Nicaragua Tourism: “While Insecurity Persists, We’ll Continue Slipping,”

Business, tourism, private construction and other sectors depend on a middle class that is now being asphyxiated by the crisis.  File photo: Jader Flores La Prensa

The persistence of a police state aggravates the situation

By Mabel Calero (La Prensa)

HAVANA TIMES – The tourist sector expects to bring in some US $460 million dollars this year from 1.12 million tourists. This figure represents a setback of up to 6 years with respect to the figures from 2017.  This information was disclosed in the annual report of the National Chamber of Tourism (Canatur) for 2019.  The report projects that at the rate that the leisure industry is moving, more than a decade will be needed “to recover competitive capacity in the region.”

According to Lucy Valenti, the Chamber’s president, the situation is aggravated by the “police state” that still persists in Nicaragua and which has gravely damaged the country’s image, so vital for full reactivation of international tourism. The sector is surviving today on national tourism, but these tourists spend very little in relation to the international visitors.

“As long as current factors persist, we’re going to continue slipping, we’re going to continue along this tiny growth curve. We’re projecting only about 7% growth with respect to last year, and, as I said, we need to grow at least 15% to increase the rhythm and the results. However, if the police state in the streets continues, that doesn’t help the country’s image. It’s important that the authorities understand this message, that a more secure atmosphere is needed,” stated Valenti on February 11, during a conference held at the installations of the Superior Council of Private Enterprise (Cosep) on the outcomes of the sector in 2019 and the perspectives for 2020.

For this year, Canatur estimates that some 1.12 million tourists will visit Nicaragua, 120,000 more than last year, but still 37% less than those that entered in 2017.  Nonetheless, Canatur felt that the 2020 goal was conditional, depending on the “state of the basic liberties” in the next months in Nicaragua.

As far as income is concerned, in 2019, Nicaragua received $430 million dollars in tourism earnings; this year they hope to perceive 30 million dollars more, or $460 million.  This compares to the figure of US $850 million dollars received in 2017, or in other words a 45% drop with respect to 2017, before the social crisis broke out.

If both projections are realized, “then the number of tourists would be on a par with five years ago, and the income from tourism equal to that received six years ago,” the Tourism Chamber concluded.

The impact of the political crisis on tourism was so severe, according to Canatur, that “recovery will only become apparent by doubling or tripling the current results. A growth of over 15% would be needed,” and this level of growth isn’t possible under the current conditions.

In Valenti’s opinion, the confidence factor continues to be the key to the sector’s recovery, just as before 2017 it was fundamental for the economic growth. Recovering that confidence “must involve the necessary political solution to the crisis, one that reestablishes credibility and the country’s stability.”

“To us, that (confidence) is still the number one element to be able to recover our numbers. Confidence is key to the tourist industry. A rapid recovery is possible, because we have the infrastructure still intact – so, the only thing that’s needed is the guarantee of security, or trust, and the authorities bear a great responsibility in that,” Valenti expressed.

“While insecurity persists, we’ll continue slipping,” the Canatur representative warned. According to Valenti, the low level of the sector’s recuperation “barely allows the survival of the tourism companies, the majority of which are small and medium businesses.

The concerns expressed by Canatur contrast with the government’s optimism. The latter affirm that the sector is on the road to recovery, although a large part of their tourism campaign has also been observed in allied countries like Cuba, which also lives on tourism and has found itself affected by the restrictive measures of the United States.

In fact, despite the fact that Nicaragua’s international tourism has been seriously affected by the political crisis, the United States continues to be a key partner. Valenti explained that of those tourists who arrive by air, 45% came from the United States, 7% from Panama; and 4% each from Costa Rica, Guatemala, and Cuba respectively.

What’s the profile of the tourists who come to Nicaragua?  Canatur informed that the country continues being an attractive destination for surfers, who tend to minimize the risks and are attracted by the beautiful beaches. European tourists are also arriving, since the travel warnings for Nicaragua have been dropped to a lower level.

A new type of tourist that has been arriving are the Cubans who come to buy. These have limited budgets to spend on hotels and restaurants and are more likely to be patronizing the informal businesses, Canatur reported.

In addition, tourists from other Central American countries (Costa Rica and El Salvador, principally) continue coming, taking advantage of the lower prices; some business people from regional and international companies in the country are also coming.

Carlos Schutze, president of the Travel Agents’ Association, declared that there are expectations that some of the business that closed in 2018 can reopen this year, such as the case of Guacalito de la Isla, a luxury beach hotel on Nicaragua’s Pacific coast.

“There are rumors that they’re going to open this year, since supposedly that type of tourism is reactivating. That’s a large hotel in Nicaragua, I understand that the chain hotels have increased their occupation,” Schutze maintained.

Other problems

In addition to the sociopolitical crisis, the tourism sector has been hit by the high cost of electricity; which increased some 19.2% in 2019.

Similarly, they’ve been affected by the high taxes, since the tax reform increased the minimum tax rate from 1% to 2 or even 3%. The sector felt yet another impact from the reforms to Social Security that raised the quota paid by employers.

“Another of the impacts is that internal tourism has increased, but international tourism has continued to be slow. The electricity bills and the taxes are strongly hurting the companies’ finances and the majority of the tourist enterprises were already small ones, because we’re an industry fundamentally made up of small and medium businesses. And if we were small before, with this crisis the companies have become even smaller,” asserted Valenti.

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