Quemado (seat of the executive branch of the government) is in La Paz, the latter is the actual administrative capital. La Paz and Santa Cruz are the two largest cities in the country with about 1.6 million inhabitants each. The Bolivian population of around 10 million inhabitants is predominantly urban (67%), with an urbanization rate of 2.2% per year.

The Bolivian population is mainly composed of indigenous descendants (30% Quechua; 30% mestizos (mixed white and indigenous blood); 25% Aymara and 15% whites). Consistent with its Plurinational orientation, the Constitution establishes as the offi cial language, besides Spanish, another 36 languages of indigenous nations and peoples, of which the main ones are the Quechua and Aymara languages. At least one of the indigenous languages should be used together with Spanish, thus maintaining the latter as the predominant language in the business world2.

The illiteracy rate in Bolivia was 86.7% until 2001, yet after a literacy campaign in 2008, the country declared illiteracy eradicated according to UNESCO’s standards10.

The Constitution establishes freedom of religion and creed and state-church inde-pendence2. Although there are records that the Bolivian population is composed of 95% Roman Catholics and 5% Protestants, a survey conducted in 2001 by the Na-tional Institute of Statistics found, in the Bolivian population, 78% of Catholics and 16% of Protestants or Evangelicals6.

Bolivia is a republic, defi ned in its Constitution, as a “Social Unitary State of Law” divided into nine administrative units (departments).

Bolivian exports, with an estimated value for 2010 of US$ 7 billion, are composed of natural gas, soybeans and by-products, oil, zinc and tin. The main importers of these products are Brazil (39.3%), the United States (13.2%), Peru (7.6%), Colombia (6.2%), Argentina (5.4%) and Japan (5.3%).

Bolivian imports, which totaled an estimated value of US$ 5.4 billion in 2010, are composed of petroleum derivatives, plastics, paper, aircraft, processed food, automo-biles and soybeans. The main exporters of these items to Bolivia are Brazil (26.6%), Argentina (16.8%), United States (12.5%), Peru (9.3%) and Chile (8.3%).

Bolivia’s Gross Domestic Product forecast for 2010 is US$ 47.9 billion, which re-sults in a per capita value of US$ 4,800. This GDP value is distributed between agricul-ture (12%), industry (38%) and services (50%). The Bolivian labor force, of 4.2 million people, is distributed between agriculture (40%), industry (17%) and services (43%).

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ANDEAN COUNTRIES 63

Bolivia’s telephone system presents limited coverage with about 810,200 fi xed lines and 7.1 million cellular phones, according to data from 2009. Most telephone lines are concentrated in La Paz and Santa Cruz. The density of telephone lines is 8 fi xed lines per 100 inhabitants and 75 mobile lines per 100 inhabitants. The number of Internet users is 1.1 million people.

Bolivia has 881 airports, of which 16 have paved runways. The railway system cov-ers 3,652 km with one meter braod gauge. The road network extends for 13,602 km, of which 4,990 km are paved. Bolivia is isolated in the center of the South American continent without being bathed by any ocean. Access to the sea is achieved via Puerto Aguirre which leads to the Paraguay/Paraná waterway.

COLOMBIA

General Data

Colombia is located in Northern South America, bordering Brazil, Ecuador, Pan-ama, Peru and Venezuela. With a total area of 1,138,910 km2, Colombia is bathed by both the Pacifi c and the Atlantics. The country’s name is a tribute to navigator Chris-topher Columbus.

Figure 2 Localization and Map of ColombiaSource: CIA (2011)4

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Colombia, which was a colony of Spain, gained its independence in 1819, taking on the name of Gran Colombia which, a few years later, in 1830, was split up into modern Colombia and another two countries, Ecuador and Venezuela.

Colombia has a population of around 45 million inhabitants, and is the third largest Spanish-speaking country, after Mexico and Spain. The Colombian population is eminently urban (75%) and the urbanization rate is 1.7% per year. Bogotá, the capital of the country, is the largest city with a population of around 8 million inhab-itants, followed by the cities of Medellin (3.5 million), Cali (2.3 million) and Barran-quilha (1.8 million).

The Colombian population is mainly formed by mestizos – mixed Indian and white ancestry (58%), followed by whites (20%), mulattos (mixed black and white ancestry (14%), blacks (4%), zambos (mixed black and Indian ancestry) (3%) and Indians (1%). Around 90% of the population professes to being Catholic and slightly less than 10% of the population is illiterate.

Colombia is a republic with an executive branch that overrides the other two branches. The country is divided into 32 administrative units called departments and a capital district.

Colombia’s economy is based on the extractive industry, agriculture and industry. The country has large natural reserves of oil, natural gas and minerals and stands out for the quality of its coffee and fl owers. The textile, foodstuff and chemical industry is well developed.

Colombia is a major oil exporter, and the third largest exporter to the United States. It also exports coffee, coal, nickel, emeralds, apparel, bananas and fl owers. The United States (42%), European Union (12.6%), China (5.2%) and Ecuador are the largest importers of Colombian products, with the country’s total exports for 2010 estimated at US$ 40 billion.

Colombia’s total import forecast for 2010 is US$ 36.3 billion. The main exporters to Colombia are the United States (25.5%), China (13.4%), Mexico (9.4%), Brazil (5.9%) and Germany (4.1%). The main imported goods are industrial and transporta-tion equipment, consumer goods and chemicals.

Colombia’s Gross Domestic Product estimate for 2010 is US$ 435.4 billion, which results in a per capita value of US$ 9,800. This GDP value is distributed between agri-culture (9.3%), industry (38%) and services (52.7%). The Colombian labor force, estimated at 21.2 million workers, is distributed between agriculture (18%), industry (13%) and services (68%).

Colombia has a modern telephone system with 7.5 million fi xed lines and 42 million cellular phones, according to data from 2009. These numbers correspond to 15 fi xed lines per 100 inhabitants and around 90 mobile lines per 100 inhabitants.

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ANDEAN COUNTRIES 65

Satellite communications coverage features 41 earth stations and a fi ber optic network connects the 50 main cities. The number of Internet users is 22.5 million people.

Colombia has 990 airports, of which 116 have paved runways, and 2 heliports. The railway network extends for 874 km, with 150 km in a gauge of 1,435 m, 498 km in a gauge of 0.95 m and 226 km in a gauge of 0.914 m. The road network extends for 141,374 km. The main ports are those of Barranquilha, Buenaventura, Cartagena, Puerto Bolivar, Santa Marta and Turbo.

ECUADOR

General Data

Ecuador is located in Western South America, bordering on Colombia and Peru, bathed by the Pacifi c Ocean and occupying an area of 283,561 km2. The name Ecua-dor originates from the Equator that cuts across the country.

Figure 3 Localization and Map of EcuadorSource: CIA (2011)5

Ecuador arose when Gran Colombia was split up in 1830, also giving rise to Co-lombia and Venezuela. Between 1904 and 1942, Ecuador lost part of its territory in

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armed disputes with Peru. The last episode of this confl ict occurred in 1995 and was resolved in 1999.

Until the arrival of the Spanish in America, Ecuador formed part of the Inca Em-pire, which is still refl ected today in the strong indigenous infl uence on the formation of its population, which is composed of 65% mestizos and 25% Indians.

Spanish is Ecuador’s offi cial language although indigenous languages such as Quechua are also used in the country. Catholicism is the religion of choice of 95% of the Ecuadorian population, with an illiteracy rate of 9%.

Ecuador’s population is around 15 million inhabitants of which 67% live in the cities, while the urbanization rate is 2% per year. Guayaquil, with 2.6 million inhabit-ants, is the largest Ecuadorian city, followed by Quito, the capital of the country, with 1.8 million inhabitants.

Ecuador has a republican government system and is divided into 24 administra-tive units called provinces.

Ecuador’s economy is heavily dependent on its oil reserves, accounting for around 50% of the country’s exports, which in 2010 had an estimated value of US$17.4 bil-lion. In addition to oil, it also exports bananas, fl owers, shrimp, cocoa, coffee, timber and fi sh, which are traded with the United States (33.6%), Panama (14.3%), Peru (6.8%), Chile (6.6%), Colombia (4.9%), Russia (4.4%) and Italy (4.2%).

Ecuadorian imports, which totaled an estimated value of US$ 17.6 billion in 2010, are mainly industrial products, fuels and lubricants and nondurable consumer goods. The main exporters of these items to Ecuador are the United States (25.4%), Colombia (10.6%), China (7.2%), Venezuela (6.5%), Brazil (4.5%) and Peru (4.5%).

Ecuador’s Gross Domestic Product estimate for 2010 is US$ 115 billion, which results in a per capita value of US$ 7,800. This GDP value is distributed between agri-culture (6.4%), industry (35.9%) and services (57.7%). The Ecuadorian labor force is distributed between agriculture (8.3%), industry (21.2%) and services (70.4%). The number of urban workers is estimated as 4.6 million.

Ecuador’s telephone system is under expansion and is made up of 2 million fi xed lines and 13.6 million cellular phones, according to data from 2009. These numbers correspond to 14 fi xed lines per 100 inhabitants and about 95 mobile lines per 100 inhabitants. A submarine cable system connects the country to the western coast of South America, extending to Aruba and the Virgin Islands in the Caribbean. The num-ber of Internet users is 3.3 million people.

Ecuador has 428 airports, of which 105 have paved runways, and 2 heliports. The railway network extends for 965 km and the road network extends for 43,670 km, with 6,472 km paved. The main ports are those of Esmeraldas, Guayaquil, Manta and Puerto Bolivar.

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ANDEAN COUNTRIES 67

PERU

General Data

Peru is located in Western South American bordering on Brazil, Bolivia, Chile, Co-lombia and Ecuador. Peru is bathed by the Pacifi c Ocean and occupies an area of 1,285,216 km2. Peru lost part of its territory to Chile in the War of the Pacifi c (1879-1823).

The word Peru is derived from the name of an Indian ruler called Birú. Peru was a territory of various indigenous tribes, including the Incas, when it was discovered by the Spanish that named it Viceroyalty of Peru. Peru declared independence from Spain in 1821, but it was only in 1824 that the remaining Spanish forces were defeated.

The Peruvian population is around 29 million inhabitants of which 77% live in the cities, while the urbanization rate is 1.6% per year. Lima, capital of the country, is the most populous city with 8.8 million inhabitants followed by the signifi cantly smaller city of Arequipa with 778,000 inhabitants.

The indigenous population forms the majority in Peru, constituting 45% of the total. Mestizos represent 37% of the population followed by whites (15%). Blacks, Japanese and Chinese and other groups constitute the remaining 3% of the population.

Figure 4 Localization and Map of Peru.Source: CIA (2011)6

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The indigenous infl uence on the formation of the Peruvian people is refl ected in the local language. Spanish and Quechua are the offi cial languages used, respectively, by 84.1% and 13% of the population. At the same time, Aymará, Ashaninka and other languages of indigenous origin are used by 2.7% of the population. The Peruvian il-literacy rate is 7.1%.

The main Peruvian religion is Roman Catholic (81.3%) followed by Evangelical (12.5%).

Peru is a constitutional republic, divided into 25 administrative units designated regions and one province.

The Peruvian economy is heavily dependent on exports of minerals, found in the mountainous regions. The Peruvian coastal waters, on the other hand, offer excellent conditions for the development of fi shing grounds.

Peruvians exports, with an estimated value of US$ 35.6 billion for 2010, are com-posed of mineral products (copper, gold, zinc, tin, iron, molybdenum, oil and natural gas), agricultural products (coffee, potatoes, asparagus and fruit) and industrial prod-ucts (petroleum derivatives, textiles, apparel and fi sh products). The main importers of these products are the United States (17.6%), China (15.3%), Switzerland (14.9%), Canada (8.7%) and Japan (5.1%).

Peruvian imports, which totaled an estimated value of US$ 25.7 billion in 2010, are mostly chemicals and pharmaceutical products, mechanical equipment, consumer electronics and foodstuffs. The main exporters of these items to Peru are the United States (19.7%), China (15%), Brazil (7.6%), Ecuador (4.9%), Chile (4.7%), Colom-bia (4.3%), Japan (4.1%) and Argentina (4.1%).

Peru’s Gross Domestic Product estimate for 2010 is US$ 275.7 billion, which re-sults in a per capita value of US$ 9,200. This GDP value is distributed between agricul-ture (10%), industry (35%) and services (55%). The Peruvian labor force, of 15.7 million people, is distributed between agriculture (0.7%), industry (23.8%) and ser-vices (75.5%).

The Peruvian telephone system presents limited coverage with about 3 million fi xed lines and 24.7 million cellular phones, according to data from 2009. These num-bers correspond to 10 fi xed lines per 100 inhabitants and 85 mobile lines per 100 in-habitants.

A submarine cable system connects the country to part of South America, Central America and the Caribbean. The number of Internet users is 9.2 million people.

Peru has 211 airports, of which 58 have paved runways, and only one heliport. The railway network extends for 2,020 km, with 1,886 km in a gauge of 1.435 m and 134 km with a gauge of 0.914 m. The road network extends for 102,887 km. The main ports are those of Callao, Iquitos, Matarani, Paita, Pucallpa and Yurimaguas.

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ANDEAN COUNTRIES 69

BUSINESS TRAVEL MARKET

Owing to the country’s expressive growth, a large number of multinational com-panies were attracted here over the last 15 years, and similarly many Peruvian compa-nies have expanded their markets by setting up operations in other countries, mainly in the region, and some of these have successfully expanded into other continents. These facts jointly with the country’s own growth have resulted in a signifi cant increase in travel from Peru, whether domestic or regional and international, which led to the need for a greater presence airlines in Peruvian territory.

Growth by business travel within the country has been constant in the last 15 years, the only declining year being 2009, during which a greater part of companies restricted their travels while awaiting developments by the local and world economies. As the economic situation in most business activities in Peru was not very unfavorable, they resumed their travel plans in 2010 and corporate travel rose sharply during this year. Similarly the growth of hotel accommodations has also been expressive, chiefl y in response to business travelers and foreign tourists, with Cuzco as the city where the hotel infrastructure grew most.

AIR TRANSPORTATION IN PERU

The sharp rise in air traffi c within the country over the last decade has evidenced the two key players that established their international hubs in Lima, with LAN setting up LAN Peru in the country and Taca Peru with the same model. The former was in-strumental in increasing air traffi c between Peru and Latin American countries, chiefl y in the Andean region. Indeed, in the case of LAN Peru, a few years ago they started operating domestic fl ights and currently have a 70% share of the domestic market. Air travel has been growing continuously since 2003. Passenger air travel in 2010 in Peru totaled 10.5 million, domestic and international, with a brisk 15.5% rise over 2009, which increase is a refl ex of the strong economic upturn that the country has expe-rienced. Even in diffi cult years such as 2009 in which GDP rose by a mere o.9%, air traffi c rose by 5.4%.

Tables on air traffi cSource: http://www.mtc.gob.pe/portal/AE2010_REVISION_14_06_2011_V2-Rev.pdf

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Air

Tra

ffi c

, 200

1-20

10(N

um

ber

of

pas

sen

gers

)

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

TOTA

L4.

280.

024

4.14

3.84

2 4.

341.

202

5.20

4.29

9 5.

741.

527

6.14

3.65

1 7.

550.

767

8.62

0.46

7 9.

082.

081

10.4

91.3

45

Nat

iona

l2.

244.

335

2.14

9.85

4 2.

311.

193

2.53

4.63

6 2.

707.

377

2.94

6.97

5 3.

655.

756

4.05

5.20

4 4.

270.

510

5.45

9.73

3

Inte

rnat

iona

l2.

035.

689

1.99

3.98

8 2.

030.

009

2.66

9.66

3 3.

034.

150

3.19

6.67

6 3.

895.

011

4.56

5.26

3 4.

811.

571

5.03

1.61

2

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ANDEAN COUNTRIES 71

INTERNATIONAL

International passenger traffi c has grown on average over the last 10 years at 10.5% yearly. In 2010 5 million international passengers were carried, a 4.6% rise as com-pared to 2009.

Our market’s key player is surely the LAN group, with a 42% share in Peru’s inter-national market. Taca is behind with an 11% share, and American Airlines, Iberia, and Copa each have a 6% share. Please note that from 2009 to 2010 Iberia increased sig-nifi cantly the number of passengers carried by 29.7%, as a result of an increase in the number of fl ights. LAN grew by 8.7% and American Airlines by 7.8%, and Taca was the only one to decrease the number of passengers carried, by 15%. TAM and Air Europa entered the Peruvian market in 2010. Air France returned to Peru in June 2011, after over 10 years of not fl ying to Lima. In 2011, Continental and United merged their op-erations, but will maintain the same fl ights Continental had. Below follow fi gures for the key airlines present in the market:

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International Flights 2001-2010(Thousands – passengers)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total 2,036 1,994 2,03 2,67 3,034 3,197 3,895 4,565 4,812 5,032

Lan Perú S.A. 74 107 137 369 520 645 997 1,183 1,385 1,523

Lan Airlines

(Ex Lan Chile) 285 322 323 320 352 382 386 454 538 584

Taca Peru 233 197 243 289 297 321 467 770 683 580

American

Airlines Inc. 331 190 200 330 357 280 305 330 294 317

Iberia 104 116 128 193 204 221 231 239 241 312

Copa 65 64 73 126 124 162 171 197 227 282

Continental

Airlines Inc. 199 198 183 182 182 201 221 221 212 208

Avianca 73 44 43 100 116 129 152 197 204 200

Klm Cia. Real

H. De Aviacion 80 81 76 131 159 171 188 212 202 198

Delta Air Lines

Inc. 70 86 87 149 158 174 178 184 148 142

Other airlines 522 588 536 480 565 509 599 580 679 686

Source: Dirección General de Aeronáutica Civil – MTC

Ofi cina de Estadística – MTC

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ANDEAN COUNTRIES 73

DOMESTIC

Domestic passenger traffi c has grown on average over the last 10 years at 8.7% yearly. In 2010, 5.5 million passengers were carried in domestic fl ights, with a signifi -cant 27.8% rise whereby the number of domestic passengers exceeded for the fi rst time the number of domestic passengers in international fl ights. This is a clear refl ex of the country’s economic growth, supported by the important competition among airlines as well as by the encouragement of domestic tourism, which had favorable results.

The key players in the domestic airline market were LAN Peru with an expressive 70% share, which held an 80% share in the previous year but lost almost 10 percentage points owing to the advent of a new player: Peruvian Airlines, an airline with domestic capital. It is expected that also in 2011 it will surrender somewhat its market share to Taca Peru, which as of 2011 has also increased sharply its domestic fl ights and plan to go on extending its schedules in Peru. Also during 2011, there has been a drastic decline in operations by LC Busre, an airline which fl ew to secondary airports with small aircraft.

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National Flights – 2001-2010(Thousands of passengers)

Airline 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total 2,244 2,15 2,311 2,535 2,707 2,947 3,656 4,055 4,271 5,46

Lan Perú 315 414 473 935 1,617 1,719 2,26 2,977 3,398 3,838

Star Up S.A. 57 28 57 83 249 398 528 531 502 659

Taca-Peru 92 28 28 35 68 55 65 79 111 147

LC Busre 3 19 31 38 46 62 76 102 114 98

Peruvian

Airlines

– – – – – – – – 46 610

Other airlines 1,776 1,661 1,722 1,443 728 713 727 368 98 107

Source: Dirección General de Aeronáutica Civil – MTC.Ofi cina de Estadística – MTC.

AirlinesNumber of Passengers

(thousands) Share

Lan Peru 3,838 70%

Star Peru 659 12%

Taca 147 3%

LC Busre 98 2%

Peruvian 610 11%

Others 107 2%

5,459

LOW COST CARRIERS.

Star Peru and Peruvian may be considered low cost airlines, which operate only domestically and with a combined internal market share estimated at 23%.

LODGING & HOSPITALITY

The hotel infrastructure grew by 35% over the last 10 years, with Cuzco as the fastest growing venue and which doubled its capacity to 7200 beds. Lima expanded

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ANDEAN COUNTRIES 75

its infrastructure by 35% and currently counts with accommodations for 23 thou-sand guests.

Important hotel networks entered the market over the last 15 years, such as Hil-ton, Swissotel, Orient Express, Marriott, Holliday Inn, as well as Starwood, which has considerably expanded its operations in the country, by means of an association agree-ment in 2009 with the Peruvian Libertador chain of hotels to build the new Hotel Westin in Lima, opened in May 2011, in addition to the Luxury Collection facilities in Paracas and Valle Sagrado, intended for luxury tourism and corporate events.

CAR RENTALS

Activities by car rental companies is not very relevant in the Peruvian market, as corporate travelers and personal tourists prefer taxis, private cars, and tour operators to move about the country’s main cities.

With regard to car rentals during overseas travel, they rent cars chiefl y in the US, and in particular in Florida’s cities.

MEETINGS AND EVENTS

Peru has been a host of important international events, with Lima as the chief venue of events. The largest event held in this city was APEC, held in 2008 in theArmy’s Headquarters which were adapted to the event’s requirements, as the city has no convention center. The largest facilities for events are hotels, the largest of these being those at Los Delfi nes and Westin. The Peruvian market also holds events such as Incentive Conventions and Travels, which are normally held overseas, the chief desti-nations being in the Caribbean and South America, in addition to the country’s cities such as Arequipa, Trujillo, Cuzco, Valle Sagrado, and Paracas.

TRAVEL INSURANCE

The best known travel insurance in the Peruvian market is Assist Card, with 25 years of market presence. There are currently roughly 12 travel insurances in the Peru-vian market.

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Credit cards

The most well-known credit card for corporate travel is American Express, with its Business Travel Account BTA service. There is also a smaller public for Diners Club Travel Account and a very small market penetration by Visa travel purchase.

TECHNOLOGY PROVIDERS

There are a number of local technology providers that provide services, chiefl y back-offi ce, for travel agencies, but with very basic applications. Technological prod-ucts are basically developed and supported by the key market globalizers Sabre and Amadeus, such as online reservations, OBT, yet with a negligible penetration. There are currently only six local companies that use an OBT online reservation system, all with very sparse use.

TMCS

The world’s key TMCs are present in the country, listed in alphabetical order: American Express with two local representatives: Travex y Domiruth; BCD with market presence since 2006; Carlson with over 30 years in the market and HRG with market presence since 2006. There is an important presence of Consolidators in the Peruvian market, i.e.: travel agencies that sell tickets to smaller agencies which in turn sell them to the public in general. The fi rst three BSP (IATA) agencies are genuine consolidators with little or no direct corporate or leisure business.

Other services (ground transportation; AV equipment; relocation services; passports, visas and vaccinations)

Many companies use overland transportation to destinations close to Lima that are not covered by regular airlines, chiefl y to the country’s central highlands, the main destination being Huancayo, as well as to the country’s north and its key des-tinations: Huacho, Chimbote, and Trujillo, and the country’s south with its key des-tinations of Cañete, Pisco, Ica, and Paracas. These destinations will require a 2 to 8-hour overland trip.

Relocation services are often used, yet there not many fi rms specialized in this fi eld and the companies themselves normally take care directly of all of their employ-ees’ relocation needs.

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ANDEAN COUNTRIES 77

GDS AND OTHER DISTRIBUTION CHANNELS

Sabre is the country’s main globalizer, holding a market share of roughly 80%. The second globalizer is Amadeus, and Travelport also has a very small market pres-ence. The following are reservations made in this market by these three globalizers. We will see that the difference in the number of travelers, the largest number in this area was in 2008. This is because all the airlines operating domestic fl ights used globalizers for their reservations, and currently two of the domestic airlines no longer use global-izers for their reservations globalizers).

Year Bookings Peruvian Market

2008 2,815,460

2009 2,530,452

2010 2,716,634

2011 (Jan-May) 1,167,036

OTHER SERVICES

In terms of Food & Beverage, there is a large portion of corporate travelers who use expense allowances according to their destinations. It is therefore very important that these travelers submit bills for all their meals and beverages and other expenses, in order to consider them as expenses and not subject to a 30% tax when not justifying such expenses.

VENEZUELA

General DataThe Bolivarian Republic of Venezuela is located in Northern South America, bor-

dering on Brazil, Colombia and Guyana, bathed by the Atlantic Ocean and occupying an area of 912,050 km2. The origin of the name Venezuela is attributed to navigator Amerigo Vespucci, who in seeing stilt houses in the region of Lake Maracaibo associ-ated the region with Venice, naming it Venezuela, that is, little Venice. The name Boli-varian is a tribute to Simon Bolivar who fought for Venezuela’s independence from

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Spanish rule. Venezuela originated when Gran Colombia was split up in 1830, also producing Colombia and Ecuador.

Figure 5 Localization and Map of VenezuelaSource: CIA (2011)7

The Venezuelan population is about 27.6 million inhabitants of which the vast majority (93%) lives in the cities, and the urbanization rate is 1.7% per year. Caracas, the capital of the country, is the most populous city with 3 million inhabitants, fol-lowed by Maracaibo with 2.1 million, Valencia with 1.7 million, Barquisimeto with 1.1 million and Maracay with 1 million inhabitants.

The Venezuelan population is mainly composed of mestizos (of indigenous and white ancestry) (50%), whites who are descendants of Europeans or Arabs (29%) and blacks (10%). Spanish is the offi cial language, but numerous indigenous dialects are also used. The illiteracy rate is 7% and Catholicism is the religion of choice of the majority of Peruvians (96%), while Protestants represent 2% of the population.

Venezuela is a federal republic of 23 states and a capital district.The Venezuelan economy is heavily dependent on oil exports that represent 95%

of export revenue and about 30% of the Gross Domestic Product that is estimated at US$ 345.2 billion for 2010, resulting in a per capita value of US$ 12,700. This GDP

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ANDEAN COUNTRIES 79

value is distributed between agriculture (4.1%), industry (34.9%) and services (61.1%). The Venezuelan labor force, of 13.3 million people, is distributed between agriculture (0.7%), industry (23.8%) and services (75.5%).

Venezuelan exports, with an estimated value of US$ 64.9 billion for 2010, are composed, besides oil, of bauxite and chemical and agricultural products. The main importers of these products are the United States (37.8%), China (5.8%), Singapore (4.9%) and Cuba (4.3%).

Venezuelan imports, which totaled an estimated value of US$ 31.4 billion in 2010, are mainly of agricultural products, raw materials, mechanical equipment and build-ing materials. The main exporters of these items to Venezuela are the United States (27.1%), Colombia (11.8%), China (8.6%) and Brazil (8.4%).

Venezuela has a modern and comprehensive telephone system with 6.9 million fi xed lines and 28.1 million cellular phones, according to data from 2009. These numbers correspond to 25 fi xed lines per 100 inhabitants and just over one cellular phone per inhabitant. A submarine cable system connects the country to part of South America, Central America and the Caribbean. The number of Internet users is 8.9 million people.

Venezuela has 409 airports, of which 129 have paved runways, and 4 heliports. The railway network extends for 806 km with a single gauge of 1.435 m. The road network extends for 96,155 km of which 32,308 km are paved. The main ports are those of La Guaira, Maracaibo, Puerto Cabello and Punta Cardon.

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4

SOUTHERN CONE

Claudio Jose Stefanini

Mario Andrés Aguirre M.

Mercedes Del Castillo

INTRODUCTION

The name Southern Cone is given to the region composed of the southernmost areas of South America below the Tropic of Capricorn (fi gure 1). Although geographi-cally this includes the South and part of the Southeast (São Paulo) of Brazil, in terms of political geography, the Southern Cone has traditionally comprised Argentina, Chile, Paraguay and Uruguay (IDB – Inter-American Development Bank, 2011)1. The main language spoken in the region is Spanish, owing to the Spanish colonization from the 16th to the 19th century; if Brazil were included, Portuguese would come fi rst.

In economic terms, according to CIA data (2011) the Southern Cone represents the developed region of South America (except for Paraguay) with an HDI (Human Development Index) similar to that of Eastern Europe (0.800 and 0.900)

The general particulars of each country from this region are presented below.

ARGENTINA

According to CIA (2011) the United Provinces of the Rio de la Plata declared their independence from Spain in 186. Soon afterwards Bolivia, Paraguay and Uruguay went their separate ways, the remaining area formed Argentina. The country’s popula-

1. Brazil is addressed in a separate chapter of this book.

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tion and culture were heavily shaped by immigrants from all over Europe, but particu-larly Italy and Spain.

Up until about the mid-20th century, much of Argentina’s history was dominated by periods of internal political confl ict between Federalists and Unitarians and be-tween civilian and military factions. After World War II, an era of Peronist populism and direct and indirect military interference in subsequent governments was followed by a military junta that took power in 1976. Democracy returned in 1983 after a failed bid to seize the Falkland (Malvinas) Islands by force (CIA, 2011).

Since 1999 the country has experienced various economic crises, the most formi-dable of which occurred in 2001-02 and led to violent public protests. In December 2001, the Argentine government declared a moratorium on its debt repayments, dur-ing which time the country had fi ve presidents in 12 days. In January 2002, the then-president Eduardo Duhalde announced the devaluation of the peso, which provoked capital fl ight (CIA, 2011).

Figure 1 Southern Cone Source: IDB – Inter-American Development Bank (2011)

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SOUTHERN CONE 83

Argentina covers approximately 2,780,400 km2, occupying 8th place in the world in terms of territorial extension (CIA, 2011). According to data from the Argentine government, the surface area is 3,761,274 km2, of which 2,791,810 km2 correspond to the American continent and 969,464 km2 correspond to the Antarctic continent, which would put the country in 7th place in terms of territorial extension. The coun-tries that Argentina borders are: Bolivia to the north (832 km), Brazil to the east (1,261 km), Chile to the west and south (5,308 km), Paraguay to the north (1,880 km) and Uruguay to the east (580 km), and it also has a coastline of 4,989 km (CIA, 2011).

As regards population, Argentina occupies 32nd place in the world with approxi-mately 41.7 million inhabitants (estimate in July 2011) and the average life expectancy of the population is 77 years (CIA, 2011).

The Argentine population is basically urban (92%), and the country’s main cities are: Buenos Aires (capital) 12,988,000; Cordoba 1,493,000; Rosario 1,231,000; Men-doza 917,000 and San Miguel de Tucuman 831,000 (2009).

Figure 2 Localization and map of ArgentinaSource: CIA (2011)

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ECONOMY

According to CIA (2011) Argentina is a country with plenty of natural resources, a highly literate population, an export-oriented agricultural sector, and a diversifi ed in-dustrial base. Although one of the world’s wealthiest countries 100 years ago, Argentina suffered during most of the twentieth century from economic crisis, persistent fi scal and current account defi cits, high infl ation, mounting external debt, and capital fl ight.

Growing public indebtedness and a bank run culminated in 2001 in the most serious economic, social and political crisis in the country’s turbulent history. The end of the peg (dollar x peso) caused the economy to bottom out that year, with real GDP 18% lower than in 1998, and approximately 60% of Argentines under the poverty line.

In December 2001, the country announced a moratorium, taking advantage of the industrial and labor capacity, with an audacious debt restructuring, and reduced debt burden, attempting to leverage the economy. Infl ation increased in this period, yet dur-ing the administration of President Néstor Kirchner (2003-2007), which responded with price restraints on businesses, as well as export taxes and restraints, and beginning in early 2007, infl ation data was understated by the government. Cristina Fernández de Kirchner was elected president in late 2007, and the rapid economic growth of previous years began to slow sharply the following year as government policies held back exports and the world economy fell into a recession. The economy recovered strongly from the recession of 2009, but the government remained dependent on the fi scal policy (expan-sionist and monetary), bringing pressure to bear on the already-high infl ation.

The Argentine Gross Domestic Product (GDP) was US$ 370.3 billion in 2010 with a growth rate of 7.5%. The breakdown of the GDP in terms of sectors was as follows: agriculture: 8.5%; industry: 31.6%; and services: 59.8%. The population below the poverty line represented 30% of the country’s population. (CIA, 2011)2.

The main industrial activities are: food processing, motor vehicles, consumer du-rables, textiles, chemicals and petrochemicals, printing and steel metallurgy. The in-dustrial growth rate was 8.9% in 2010 (CIA, 2011).

According to CIA data (2011) Argentine exports totaled US$ 68.5bi (estimates) in 2010, and the main exported commodities were: soybeans and derivatives, petroleum and gas, vehicles, corn and wheat. The main export partners are the following coun-tries: Brazil 20.5%, Chile 7.9%, US 6.6%, China 6.6%, Netherlands 4.3% (2009)

According to CIA estimates (2011), Argentine imports in 2010 totaled US$ 56.44bi (estimates, and the main imported products were: machinery, motor vehicles, petro-

2. Note: All data is obtained from private estimates for the year 2010 (CIA, 2011).

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SOUTHERN CONE 85

leum and natural gas, organic chemicals and plastics). The main import partners are: Brazil 31.1%, US 13.3%, China 12.4%, Germany 5.1% (2009).

Energy

Electricity production was 109.5 billion kWh (2007 estimate). The oil production was 796,300 barrels/day (2009), and proved oil reserves are 2,386 billion bbl (Janu-ary 1, 2010). The production of natural gas in 2009 was 41,360 million cubic meters (CIA, 2011) 5

Telecommunications

Since 1998 after the telecommunications liberalization plan the government has opened the domestic market to competition and to foreign investment, encouraging technological growth. The country’s international dialing code is 54. In 2009 Argen-tina ranked 22nd in the world in number of installed telephone lines (fi xed and mobile lines), with 9,764,000 fi xed lines and 51,891,000 mobile lines (CIA, 2011).

The government owns a TV broadcasting station and a radio station while private enterprise owns more than a dozen open signal TV broadcasting stations and more than one hundred radio stations, while there is also a high rate of cable TV use. The country’s Internet code is suffi x .ar and in 2009 there were more than 13.5 million Internet users in the country, in other words, more than 30% of the population (CIA, 2011).

Transportation

The Argentine transportation system is divided as follows: Air: 1,141 runways of which 156 are paved; the main Argentine cities have airports, whereas those of the city of Buenos Aires are Aeroparque and Ezeiza; Pipelines: Argentina has pipelines to transport oil derivatives divided as follows: 29,401 km for gas; liquid petroleum gas 41 km; oil 6166 km; refi ned products 3,631 km (2010); Railways: There are 36,966 km of railways (broad, standard and narrow gauge); Roads: With 231,374 km of express-ways, Argentina ranks 22nd in the world, of this total, only 69,412 km are paved ex-pressways; Waterways: Waterways total approximately 11,000 km (2007), with special emphasis on Rio de la Plata, main route of access to the Port of Buenos Aires. (CIA and ARGENTINE GOVERNMENT, 2011)

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CHILE

Chile declared its independence from Spain in 1810, yet decisive victory over the Spanish was not achieved until 1818. In the War of the Pacifi c (1879-83), Chile de-feated Peru and Bolivia and won the northern regions. After a series of elected govern-ments, a three-year old Marxist government of Salvador Allende was overthrown in 1973 by a military coup led by Augusto Pinochet, who ruled until a freely elected president was installed in 1990. Sound economic policies, maintained consistently since the 1980s, have contributed to steady growth, reduced poverty rates by over half, and have helped secure the country’s commitment to a democratic and representative government. Chile has increasingly assumed regional and international leadership roles befi tting its status as a stable, democratic nation (CIA, 2011).

Chile is located in southern South America, occupying a narrow strip of land be-tween the Andes mountains and the Pacifi c Ocean (as per Image 2). It covers an area of 756,102 km², and borders the South Pacifi c Ocean to the west (6,435km), Argentina to the east and south (5,308 km), Bolivia to the northeast (860 km) and Peru to the north (171 km). It also has two overseas territories (Easter Island and Salas y Gomez Island) (CIA, 2011).

Figure 3 Localization and map of ChileSource: CIA (2011)

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SOUTHERN CONE 87

The main data for Chile are presented in the following table.

Table 1 Data for Chile.


Country name Republic of Chile

Location Southern South America, bordering the South Pacifi c Ocean, between

Argentina and Peru

Government type Republic

Chief of state Felipe de Jesus Calderon Hinojosa (since 1 December 2006); note – the

president is both the chief of state and the head of government

Capital: Santiago

Languages Spanish (offi cial), Mapudungun, German, English

Currency Chilean Peso

Area 756,102 sq km

Population 16,888,760 (July 2011 est.)

Urbanization Urban population: 89% of total population (2010) rate of urbanization:

1.1% annual rate of change (2010-15 est.) SANTIAGO (capital) 5.883

million; Valparaiso 865,000 (2009)

Life expectancy at birth Total population: 77.7 years

Climate temperate; desert in north; Mediterranean in central region; cool and

damp in south

Natural hazards severe earthquakes; active volcanic activity; tsunamis: Chile has

signifi cant volcanic activity due to the more than three-dozen active

volcanoes situated within the Andes Mountains; Lascar (elev. 5,592 m),

which last erupted in 2007, is the most active volcano in the northern

Chilean Andes; Llaima (elev. 3,125 m) in central Chile, which last

erupted in 2009, is another of the country’s most active vocanoes;

Chaiten’s 2008 eruption led to major evacuations; other notable

historically active volcanoes include Cerro Hudson, Copahue, Guallatiri,

Llullaillaco, Nevados de Chillan, Puyehue, San Pedro, and Villarrica

Natural resources copper, timber, iron ore, nitrates, precious metals, molybdenum,

hydropower

Costline 6,435 km

GDP (purchasing

power parity)

$257.9 billion (2010 est.) country comparison to the world: 46

GDP – real growth rate: 5.3% (2010 est.) country comparison to the world: 64

GDP – per capita (PPP): $15,400 (2010 est.) country comparison to the world: 72

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GDP – composition

by sector:

Agriculture: 5.6%; Industry: 40.5%; Services: 53.9% (2009 est.)

Unemployment rate: 8.7% (2010 est.) country comparison to the world: 100

Population below

poverty line:

11.5% (2009)

Household income or

consumption by

percentage share:

Lowest 10%: 1.6% / Highest 10%: 41.7% (2006)

Distribution of family

income – Gini index:

52.4 (2009) country comparison to the world: 16

Infl ation rate

(consumer prices):

1.7% (2010 est.) country comparison to the world: 46

Telephone system General assessment: privatization begun in 1988; most advanced

telecommunications infrastructure in South America; modern system

based on extensive microwave radio relay facilities; domestic satellite

system with 3 earth stations: number of fi xed-line connections has

stagnated in recent years as mobile-cellular usage continues to increase,

reaching a level of 100 telephones per 100 person international:

country code – 56; landing points for the Pan American, South

America-1, and South American Crossing/Latin America Nautilus

submarine cables providing links to the US and to Central and South

America; satellite earth stations – 2 Intelsat (Atlantic Ocean) (2009)

Broadcast media: National and local terrestrial television channels, coupled with extensive

cable TV networks; the state-owned Television Nacional de Chile (TVN)

network is self-fi nanced through commercial advertising revenues and

is not under direct government control; large number of privately-

owned TV stations; about 250 radio stations (2007).

Internet users 7.009 million (2009) country comparison to the world: 39

Airports: 366 (2010) country comparison to the world: 22

Railways: Total: 7,082 km country comparison to the world: 28 broad gauge:

3,435 km 1.676-m gauge (850 km electrifi ed) narrow gauge: 3,647 km

1.000-m gauge (2010)

Roadways: Total: 80,505 km country comparison to the world:59 paved: 16,745 km

(includes 2,414 km of expressways) unpaved: 63,760 km (2004)

Ports and terminals: Coronel, Huasco, Lirquen, Puerto Ventanas, San Antonio, San Vicente,

Valparaiso

Source: CIA, 2011.

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SOUTHERN CONE 89

Although Chile is not a country of continental dimensions its territory extends for more than 6,000 km from northern to southern South America, hence its climate presents distinctive and varied characteristics, with temperate zones, desert in the north, Mediterranean climate in the middle and glacial climate in the south.

Chilean natural resources are: copper, timber, iron ore, nitrates, precious metals, molybdenum and hydropower. Chile is the world’s leading producer of copper (25% of all the world production). Copper exports totaled US$ 26.2 bi in 20093.

Natural hazards in Chilean territory are earthquakes, volcanism (more than 30 active volcanoes in the country) and tsunamis. Such risks are due to the fact that Chile is located over the meeting point of three large tectonic plates (South American plate, Nazca plate and Antarctic plate).

As it is in a strategic location relative to sea lanes between the Atlantic and Pacifi c Oceans (Strait of Magellan, Beagle Channel, Drake Passage), Chile represents an im-portant route of passage in the southern hemisphere.

The country’s main cities are Santiago (capital) and Valparaiso with 5,883,000 and 865,000 inhabitants, respectively.

The Chilean population has one of the lowest infant mortality rates in Latin Amer-ica (7.34/1,000 live births), the population’s life expectancy is 77.7 years, access to drinking water (99%) and sanitation (98%) in the urban population. In relation to literacy, exhibits a rate of 95.7% of people over 15 years of age who can read and write. These are just some of the indicators that position the country among the most devel-oped nations in the region.

Economy

Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong fi nancial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports account for more than one fourth of GDP, with commodities making up some three quarters of total exports. Copper alone provides one third of government revenue. Chile has 57 agreements with countries or trade zones, including with the European Union, Merco-sur, China, India, South Korea and Mexico. The country has had a free trade agreement with the United States since 2004 (CIA, 2011). This reinforces the Chilean exporter profi le, a characteristic shaped by the liberal model (MELLER, 1996). This model was idealized by Sergio de Castro who is considered the architect of the Chilean economic model (CLAVEL and PÁEZ, 2007).

3. Offi cial information from the Chilean government (www.gob.cl), access in July 2011.

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The Chilean GDP in 2010 was approximately US$ 203.3 bi, with a real growth rate of 5.3%, putting the country’s economy among the most developed in the region.

The country’s main agricultural products are: grapes, apples, pears, onions, wheat, corn, oats, peaches, garlic, asparagus, beans, meat, poultry, wool, fi sh and timber. With special emphasis on grapes, as the country is the 2nd largest producer from South Amer-ica, and one of the largest fruit exporters from the southern hemisphere. (CIA, 2011)

The main Chilean industries are: copper, lithium, other minerals, foodstuffs, fi sh processing, iron and steel, wood and wood products, transport equipment, cement, and textiles.

The main export partners were: China 23.2%, US 11.3%, Japan 9.2%, South Korea 5.8%, and Brazil 5.1% (2009). The main products imported by the country were: pe-troleum and petroleum products, chemicals, electrical and telecommunications equip-ment, industrial machinery, vehicles and natural gas. Since the country is not self-suffi cient in oil, this product and its derivatives weigh heavily in its trade balance. The main import partners were: US 16.8%, China 11.8%, Argentina 10.9%, Brazil 6.7%, and South Korea 5.1% (2009)

Communications

The Chilean telecommunications system is one of the most advanced in Latin America, and was privatized in 1988 bringing foreign investments and technological development to the country. There are 3.57 million (2009) fi xed lines and 16.45 mil-lion cellular phones. As regards Internet users, there are more than 7 million users in the country, representing approximately 42% of the population. (CIA, 2011)

Transportation

The country has 366 airports of which 84 have paved runways. Pipelines in the country are distributed as follows: 3064 km for gas; liquid petroleum gas 517 km; oil 895 km; refi ned products 768 km (2010). Railways total 7,082 km (broad and narrow gauge). There are more than 80,000 km of roads, and of this total 16,745 km are paved (including 2,414 km of expressways). The main ports are: Coronel, Huasco, Lirquen, Puerto Ventanas, San Antonio, San Vicente and Valparaiso. (CIA, 2011)

The Business Travel Market in Chile

Over the last few years the Chilean outgoing tourist activity has undergone a brisk increase in the number of passengers. Business travel in particular has witnessed a

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SOUTHERN CONE 91

higher increase as compared to personal tourism (59% versus 19%)4, greatly encour-aged by the country’s economic expansion and liberalization, and the subsequent at-traction of foreign investors and the globalization of major Chilean companies, also being benefi ted by the rise in airline traffi c, with a clear refl ection in the increase of fl ights over important routes (Buenos Aires, Lima, São Paulo, USA, and Europe), the introduction of new connections by existing airlines, and the entry of new air services operators into the domestic market.

Having in mind purely air travel, growth between 2010 and 2009 in the number of passengers carried was 13.9% (9.4% in the international market and 18.1 in the domestic market)5, while during the period from January to May in 2011 and 2010, growth observed was of 26.5% (25.4% in the international market and 27.6% in the domestic market)6. The largest share was held by LAN Airlines in the domestic market, with a 76% share, followed by Sky Airlines with 19% (see Table 1)1. As to the interna-tional market, the largest market share was also held by LAN Airlines with 59%, fol-lowed far behind by TAM with 5.8%, American Airlines and Sky Airlines, with 4.2% each (see Table 2)7.

With regard to the travel agents’ market based on 2010 data, the largest player was Cocha with 26%, followed by Travel Security with 16.3%, behind which are Carlson Wagonlit, Viajes Falabella, and Turavion. Please note also that growth in 2010 as against 2009 was of 30% for the overall market, Despegar with 100% being a highlight, Carlson Wagonlit with 46.8%, and Turavion with 40.1% (see Table 3)8.

A close view of the performance of business travel will evidence that average visit-ing days were greater than in personal tourism (11 days as against 9, during the third quarter of 2010), in addition to showing that average daily travel expenditures were

4. Compared to the second and third quarters of 2010 and 2009, pursuant to information found in

“Resultados de Turismo Emisivo”, by the National Tourist Board. Ministry of the Economy. Government

of Chile.

5. Technical and Economic Department. Civil Aviation Board. Ministry of Transport and Telecommunications.

Government of Chile. (January 2011). STATISTICAL SUMMARY OF COMMERCIAL AIR TRAVEL IN CHILE,

December 2010.


Government of Chile. (June 2011). STATISTICAL SUMMARY OF COMMERCIAL AIR TRAVEL IN CHILE,

May 2011.



May 2011.



May 2011.

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much higher, as much as US$ 112, compared to US$ 53 by personal tourism (see Table 4 and Table 5)9. The key destinations in business travel included Argentina, Peru, United States, Brazil, Spain, and Mexico, accounting for 81% of all passengers (see Table 6 and Figure 1)10. Under the circumstances, the TMCs’ role in our country is essential, as they assist the large majority of companies that need to plan trips for their executives, and this has developed into an industry that has become highly professional and successful in providing complete services to their customers, offering companies planning, defi n-ing, and complying with a travel policy, and the management of agreements with air-lines and hotels, with the end result of savings for their customers.

Table 1 Passengers and share per airline, Chilean domestic market (January-May 2011).

Passengers Share

LAN 2196723 75.9%

Sky Airlines 555976 19.2%

PAL Airlines 128362 4.4%

Aerovias DAP 14078 0.5%

Total 2895139 100.0%

Linea Aerea Nacional de Chile (LAN Chile) is the largest airline company from South America, due to its presence in the region and particularly in Chile its share of the Chilean market is above 75% (Table 1). The second largest company from the re-gion is the Brazilian TAM (Transportes Aéreos Meridionais) and since August 2010 the two companies have announced their intention to merge operations creating the LA-TAM Airlines Group. Such operation is subject to approval by the competent bodies CADE (Administrative Council for Economic Defense) and ANAC (Brazil’s National Civil Aviation Agency), yet the companies have already obtained prior authorization for the operation from ANAC. The two companies tend to consolidate their market share with this strategy (Table 2).Table 2 Passengers and share per airline, international market. (January-May 2011).

9. BSP (February 2011). Report on annual billings.

10. Planning Department, Economic Analysis and Statistics unit. National Tourist Board. Ministry of the

Economy. Government of Chile. (2009, 2010). KEY RESULTS OF OUTGOING TOURISM, SECOND AND

THIRD QUARTERS 2009 AND 2010.

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SOUTHERN CONE 93

Passengers Share

LAN 1466716 59.0%

TAM 144972 5.8%

American Airlines 105008 4.2%

Sky Airlines 103379 4.2%

COPA 88085 3.5%

Iberia 81279 3.3%

Aerolineas Argentinas 73126 2.9%

Taca Perú 64562 2.6%

Air France 63759 2.6%

Air Canada 59259 2.4%

Pluna 58260 2.3%

Delta 49003 2.0%

Gol 39607 1.6%

Avianca 37919 1.5%

PAL Airlines 35318 1,4%

Aeromexico 13332 0,5%

LACSA 1485 0,1%

Aerovias DAP 2 0,0%

Total 2485071 100,0%

Table 3 Share and growth by travel agencies in Chile. Report BSP 2009 and 2010.

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Agencies Sales 2009 (US$) Sales 2010 (US$) % 09 % 10 Growth

Cocha 161,909,600 211,326,586 25.8% 26.0% 30.5%

Travel Security 103,197,084 132,552,115 16.5% 16.3% 28.4%

Carlson Wagonlit 44,520,731 58,006,341 7.1% 7.1% 30.3%

Falabella 39,813,923 55,239,210 6.4% 6.8% 38.7%

Turavion 19,768,537 27,699,913 3.2% 3.4% 40.1%

Andina del Sud 23,847,553 26,554,036 3.8% 3.3% 11.3%

El Corte Inglés 18,058,710 26,515,871 2.9% 3.3% 46.8%

Mundo Tour 16,942,124 22,269,588 2.7% 2.7% 31.4%

Despegar 11,024,963 22,045,762 1.8% 2.7% 100.0%

Travel Club 13,683,593 17,899,922 2.2% 2.2% 30.8%

Blanco Viajes 12,299,076 13,649,634 2.0% 1.7% 11.0%

Others 161,692,809 197,923,298 34.4% 32.0% 22.4%

Grand total 626,758,702 811,682,275 100% 100% 30%

Source: Ministry of the Economy. Government of Chile.

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SOUTHERN CONE 95

Table 4 Performance of outgoing tourism in Chile, second and third quarters 2009.

2009

PeriodReason For Traveling

Nbr Of Arrivals To

Tourist Destinations

Average Stay

(Days)

Average Daily

Expenditu-re Per Person

Total Expenditure Per Person

Outgoing Currency

(Us$)

Seco

nd Q

uart

er

Personal 274,054 7.9 64.2 509.9 139,730,307Vacations 156,487 5.5 97.7 533.5 83,484,288

Studies 4,262 110.4 38.5 4,248.60 18,107,683Health 7,828 2.4 49.3 120.1 940,340Visit to Family/

Friends 50,388 12.1 41.9 506.3 25,509,917

Other Reasons 55,089 4 52.4 212.2 11,688,079Business 72,737 8.6 166.8 1,432.60 104,200,648Business 26,244 5.7 215.3 1,224.20 32,128,630Congresses/

Seminars 5,619 6 191.4 1,146.40 6,441,684Professional

Reasons 40,874 10.8 148.5 1,605.70 65,630,334Total 346,791 8.1 87.1 703.4 243,930,955

Thir

d Q

uart

er

Personal 371,424 10.4 59.9 622.8 231,340,400Vacations 219,853 6.8 99.9 680.4 149,590,288Studies 5,242 141.9 34.6 4,909.60 25,735,944Health 8,810 4.1 46.5 191.5 1,687,427

Visit to Family/

Friends 80,256 17.1 31.6 539.6 43,303,659Other Reasons 57,263 3.7 51.8 192.5 11,023,082Business 58,635 10.7 121.1 1,293.60 75,851,305Business 23,157 9 142.4 1,288.10 29,829,664Congresses/

Seminars 7,494 8.7 95.4 831.30 6,230,108Professional

Reasons 27,984 12.6 113.1 1,421.90 39,791,533Total 430,059 10.4 68.4 714.3 307,191,705

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Table 5 Performance of outgoing tourism in Chile, second and third quarters 2010.

2010

PeriodReason For Traveling

Nbr Of Arrivals To

Tourist Destinations

Average Stay

(Days)

Average Daily

Expenditure Per Person

Total Expenditure Per Person

Outgoing Currency

(US$)

Seco

nd Q

uart

er

Personal 352,817 8.4 47.7 400.9 141,434,324

Vacations 139,542 6.6 93 611.3 85,308,953

Studies 7,018 65.5 33.8 2,216.00 15,551,677

Health 21,017 3 27.6 81.9 1,721,176

Visit to

Family/

Friends 109,142 11.9 22.9 273.4 29,841,634

Other

Reasons 76,098 3 39.9 118.4 9,010,884

Business 105,709 8.7 149.2 1,302.10 137,648,808

Business 28,551 8.1 193.6 1,571.20 44,859,534

Congresses/

Seminars 10,553 6.6 135 888.7 9,378,607

Professional

Reasons 66,605 9.3 134.3 1,252.30 83,410,667

Total 458,526 8.5 71.7 608.7 279,083,132

Thir

d Q

uart

er

Personal 398,797 8.9 52.6 470.4 187,578,380

Vacations 262,519 6.2 72.7 453.9 119,165,057

Studies 9,374 81 40.2 3,257.70 30,537,649

Health 23,220 2.4 57.9 138.4 3,214,446

Visit to

Family/

Friends 89,914 9.8 28 274.6 24,686,305

Other

Reasons 13,770 16.9 42.9 724.4 9,974,923

Business 103,283 10.9 112.4 1,227.20 126,750,541

Business 10,718 7.2 105 751.30 8,052,120

Congresses/

Seminars 7,379 9.1 101.6 919.3 6,783,526

Professional

Reasons 85,186 11.6 113.7 1,313.80 111,914,895

Total 502,080 9.4 66.9 626.1 314,328,921


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SOUTHERN CONE 97

Table 6 Destinations of outgoing tourism in Chile, second and third quarters 2010.

Personal Business Total

Americas 91% 85% 90%

Argentina 47% 36% 45%

Peru 29% 13% 25%

USA 6% 16% 8%

Brazil 4% 10% 5%

Mexico 2% 2% 2%

Canada 0% 1% 0%

Rest of Americas 4% 6% 4%

Europe 5% 5% 5%

Spain 3% 3% 3%

France 1% 1% 1%

Germany 0% 0% 0%

Rest of Europe 1% 0% 1%

Rest of the World 3% 10% 5%


Figure 4 Graph of outgoing tourist destinations.Source: Ministry of the Economy. Government of Chile.

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PARAGUAY

Paraguay gained its independence from Spain in 1811. In the War of the Triple Alliance (1865-1870), among Paraguay, Argentina, Brazil and Uruguay, Paraguay lost two thirds of all adult males and much of its territory. It stagnated economi-cally for the next half century. After the Chaco War of 1932-35 with Bolivia, Para-guay won a large portion of the Chaco plain region. The 35-year military dictatorship of Alfredo Stroessner was overthrown in 1989 and, despite a marked increase in political fi ghting in recent years, relatively free and regular presidential elections have been held since then. (CIA, 2011)

Paraguay and Bolivia are the only landlocked nations in South America, which in commercial terms is a hindrance to their development. Paraguay is located in central South America, northeast of Argentina, southwest of Brazil and its total area is 406,752 km², with borders totaling 3,995 km and divided as follows: Ar-gentina 1,880 km, Bolivia 750 km, Brazil 1,365 km, and no coastline. Its climate is subtropical to temperate; substantial rainfall in the eastern portions, becoming semi-arid in the far west. (CIA, 2011)

Figure 4 Localization and map of ParaguaySource: CIA (2011)

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SOUTHERN CONE 99

The country’s natural resources are: hydroelectric plants, timber, iron ore, manga-nese and limestone.

There are approximately 6,459,058 inhabitants (July 2011 est), and the average age of the population is 25.4 years; more than 60% of the population is urban, con-centrated in the southern region of the country. The largest city is Asuncion (capital) with 1,977,000 inhabitants (2009), and the infant mortality rate is high (23.02 deaths/thousand live births), with a life expectancy of 76.19 years. Approximately 90% of the urban population has access to drinking water and basic sanitation.

The offi cial languages are Spanish and Guarani, and the total literacy percentage of the population is 94% (individuals over 15 years of age that know how to read and write). (CIA, 2011)

Economy

Paraguay has a market economy distinguished by a large informal sector, featuring re-export of imported consumer goods to neighboring countries, as well as the activi-ties of thousands of microenterprises and urban street vendors. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence base. Because of the importance of the informal sector, eco-nomic measures are diffi cult to implement. In 2010 GDP was US$18.48 billion, the real growth rate was 15.3% (this result occurred due to the recovery after the economic crisis of 2008/2009), and GDP per capita was US$ 5,200 in 2010. The GDP breakdown by sector was as follows: agriculture: 21.8%; manufacturing: 18.2%; services: 60.1%11. (CIA, 2011)

The unemployment rate was 5.7%, with 18.8% of the population below the poverty line (2009 est), and an infl ation rate (consumer prices) of 7.2% (2010 est). (CIA, 2011)

The main agricultural products are: cotton, sugarcane, soybeans, corn, wheat, to-bacco, cassava (tapioca), fruit, vegetables, beef, pork, eggs, milk and timber, with spe-cial emphasis on soybeans, of which the country is the largest producer per capita in the world12.

The main industries in the country are: sugar, cement, textiles, beverages, wood products, steel, metallurgy and electric power. Electric power enjoys a prominent posi-tion in the Paraguayan economy, as in partnership with Brazil the country is the owner

11. All the data consists of estimates for the year 2010. (CIA, 2011)

12. Information from the Paraguayan Government: (www.presidencia.gov.py), 2011

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of the Itaipu Plant (largest hydroelectric plant on the planet), with 14,000 MW of in-stalled power and market value of over US$ 60 billion13.

Paraguayan exports totaled US$ 7,972 billion (2010 est), and the main exported products were the commodities: soybeans, animal feed, cotton, meat, edible oils, elec-tricity, wood and leather. Paraguay’s main export partners are: Brazil 20.7%, Uruguay 16.9%, Chile 11.5%, Argentina 10.8% and Russia 4% (2009). Imports amounted to US$ 9,567 billion (2010 est), and the main imported products were: road vehicles, consumer goods, tobacco, petroleum products, electrical machinery, tractors, chemi-cals and vehicle parts, having the following main import partners: China 30%, Brazil 23.3%, Argentina 15.9%, Venezuela 5.1%, Japan 4.9% and the US 4.1% (data from 2009). (CIA, 2011)

Communications

The Paraguayan telephone system is not well developed, and the country has a state monopoly in this market, with 387,300 fi xed lines and 5,619,000 cellular phones in use (2009). Internet users total 1,105,000 in the country (2009), approximately 17% of the population.

Transportation

Paraguay has a very large number of airports (runways), approximately 800, put-ting the country in 9th place, yet only 15 of these airports have paved runways. The country’s railways total only 36km while roads add up to 29,500km, of which 14,986 are paved (50%). There are 3,100km of waterways, mainly along the rivers Paraguay and Paraná (border with Brazil). (CIA, 2011)

Illicit drugs

A producer of cannabis, most of which is consumed in Brazil, Argentina and Chile, Paraguay is a transshipment country for Andean cocaine headed for Brazil, other Southern Cone markets and Europe. Weak border controls, extensive corruption and money-laundering activity, especially in the Tri-Border Area, besides the defi citary legal system, make the country a favorable place for this activity.

13. Information from the company Itaipu Binacional: (www.itaipu.gov.br), 2011.

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SOUTHERN CONE 101

URUGUAY

Montevideo was founded by the Spanish in 1726 as a military stronghold, and became an important commercial center, taking advantage of its strategic position and natural harbor. Claimed by Argentina, but annexed by Brazil in 1821, Uruguay de-clared its independence in 1825 and secured its freedom later in 1828 after a three-year struggle. The administrations of President José Batlle in the early 20th century provided the foundations for widespread political, social and economic reforms that established a statist tradition. During the period of 1973-1985, as is the case of other Latin Amer-ican countries, Uruguay had military governments. Uruguay’s political and labor con-ditions are among the freest on the continent.

The country is located in southern South America, bordering the South Atlantic Ocean, between Argentina and Brazil, covers a total area of 176,215 km², extends over 1,648 km, and borders on: Argentina 580 km, Brazil 1,068 km, with a coastline of 660 km.

Figure 5 Localization and map of UruguaySource: CIA (2011)

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Uruguay is the second-smallest Latin American country; due to its history of con-fl ict and its shortage of natural resources and technological development it depends on its neighbors for trade. The main data for the country is presented in table 3.

Table 3 Data for Uruguay


Country name Oriental Republic of Uruguay

Location Southern South America, bordering the South Atlantic Ocean,

between Argentina and Brazil

Government type Constitutional republic

Chief of state President Jose “Pepe” MUJICA Cordano (since 1 March 2010)

Capital: Montevideo

Languages Spanish (offi cial), Portuguese (mix of Portuguese and Spanish

near the border with Brazil)

Currency Uruguayan Peso

Area 176,215 sq km country comparison to the world: 91

Population 3,308,535 (July 2011 est.) country comparison to the world:

133

Urbanization Urban population: 92% of total population (2010)

Life expectancy at birth Total population: 76.21 years, country comparison to the world:

73

Literacy Total population: 98%

Climate Warm temperate; freezing temperatures almost unknown

Natural hazards Seasonally high winds (the Pampero is a strong, chilly wind that

occasionally blows north from the Argentine pampas), droughts,

fl oods; because of the absence of mountains, which act as

weather barriers, all locations are particularly vulnerable to

rapid changes from weather fronts

Natural resources Arable land, hydropower, minor minerals, fi sh

Costline 660 km

GDP (purchasing power parity) $47.99 billion (2010 est.)

GDP – real growth rate: 8.5% (2010 est.) country comparison to the world: 14

GDP – per capita (PPP): $13,700 (2010 est.) country comparison to the world: 86

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SOUTHERN CONE 103


Unemployment rate: 6.8% (2010 est.) country comparison to the world: 67

Population below poverty line: 20.9% of households (2009)

Household income or

consumption by percentage

share:

Lowest 10%: 1.6%; Highest 10%: 35.5% (2007)

Distribution of family income

– Gini index:

47.1 (2007) country comparison to the world: 33

Infl ation rate (consumer prices): 6.9% (2010) country comparison to the world: 171

Telephone system General assessment: fully digitalized. Domestic: most modern

facilities concentrated in Montevideo; new nationwide

microwave radio relay network; overall fi xed-line and mobile-

cellular teledensity approaching 150 telephones per 100

persons

Broadcast media Mixture of privately-owned and state-run broadcast media;

more than 100 commercial radio stations and about 20

television channels broadcasting; cable TV is available; large

number of community radio and TV stations; adopted the

hybrid Japanese/Brazilian HDTV standard (ISDB-T) in December

2010 (2010)

Internet users 1.405 million (2009) Country comparison to the world: 86

Airports 58 (2010) country comparison to the world: 81 Airports – with

paved runways: total: 9

Railways: total: 1,641 km, country comparison to the world: 77

Roadways: 77,732 km country comparison to the world: 63

Waterways: 1,600 km (2010) country comparison to the world: 50

Ports and terminals: Montevideo

border countries Argentina 580 km, Brazil 1,068 km

Current account balance $-377 million (2010 est.)

Exports – commodities: beef, soybeans, cellulose, rice, wheat, wood, dairy products;

wool

Exports – partners Brazil 21%, Nueva Palmira Free Zone 10.2%, Argentina 7.5%,

Chile 5.5%, Russia 5.3% (2010 est.)

Source: CIA (2011)

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Uruguayan natural resources are arable land, hydroelectric plants, minor minerals, and fi sheries. The country is one of the main beef cattle producers in the world.

The total population in the country is 3,308,535 (July 2011 est), and the average age is 33.6 years; 92% of the population is urban and the main city is Montevideo (capital) with 1,633,000 (2009). It has a low infant mortality rate (9.69 deaths/1,000 live births), the life expectancy is 76.21 years, and 100% of the population has access drinking water and sanitation (2008). The offi cial language is Spanish and 98% of the population is literate.

Economy

Uruguay’s economy is directly and indirectly dependent on the agricultural sector, despite the fact that this sector represents only 9.3% of GDP, agricultural products ac-counted for 65% of Uruguayan exports. The 2010 estimated GDP was US$ 40.27 bil-lion and the growth rate was 8.5%. The GDP breakdown by sector was as follows: agriculture: 9.3%; manufacturing: 22.8%; and services: 67.9% (2010 est). The Uru-guayan service sector is representative, since banking services bear heavy weight in the economy, Uruguay is recognized as a tax haven in the southern hemisphere, it is easy to open businesses, there is the fi nancial activity, and transfers of funds, which all mean that this country has a different approach to the others in the region. (OCDE, 2011)

The SAFIs (Sociedad Anonima Financiera de Inversion – Financial Investment Corporations) have all the typical characteristics of a business located in a tax haven: the offi cers can be of any nationality (just one offi cer is enough); the principals are not obliged to register with the government control agencies, and bearer shares are permit-ted. Non-residents are allowed to trade in foreign currencies. Therefore with such char-acteristics, Uruguay occupies a privileged position in comparison to the other Southern Cone countries as it offers sophisticated fi nancial services, banking secrecy and conve-nience in the transfer of funds.

The main agricultural products are: beef, soybeans, cellulose, rice, wheat, lumber, dairy products and fi sh. Cattle breeding has been one of the main activities of the Uru-guayan economy, and the country is among the largest producers in the world. The most important industries are: food processing, electrical machinery, transportation equip-ment, petroleum products, textiles, chemicals and beverages. Exports totaled US$ 6.7 billion (2010 est) and the main commodities are: beef, soybeans, cellulose, rice, wheat, timber, dairy products and wool. Its main export partners are: Brazil 21%, Nueva Palmira Free Trade Zone 10.2%, Argentina 7.5%, Chile 5.5% and Russia 5.3% (2010 est). Im-ports totaled US$ 8.3 billion (est. 2010), and the main imported products are: crude oil

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SOUTHERN CONE 105

(13.4%), refi ned oil (4.9%), passenger vehicles (3.5%), goods vehicles (2.7%), vehicle parts (2.2%), cellular phones (2.1%) and insecticides (1.7%). The country’s main part-ners are: Brazil 18.6%, Argentina 16.7%, China 13.5%, Venezuela 9.1%, US 8.3% and Russia 4.2% (2010 est). (CIA, 2011)

Communications

The Uruguayan telephone system is modern, and fully digital. The country has over 950,000 fi xed telephone lines and more than 4,112,000 cellular phones, present-ing a rate of approximately 150 telephones per 100 people. There are 1,405,000 (2009) Internet users in the country (42% of the population).

Transportation

Uruguay has 58 airports (2010) and only 9 with paved runways. There are 226 km of pipelines for gas and 155 km for oil. The railways extend over 1,641 km. Roads total 77,732 km with only 7,743 km paved. The country has 1,600 km of waterways and the main port is that of Montevideo.

THE BUSINESS TRAVEL MARKET IN THE SOUTHERN CONE

In all of the Southern Cone’s regions without exception, the discussions when dealing with Corporate Travel Management programs refer to structured solutions in search of quantitative (savings) and qualitative (service quality) results.

One of the more usual terms used and heard is “World Class”, a form of describ-ing the parameters and goals pursued. There is a need to defi ne “World Class”, what are its components and attributes.

In the Southern Cone countries, many of the standards that are found in the pro-grams are far from being considered within the mentioned class. Their qualitative development could convey the region to new and higher levels of experiences between customers and providers, a signifi cant benefi t.

Contributions in this respect by stakeholders in business travel show that there is a growing need for hearing different departments in order to develop a corporate travel policy, chiefl y from travelers themselves. Travel management is little developed professionally, and hence is far from being considered of a world class. Decision makers and owners of travel programs are very centralized and focused on procure-ment and fi nance.

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Added together, there are very few and sparse studies that allow travel users to compare their programs with their peers, and hence they are unable to capitalize this extremely valuable guide. Integration of travel, means of payment, expense reports, and technological tools are still a topic to be solved in the region, and are one of the key challenges. In the scale prepared by Outback Consulting to defi ne maturity levels of current travel programs, we might state that the region is in an emerging situation, with a considerable need for improvement so that the programs currently in force should be deemed as “World Class”, equal to the most developed ones in the world(5). The chapter below is intended to analyze each one of the key components, to defi ne and establish its current status, and to make known what we believe are the opportuni-ties and future growth trends for performance by all the key players.

Airlines

The region’s airlines have a number of specifi cs as compared to the rest of the world. In Argentina the greater share of outbound fl ights are within the same Latin American region and equal 60% of market share. Regarding the remaining fl ights, Europe follows with 20%, North America with 20%, and Africa and Asia with 10% each.

This information defi nes the overall trend of fl ights in the region, bearing in mind that distances from this far south of the world are very extensive as compared to other regions.

There was a recovery and increase in airfares and fuel. Growth was moderate in this fi rst quarter of the year, of 15% in billings and 10% in volume. It is estimated that in 2011 these levels will be maintained, with more fl ights by KLM towards the year’s end the arrival of Emirates Airlines in 2012, which may provide a new boost to the activity. This increase is in line with economic activity in general and creates greater interchange, business activity, and courses and events.

Currently higher margin fares (First and Business class), hold an unusual and important occupancy rate. Most of the occupants are corporate travelers. According to the CFO Research business and investment survey by American Express, among 664 fi nancial executives surveyed, 41% stated that this year they invest more in business travel. This is a 15 p.p. growth over 2010. This survey which was concluded in April this year indicates that 64% of the persons interviewed will spend the same or more in this kind of travel, and that 10% expect that expenditures will rise by 10% or more. As op-posed to what is happening in the world, domestic fl ights will expand more than in-ternational fl ights. (1)

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SOUTHERN CONE 107

In a survey of the low cost airline segment in the Southern Cone region, as op-posed to what occurs in Brazil, we found no airlines that adopted this model. There are two prevailing airlines: LAN and Aerolíneas Argentinas. A third one now taking shape with a new and interesting business model is PLUNA in Uruguay, with the cre-ation of a hub in Montevideo to serve the entire Southern Cone region. This city re-cently commissioned one of the region’s most modern airports. On the other hand, market regulations continue to serve as obstacles for new airlines wishing to enter and compete in the market.

Hotels

It is expected that rates should rise by 4% this year. While capacity rose by 10% in 2010 and will be slightly lower on 2011, or 7%. The average daily rate in Buenos Aires will drop to 580 pesos as compared to the 615-peso rate in 2010. In Santiago, Chile, rates are expected to rise in 2011 above the CHL 100,000, compared to 1Q2010. It should be explained that these average rates are not those offered as BAR (“Best avail-able rate”) and LRA (“Last room available”).

While expenditures in airfares continue to be the greater share of travel budgets, expenses with accommodations are still largely unmanaged. Hotels in the Southern Cone have been especially active and business efforts directed at corporate travelers have increased in Argentina, Chile, and Uruguay.

The increase in the region’s hotel capacity may be explained by the expressive development of this alternative class of hotels in excess of the more traditional chains such as Sheraton, Radisson, Marriott, and Intercontinental. The new players in the fi eld of hotels include: Holiday Inn Express in Argentina, Chile, and Uruguay; Howard Johnson in Argentina, Chile, Paraguay, and Uruguay; Novotel in Argentina and Chile; Ibis in Argentina, Paraguay, and Uruguay; Amerian, Melia, NH, and Aspen Towers & Suites, Dazzler, Fen Hoteles in Argentina. These properties known for their mix of fa-cilities and services for business travelers are starting to attract growing attention from travel managers when compiling a list of preferable hotels.

The reasons are not only comfort and ample spaces, but also the cost-effective and budgetary aspect. Total accommodation costs are much below that of the fi ve-star counterparts, resulting in an attractive cost / benefi t relation. These properties are now found not only in the business centers of Southern Cone capital cities, but they have also expanded within the country to towns such as Córdoba, Mendoza, and Rosario, and also to the neighborhood of industrial districts where growing numbers of com-panies seek accommodations close by.

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Corporate travelers and administrative departments require and create new prac-tices and preferences when selecting accommodations. Assistance by experts from the account management teams in the TMCs (“Travel Management Companies”), has pro-vided their travelers with a better understanding of market dynamics, travel standards, and ease of operations, and hence an incipient practice of strategic sourcing may be felt that will create an ongoing alert among competitors for the lion’s share of accom-modation expenses, as having favorable rates is currently not suffi cient: customer pref-erence is a result of an appropriate combination of factors.

Car Rentals

With regard to the region’s car rental companies, the key multinational companies are present, with very few cases of local or regional companies such as Localiza. The percentage of self-drive car rentals is marginal in corporate travel budgets, well below 3%. Executives traveling to the region usually move about in chauffer-driven cars, a custom ingrained in Argentina as in Chile, or also in the co-called “radio taxis.” There is a trend to discuss and control their use and the respective costs, with a gradually more constant approach in explicit policies regulating their use and requiring documental support as is required for self-drive car rentals.

There is an increase of car rentals in domestic travel, for the use of local executives. It will also be noted that the costs of chauffer-driven cars are comparatively lower than those of self-drive cars. To this price difference should be added increasing parking fees, ever stricter local traffi c rules, and the high cost of willful or unwilling violations.

Events and Conventions

There is a brisk growth in the region of international travel for conferences. Argen-tina has become one of the world’s 20 most important destinations in hosting inter-national events. Over the last six years the number of congresses and international conferences that selected the country to host them grew by 140%. “The uncommon development of the so-called ‘conference tourism’ in Argentina may be evidenced by considering the international events that the country has prepared in over 30 of event destinations,” attested el Instituto Nacional de Promoción del Turismo (Inprotur) (2). According to fi gures by Asociación Internacional de Congresos y Convenciones (ICCA) (3), Argentina hosted only 17 international events in 2003, while in 2009 it hosted 145 conferences of this nature.

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SOUTHERN CONE 109

ICCA informed that in 2004 it recorded an expressive increase in its conferences totaling 25, which rose to 37 in the following year and to 38 in 2006 (3). An even larger growth took place in 2007 with 60 congresses and conferences, which rose to 115 in 2008 and to 145 in 2009. In a background of international crises whereby a major portion of economic activities were seriously affected at a world level, since 2009 Argentina was able to place itself among the world’s foremost countries in host-ing international events, and in second place in Latin America, according to ICCA. In this regard, Inprotur explained that “this growth in the country’s Conference Tourism did not occur by chance but is the outcome of efforts by a “Country Team” prepared jointly by the public and the private sectors, and of implementing a “Strategic Confer-ence Tourism Marketing Plan” by the agency. During the fi ve years preceding the Mar-keting Plan’s implementation in 2008, Argentina was ranked between world positions 36 and 40, prepared by ICCA. The databases of all the countries in the world that host international events every year were considered for this ranking. As of 2008 and owing to the Plan’s implementation and the public and private sectors’ commitment, Argen-tina achieved an important international ranking, having advance 14 positions in the fi rst year and consolidating its growth in 2009, rising to the 19th world ranking of countries that host congresses. Growth in the activity has also positioned the city of Buenos Aires as the fi rst in the Americas to host international events, and for the fi rst time there are three Argentinean cities in the ICCA ranking that hosted more than fi ve international congresses: Mar del Plata, Córdoba, and Mendoza.

As of the implementation of the Strategic Conference Tourism Marketing Plan, the First Economic Report on Conference Tourism has been set in place in 2010, among other actions, which is the activity’s fi rst statistical database to cover all the destina-tions that host events in the country, a joint effort by Inprotur, Asociación Argentina de Organizadores y Proveedores de Exposiciones y Congresos (AOCA), and Universi-dad de Buenos Aires (UBA). The Report consists in a national network of 27 Provincial Technical References that belong to provincial and local government tourist boards, and to the private sector’s Convention & Visitors Bureau, which are in charge of the process of gathering information by means of interviews with pre-established forms. As a result, during 2010 a total of 1374 events held in the country were recorded. It is expected that in 2011 the same growing trend will be confi rmed as in the last fi ve years.

Travel Insurance

The growing trend in the use of corporate credit cards has aided in retaining an increased share of Travel Insurance. Many of the issuing banks already include this as an additional benefi t, chiefl y for plastics issued under the Visa and Mastercard banners

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in the Gold and Platinum classes. Yet there a several inconveniences at user level. One of the main ones lies in who retains this service: in many cases it is Human Resources, in others contracting means of payment is under Procurement, and in a few cases this involves the Travel Department in overall discussions. The few companies that defi ne contractual policies do this jointly with the above-mentioned departments, and they are the ones that obtain greater benefi ts when contracting prices and services for Travel Insurance. Another factor in favor of the increased retaining of this service is the grow-ing need by large corporations to provide security to its passengers, thus creating more awareness by considering the service as an additional cost in travel expenses. This evi-dences the large opportunity in companies that provide this kind of service, as in the defi nition of “Total Cost of Travel” this is an item that is less often a focal point by management, which should be given more consideration. The key players in this class are: Assist-Card, Universal Assistance, Axa Assistance, which provide coverage directly and by means of the main fi nancial institutions that issue credit cards.

Credit Cards

Means of payment continue to be a great challenge in the region. Only 43% of companies that responded to the “Latin America Travel Management Study” held in 2010 by ACTE, have a single preferred payment instrument for its transactions in the region, while a similar percentage has one in place for some transactions. Under the circumstances, developments have given rise to new procedures in integrating fi nan-cial data, the next stage for efforts in travel management. Consultants and executives in corporate travel agencies note that in spite of new tools becoming available, the hurdles to overcome in devising highly effi cient payment systems are still signifi cant. The use of corporate credit cards continues limited in the Southern Cone for a number of reasons, from acceptance to resistance associated with cultural values in connection with handing out plastic money to employees. Many companies also fi nd support in their corporate travel agencies which extend them credit facilities by means of current accounts. As a number of Southern Cone hotels do not accept credit card payments, the outcome is: greater intensive manual work, high fi nancial costs owing to double or even triple processing, and to the costly, ineffi cient, and risky transaction of the pay-ment cycle. Jointly with the above, many hotels that do accept payment in credit cards transfer to their rates the commissions charged by the latter, that vary from 3% to 5%.

Proceeding with the survey, 49% mentioned that they hand out credit cards to the majority of their travelers, while 51% reported that they do not. Among the latter, more than one-half stated that they reserve corporate credit cards only to higher level executives. In Argentina, corporate travel expenses are covered by plastic and are on the

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SOUTHERN CONE 111

rise. This is the key card expenditure by companies and it is estimated that it will con-tinue to increase this year. A survey by American Express (1) with corporate customers points out that 40% of expenditures by large corporations are paid to airlines and 18% are expenses at the destination. In small and medium companies, the fi gures are the opposite: 21% of expenditures are with airlines and 22% are expenses at the destina-tion. The use of credit cards makes it easier to manage expenses in general. When traveling, this is a good means of control and it provides many of the reports required to deal with suppliers and to control compliance with travel policy.

70% of corporations employ these reports from their corporate card program to manage purchases from suppliers, which as percentage higher than any other. There is still much margin for growth: in Argentina only 9% of total travel expenses are paid in plastic. Checks still prevail with 45%; followed by cash with 12%. Another inconvenient is that in private airlines electronic means are not very developed. The ever growing use of virtual cards requires the region to adopt more sophisticated technological tools than those that currently exist. For this reason the market has begun to practice increased competition in the different brands of payment forms, as well as by issuing banks, as they have become aware of the importance and potential that lies in the region.

One of the greatest challenges in the market in connection with means of pay-ment is the absence of reconcilement of these expenditures by means of credit cards, as informed by Outback Consulting. For this reason, there companies that provide solutions for suppliers as well as for corporations, whereby they seek to reconcile a very high percentage of travel expenses, whether airfares or hotel expenditures. This last item regarding accommodation is of the greatest inconvenience when reconciling travel expenses with information provided by other market agents, whether corporate travel agencies, issuing banks, or hotels.

Technology Providers

Argentina and the adjoining region continue to be an immature market with re-gard to the use of online booking tools (OBT). Some companies use OBTs as policy from their head offi ces, some of these with a very low adoption rate, and very few employ them due to a local or regional decision. There is little knowledge of these tools’ functionalities and benefi ts; as opposed to other markets such as the US and Europe, integration with ERP platforms is not taken into account and is ignored. Cor-porations have begun to specify the use of specifi c platforms in their public bids, and those that do this globally are faced with the inconvenience that these OBTs are not available in our region or do not have Spanish versions.

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This kind of situation leads to companies adopting regional or local solutions in order to cover company needs. HRG Argentina and Outback Consulting, held a joint survey during May and June 2011. The survey was entirely online and included 11 ques-tions on technology applied to travel, its adoption, resistance factors, and the relation by age groups in the use if self-management applications. The results were a part of the “Travel Tech” seminar held in June 2011, ass a supplement and in support of its central theme. The survey was answered by 34 professionals, four of whom representing local companies (12%) and the remaining 30 representing multinational companies (88%).

With regard to participation by age groups, 44% of total questions were made to the 25 to 35-year age group, equal to Gen Y, 26% to the 35 to 45-year age group, equal to Gen X, and the remaining 30% to persons above age 45, equal to the Baby Boomers. An interesting conclusion with regard to this breakdown in replies is that Gen Y is more likely to answer right away to invitations to processes involving simple, quick online replies. Its counterparts in Gen X and the Baby Boomers usually analyze in more detail if they should reply, asking themselves what are the benefi ts and purpose of participation. Hence, quick thinking and high participation levels are features usu-ally associated with Gen Y. This trend is refl ected in the survey, which also points to its needs when undertaking corporate travel. In connection with the use of an OBT, the penetration and adoption levels in the group being surveyed is a picture of what we in Outback Consulting and HRG Argentina have detected and monitored in the domestic market. Only 29% of those who answered (of which 88% multinationals and these, it may be believed, are more receptive to the use of self-management tools) employ self-management tools, while the remaining 71% still do not have any in place.

Having broken down this 71%, there is an interesting correlation. In 70% of these, implementation of an OBT in their organizations is considered likely or very likely, though the answers make no reference to a time frame or implementation horizon. The fi rst conclusion is that there is an expressive measure of misconception with regard to the functionality and benefi ts that applied technology may provide to travel manag-ers. We also understand that there is a certain apprehension by those involved in travel management, as instead of an opportunity to complement and improve management; this may be seen as a threat. Testimonials collected during the seminar clearly indicate that the benefi ts obtainable are expressive. Resistance levels noted in the remarks made were offset by the overall perception that sooner or later the use of self-management tools will be an unquestionable need and not an option to be discussed. In fi ve years we will certainly see everybody, regardless of age or of any specifi c knowledge in sys-tems, using the main functionalities of fi xed or mobile systems. The latter will gradu-ally supplant the former, as occurred with telephones. More and more applications are being developed for mobile devices.

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SOUTHERN CONE 113

In this regard, 60% of respondents in the survey are currently users of smart phones, for which there are dozens of travel applications, including the functionalities of an OBT. This group’s breakdown is as follows: 50% Gen Y, 25% Gen X, and 25% Baby Boomers , which refl ects an earlier adoption by the so-called “digital natives” and also an expressive and growing use by “digital immigrants” (Gen and BB), who may already be seen using mobile means for personal self-management not only for travel but also for banking, social networks, and news articles, among others.

On-the-spot use and connectivity when required will make using applications a growing trend. Outback Consulting believes that applications will have an ample po-tential for adoption inasmuch as their use becomes more widespread and their essence is understood: Technology when desired, people otherwise. This refl ects a user’s discre-tion in adopting different management support levels, to suit his/her times and use control. As to the 30% that replied that it is scarcely likely or unlikely that a self-man-agement toll will be implemented, this is composed chiefl y of multinationals, con-fi rming the belief that the great majority of these will not hesitate to welcome new technologies. The analysis resulting from actual use is even more striking. These results point out that a direct correlation cannot be made between age and intensity of use, and that the reason for using has little in common with corporate guidance and with each organization’s culture, but with generation or personal profi les. Use is not always in accordance with date of birth. We have indeed noted an extensive adaptation to new trends by organizations and users, as they have made the decision to prove how much there is of myth and how much of reality. The latter is knocking down many of the common prejudices in connection with technology applied to corporate travel.

TMCS

In the region’s two main countries, Argentina and Chile, a large concentration of corporate travel has been noted in a small number of agencies. Pursuant to a study by ACTE with regard to other maturity indicators, using a TMC for operations has become the most extensively adopted practice.

48% of survey respondents stated that their companies retain TMC services to as-sist in travel management for all their operations in the region. Meanwhile, 42% use them in some countries only. In any case, it is unlikely that the majority of respondents retain one TMC only for their operations in the entire region. There are a large number of small and medium agencies specialized in certain markets.

Many customers with incipient programs still see TMCs as an additional cost with no value added, and not as a stakeholder to implement polices and help in travel cost

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reductions, as may be concluded from a study held in the region by Air Plus. Walter Teixeira, Director of TSC Latin America, asserted that the day-to-day efforts of a travel manager in the region’s countries has to do more with operations and less with strategy. Teixeira mentioned that: “Obtaining information takes more time than employing stra-tegic information to make decisions.” Owing to the logistic diffi culties for travel man-agement in the region, it will be easily conclude that many travel managers need to approach their TMCs to assist them with this aspect. Immediate daily requirements keep the relation at a tactical level in the short run, even when the intention is to adopt a more strategic long-term view. Source: ACTE/AirPlus International May 2010 Latin America Travel Management Study.

Other Services

Overland transportation: New platforms and bus ticket reservations has allowed TMCs to provide this service to corporations as a value-added item. In view of problems that affect the region, such as the natural disaster involving the Puyehue volcano in Chile or the constant down time affecting airlines, a number of companies have opted to have their personnel travel over land, with a more positive outcome. For short routes, air travel has been replaced by buses which have improved greatly their service, with several examples being the Executive and Premium classes provided by some compa-nies, similar to fi rst or business class in an airline.

The GDS and other Distribution Channels

There are two global content distribution companies (known as GDS for “Global Distribution System”) that prevail in the region: Sabre and Amadeus, though there is also a small presence by Travelport. This concentration allows their contents to be very comprehensive. There is no extensive and critical contents outside of the GDS, as in Brazil. Only a small number of airlines keep their inventories outside of the GDS, such as the SOL airline in Argentina, but this name represent 1% only of the Argen-tinean market. Some airlines have attempted to use their direct channels for their sales, with very poor results owing to the lack of compliance by fl ights.

With regard to hotel contents, a greater portion of the major international chains do post their services in the GDS, but as occurs in Brazil, most of the accommodations that do not belong to a chain do not appear in the mentioned GDS. Another inconve-nient found in the region is that a large number of hotels have corporate rates agreed on with companies in general and do not display them in the distribution systems, which fact brings in the TMCs that will be in charge of making reservations for these

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SOUTHERN CONE 115

companies through other less effi cient channels such as email or telephone. The major GDSs have invested growing sums to develop solutions for the corporate segment. Evidence of this are the proprietary tools such as E travel manager by Amadeus, Biz Site, and Get There from Sabre, as well as solutions that report data integration. The vast majority of these solutions were developed by third parties in response to ever more specifi c and sophisticated demand by account holders.

In Argentina as well as in Chile and Uruguay, a strong bond has developed be-tween GDSs and TMCs, which operate in partnership to serve customers in common. The great hidden and pending challenge is who, how, and when will it be possible to integrate all the sources of inventories and rates, which are increasingly outside of the reach of the GDSs for the fi rst time in history. Direct airline and hotel websites and in particular the social networks, have been acting as a source of alternative information and opinions.


Corporate traffi c has grown 19% during the fi rst quarter of 2011, above the world average. Following the 2009 world crisis, travel by executives inside the country as well as to the rest of the world recovered very quickly, at a 40% rate in early 2010. The pro-cedure in effect is of a growth trend with a change in criteria. The new economic sce-nario has brought change to how corporate travel is managed. Companies with frequent travelers currently seek safety and comfort as well as the best value for each cent invested. Therefore, managing travel policies by each company will consider that corporate travel is an investment and not expenditure; hence procurement will be more often in charge of dealing with this, with more emphasis on price negotiations. As of the crisis in 2008, a rising inclination by companies was noted in reviewing their policies based on their return on investments and the benefi ts of retaining consultants and advisers to increase effi ciency of investing in this activity.

As a parameter for comparison, in the United States today 28% of companies as-sess the return on corporate travel. In this regard, the role played by TMCs is essential in optimizing the return on investment and in avoiding the concept that travel is a commodity. At a world level, it is estimated that corporate travel totaled US$ 896 bil-lion and that this year this sum will rise to US$ 967 billion. During the same period in Argentina this item will total US$ 1 billion for an estimate of domestic and out-bound international fl ights valued at US$ 1.7 billion.

In recent years there has been a growing traffi c in Argentina of corporate coastal shipping, partly explained owing to the openings of facilities by the major supermar-

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ket chains, bank branches, and investments in manufacturing and in mining, among other activities. In view of the declining activity caused by the world recession in early 2009, that is currently still present in the United States and in several European coun-tries, but which abated quickly in Argentina, changes in paradigms were noted in corporate policy. There are three very distinct pillars that should serve as guidance for corporate travel. One is a better understanding of why and how companies decide to exit from their bases, and when will this be replaced by new communications tools such as video- and teleconferences. The second is pillar is price, always and whenever it is perceived that the cheapest is not always the most effi cient. And the third pillar is to seek out the correct form, i.e.: to assist the company and its travelers in participating in this change. Furthermore, a by-product that arose from the crisis was the apprecia-tion of procurement, though there is a risk that travel may be deemed to be a commod-ity, as the best price is not always satisfactory by travelers’ expectations.

The case of TMCs: TMCs will have to select and adapt methodologies and deliv-erables that have proved to be successful in other markets, although always previously validating the specifi c needs of each customer. Argentina and Chile are maturing and are closer to reaching a stage in which pre-packed solutions are no longer functional indiscriminately for everybody. It will become essential to: adapt instead of expecting customers to be adaptable. Outback Consulting has projected an ongoing movement towards a market genuinely focused on customers and not on products. According to its Director Julián Benavento, this means that providers should start to understand and to apply experience management instead of providing services only. Daniel Feige, an-other company Director, has asserted that “Staying or not staying will not depend on the answers available for each moment of truth for a customer from the same reserva-tion request.”

Airlines: It is estimated that airfares will rise by 5% in 2011 for Business Class and 4% for Economy Class. The prevailing subject for companies will be how to work with the outcome of consolidation, basically the merger procedures between LAN / TAM and AVIANCA / TACA Whether these new large companies should bring problems due to reduced options and likely increases in fares owing to the lack of competition, we will see in the second half of 2011 and during 2012. What we can certainly expect are negotiations with stricter conditions. Travel managers should enforce controls more in order to ensure that targets are met, or begin to forego benefi ts as they have been known to date, stated Benavento from Outback Consulting.

Pursuant to a study prepared by Phocus Wright, the use of self-reservation tools will grow by 18% in the region over 2010, during which growth was of 14% (8). This is a clear indicator regarding how future trends appear in the industry, to which we should add the following:

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SOUTHERN CONE 117

• The number of additional air services will increase• The gap between Low Cost and traditional airlines will decline• A greater airline consolidation will occur• The practice of video-conferences will increase• The environment will become hostile in discussions with hotels and airlines• A greater number of self-manageable services • The social networks will provide support to travel management• Travel management mobile applications will increase• Focus on risk management, safety, and prevention

i. Departamento Técnico-Económico. Junta Aeronáutica Civil. Ministerio de Transportes y Tele-

comunicaciones. Gobierno de Chile. (Junio 2011). RESUMEN ESTADÍSTICO TRANSPORTE

AÉREO COMERCIAL EN CHILE a Mayo 2011.

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5

BRAZIL

Alessandra Mokarzel Passos

Roseane Barcellos Marques Sousa

Brazil is a country that believes in the promise of a brighter future. This belief has persisted over the past few years, and there are signs that its time has now come. This is because the past few years have been branded by economic, social and political events of major relevance to its progress and development. A country marked by the Portuguese colonization both in its language and in many of its social characteristics. In spite of this cultural heritage, the Brazilians have built a nation whose main charac-teristic is diversity.

Data published by the Central Intelligence Agency (CIA) presents Brazil as:

By far the largest and most populous country in South America, …. Brazil continues

to pursue the industrial and agricultural growth and development of its interior. Ex-

ploiting vast natural resources and a large labor pool, it is today South America’s lead-

ing economic power and a regional leader; one of the fi rst in the area to begin an

economic recovery. Highly unequal income distribution and crime remain pressing

problems. (CIA, 2011)

Brazil commands a geographical area of 8,514,877 km², occupying fi fth (5th) place in comparison to the rest of the world, including 55,460 km² of drinking water. The positive aspects are defi ned in the condition of land area to be cultivated and thus to continue developing agribusiness. On the other hand, one of the weak points of this vast territorial extension is the diversity that Brazilians have to cope with, whether in political aspects or in aspects of human and social development. As regards human

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development, Brazil has been occupying the position of medium development, in the studies conducted by the World Bank and published in the Human Development Re-port, yet this classifi cation varies signifi cantly among Brazilian municipalities.

Like the Brazilian geography and its distinctive features, the environment in Brazil is marked by the paradox quantity versus quality. That is, a country that has an envi-ronmental heritage, including the Amazon and the Atlantic Forest, is also a country with a high level of forest clearing, a fact that is jeopardizing the survival of plant and animal species. Brazil’s challenge is to control the illegal trade in wildlife, as well as atmospheric and aquatic pollution, with special emphasis on the metropolitan re-gions of Rio de Janeiro and of São Paulo. (CIA, 2011)

The territorial extension and environmental issues combined with the Brazilian population with approximately 203 million inhabitants, the fi fth most populous country in the world according to CIA data, corroborate Brazilian diversity. The chal-lenges also include commercial opportunities, such as a consumer market formed by a population between 15 and 64 years of age of approximately 135 million people, 67% of the total population, of consumption age. It is a signifi cant population group as concerns consumer market, mainly because 87% of the Brazilian population resides in urban areas. The regions that stand out in this characteristic are: São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre and Brasília (capital of Brazil) with an estimated total population of 45 million inhabitants.

Table 1 Population of the Largest Brazilian Metropolitan Regions (data from 2009)

Metropolitan Regions Population

São Paulo 19,960,000

Rio de Janeiro 11,836,000

Belo Horizonte 5,736,000

Porto Alegre 4,034,000

Brasília 3,789,000

Total 45,355,000

Source: CIA, 2011.

This quantity of members of the population in urban areas and with greater eco-nomic development causes the ‘Belindia’ (Belgium + India) phenomenon. This term

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BRAZIL 121

was created by Brazilian economist Edmar Bacha1, at the beginning of the seventies, with the objective of exemplifying Brazilian heterogeneity. This heterogeneity is caused by the substantial concentration of income of the wealthiest individuals in relation to Brazilian poverty that at times is concentrated in the suburbs of large cities and at oth-ers is present in smaller cities with a lower degree of development. Hence the term ‘Belindia’ designates a period of Brazil’s history characterized by two differentiated social and economic panoramas. The fi rst consisting of part of the population with a standard of living similar to the wealthy Belgium and the second with the other part of the population surviving in extremely poor conditions that resembled the poverty of India in those times. Since the 90s this situation has been undergoing considerable changes both due to the attempts at income distribution in Brazil and to the changes in the living conditions of Belgium and of India. These changes prompted Edmar Ba-cha to start clarifying in his texts that the term, which was so expressive at that time, no longer has the same connotation.

THE BRAZILIAN ECONOMY

The Brazilian economy achieved prominence in the international scenario as it promoted its consumer market with policies that started with the stabilization of the currency in 1994 (Real Plan) and went on to include the improvement of income dis-tribution fostered by the social policies of the last nine years of government of Presi-dent Lula and his successor Dilma Roussef. The heavy investments in commodities in the sectors of cattle breeding and agriculture, minerals and paper and pulp, besides feeding Brazil’s development, also became strategic for countries in full development such as China. Besides contributing to the food security of developed countries, de-serving the recent nickname given by international analysts: “world barn”.

The concern with world food security brought about the inclusion of the agribusi-ness discussion in economic analyses, and its investigation by research institutes whose concern is to understand the importance of commodities in the generation of wealth and in human survival. Times magazine recently published an article entitled: “Want to make more than a banker? Become a farmer” in which it defends the theory that investments in the agribusiness area can produce an excellent return for investors, even when compared to the returns of fi nancial investments on Wall Street, and that these

1. Edmar Lisboa Bacha, economist graduated from UFMG/MG (Universidade Federal de Minas Gerais)

with a doctorate in economics from Yale University – US, author of books about the Brazilian economy

and its economic policy, among other topics.

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have the potential to be the best 21st century investment both in the context of income and due to the unemployment reduction prospects.

Even with the recent uptick, however, agriculture accounts for only 1% of U.S. GPD.

Add in all those other things that are part of the farm economy – tractors, fertilizer,

seeds – and you still get to only about 4%. That’s smaller than real estate – about 13%

– and far smaller than the nation’s service sector, which makes up about 70% of the

economy. As Jamie Dimon, head of JP Morgan Chase, told Time, “We don’t make up

what we lose to the world in buying oil by selling them corn.” [...] But some experts

believe agriculture can do more to fuel job growth. Chuck Fluharty of the Rural Policy

Research Institute of the University of Missouri sees a possible renaissance in farm

towns. As money fl ows back into those areas, he predicts, farmers will need some-

where to invest. As they did with ethanol, he says, farmers will put their money in new

industries that will create uses for their crops, like biodegradable plastic or other kinds

of biofuels. The result will be more jobs. “Agriculture is the most critical story in our

economy today”, says Fluharty. “It will affect the future of the world.”(Stephen Gandel

– Times – ISSN 0040-781X2, July 11, 2011, p. 38-42)

In the article, the author clarifi es the standpoint of researcher Chuck Fluharty from the Rural Policy Research Institute of the University of Missouri/USA on the share of agriculture that may reach 4% of the American GDP, in relation to the other sectors of the US economy such as: services (70%) and real estate (13%). However, even with a reduced contribution to the economy, the researcher believes that this sector is un-dergoing a process of appreciation, and considers that the prospects of US investment in this area of the economy will be able to infl uence the world’s future.

Faced with the panorama presented by Gandel, 2011, and with Brazil’s agro-export characteristics, it is possible to signal that Brazilian prospects in the world context are positive and to corroborate this trend, data from the Food and Agriculture Organiza-tion of the United Nations (FAO), presented in Table 1, shows the most widely-pro-duced commodities in the Brazilian economy and their position in comparison to world production.

2. TIME – ISSN 0040-781X – is published weekly. New York/NY-USA.

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BRAZIL 123

Table 1 Position of Brazilian Commodities in relation to World Data

Ranking of Production in

Brazil

Commodities Produced Ranking of Brazilian Production/World

Production.

1st Indigenous Cattle Meat 2nd

2nd Sugar cane 1st

3rd Soybeans 2nd

4th Indigenous Chicken Meat 3rd

5th Cow milk, whole, fresh 6th

6th Oranges 1st

7th Indigenous Pigmeat 5th

8th Rice, paddy 9th

9th Coffee, green 1st

Source: FAO, 2008 (Adapted by the author)

In this ranking, Brazil is one of the main players in the world market in the context of agribusiness. In this sector businesses tend to grow both in relation to domestic investments and in foreign investments. However, it should be emphasized that Bra-zil’s greatest challenge in this area is to improve the added value of exportable prod-ucts. Today, in spite of the volume exported, according to data from the Brazilian Foreign Trade Secretariat, Brazil has an approximate share of 1.1% in International Commerce, occupying 25th place in the world ranking even though it is the 9th leading world economy, according to data from CIA (2011). For example, we have Colombian coffee that over the years has developed a “Made in Colombia” seal that today is rec-ognized as a quality coffee with premium prices.

The Brazilian economy and its relationship with the agro-export sector are present throughout the country’s economic history. Other events enriched this context such as the changes experienced from the year 1994, in the economic policy, with the adop-tion of measures that culminated in the control and adjustment of variables such as foreign exchange, interest, infl ation and in reliability at Brazilian institutions. These measures contributed to leveraging commercial relations between Brazil and the other countries of the world, and expanding its inclusion in economic blocs. The Economic Commission for Latin America and the Caribbean (CEPAL) presented data on the

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Foreign Direct Investment3 that indicates a signifi cant position for Brazil in relation to the other Latin American countries.

The main reasons for this warm-up of foreign investments in the Brazilian econ-omy can be explained by the analysis published by CIA, 2011, emphasizing the poten-tial and consolidation of the Brazilian economy.

Brazil experienced two quarters of recession, as global demand for Brazil’s commod-

ity-based exports dwindled and external credit dried up. However, Brazil was one of

the fi rst emerging markets to begin a recovery. Consumer and investor confi dence re-

vived and GDP growth returned to positive in 2010, boosted by an export recovery.

Brazil’s strong growth and high interest rates make it an attractive destination for

3. Foreign investments made in Brazilian production generating a rise in the Gross Domestic Product

(GDP) of employment, and consequently increasing the income available for new investments and

consumption. (KRUGMAN, 2005)

Graph 1 Latin America and the Caribbean: Foreign Direct Investment Infl ows from the Main Receivers in the Region, 2009-2010 (in billions of dollars)Source: CEPAL, 2011.

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BRAZIL 125

foreign investors. Large capital infl ows over the past year have contributed to the rapid

appreciation of its currency and led the government to raise taxes on some foreign

investments. (CIA, 2011)

Brazil’s GDP forecast for 2010 is around 2 trillion dollars, according to CIA data (2011), putting it in 9th place in the world in terms of the highest GDPs, with industrial development of textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, vehicles and parts, other machinery and equipment contributing to industrial growth of 11.5%. Supplementing the information on Brazilian productivity, estimated oil pro-duction in Brazil, 9th largest world production, is almost suffi cient to satisfy domestic consumption requirements.

Brazil has challenges close to its immense territorial magnitude, but among them are prospects and signs that its businesses are climbing the ladder and achieving con-solidation. In 2011, Dilma Rousseff assumed the presidency of the republic with the commitment of keeping Brazil on this path of stability and prosperity of economic variables.

COMMUNICATION IN BRAZIL

Brazilian telephony occupies 6th place in the world in quantity of lines in use and 5th place in quantity of cellular phones, according to data from CIA, indicating that in a general evaluation, Brazil has a good telecommunication system, featuring micro-wave radio relay systems and a domestic satellite system with 64 earth stations. In domestic use, the communication system can be considered relatively stable in fi xed-line connections and less expensive in mobile phone lines. The reduced cost for cel-lular phone use is a major driver of access to telephone services for the lower-income population.

Communication system and Internet access places Brazil in a prominent position as far as digital inclusion is concerned. Brazil, according to the CIA (2011), appears in 4th place in quantity of Internet users. This digital inclusion is being expanded across the entire Brazilian population, regardless of income category. This is because access can be achieved in school or acquired by means of an installment credit system. How-ever, Brazil needs to advance in the dissemination of spaces with free wireless access in public areas. There is a reduced quantity of initiatives in the private sector that offers free access to its consumers, but in Brazil digital access is marked by private consump-tion either of connection methods or of Internet enabled computers.

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TRANSPORTATION IN BRAZIL

The situation of Brazilian transportation as regards air transport and car rental is moving in the opposite direction to sectors under development. Brazil’s transportation capacity is defi cient. It is necessary to reformulate the management, investment and regulation policies to prevent this sector from becoming a limiter of the country’s eco-nomic growth. Brazil contains approximately twenty airports with a fl ow of regular passengers and fi ve airlines selling tickets to domestic destinations and 16 companies selling tickets to international destinies, including Latin America.

The airports with the heaviest passenger traffi c are mainly concentrated in the capitals of the Brazilian states while the other cities do not have a regular fl ow of pas-sengers, hindering domestic travel. In these cases the transport modalities used are by land, mainly by road.

Table 2 The 20 main Brazilian airports (by order of passenger fl ow)

Brazilian States Cities Brazilian States Cities

1 São Paulo Guarulhos 11 Ceará Fortaleza

2 São Paulo Congonhas 12 São Paulo Viracopos

3 Distrito Federal Brasília 13 Amazonas Manaus

4 Rio de Janeiro Galeão 14 Santa Catarina Florianópolis

5 Rio de Janeiro Santos Dumont 15 Espírito Santo Vitória

6 Bahia Salvador 16 Pará Belém

7 Minas Gerais Confi ns 17 Rio Grande do Norte Natal

8 Rio Grande do Sul Porto Alegre 18 Goiás Goiania

9 Pernambuco Recife 19 Mato Grosso Cuiabá

10 Santa Catarina Curitiba 20 Alagoas Maceió

Source: INFRAERO/IPEA, 2011.

The panorama of Brazilian air traffi c resembles the situation of vehicle rental com-panies. The car hire companies in regular operation in Brazil are: Avis, Hertz, Land-auto, Localiza, Locaralpha, Unidas and smaller and regionalized companies. This sector lacks streamlined and practical methods of meeting the demand of Brazilians and foreigners. In the cities with regular passenger traffi c these companies deliver rea-

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BRAZIL 127

sonable service, but in the other cities it is necessary to resort to regional/local car hire companies that may offer more bureaucratized services with less practicality.

BRAZILIAN MILITARY ISSUES

Safety in Brazil has been receiving special attention from the municipal and state rulers and from the federal government. The data published by CIA, 2011, indicates that almost 2% of the Brazilian GDP is set aside for military expenses. However, the land area, the size of the population and the other challenges, such as social and eco-nomic inequality, produce diverse situations in relation to urban violence exceeding the capacity of national security.

THE BUSINESS TRAVEL MARKET

Business tourism has been growing in recent years in Brazil. This growth is mainly defi ned by the volume of business done in São Paulo, which has the largest and most developed hospitality, gastronomy and transportation (air, road and vehicle hire) market.

In Brazil, the presence of international hotel chains is signifi cant, as keeping abreast of development in the Brazilian tourism sector, the chains began a process of setting up their units to meet the demand. The main installed chains are: Accor, Choice Atlantica, Meliá International, Best Western, InterContinetal, Marriott, Pestana, Posa-das, Bass Group, Forte Hotels, Starwood Hospitality, Hyatt, Caesar Park and others. The cities of São Paulo and Rio de Janeiro have around 70% of the hotel units of these chains, thus demonstrating that the tourism potential both for leisure activities and for business activities is concentrated in the two cities.

The Northern, Northeast, Southern and Midwest regions as well as other capitals of the Southeast region in Brazil present potential for leisure tourism, but the combina-tion of leisure and business is concentrated in the Rio-São Paulo belt. Therefore, Brazil has geographical and economic space to leverage the tourism sector across its territory with the growth and development of economic activities in these regions. To this effect the oil potential of this continent associated with the development of energy markets arising from organic products plus world export market participation contributes to enable Brazil to promote the productive expansion of its products and the creation of products originating from regions with a lower level of economic development.

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According to FIPE/EMBRATUR (Institute of Economic Research/Brazilian Tourist

Board), in 2001 tourism represented between 2 and 2.5% of the Brazilian GDP, ac-

countable for US$ 19.08 billion of generated income, US$ 7 billion of direct and in-

direct taxes, US$ 4.2 billion of foreign currency infl ows and 6 million jobs. The

accommodation sector, according to ABIH (Brazilian Hotel Industry Association), has

10 thousand lodging facilities – with just 1,392 registered at EMBRATUR -, generating

annual revenue of US$ 2 billion, raising about US$ 400 million between taxes and

fees and accounting for 1 million direct and indirect jobs. (LIMA, 2011, p. 17)

The fact that Brazilian tourism accounts for 2 to 2.5% of the Brazilian GDP may appear negligible, but it is important to stress that markets such as pharmaceuticals belonging to the Brazilian chemical industry represent 2.6% of the Brazilian GDP. In other words, the percentage may be limited, but this is far from meaning that tourism and the chemical industry are secondary sectors in the Brazilian economy.

Business travel in Brazil, according to HRG-Brasil, presents 71% of national origin and 29% of foreign origin; in other words, expenses incurred by business travelers are mostly directed at business transactions conducted inside Brazil.

The business travel panorama in Brazil presents the following share of expenses: air transport (61.64%), hotel accommodation (22.35%) and almost 9% in meetings. Services such as road transport, insurance, domestic tourism, transfers and visas sup-

Graph 2 Percentage of Services in Total Expenses Used by the Business Traveler Source: HRG/Brazil, 2011.

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BRAZIL 129

plement the business travel activity and are relevant to the activity since in countries that require a visa for foreign visitor admission, the absence of this service may imply the non-performance of a business transaction by a company. Accordingly, the per-centage share of expenses can vary, but for the business traveler the set of services is important to achieve their goals.

The payment methods used in the commercial transactions of business travelers are: cash, credit card, direct payment between the companies involved and the billing of amounts for future payment. The most popular method used in Brazil is the billing for future payment, followed by the credit card. The categories of these payment meth-ods do not present alterations in their types, but there are specifi cities in the travel policies of companies that produce expansion and peculiarities inherent to the way expenses are managed.

Graph 5 Payment Methods Used by the Business Traveler Source: HRG/Brazil, 2011.

In Brazil, economic and social issues are receiving special attention from the country’s rulers, indicating a positive panorama for all the economic sectors. The cat-egories of leisure and business in the tourism sector are potential alternatives to the economic development of Brazilian regions. Hold an event in Brazil and you will perceive that the results will be above average. Brazil continues to be a commercial multiplier in which a business transaction will be able to clear paths for further busi-ness as most foreign investors are unaware of Brazilian diversity.

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06-cap05.indd 13006-cap05.indd 130 14/09/11 10:4114/09/11 10:41

Final considerations and

the starting point for

new refl ections...

As noted in previous chapters, the complexity of the region is proportional to the opportunities for companies with operations there, or for those that wish to start do-ing business with that part of the world. Whether to obtain raw commodities – metal, agricultural product, oil – or to produce goods and to trade services, Latin America is a thriving market for imports and for exports, avid to build up its presence in the global context.

The challenges are related to matters such as the vast social inequality that entails gaps in education; lack of basic services such as health, sanitation and safety; need for public welfare policies; populism; bureaucratic red tape; lack of transparency and corruption.

Opportunities arise with the internationalization of companies from the region, notably Mexican, Brazilian, Chilean and Argentine fi rms that generate an outfl ow to supplement the traditional reception of companies and executives from other coun-tries that have invested in Latin America for decades. The strengthening of the middle class in countries with a large population, such as Brazil and Mexico, involves the pos-sibility of expansion of the supply of products and services.

Human mobility occurs both for positive and for negative aspects, in its three forms. Physical mobility, with the continuous migration from the countryside to cities, which gives rise to the need for public policies for the settlement of individuals back in rural areas, incentives to agribusiness and the application of technology, since the imbalance may entail a shortage of raw material, on one hand, and scarcity of housing, products and services in urban centers.

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Social mobility is the most visible of the forms, in which mass communication plays a preponderant role, in disseminating information on ways of life and lifestyles that generate desires and aversion. As “excluded” individuals become part of the con-sumption chain, either through government policies or through the dynamics of each country’s economy, there are challenges and opportunities for new businesses. Aspira-tions of social ascension or, on the contrary, decline, can generate imbalances that beget indifference towards licit careers that produce slow results versus criminal activ-ity, with rapid earnings; acceptance of corruption as a necessary element for faster development and the obtainment of public resources, among others.

Work-based mobility that is commonly confused with the previous forms has oc-curred throughout Latin America since the pre-Colombian period and explains part of the population diversity in the region. Whether through conquests among tribes that took the defeated as slaves, through group after group of workers brought from Africa or through mass immigration contracts, the Latin American countries were always considered places of business exploitation with the use of abundant labor. Nowadays, the intra-Latin movement takes place with the immigration, which is not always legal, of individuals in search of better working conditions in bordering countries, as is the case of Haitians who go to the Dominican Republic or Bolivians who start to work in the garment industry in Brazil.

Corporate mobility, which is starting to be discussed in organizations, includes refl ections on and evaluation of the travel movements of individuals. In its effective activation, there are mishaps such as taking out a “tourist” visa instead of a “business” visa as it costs less; taking and receiving samples without the appropriate customs declarations; not considering insurance policies, communication and payment meth-ods for employees that are traveling, exposing them to unexpected risks and costs.

Corporate mobility management aims to minimize risks, costs and unpredictable incidents in the movements of people from a particular organization, defragmenting operations that are currently excessively diluted in the daily routine of companies; the lack of a general overview results in gaps and loopholes that can lead to bad decisions, whether of a fi nancial nature or, above all, those that are supposed to ensure the well-being of travelers.

In the 21st century, being out is in. An integrated approach, when properly executed,

yields competitive advantage. But as with any improvement initiative that involves

many different areas of the organization, transformational improvements are only

possible when a senior executive pushes for change. In the absence of this leadership,

the gravitational pull will always be toward marginal gains.


FINAL CONSIDERATIONS AND THE STARTING POINT FOR NEW REFLECTIONS.. 133

If cost savings, greater agility, and better employee relationships sound attractive, and

if a 1% – 4% improvement in operating income is appealing, the case for action is

strong. (HARPER, RUNZHEIMER, 2007, p. 5)



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Ferreira e wada corporate mobility in latin america