Exchange Rate Hammers C.R.’s Tourism Industry
While the number of tourists is up this year, hotel and hospitality revenues are being punished by the continued depreciation of the U.S. dollar. On Thursday, a dollar could be bought for ₡506 colones, ₡70 less than its value one year ago.
On Thursday, the Costa Rican National Tourism Chamber (Canatur) gave a presentation to highlight the financial damage done to the balance sheets of its members, best exemplified by a survey that revealed 66 percent of the country’s hotels and other tourism venues reported being negatively affected by fluctuations in the exchange rate.
“Members of the tourism industry set their rates in dollars and receive payments in dollars,” said Juan Carlos Ramos, the president of Canatur. “They then have to be converted to colones to make payments and pay salaries. With a devalued dollar, less colones are available.”
Part of the presentation, which also included participation of representatives of the Costa Rican Tourism Professionals Association (Acoprot), the Costa Rican Hotel Chamber CCH) and the Costa Rican Restaurant and Hospitality Chamber (CACORE), compared the tourism years of 2006 and 2010, when the exchange rate hovered around the same value. In those four years, Canatur found that average operating costs have increased 11 percent, services costs have risen 31 percent and minimum salary is up 46 percent.
“We are earning 2006 levels of income with 2010 costs,” said the President of the CCH, Carlos Lachner.
According to the study, the effects of the exchange rate have resulted in reductions in personnel, hotel and lodge closures, increased prices for tourists and tour operators, and less business for indirect beneficiaries of tourism.
Ramos said that representatives of the tourism sector have already spoken with Costa Rican President Laura Chinchilla and representatives from the Central Bank of Costa Rica (BCCR) to discuss potential interventions to limit the negative impact of the falling value of the dollar versus the colón.
According to the Costa Rica Tourism Board (ICT), revenues from tourism accounted for 6.8 percent of the nation’s gross domestic product (GDP) in 2009 and over 7 percent in 2007 and 2008. In the last three years, earnings from tourism have averaged around $2 billion.
Through September of this year, the ICT reports that an estimated 1.6 million people have visited Costa Rica in 2010, a 9 percent increase over the same period in 2009.
For more on this story, see the Nov. 5 print or digital editions of The Tico Times
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