San José, Costa Rica, since 1956

Tourism Showing Slow Signs of Recovery

MANAGUA – Following a year of political and economic instability, Nicaragua’s tourism industry is starting to show signs of recovery this year, with tourism up 8.4 percent during the first quarter of 2008.

After getting off to a slow start last year, the government of Daniel Ortega has since worked to establish positive relations and permanent dialogue with the tourism sector, and Tourism Minister Mario Salinas continues  o receive high marks from private sectorleaders for his behind-the-scenes lobbying on behalf of Nicaragua.

Important advances, such as the long awaited

Coastal Highway

– scheduled to break ground in the coming months – and the forthcoming ratification of the Coastal Law, expected to be approved by the National Assembly in the coming weeks, will have tremendous impacts on the country’s climate for tourism investment.

Last year, the tourism sector generated $255 million – an annual earning that the government hopes to double by 2012.

The $120 million

Coastal Highway

project, which will unite Nicaragua’s Pacific beaches to the Costa Rican border, is expected to attract about $700 million in tourism investment alone, as well as dramatically increase the number of tourists visiting from Costa Rica, according to Minister Salinas (NT,March 28).

The Coastal Law, meanwhile, will finally establish clear rules to owning and building along the coastline, and is expected to signal a green light to many investors who have anxiously awaited the law for years.

President Ortega has identified tourism as a priority for his government’s economic development and poverty reduction plan.

“Tourism is very important because it generates income quickly and it allows Nicaraguan families to offer services,” Ortega said. “The more families that offer these tourism services, the more people benefit.” Salinas, for his part, says tourism is “a very efficient way to fight poverty.”

The tourism minister notes that tourism activity stimulates all sectors of the local economy, from transportation and agriculture to the service industry and small businesses.

It also helps create jobs in all lines of work, employing men, women and youth in a variety of activities that support tourism, Salinas said.

“(Tourism) creates opportunities for all business, both in the formal and informal economy,” Salinas said. “One doesn’t need a lot of investment to become part of the tourism economy.”

Big Tourism vs. Small

While the Sandinista government recognizes the importance of tourism for poverty reduction, and has insisted that tourismdevelopment projects respect the culture and give back to the community through social programs, President Ortega has – at times – sent mixed messages about the type of tourism he wants for Nicaragua.

Despite a mighty push by the private sector to get Ortega to support the Tourism Investment Bonds (BIT) Law, an initiative that developers argued was necessary to attract major tourism investment, the bill wasn’t supported by Ortega and ultimately died in the National Assembly last year.

At other times, Ortega has appeared very nationalistic when it comes to tourism, celebrating Nicaraguan projects while warning against foreign brand-name tourism, such as that which has been attracted to Costa Rica.

During a speech last February, Ortega said “We don’t win anything by handing over our tourism to transnationals that build giant buildings and do their own business.”

On the other hand, Ortega applauded the Guacalito beach tourism development project that’s being developed by Nicaraguan business mogul Carlos Pellas.

“Look at the name of this project,” Ortega said. “It’s called ‘Guacalito.’ It’s not a Hilton project. No, not that! It’s not one of these great big brand-name tourist projects; it’s not a Sheraton with a 10-floor building blocking the ocean view.”

Ortega also remembered some advice that former Costa Rican President Rodrigo Carazo allegedly gave him: “He said, you (Nicaraguans) who haven’t yet developed tourism, go to Costa Rica, send a mission, to learn how not to commit the errors that we made in Costa Rica – and continue to make.”

Instead of big brand-name developments, Ortega has called for a tourism that reflects Nicaraguan culture, tradition and heritage.

“Tourists from the United States and Europe want to come and experience our culture, our identity and our nature.”

Yet in more private moments, Ortega has also shown a capacity and willingness to reach out to larger foreign investors – even the ones who represent the big chains.

Mike Cobb, CEO of Gran Pacifica, a $72 million hotel, condo and townhouse development with a letter of intent from Marriott Hotels, met recently with Ortega to explain his project. Cobb says the president was “very receptive” to the project and seemed impressed with the social programs that Gran Pacifica has integrated into the local community of Villa el Carmen, one hour west of Managua.

“I came away with no misgivings. Zero,” Cobb said of his recent meeting with Ortega.

Lucy Valenti, president of the Nicaraguan Tourism Chamber (CANATUR), said a project such as the Marriott, or another major hotel chain, would provide a very important international seal of approval for Nicaragua’s tourism industry. Not only would it help draw more U.S. tourists with a recognizable seal of quality, but it would also pave the way for other big capital to invest here, she said.

“International chains, especially for U.S. tourists, are a mark of confidence in a country like Nicaragua, which still has an image problem,”Valenti told The Nica Times. “(An international chain) would have an extraordinary positive impact.”

The Coastal Law

Tourism industry leaders say another important tool for increasing investor confidence will be the forthcoming Coastal Law, which has been a subject of speculation and debate for years.

The Coastal Law seeks to regulate coastal development here by sorting out the tangle of overlapping legislation that currently pertains to coastal land ownership and building codes. The law was first set to pass in 2006 and then again in 2007, but was sent back to the drawing board each time, amid fears that it would be a confiscation law.

CANATUR’s Valenti says the private sector and government have been working together to redraft a new version of the law, and that the politicians now understand the importance of private sector consensus. Valenti says she is encouraged by the way the talks have gone, and thinks the final law will be a positive tool to establish clear rules and regulations – after years of uncertainty.

Though nothing is finalized, Valenti says there appears to be consensus that the first 30 meters of beach from the high-tide line will remain public land, on which all construction is prohibited. The next 250 meters would then be “restricted use,”meaning that certain construction is allowed, pending permits and approvals.

In the case of state land, the 250 meters would be open to private concessions, but the rights of private property will be respected for land that is privately held and properly titled, Valenti said. If the law passes as such, she said, it would eliminate concerns that the law could be used to confiscate property or prevent owners from building on private land.

However, she added, “I’m not going to sing victory until this actually becomes law.”

Ortega has called for the law’s approval as soon as possible, and Valenti expects it could be passed within the coming weeks.

Seeding the Future

Though Nicaragua’s tourism growth has not yet recovered to the 16 to 17 percent growth rate it experienced several years ago, and tourism investment has slowed considerably from the 2005 growth, industry insiders say they are hopeful about the groundwork that’s being laid for the future.

Donald Porras, president of the Nicaraguan Chamber of Small and Medium-Sized Tourism Businesses (CANIMET), says Nicaragua is in desperate need of basic infrastructure to attract more visitors and investment.

The blackouts of last year, for example, are still having a hangover effect on the tourism market, he said.

“We have a calculation that for every tourist who leaves Nicaragua unsatisfied, 11 more potential tourists won’t come due to bad word of mouth,” Porras said.

While the public and private sector are working together to resolve the electrical infrastructure problem, a similar effort is needed to resolve the country’s tourism infrastructure problem, including new roads and more hotel rooms, Porras said.

“In Costa Rica, there are 30,000 hotel rooms, and in Nicaragua we have only 6,000,” he noted.

Porras, who sits on the country’s board of directors for tourism incentives, says Tourism Minister Salinas is quietly doing his part to fix another tourism infrastructure problem: the lack of direct flights to Nicaragua.

Porras said the minister is currently negotiating with airlines to try and lure new direct flights here from Spain, the United States, Mexico and Brazil – any or all of which would make Nicaragua a more attractive tourist destination.

“You have to plant the seeds if you want to reap the harvest,” Porras said. “But I think we’ll start to see some fruits by next year.”


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