Caribbean & Central America - February 2021

Tourism is a major contributor to Central American economies and regional governments are scrambling to rebuild the industry amid continued disruption caused by the coronavirus (Covid-19) pandemic.

Visitor numbers crashed dramatically as the pandemic took hold in the second quarter of 2020, and the situation is far from returning to normal. The economic impact in Central America cannot be understated, given the region’s reliance on income from tourism. One way to illustrate this is by using the Inter-American Development Bank (IDB) Tourism Dependency Index (TDI) which gives each country a score out of 100, with higher numbers showing greater dependency on the industry. The most recent TDI, published in July 2020, gives Belize the highest score in Central America on 38.4, followed by Panama (16.8), Costa Rica (14.7), Honduras (12.7), El Salvador (12.5), Nicaragua (10.6), and Guatemala (9.3). By way of comparison, these numbers are higher than every South American nation bar Uruguay (11.1).

Belize finds itself in the most perilous situation as tourism accounts for almost 40% of GDP, compounding the already difficult economic outlook faced by Prime Minister Johnny Briceño, who took office in November 2020. The new government said it had ambitious plans to boost tourism, including building a new airport in the tourist town of Placencia, Stann Creek district; investing in other infrastructure; trying to revive cruise tourism; and rebuilding confidence after the pandemic. However, it is not clear how the government plans to pay for these plans while its finances remain in a parlous state: on 24 November 2020 credit ratings agency, Moody’s Investors Service, downgraded Belize’s rating to ‘Caa3’ from ‘Caa1’ warning that this “reflects the structural deterioration in government finances that is likely to push debt ratios to very high levels of over 130% of GDP”. Yet Tourism Minister Anthony Mahler recognised the need for action. “Our priority is to support the tourism business and jobs, and restore traveller confidence”, Mahler said. In January, the Belize Tourism Board implemented sanitary protocols to position the country as a safe destination for travellers.

Tourism is also a crucial industry in Panama, which earned 13.6% of its GDP from the sector in 2019, according to figures from the World Travel and Tourism Council, which also show that travel and tourism contributed 14.7% of total employment and US$5.7bn in revenue, or 21.7% of total exports. In July 2020, the president of the national tourism board (Camtur), Ernesto Orillac, estimated the impact of the pandemic meant the tourism sector was losing US$12m a day, and in December 2020 national daily La Prensa cited estimates from the International Air Transport Association that the tourism and aviation sectors lost a combined total of just over US$4bn in 2020. In January 2021, Panama’s official tourism authority (ATP) released its plans for this year, including a focus on conservation and domestic tourism. The ATP said it would fund improvements in infrastructure and urban planning as part of its integrated urban growth plan for tourist cities, as well as developing a system of hiking trails and a ‘coffee circuit’. Other key points include training programmes for industry staff and the scheduled opening of the Amador convention centre, a new venue for international fairs and exhibitions which will be the largest facility of its kind in Latin America. However, the ATP will have a budget of US$42m, compared to the US$83m it asked for, and the Panama tourism promotion fund (Promtur), a grouping of tourism businesses which works closely with the ATP, has also complained about budget cuts.

Costa Rica received just 1.01m visitors in 2020, a third of the number of visitors in 2019, according to statistics from the country’s tourism institute (ICT), a government body. Tourism Minister Gustavo Segura stressed that the country performed well compared to some other nations, which saw tourism plummet to just 5% of previous levels. The ICT also highlighted that 71,000 people arrived in the country in December 2020, double that registered the previous month as restrictions were lifted and 20 airlines resumed flights. Tourism authorities are working with a national network of private health clinics to make coronavirus testing easier for travellers, and they are also working to make beaches more accessible with a specially equipped truck that will tour different parts of the country. Authorities are also targeting couples travel, releasing eight different suggested travel plans for how to enjoy Costa Rica with your partner.

On 2 February Honduras’s deputy tourism minister, Selvin Barralaga, said the sector lost over US$1.3bn and some 100,000 jobs in 2020 due to the pandemic and the damages caused by the hurricanes ‘Eta’ and ‘Iota’, which struck the country in November 2020. However, Barralaga is optimistic about recovery in 2021. He said hopes were high for 2020 before the pandemic and the hurricanes, with international flights up 28% in January and February 2020. Recovery is a huge challenge but Barralaga underlined that the sector is a priority for President Juan Orlando Hernández. On 22 January, the Hernández government promised L7bn (US$290m) in funding for tourism, among other sectors, to help the recovery. In terms of travel initiatives, Tourism Minister Nicole Marrder said authorities will promote the Trujillo area on the country’s northern coast.

In August El Salvador’s tourism minister, Morena Valdez, estimated the industry had lost US$1.145bn due to the impact of the pandemic, with 30%-40% of jobs in the sector lost. President Nayib Bukele has bet big on tourism, with a focus on the country’s surfing beaches. Under the ‘Surf City’ project the government is investing approximately US$12.4m in roads and improving infrastructure to link surf spots such as the departments of Ahuachapán, Sonsonate, La Libertad, La Paz, San Miguel, Usulután, and La Unión. The project started before the pandemic, but it remains a key part of the tourism strategy for 2021. On 7 December 2020, Valdez swore in the first regional committee for tourism development for the Surf City area, designed to develop sustainable growth plans. And on 16 January Valdez announced non-refundable grants to microbusinesses in the Surf City area. A total of US$1.3m in funds from the Inter-American Development Bank will be handed out. Other efforts include certifying over 200 tourist guides and businesses to operate according to biosecurity measures that will allow a safe reopening of the sector.

As for Nicaragua, in August, Lucy Valenti, the director of the national tourism chamber (Canatur), said that due to the domestic political crisis (stemming from the crackdown by the government led by President Daniel Ortega on its opponents, which began in April 2018) and now the pandemic, employment in the tourism sector had fallen “dramatically with just some 20,000 to 24,000 jobs in the sector active, down from 120,000 in 2017”. Valenti said that prior to the pandemic, the sector was expecting revenue of some US$460m in 2020, already less than the US$840.5m in 2017 but that as a result of the pandemic, it now expected to generate just a quarter of this forecast. In early January Nicaragua’s tourism institute (Intur), the official tourism agency, released its plans for 2021 with a focus on domestic and regional tourism (see sidebar).

In Guatemala, at the beginning of December 2020, national daily Prensa Libre cited figures from the national tourism institute (Inguat) which forecast that the country would receive a total of 547,000 visitors in 2020, down from 2.56m in 2019. Authorities will run a campaign to attract international visitors marking the bicentenary of independence, hot on the heels of a domestic tourism campaign at the end of 2020. Inguat has also issued biosecurity certification to more than 100 businesses to encourage visitors.

Ruta Maya

There are also interesting plans to promote the so-called ‘Ruta Maya’, a circuit linking key sites from the ancient Maya civilisation which runs through Mexico, Guatemala, El Salvador, Belize, and Honduras. Each of these countries is part of the Organización Mundo Maya, a regional body that aims to promote multi-stop trips focused on the area’s Mayan history. Another regional organisation, the Central American integration system (Sica), has recognised the importance of tourism but is yet to reveal any detailed plans to rebuild the sector in 2021.

• Nicaragua’s plans

According to the Intur plan, other key areas on which it plans to focus include improving the quality of staff training and the promotion of inclusive tourism that is accessible to everyone. Intur will release updated digital packages each month showing what visitors can do in each region of the country, as well as visiting international fairs to promote Nicaragua as a destination. Businesses will also benefit from digitalised registration and payment systems, said Intur.