Cup visitors: Beware of Brazil's sky-high prices

A beach soccer player practices in a passage at Chapeu Mangueira shantytown in Rio de Janeiro, Brazil, on Tuesday. Yasuyoshi Chiba / Agence France-Presse

Tourists planning to flock to Brazil for the World Cup a year from now should brace for some of the world's highest housing, restaurant and transport prices.

Prices have gone through the roof, particularly in the country's tourism gateway Rio, which this month is one of the hosts for football's Confederations Cup and in July welcomes Pope Francis for a major Catholic Youth festival.

Famous for its annual carnival and spectacular beaches, Rio is now the world's third most expensive city when it comes to hotels, according to a recent Brazilian Tourism Board (Embratur) study.

A hotel room in "The Marvelous City" on average costs $246.71 (187 euros, 159), compared with $245.82 in New York and $196.17 in Paris, the state-run agency noted.

Victor Mameaux and Damien Lambrecht, two 32-year-old Parisians recently rented a 20 square-meter (215-square foot) apartment in the trendy Copacabana district for $1,324 for two weeks.

"We had heard that Rio is a cheap but unsafe city, while in fact it is just the opposite," Mameaux told AFP.

"I paid $40 for a 'feijoada' (the black bean stew that is Brazil's most beloved dish) without a drink in an Ipanema restaurant. It is more expensive that what I pay in Paris," he complained.

Over the past 10 years, restaurant prices have soared 140 percent, according to the national statistics agency IBGE.

"Everything is expensive except cigarettes," according to Lambrecht, who nevertheless said he saw fewer beggars than in the French capital.

"It is not surprising. Here you have full employment while at home we have a high jobless rate," he added.

The pair also said they never felt unsafe, including when they toured Dona Marta, the first shantytown that came under police control in 2008 after years in control of drug gangs.

Higher prices blamed on over-valued reais

Embratur chief Flavio Dino meanwhile blamed the price hikes on an overvalued reais in relation to the dollar, and to a limited accommodation availability at a time of a high demand due to the upcoming major sporting events.

He also pointed to inadequate infrastructure in terms of goods and services to cope with a growing mass consumption market.

Brazil is as a result paying the price of its spectacular development. Economic growth coupled with social programs have lifted around 40 million Brazilians out of poverty over the past decade.

These new members of the lower middle class are now avid consumers in a country where everything, from shoes to silicon breast implants, can be paid by installment.

Brasilia wants to use the World Cup to spur development in the 12 host cities that are all potential tourist hubs.

"We must increase offer from hotels and airlines to spur competition," said Dino, pointing out that over the past 10 years, the number of passengers on domestic flights has more than doubled to more than 100 million.

There are now more than six million passengers on international flights and Embratur is banking on 10 million by 2020.

Authorities have launched a plan to upgrade the country's congested airports and have invested $4 billion in the hotel infrastructure.

Don't kill the goose that lays the golden egg

Professor Daniel Pla, a marketing expert at Sao Paulo's Getulio Vargas Foundation business school, also noted that Brazil is a costly destination.

Domestic travel is expensive and consequently hobbles mass tourism because of the monopoly held by the country's two major airlines: TAM and Gol.

Fans will therefore need to have deep pockets to follow their respective teams in the various host cities.

"To go from Rio to Fortaleza in the northeast is as expensive as flying to Miami. The government must break this monopoly," Pla said.

Prices in Rio have skyrocketed since the city was picked in 2009 as host of the 2016 summer Olympics. Prices in other World Cup host cities such as Fortaleza, Recife and Salvador are lower, Pla added.

In Rio, the hotel industry has invested around $1.5 billion in construction of 250 new hotels to bring room capacity from 30,000 today to 50,000 in 2016.

To combat price gouging, it set up a "tourism watchdog".

Embratur's Dino said after meeting industry representatives last week that the government would monitor hotel prices to prevent abuses in World Cup host cities.

"The problem is what happens after 2016. Brazil must not be seen as an expensive destination or we will kill the goose that lays the golden egg and hurt tourism for the coming decades," he warned.

(China Daily 06/14/2013 page23)