La Cumbre Presentation -- 1998
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So what lies ahead? Our forecast of May 1998 was very bullish for travel from Latin American countries. Demand was high, outbound travel was growing in popularity for a number of reasons, and while we were particularly susceptible to uncertainties of politics, global economics, and the slump in world stock markets, we looked to Latin America to provide more than 15 million travelers to the U.S. in the year 2001.

We looked particularly to South America to provide the impetus for growth, at the rate of 7-8 percent a year. Within South America, we leaned a bit toward the business traveler to maintain high growth rates. This forecast called for strong growth from Brazil so that this year we would top the one million mark.

Based on JUST RELEASED January-May 1998 data, arrivals from South America are up about 5 percent for the first 5 months of the year. Strong growth is evident from Argentina, up 7%, Colombia, up 24%, and Venezuela, up 16%. And Central America is up a whopping 27 percent for January to May while the Caribbean is flat.

However in that same January-May 1998 data, arrivals from Brazil are down 7%. Add to this the current news about the "worst swoon in nearly a decade", according to Monday's Wall Street Journal, the "panic-driven evaporation of 48% in value of the Sao Paulo Stock Exchange" (USA Today), the lack of confidence in the country's ability to support its currency, the out-migration of $23 billion in hard currency reserves, the "far from flush" IMF's offer of intervention, and the upcoming national elections in less than 3 weeks, and we have a situation that could bode well or badly for U.S. tourism.

There are those who suggest that the rich get richer in this situation and so travel more. Another camp that suggests that in times of economic turmoil, shifting assets and shoring up business in the U.S. results in increased travel to our country. On the other hand, this crisis could cause our tourist arrivals to go just the opposite direction. Coupled with the sharp decline in the value of the Mexican peso and a 44% decline in that country's stocks this year, some suggest a region-wide recession.

A strong summer and winter travel season could bring numbers back up but it's unlikely at this point that we'll see increases as projected last May. Our next forecast will be run in early October for release at the Travel Outlook Forum and will be greatly anticipated for those in the Asian markets, the Canadian market and also for those who are watching Brazil.

Chart 27 -- Estimated and Projections of Latin American Travel to the U.S.

Estimated and Projections of Latin American Travel to the U.S.

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