After the Hurb case, the CEO of CVC (CVCB3) calls for regulation in the tourism sector

After all the controversy about what happened to Hurbwith customers fearing their trips will not go ahead and the government charge the companythe CEO of CVC Brasil (CVCB3) defended the regulation of the tourism sector this Wednesday (10). The speeches came during the company’s first-quarter earnings conference call.

“I support the fact that the tourism sector in Brazil needs serious regulation as we don’t have the competitors’ balance sheets,” said Leonel Andrade. “Any company selling more than R$200 million in travel would need to have a public and audited balance sheet. If that doesn’t happen, we will continue to be afraid.”

According to the executive, CVC is behaving differently than the company that raised issues. “First, we have a good competition policy within our governance model. There are competitors who sell short, without a ticket issued, without a hotel. To me, this is a lending company, not a tourism company,” he explained.

Nevertheless, the situation created a general climate of uneasiness among suppliers and customers. Airlines and hotels are less willing to partner, as are people looking to buy travel.

“We are not happy that competitors have problems. I don’t like failures. This is a problem for everyone. I have spoken to the authorities and will continue to speak,” defended Andrade. “All of this is leading to a deeper and deeper dysfunction in the industry. We defy associations and external regulators. If you have 8% of GDP, you can’t stay that way. I maintain that there are no short sales. “You can’t sell a product you don’t have.”

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CVC is having a difficult first trimester

In addition to the Hurb issue, executives discussed other topics raised by analysts during the call. CVC announced the previous day that the company suffered a net loss of R$128 million between January and March this year.

The tourism company’s net sales, on the other hand, remained virtually stable on an annual basis, increasing from R$292.8 million to R$295.5 million – an increase of just 0.9% over the year.

Bradesco BBI highlighted that confirmed consolidated bookings were up 44% year-on-year and 10% ahead of the bank’s estimate, supported by higher bookings in Argentina and greater availability across the airline network.

“While reserves have exceeded our estimates, the take rate (Share of what company receives that stays in business) shrank 2.30 percentage points (PP) year-on-year to 7.4%, pressured by higher marine product sales and the impact of Black Friday,” say the banking analysts .

However, on the conference call, CVC executives said the decrease in the take-up rate is a one-time event.

“Any points that lowered the take rate will not be repeated. Black Friday consumption is gone and the rest is heavily diluted,” the CEO said. “B2B (from shop to shop) has grown again and this was fundamental due to the existing margin. Let’s remember that it was the hardest hit company. Now we are 100% robust in this segment. He brings in take rate greater”.

The company also claims that due to its size and scenario, it has managed to renegotiate with suppliers and that the next waves are to come take prizes greater.

“We struggle with the mix and the involvement of each segment. We have strong promotions but with no impact on margin. We review proposals with our partners. Nobody sells as well as we do and that has a big impact. “Our operation is now more analytical,” they defended.

JPMorgan also drew attention to this take rate lower than expected, particularly given the issues related to unsold product inventories.

“We continue to see the company grapple with a difficult consumer environment and limited credit availability. And despite the debt restructuring, we still see that the company needs additional capital to sustain its growth, which could result in high financial expenses.”

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