San José, Costa Rica, since 1956

Costa Rica Tourism Singing Blues

On a Saturday night in Puerto Viejo in late January, Rocking J s is packed. The hostel, a popular destination for backpackers and budget travelers on the Caribbean, teems with twenty-somethings shouting and laughing, kicking back with a beer after a long day of surfing and tanning on the beach.

Unfortunately, nights like this are increasingly rare in Costa Rica these days. In interviews with nearly a dozen hotel owners, tour operators and tourism officials, almost all expressed the same concern: The global economic downturn is beginning to take its toll on tourism in Costa Rica. And many are worried, unsure when the crisis is going to end and just what can be done to weather the storm.

We were dead in the water, Rocking J s owner Joseph John Korchmaros said of the slowdown that hit his hostel beginning in October, considered to be the high season in the Caribbean. We could barely stay afloat. We didn t have a high season.

For the tourism industry in much of the country, the high season is just beginning. But according to a poll of 66 businesses conducted by the National Tourism Chamber (CANATUR) last month, more than 60 percent of respondents said reservations for the first quarter of 2009 were down compared to 2008. Those that reported a slowdown said reservations had declined an average of 29 percent. And the number of passengers at JuanSantamaríaInternationalAirport was down 8.25 percent for the first 15 days of the month, CANATUR reported.

Definitely, there is a slowdown, said Alexi Huntley, commercial director at Nature Air. We ve seen about a 10 percent reduction in passengers flown. People are really shopping around; they are more price-sensitive and are comparing different providers. People are holding on to their money more, and that hurts everybody. Everyone s a little freaked out.

Employment fear factor

Many tourism employees are especially nervous about potential job cuts. The national jobless rate increased for the first time in three years in 2008, and President Oscar Arias warned of higher unemployment and increased poverty during his address on the economy last week.

For their part, many in the tourism industry said are doing what they can to avoid making job cuts. For hotels, that often means reducing utility expenses such as water or electricity, as well as asking employees to take unpaid days off.

Some of our people have been with us for 15 or 16 years, said Sue Kalmbach, owner of La Paloma Lodge on the OsaPeninsula. We don t want to let them go. There aren t any jobs out there for them to go to.

Kalmbach and others have already let go of short-term labor hired before the holiday season. But the prospect of a prolonged slowdown has many owners and operators worried that more job cuts may be inevitable.

You don t want to keep people laid off, said Brad Johnson, owner of Aguila de Osa Inn at DrakeBay. Maybe we have them work two weeks a month so everyone can keep their jobs. I can t afford to keep everyone on. It s scary.

Changing habits

Along with tightening their wallets, travelers are adjusting to the economic slowdown in a variety of different ways.

They re trying to be careful with expenses, such as food, drinks and gifts, said Diego Araya, operations manager Hotel Capitan Suizo in Tamarindo. While occupancy in January was down only about 4 or 5 percent, Araya estimated, the downturn was closer to 10 percent at Capitan Suizo s restaurant and 20 percent at the gift shop.

It is not very bad, he said, but what you see in Tamarindo, in shops and restaurants, it is down.

Those that do travel to Costa Rica are often sticking to one location instead of spending weeks exploring the country, said Michael Mendez, reception and reservation manager at Desafio Adventure Company in La Fortuna, which has seen a 40 percent decline in clients from this time last year.

They are taking vacations, but spending less time, Mendez said. They don t visit five different cities, now they choose just one. And they think a lot more before they spend.

More than anything, hotels are reporting a strong surge in last-minute reservations, as travelers search for the best deals without worrying about accommodations filling up. Sure, we re down from last year, but the glimmer of hope is that people are waiting a little longer to make reservations, said Michael Caggiano, president of The Alta Hotel in Escazú. We re all holding our breath to see what May and June bring.

Silver lining

The rise in last-minute reservations is a glimmer of optimism for many owners and operators worried about 2009 s low numbers.

Hostels such as Rocking J s also hope that tighter wallets could be a boon for budget travel. And many are putting together packages and promotions at discounted rates, making the current economic climate a traveler s market, said Jim Damalas, principal owner and general manager of Hotel Sí Como No in Manuel Antonio and Villa Blanca Cloud Forest Hotel & Spa in San Ramón.

We have to come up with new ideas to add value for clients, said Damalas, who said hotels with green credentials would continue to draw customers interested in sustainable tourism. Last-minute promotions and specials, he said, were working well.

I think you have to be creative in a time like this, Kalmbach said, then you just have to hunker down and try to make it through.



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