Decision Endangers Country's
Tourism Future, Sector Leaders Say
By Katherine Stanley
Tico Times Staff
kstanley@ticotimes.net

Costa Rica is in grave danger of losing its supremacy as Central America's tourism leader, tourism sector representatives said yesterday at a press conference.

While poorly maintained roads, a lack of hotel rooms, and increased competition from other Latin American countries were mentioned as reasons for unprecedented concern, the main focus of the leaders' opposition was a recent Comptroller's Office decision to eliminate tax breaks for tourism businesses here.

The breaks allowed for various tax-free imports such as vehicles for car-rental companies and furniture for hotels. After an extended disagreement about whether the tourism incentive law applied only to new businesses for a short period of time, or was a long-term support for existing businesses, the Comptroller's Office rescinded the benefits last week, to the consternation of the Costa Rican Tourism Institute (ICT) and other groups (TT, Jan. 28).

The decision could cause Costa Rica to lose countless millions in foreign investment and 177,822 direct and indirect jobs, said William Rodríguez, president of the National Tourism Chamber.

Rodríguez said he calculated the numbers based on last year's hotel construction rates. In 2004, 833 new hotel rooms were constructed here, he said – a rate unlikely to improve in future years if foreign investors seek projects elsewhere, something Rodríguez and others say the Comptroller's decision will cause. Continuing at that rate, the country will be 6,880 rooms short within eight years, driving down sector growth and causing job loss, Rodríguez said.

As it is, many hotels maintain 100% occupation rates during the high season, and Agustín Monge, a representative of the Costa Rican Hotel Chamber (CCH), said the national average from December-May is approximately 80%.

“We are turning away tourists in droves,” Rodríguez said. “We'll be handing visitors to our neighboring countries (as a result of the Comptroller's decision).”

He also said Costa Rica's high demand, but low room availability, is one cause of higher prices here than elsewhere in Central America.

Monge said the fact that the Comptroller can make such far-reaching decisions unilaterally is enough to scare away prospective investors.

“How do we explain to the Marriott or the Four Seasons… that the rules of play can be changed on a whim?” he said.

According to Monge, the Costa Rican Tourism Institute (ICT) plans to present a petition today to the Comptroller's Office, requesting clarification of the reasoning behind the controversial decision.