Brazil’s Much Needed Tourism Drops Sharply : Economy: Reports in the foreign press about crime and pollution have discouraged many from visiting. It is cutting deeply into a big source of capital.

Reports of crime and grime have soiled beautiful Rio’s reputation for sun and fun, sending the tourism industry into a slump.

Hotel occupancy in the Southern Hemisphere’s summer tourism season now ending is off by about one-fourth from the previous season, according to trade estimates. Even during Carnival, Rio’s famed pre-Lenten extravaganza, occupancy rates were as low as 75%, down from the usual 95%.

Travel business leaders say stories in the U.S. and European press about crime and pollution in Rio are largely to blame for the slump, which represents a major loss of income for Brazil. Tourism is one of the country’s top sources of foreign revenue, and Rio accounts for more than half of the country’s total foreign tourist income.

Statistics on the Brazilian tourist industry are sketchy and out of date, but Alcides de Souza Campos, executive director of the Tourism Foundation, told Brazilian newspapers recently that the foundation hopes for 2 million foreign tourists in Brazil in 1991, and total revenue of $3.5 billion.

Campos said this would be an increase of more than 50% over last year. To reach that goal, he said, Brazil will need to spend between $5 million and $10 million for promotion and advertising abroad, partly to counteract negative publicity on crime and pollution.

Campos was quoted by Brazilian newspapers as saying seven out of every 10 foreign tourists responding to a survey in Rio indicated that they had been robbed while here. But other officials of the foundation, known as Funtur, denied that robbery was anywhere near that widespread a problem.

“That is a total, gross exaggeration,” said Philip Carruthers, manager of the Hotel Copacabana Palace and vice president of Funtur. Carruthers acknowledged that pickpockets and muggers have been a problem in Rio tourist areas, but he said most crime against tourists is nonviolent petty theft committed by impoverished teen-age boys.

Nevertheless, some foreigners are afraid to come to Rio because of reports of death-squad murders and other killings in violent areas of the sprawling city where tourists never go. Some potential tourists are kept away by reports of pollution along Rio’s shoreline.

Carruthers said the impact has been strongest on American tourists, who normally number 130,000 to 150,000 a year.

“I would risk saying that went down by 50% to 60%,” he said in an interview. “We’ve even scared off our local Brazilian tourists. There has been a tremendous fall in the number of tourists coming to Rio from Sao Paulo, Belo Horizonte and other parts of Brazil.”

Carruthers said officials have recently begun to pay more attention to problems of the tourism industry, partly because the problems have become more serious than ever and partly because tourism brings in substantial amounts of foreign currency.

Until early last year, most tourist dollars went into the black market, where the exchange rate is much more attractive than the official rate, and were never seen by the government. But since the government created a legal “tourist rate,” which is roughly the same as the black market rate, tourist dollars have been pouring through legal channels into the Central Bank.

As a result, tourism has suddenly been recognized as Brazil’s No. 3 or No. 4 earner of foreign exchange, Carruthers said, adding: “The government for the first time is really seeing that in its books.”

He said local and state authorities have increased efforts to control crime and pollution in tourist areas.

Three new sand-cleaning machines imported from Italy are being used regularly on Copacabana Beach. Police patrols in beach areas on the southern side of the city have been increased this season by 500 officers.

Sergio Nogueira, president of the Brazilian Assn. of Travel Agencies, said police officials have been cooperative in changing police schedules to provide better tourist protection.

Carruthers and Nogueira observed that negative publicity about Rio is not the only cause of the current slump in tourism. They said other reasons include:

- Government funds have not been available for promotion abroad. Carruthers said Embratur, the official agency for promoting tourism, has spent little or nothing on advertising in the past year because of budgetary problems.

- Brazilian hotels do not have a unified rate policy. Nogueira said hotels sometimes set rates too high for the market, sometimes mark them up after lower rates have been circulated abroad and sometimes offer discounts too late to be noticed by foreign travel agents.

- Brazilians traveling abroad have filled planes on bargain air fares made possible by hyperinflation and an artificially low official exchange rate. As a result, airlines have been doing less to promote incoming tourism, and prospective travelers often find no seats available on flights to Brazil.

- Severe economic problems in neighboring Argentina, Brazil’s main source of foreign tourists, have sharply reduced the number of Argentine tourists.

Although the slump in Rio has meant a decline in both local and national tourism revenue, some other parts of the country are doing well.

Recife and Salvador, on the northeast coast, have been receiving increasing numbers of tourist charter flights from Canada and from West Germany and other European countries. Carruthers said the Recife Palace Hotel had an occupancy rate of 97% in February.

Many Brazilian tourists are bypassing Rio and spending their vacations in the resort areas of Angra dos Reis and Buzios. “They’ve had their best season ever,” Carruthers said.

“Ecological tourism” in the Amazon region and the Pantanal wilderness park is drawing more tourists from the United States and Europe, he said, and “that’s a growing market indeed.”