San José, Costa Rica, since 1956

Costa Rica Tourism Industry Copes With Downturn

Bustling beaches and full hotels are a familiar sight during Costa Rica’s high season, traditionally running from January through April in most of the country. Save for Semana Santa, or Easter week, however, such cases have been few and far between this year.

As the economy goes, so goes the tourism industry, which has been hit particularly hard as consumers decide to cut back on spending and tighten their belts through the tough times.

In March, the government projected economic growth for 2009 to land somewhere between 0 and 0.5 percent. Meanwhile, in a survey of 112 tourism-related businesses conducted last month by the National Tourism Chamber (CANATUR), more than 67 percent projected that tourism activity would decline in May, June and July compared to the same period last year.

“Tourism is one of the economic areas that is impacted the most and the fastest, but at the same time that can recover the fastest,” said Mario Socatelli, executive vice president of tourism consulting group Desarrollos Turísticos Los Cuatro, which projected the number of tourists to decline between 5 and 7.5 percent in the first quarter of 2009, with hotel occupancy falling below 50 percent for the same time period.

According to CANATUR, just over 76 percent of those surveyed said business was down the first three months of the year from 2008, and 65.5 percent reported reduced occupancy in November, December and January compared with the same period the previous year.

The numbers were also bad for employment, with more than 32 percent of tourism businesses reporting layoffs during March and April. A previous CANATUR survey found that 30 percent of companies had to lay off employees during the last quarter of 2008, and just over a quarter of businesses laid off workers in January and February.

Furthermore, those companies that were forced to lay off workers were hit particularly hard, especially in the hotel sector, which laid off an average of 14.5 employees per business, among those that experienced layoffs, during January and February.

Some tourism outlets, on the other hand, have tried to take advantage of the economic downturn.

Recreo Costa Rica, a luxury villa resort in the northwestern Guanacaste province, is offering a free night for recently laid-off workers who stay for four nights or more.

The discount, which the resort has marketed mostly in New York City, has helped the hotel “weather the storm,” spokesman Will Candis said.

“It’s been very successful,” Candis said. “People are getting nice severance packages, and we noticed there was this opportunity.”

Package deals have also been a boon for Jim Damalas, principal owner and general manager of Hotel Sí Como No in Manuel Antonio, on the central Pacific coast.

“We’re holding our own,” said Damalas, who added occupancy was down at Sí Como No about 10 percent compared to last year.

“We’re not doing as well as last year, but we’re not in a grave situation yet.”

Damalas has elected to “add value” by assembling discount packages rather than lowering rates, and thinks smaller, boutique hotels and those with strong ecotourism credentials are best equipped to attract customers during the crisis.

“I don’t think Costa Rica needs to be a bargain basement,” he said. “It needs to maintain caliber of quality as a destination. I think people are looking for something that is unique and hopefully sustainable.”

Indeed, while tourism business has dried up at some locations throughout the country, travelers have continued to flock to Costa Rica’s unique and eco-friendly destinations.

“It’s been packed this year,” said Jesse Lachenman, who runs Turtle Beach Lodge outside Tortuguero, on the northern Caribbean coast. “There have been some cancellations for sure, but we were honestly expecting a lot more, and (the economy) hasn’t changed much.”


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