San José, Costa Rica, since 1956

Papagayo Peninsula Development Finally Taking Shape

In 1972, the Central American Bank for Economic Integration (CABEI) found a way to combat poverty in Costa Rica: development of 2,000 hectares (7.7 square miles) of beautiful seaside property in the northern corner of the northwestern province of Guanacaste.

Though their cause was noble, perhaps no single tourism project has generated as much debate as has development of the PapagayoPeninsula. The past two decades have been plagued by controversial government expropriations, legal wrangling and mixed community reactions regarding public access and benefit. Only in recent years has the project started taking the form its founders had envisioned.

While some controversy continues, the construction of the Four Seasons resort on the peninsula in 2004 has re-attracted international attention to the area and seems to have given new drive to the project.

Over the next several years, Papagayo will see new hotels, private homes and condos and a marina.

The Polo Turístico Golfo Papagayo – as the Papagayo Tourism Project is also known – consists of not only the Papagayo Peninsula but also the coastal land across from it, on the other side of Bahía Culebra, about 30 kilometers south of Santa Rosa National Park.

The project began in the early 1970s when CABEI conducted studies that revealed the tourism potential of Central America. The studies labeled Papagayo as the best place in the region to develop a major beach tourism project. A location in Honduras was chosen as well for another polo, and all of Central America was to benefit from both projects that would result in a total of 25,000 hotel rooms for the region, explained Javier Bolaños, executive director of Polo Turístico Golfo Papagayo and one of the original minds behind the project.

Disagreement made such a region-wide project impossible, and each of the five countries instead received support from CABEI to develop smaller projects independently.

Little happened for the next decade until 1982, when a law allowing the government to expropriate land and grant land concessions (renewable leases) for tourism projects was passed. Under the law, property on Papagayo would not be sold; rather, the government would award 10-50 year property concessions to developers.

Despite this progress, the first major step – which proved to be a disastrous one – did not happen until another decade later.

In 1992, the Costa Rican Tourism Institute (ICT) granted an approximately 1000-hectare concession to the Mexican development company Grupo Situr, which built, owned and operated numerous large-scale development projects throughout Mexico.

The Situr project, named Eco-Desarrollo Papagayo, was to include hotels, houses, golf courses, a commercial center and a marina. However, little more than this master plan ever saw the light of day.

While critics charged Costa Rica’s reputation as a low-impact, highly personalized ecotourism destination would be threatened by such massive tourism projects, Bolaños said it was on the cutting edge of sustainability.

The original studies called for high-density development, but Costa Rican officials decided to limit development to 20 rooms per hectare and buildings of no more than 14 meters high. Furthermore, buildings could cover only 30% of a developers’ property. These limits still stand.

Despite these efforts, criticism from environmentalists still arose – particularly regarding sewage treatment and deforestation.

ICT responded that the answer to the former was septic tanks, and the latter wasn’t a problem because the land wasn’t primary forest and had been heavily deforested over the years by cattle ranchers (TT, Dec. 31, 1993). The ICT cancelled at least one hotel project for environmental reasons.

In 1994, the Ombudsman’s Office issued a scathing report saying the government was negligent in exercising control over the massive tourism project and alleging violations of the public beach zone, violations of wildlife and forestry laws, and the granting of land-use concessions for periods longer than those allowed by law (TT, March 4, 1994).

Allegations have also been made that developers on Papagayo have been exempt from acquiring proper permits, particularly those from local municipalities. The ICT has denied such suggestions, insisting permits are necessary and municipalities have jurisdiction (TT, July 15, 1994).

In response to the criticism, a new master plan was released in 1995; however, it required no major changes for developers (TT, July 21, 1995). That same year, construction of Situr’s first hotel – a 400-rooom “village” – was halted by the Constitutional Chamber of the Supreme Court (Sala IV) halfway through construction (TT, Nov. 10, 1995). A drop in value of the Mexican peso kept Grupo Situr from later moving forward, and by 1996 the company was bankrupt and Papagayo was abandoned. The company’s president José Martínez was later arrested for tax fraud.

Smaller projects continued to move forward, but the 1,000-hectare Eco-Desarrollo Papagayo project was in a coma.

All along, one of the major concerns of Costa Ricans has been access to the area’s public beaches. Protests have been held on various occasions – including environmentalists taking boats and trying to camp out on the beach in front of the exclusive Four Seasons resort (TT, April 2, 2004).

Bolaños said all of the beaches in the area are open to the public, and developers must provide access to the beach.However, he said cars are not allowed on the beach, so what these hotels and restaurants must provide is a parking lot somewhere and then walking path to access the beach. In addition, at least five radial roads will eventually arrive in the region from main artilleries.

Over the past decade, Papagayo has become home to 1,154 hotel rooms in some eight hotels. The number is a far cry from the 15,000 rooms Bolaños says could one day be built in the area, and the project continues to draw controversy. In 2003, developer Enjoy Group opened Papayago’s sixth hotel, the Fiesta Premiere Resort and Spa, in 2003 (TT, Nov. 7, 2003). Enjoy Group’s president is former Tourism Minister Rubén Pacheco, who said negotiations for the hotel began while he was still minister, and he decided to retire from the post to work on the project, leading some people to cry foul play.

However, as more development happens, more interest is drawn to the area. The Eco-Desarrollo Papagayo project was taken over by a new concession holder, and in 2004 the exclusive Four Seasons resort was born out of the project. The peninsula now also includes a golf course, and private home and condo projects are moving forward, though Bolaños said none have been completed.

Two small hotels, amounting to 42 rooms, are also in construction in the Polo Turístico. Though he could not give project details, Bolaños said several international developers are making deals with one another to build “major” projects.

True to the original plan, Papagayo will  soon see the construction of a marina tomeet the aquatic needs of the area’s guests  and residents. The $15 million marina has received most major approvals; construction is expected to begin in June or July and take 18-20 months for completion, according to Roberto Kopper, director of the marina project.

The marina, which will be located at the northeast end of Bahía Culebra near Playa Manzanillo, will be complemented by a waterfront village featuring restaurants, bars, a gymnasium and language schools (TT, April 1, 2005).


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