Latin America waits for tourists to return

“PERÚ, DESPEGUEMOS nuevamente” (“Peru, let’s take off again”) pleads the slogan in big letters across the glass front of Lima’s airport terminal. In the Plaza de la Independencia in the colonial heart of Quito, Ecuador’s capital, a small group of blond tourists stands out like an exotic species in a sea of dark-haired street vendors. From the beaches of the Caribbean to the lakes of Patagonia, the question being asked is that posed earlier this year in a cartoon by El Roto in El País, a Spanish newspaper. He drew two empty sun loungers with one asking the other, “Do you think they’ll come?”

The answer matters. Tourism plays a big role in most of the economies of Latin America and the Caribbean. On a simple average of all 34 countries in the region, it accounts for around 20% of GDP, according to an index drawn up by the Inter-American Development Bank (IDB). The figure ranges from more than a third for several Caribbean islands to 15% in Mexico and 8% in Brazil. In addition, tourism provides a large share of employment, from 80% or so in the likes of Aruba and Antigua to 13% in Mexico and 8% in Brazil. The Caribbean is similarly dependent on tourism for foreign exchange, and it accounts for around 10% of export earnings in Ecuador and Peru.

Foreign tourism to the region has dipped in the past because of international crises. In 2009, during the financial crisis, it fell by 5%. But this time “tourism was shut off like a tap,” says Henry Mooney of the IDB. Arrivals fell by 70% in 2020 as both destination and source countries closed their borders. The World Travel and Tourism Council (WTTC), an industry body, estimated that the region’s tourist industry as a whole lost $230bn and 12.4m jobs in 2020. Latin America’s airlines have taken a beating. Latam and Avianca, two of the three biggest carriers, sought bankruptcy protection. Tourism revenue in the Caribbean last year was only a quarter of what had been forecast.

Now a modest revival is under way, especially in the Caribbean, as vaccination progresses and borders are reopened. Cruise ships are sailing again, though they are struggling to adapt to health regulations. Americans are venturing back to the beaches. The WTTC says that tourism is recovering faster in the Caribbean than in other parts of the world, with forecast growth of 47% this year from last, meaning an extra $12bn in revenue.

The reopening is slower in South America, a longer flight from most big markets. Latin Americans and Americans are trickling back but not Asians or Europeans, says Pedro Morillas, who owns a 350-room four-star hotel in Cusco in Peru. “We had a lot of bookings for the second half of this year but many cancelled,” says Roque Sevilla, the boss of Metropolitan Touring, a large tour operator in Ecuador, which owns three ships in the Galápagos Islands and a retreat in a cloud forest. With tours starting at $5,000, excluding international flights, for many “Ecuador is the trip of a lifetime and they want to be sure they won’t suffer restrictions and will be safe.” Many in the industry think travel won’t reach its pre-pandemic level until 2024.

For some, that will be too late. A survey of 255 businesses by the Caribbean Hotel and Tourist Association in February found that 14% of them were unlikely to reopen. For others the slow recovery means a struggle to adapt. The occupation rate at Mr Morillas’s hotel, normally 85%, with foreign tourists nearly all the guests, went to zero, forcing him to lay off his 150 staff. “The blow was sudden and drastic,” he says. With no revenue coming in, interest charges on his debt to the bank piled up. But the hotel is open again, he has rehired 15 staff and negotiated a grace period on the bank loan. “The hotel will survive,” he says.

As part of a large conglomerate with deep pockets, Metropolitan Touring was better placed. Mr Sevilla carried on paying its 850 workers 75% of their wages for a year before reluctantly laying off 85. He has cut prices and found a new market in Ecuadorean tourists. Latam and Avianca are about to emerge from bankruptcy.

Governments can help to speed recovery, says Mr Mooney, by working with the industry to co-ordinate health-protection measures throughout the tourism chain and to conduct marketing and market research. “People will travel differently and require different things,” he says. Many Latin American countries are close to overtaking their pre-pandemic level of economic output. But employment is lagging behind. The sooner tourists come back the quicker that will change.

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This article appeared in the The Americas section of the print edition under the headline “Waiting for the tourists to return”

Source: Einnews

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