Brazil - Commercial Guide
Services - Education, Franchising, Travel and Tourism

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2019-10-13

Service industries represent a growing sector of the Brazilian economy, with four leading subsectors leading the way: education, financial technology (fintech), travel & tourism and franchising.

Despite the recent economic and political challenges, Brazil remains the fifth largest higher education market in the world and the biggest higher education market in Latin America. Industry specialists such as Hoper Education expect that, despite a challenging economic and political environment, the education sector in Brazil will continue to grow, particularly the distance-learning segment.

The lower monthly tuition fees in distance learning are expected to increase the penetration of higher education in Brazil. Distance learning solutions are particularly attractive to the substantial number of Brazilian private for-profit universities.

Brazil ranks number 10 as a country of origin for foreign students studying in U.S. universities. In the 2017-18 academic year, 14,620 Brazilian students in the United States were broken into the following programs groups: 50percent undergraduate; 29 percent graduate students; 9 percent non-degree and 12 percent optional practical training.

Non-recognition of foreign university credits toward earning a degree in Brazil is a barrier to U.S. education exports. However, the Ministry of Education is in the early stages of creating a system to recognize foreign university degrees. Despite the bureaucratic challenges of having U.S. degrees recognized in Brazil, the number of Brazilian students choosing U.S. education is significant. The economic impact of Brazilian students in U.S. colleges and universities contributed $477 million to the U.S. economy during the 2017-18 academic year.

Brazil is the largest fintech market in Latin America, with approximately 370 startup companies. Investment in Brazilian Fintech companies totaled approximately $160 million in 2017, and as of December 2018, investment had reached $375 million, making Brazil eighth in investment globally. Though the overall Brazilian financial sector is heavily regulated, regulation in the fintech subsector is still largely undefined, although the Central Bank has issued a Resolution (4,656/18), which allows fintechs to grant credit without the intermediation of a bank. The regulation also provides that credit fintechs may be controlled by investment funds. In addition, the Brazilian Securities Exchange Commission (CVM) created an internal "Fintech Hub" to foster a better understanding of the market in order to guide future regulation.

As in most other industry sectors, to be successful in Brazil, foreign service providers must either establish themselves in the country or have a local representative. Additionally, since this sector is still in its early stages, there are only a couple of associations.

Travel & Tourism
Brazil is the eighth international source of tourists to the United States. According to the National Travel and Tourism Office, Brazil is the top arrivals market to the U.S. from South America and accounts for more than 30 percent of all arrivals in the United States from South America.

In 2018, Brazil had six local airlines and 37 foreign airlines operating in country. Brazil shows signs of overcoming its recent economic downturn, and 2017 statistics show that 1.9 million Brazilians visited the United States, representing an increase of 11 percent in comparison with 2016 numbers. Brazilians spent $11.5 billion in the United States in 2017, a 2 percent increase from the previous year. 2018 numbers will approach a 15 percent growth rate, representing more than 2.2 million Brazilian visitors in the United States.

Brazil is the fourth largest market in the world in terms of  number of franchise chains. In 2018, the Brazilian franchise sector grew by 7.1 percent and total sector revenue was about $45.9 billion, (R$174.9 billion). There are 2,877 franchising chains (an increase of 1.2 percent compared to 2017) and 153,704 franchising units in the country (a growth of 4.9 percent compared to 2017), making Brazil the 6th largest market in the world in number of units and the 5th largest in terms of franchise chains. There are only 79 American brands operating in country, which represents a huge opportunity for U.S. companies seeking to expand their presence internationally.

In the coming decade, the fastest growing segment of the educational market in Brazil will likely be short-term vocational and English learning courses, given the Brazilian government’s investments in technical schools and courses for high school students and adults. Although private English language schools are abundant, student exchange programs are a huge market in Brazil, especially short and part-time programs. Examples of exchange programs popular in Brazil include part-time study programs combined with tourism and outdoors sports; teen vacation (specifically for teenagers with a mix of classes and leisure activities) and English language programs designed for students who are 50 and over. U.S. schools interested in recruiting in Brazil should provide creative financing options, including options to pay in installments, since cost (along with proficiency in English language skills) will continue to be a challenge for Brazilian students studying abroad. Installment payments are also widely popular throughout Brazil for educational services.

Brazil has the fifth largest population in the world, with a market of 200 million potential consumers. A large part of the population, though, is unbanked, which presents a huge opportunity that it is not limited to banks. Opportunities range from insurance (insurtech) and digital technologies to financial management. Startups are investing in areas such as field management, equipment and construction materials marketplaces, and applications in mobile and cloud technologies, robotics, and software for the construction industry. In Brazil, there are already over 250 construction firms, and about $150 million were invested in 2018. Additionally, fintechs are deeply rooted in eCommerce. Digital financial services are progressing rapidly in the traditional retail sector, particularly in payments and remittances, digital banking, mobile payments and virtual currency.

Travel & Tourism
While leisure dominates the tourism segment of the Brazilian market: Meetings, Incentives, Conferences, and Exhibitions (MICE), luxury, and “bleisure” (Business+Leisure travel) are growing sub-sectors. Traditional destinations such as Florida and New York rank among the favorite places for Brazilians, but MICE destinations such as Las Vegas and California attract thousands of tourists from Brazil. Opportunities also exist for less explored destinations like Georgia, Boston, New Orleans, Chicago and Philadelphia.
In terms of forecasts, we expect a rise in travel and tourism numbers into Brazil, in large part, due to the U.S.-Brazil Open Skies Agreement, which formally entered into force in Q2 of 2018. Major airlines into the U.S. and hubs include: American Airlines (Dallas, Miami, New York, Los Angeles); Delta Air Lines (Atlanta, Detroit, New York); and United Airlines (Washington, D.C.; Chicago, Houston).

According to the Brazilian Franchise Association, the franchising sub-sectors that saw the greatest growth in 2018 were: Education/Recreation (12.7 percent), Hotel & Tourism (12.3 percent), Services & Other business (8.7 percent), and Home/Construction (8.6 percent). Other areas with strong growth were Informatics/Electronics (7.5 percent), Food (7 percent) and Health & Beauty (6.3 percent). To succeed in the Brazilian market, U.S. companies should also consider working in developing areas outside of major cities, since these business entrepreneurs are focused in medium sized cities in Southern and Southeast Brazil.  Some examples of these locations include Campinas and Guarulhos in the state of Sao Paulo, Niteroi in the state of Rio De Janeiro, and Uberlandia in Minas Gerais.  

Web Resources
Education: Brazil Top Markets Report
EducationUSA Brazil
Institute of International Education: Open Doors
Brazilian Educational and Language Travel Association (BELTA)
Anima Educação
Top University Rankings

Brazilian Association of Digital Credit (ABCD)

Travel & Tourism
DOC Office of Travel & Tourism Industry (OTTI)
DOC National Travel and Tourism Office, 2017 Market Profile
DOC International Trade Administration’s 2017 Fast Facts: United States Travel and Tourism
Travel Agencies Outlook - Sebrae

World Franchise Council
Brazilian Franchise Association