The effects of the worldwide economic crisis continue to be felt in Costa Rica’s tourism industry.  However, perhaps nowhere is the degree of impact more severe than in San Carlos, especially places like La Fortuna, where virtually everyone is involved to some extent in the tourism trade.  The numbers are in and reflect a decrease that is perhaps less than many feared.  In 2008, Costa Rica had 2.1 million tourism arrivals.  Last year that number fell by about 10.5% to 1.9 million.  Yes it could have been worst, but in places like La Fortuna, where in the last few years new hotels have been popping up everywhere, the decrease is much more severe.  Even this year hotel occupancies are down by 40 to 50% in many places and there is fear that this year’s low season, which starts in May, will be even worst than last years.  Many hotels are simply unable to pay their bills and debt service, and with banks clamping down, some have sought protection under the law, a law similar to the bankruptcy code in the U.S., but not nearly as forgiving.  Simply stated, hotels going out of business present a grave threat to the entire region due to unemployment and societal problems it engenders.  That is why hoteliers like Leovigildo Villegas, of the Hotel Montaña de Fuego, are urging them to unite to combat the crisis.  At Package Costa Rica, we are also “feeling it,” but with very low overhead, not as severe as many others.   We hope that predictions of a dire low season turn out to be false alarms.  Costa Rica still has the same appeal as before the crisis, we just need people to loosen their wallets a bit and stop putting off those vacations!

Link to Article in La Nación

The 19 commercial airlines now flying into the Juan Santamaría airport in Alajuela, Costa Rica’s busiest international airport, cut 1,184 flights during the period January to August, 2009 as compared with the same period in 2008.  The reason?  Well the numbers tell the story. The economic crisis has taken its toll on Costa Rican tourism.  During the period January to August of 2008, there were 20,665 flights.  For the same period this year, there were only 19,481, for a 6% decrease.  During that period 117,000 less passengers arrived at the airport (1,053,000 total arrivals versus 1,170,000 during the same period in 2008).  The principal routes that have been cut are from the U.S. as that country accounts for 12 daily flights and over half the total tourism arrivals.  In addition to cutting flights, some airlines are opting to use smaller planes.  For instance, if the market demands at least 80 seats, a 90 seat-er will be more profitable than a plane that seats 150.  William Rodríguez, vice president of the Costa Rican Tourism Chamber, told La Nación that while this year tourism will likely see a sizable decrease compared to the exceptional year of 2008, already the market is beginning to witness a turnaround.  Although ICT (the Tourism Ministry) wants to attract more flights to Costa Rica, Director Mario Zamora noted that now is not a good time to spend money and time trying to do so.  Allan Flores, also with ICT, added that the $20 million allocated by ICT to promotion of tourism in other countries has definitely softened the blow a bit with respect to Costa Rica as compared to other major tourism destinations.

Link to Article in La Nación

And where do they go?  Costa Rica, that’s where.  I am sick and tired of hearing the right-wing talking heads bash Obama’s health care plan with the claims that “people only come to the U.S. to receive health care….no one ever leaves to look elsewhere for it.”  Hogwash!  This year it is estimated that 20,000 will come to Costa Rica from the U.S. and other countries seeking quality health care at affordable prices….as the latter aspect is sorely missing in the so-called best health care system on the planet.  Health care in the U.S. is fast becoming unaffordable for many, or at least non-competitive with other countries that offer a similar level of quality, but at 1/3, or less, of the cost.  The fact that no one leaves the U.S. to seek health care would certainly come as a shock to Rubén Darío Martín, whose Che Tica Ranch, a post-surgical recuperation retreat located in the mountains of Heredia, just outside of San Jose, is growing by leaps and bounds.  So much so, that Rubén plans to add 8 new villas to the 18 that his retreat already offers.  It is estimate that within five years, the number of patients seeking treatment in Costa Rica will surge to 100,000 annually.  This is the expectation of Promed, a consortium that was organized recently to promote medical tourism to Costa Rica.  One thing that is noticeable is that people are coming to Costa Rica now for more than just cosmetic surgery.  Other elective surgeries such as hip and knee replacements, hernias, bariatric surgery, and others are also becoming popular for foreigners seeking medical care in Costa Rica.  Hospital Clinica Biblica, a private facility in downtown San Jose, has seen 10 to 12% growth in treatments of foreigners.  Recently the Colegio de Médicos y Cirujanos and Promed, with the support of the Costa Rican Minister of Health, created the Center for Resolution of Conflicts with the idea of giving foreigners a forum to resolve complaints out of the courts, where delays of up to three years are commonly experienced.  In February of this year, the government of Costa Rica declared that medical tourism is of national public interest and plans to take action to promote and support it, such as the creation of certifications of quality for health care clinics and personnel.

Link to My Costa Rica Medical Tourism Squidoo Lens

Link to Article in El Financiero

Costa Rica boasts numerous small “boutique” hotels.  In my opinion these are the hotels, and not the gargantuan luxury types like Four Seasons, that present the best experience of Costa Rica.  Now an article in El Financiero also makes another interesting point about these small hotels….and that is that they are knocking the socks off of their larger counterparts in the midst of the economic crisis. The article highlights the recently opened hotel Arenal Nayara in La Fortuna, one the areas hardest hit by the crisis.  Despite many hotels in the area who have seen their occupancy levels plummet, Nayara has been clipping along at 85 to 95%.  The hotel offers only 24 rooms.  As a consequence of the high demand, general manager Freddy Pacheco already has plans to add 15 more rooms. Other hotels in a similar category in various locations around the country and faring well despite the crisis are Lapa Rios, Arenas del Mar, Harmony Hotel, and Finca Rosa Blanca, all of which are hotels managed by the specialist in boutique “sustainable” hotels, Cayuga Sustainable Hospitality.  So what is the key to their success?  Well because they are small they hire less and more qualified people and coupled with the fact that they have less guests to deal with, they can offer much higher quality personal service.  Many of the boutique hotels have focused heavily in sustainability and that has brought both cost savings and a “green” marketing appeal.  According to the ICT (Costa Rican Tourism Ministry), 34% of the tourists that arrive to the country are looking for that boutique hotel experience.  I know from my own experience as owner of Package Costa Rica that boutique hotels like the ones mentioned above are wildly popular with our customers.  We also like them because they are much more environmentally friendly and contributed to keeping Costa Rica uncluttered and green.  They also tend offer a unique and more intimate cultural experience compared with larger hotels.  Because of the high degree of personal attention these hotels can offer very competitive price points and also have major flexibility in terms of creative promotional ideas.  In short, it appears that for some time to come, small is the way to go in Costa Rica.

Link to Article in El Financiero

The Intercontinental Hotels Group (IHG) is one of Costa Rica’s largest hoteliers.  They currently operate five hotels in the country, all of which are located in the San Jose area.  They are: Real Intercontinental, Crowne Plaza Corobicí, Aurola Holiday Inn, Holiday Inn Express and Indigo (which opened for business on May 7th).  The hotels IHG currently operates in San Jose are what one would consider “business class” and cater to travelers in Costa Rica for business reasons. Now IHG wants to get into the beach market and has plans to open two new hotels, one in Guanacaste and the other in the Central Pacific.  Jim Abrahamson, the president of IHG in America, stated that while the economic crisis has affected the Guanacaste area, IHG believes this is only a short-term phenomenon and that when the economy recovers Guanacaste will once again be a very strong market.  Likewise, he stated that the Central Pacific market is strong and will get stronger with the opening of the new highway from San Jose to Caldera.  A specific timeline for the hotels was not given, Abrahamson stating that in Costa Rica, these things take time.  IHG further has plans to open a sixth hotel in San Jose in 2011.  This will be another of the Holiday Inn brand and will be developed in an alliance with Grupo Agrisal of El Salvador.  IHG is one of the largest hoteliers in the world with interests in 4,150 hotels with 620,000 rooms in 100 countries.

Link to Article in La Nación

Tourism numbers are in for the first three months of 2009 and they don’t look too good.  For the first three months of 2008 there were 634,000 tourist visitors arriving at Costa Rica’s two international airports (Juan Santamaría and Daniel Oduber).  For the same period of 2009, there were 551,000 arrivals, for a decrease of 83,000.  Tourism was growing briskly in 2008, with the numbers of the first trimester showing 17% growth over the prior year.  The year the trend is in reverse.  Most of the problem stems from Costa Rica’s strong tourism link with the U.S., where the now worldwide economic crisis began.  Some 54% of Costa Rica’s visitors hail from that country.  The hotels are really feeling the pinch.  Most affected are the regions of San Carlos (where the Arenal volcano is located), Alajuela, Guanacaste and San Jose.  Even more alarming is the fact that the tourists that are visiting are staying for shorter periods and spending less money.  In 2008, the average a tourist spent per each day in the country was around $110.  This year is apt to show much lower daily spending figures according to reports from tour operators and artisans that cater to tourists.  However, a bright note is that while this year has been down from those past, it isn’t nearly as bad as other countries, most notably Mexico, where tourism numbers are down as much as 50%.  ICT (Costa Rica Tourism Ministry) Director Carlos Benavides stated that increases in airline flights, most notably Continental, which increased by three the number of flights to both international airports, as well as the addition of Jet Blue into the market, have helped bolster tourism figures.  Everyone in the tourism industry, myself included, is more than ready to see an end to this “crisis.”  Hopefully, the silver lining is that while the high season wasn’t that high, maybe the low season won’t be so low….wishful thinking, but it always pays to be optimistic.

Link to Article in La Nación

Costa Rica’s second marina, the Marina Papagayo, opened for business on December 15th of last year, but many of their boat slips remain empty.  A likely result of the lingering world economic crisis.  According to today’s article in El Financiero, during this past Semana Santa (or Holy Week), one of the busiest weeks of the year for tourism, 20 of the 180 available slips were occupied.  Compare this to the marina at Los Sueños, which claims that it has been at virtual 100% occupancy for several years since its opening in 2001.  The Papagayo Marina actually has capacity for much larger yachts than does Los Sueños, so-called super-yachts of more than 240 feet in length.  According to MOPT (the Ministry of Transportation and Pubic Works) there exists only one application with the intention of docking at Papagayo under the Ley de Marinas for an exclusion from importation taxes for yachts that will remain in the country more than three months, but less than two years.  Another manner by which yacht owners can maintain their ships docked at the marina without triggering import taxes is to apply for a temporary certificate of importation, which allows them to remain for up to three months.  According to the General Director of Customs, 15 of such certificates have been applied for with the intention of docking at Papagayo.  At present, 12 of them are active and 3 have expired.  The marina’s director, Roberto Kopper, stated in the article that Papagayo is receiving one or two ships per week under the temporary importation designation.  Kopper believes that the major marketing advantages for Papagayo are its proximity to the Daniel Oduber International Airport in Liberia, as well as the fact that there exist very few sizable marinas along the Pacific coast of Central America. The Marina Papagayo features many amenities such as a restaurant, pool, gym, gameroom, wireless internet access, among others.

Visit the Marina Papagayo Web Site

The Austrian hotel chain Fashion Hotels has invested $25 million in the construction of two new hotels in Costa Rica.  The first, Le Caméléon, will open in the coming weeks and is located in Puerto Viejo on the Southern Caribbean coast.  The group has invested $5 million into this property.  The second, The Ocean, will open in July at a cost of some $20 million.  Management of the Fashion Group cited several reasons as to why they decided to invest in Costa Rica at this time.  Among those reasons were its natural beauty, which is very attractive to North Americans and Europeans, its economic and political stability, its friendliness towards foreign investment and ample access to high technology.  The group is also constructing hotels in Dubai and Indonesia.  The Le Caméléon will be a “boutique hotel” with only 25 rooms and will include a private nature preserve.  The hotel will employ 30 persons.  The Group hopes to capture mainly an European market with this property, as Europeans seem to be more attracted to the Southern Caribbean coast than are North Americans.  The Ocean Hotel will be a luxury, but also a relatively small, hotel with only 44 guest rooms.  The hotel will employ 45 persons and will feature the unique offer of assigning a private butler (or what the Group calls a Personal Vacation Assistant) for each guest.  Fashion Hotels was founded in 2008 by Antonio Aouji and Mag Phil Ben Abdelkader, who were longtime hotel managers who grew tired of working for mega-hotels.  Instead they founded the Group with the idea of designing small boutique hotels that integrate glamour and nature.  Part of the concept is to continuously change the look and feel of the hotels by changing such things as color and decoration.  Abdelkader first visited Puerto Viejo in 1992 and fell in love with the place and decided then and there to build a hotel in the area.

The International Air Transport Association (IATA) is up in arms about Costa Rica’s recent decision to forgo the 3% hotel tax in favor of a $15 per ticket airline tax. Humberto Rivero, International Director for IATA claims that in the midst of this economic crisis, this will kill tourism to Costa Rica. Passengers will instead choose to go to another destination rather than pay the “onerous” $15 tax. Carlos Benavides, Costa Rica’s Minister of Tourism, says “hogwash.” That not a single would-be traveler to Costa Rica will change their mind due to this $15 tax. Also, that the elimination of the 3% hotel tax represents a far greater savings to tourists who on average pay for a 10-days stay in Costa Rican hotels. Benavides dismisses the claims of IATA and says that they are only looking out for the interests of airlines worldwide and not in the least bit concerned specifically about Costa Rica’s tourism.  What they are concerned about is that if the tax works for Costa Rica, that other major tourism destinations may follow suit and impose their own tax. Benavides states that the tax is not on the tourist in the first place, but is levied against the airline. He states that unlike hotels, airlines have the ability to alter their prices moment by moment and thus are in a much better position to weather the pain imposed by the tax. This he said in reponse to Rivero’s allegation that to remove the tax on hotels and impose it on airlines is unfair. The change in tourism tax structure is part of the Costa Rican government’s Ley de Fortalecimiento de la Industria Turística (or law to strengthen the tourism industry). ICT plans to use money raised by the new tax to fund an advertising campaign aimed at promoting tourism to Costa Rica. For my part, I believe the move makes sense. Like Benavides I can’t see Package Costa Rica customers changing their minds due to a $15 per ticket tax.  Times are bad, but hopefully they aren’t that bad.  Also, yes indeed the elimination of the 3% hotel tax will result in more savings for the tourists.

Article in La Nación

According to figures released by the World Tourism Organization at its International Convention held in Berlin, tourism arrivals to Central American countries in 2008 grew at a rate of 2% over 2007.  The total arrivals were around 8.2 million dispersed as follows:

Costa Rica - 1,979,789

Panama - 1,585,800

Guatemala - 1,526,729

El Salvador - 1,403,231

Honduras - 899,300

Nicaragua - 857,279

The data was supplied by the Centro American Tourism Agency (CATA).  According to CATA, what aided Central America was its focus on sustainable tourism centered around environmental conservation and preserving cultural traditions of the region.  A highlight that was noted in this regard is Costa Rica’s vow to become completely neutral in its carbon emissions by 2021.  For the year 2008, Costa Rica grew at a rate of 12% over the prior year.  Nevertheless, in the last six months of the year growth actually decelerated as the economic crisis kicked into full effect.  The reduction in the final six months was -8% compared to the same period in 2007. 

Link to Article in El Financiero