More than Beaches, Salsa and Politics
For many of us, unstable economic environments, corruption, and safety concerns are reasons enough to avoid Latin America. Others, however, seek the vibrant atmosphere and its diverse natural territory. In some specific cases, the governments have intentionally diluted tourism growth as a result of their political engagements. Nevertheless, most of Latin America’s tourism growth stems from the governments’ commitment to promoting the sector and its economic potential. This blog post explores how geopolitical factors throughout the region influence tourism demand and future growth by way of several examples.
Cuban hotel employees often earn more than in any other profession thanks to tips from international visitors.
Cuba
Since 1959, the Caribbean Island has been ruled by a communist regime which caused low living standards and poverty for most Cubans. Opportunities for professional development do not exist and the freedom to voice one’s own opinion becomes dangerous, as it is followed by repercussions. On the other hand, the Cuban government has invested heavily in its tourism infrastructure and the number of international tourists has continually grown for the last 15 years. Today, every 10th Cuban works in the travel industry. This has enabled the locals to get in touch with international travellers, and sometimes even earn a reasonable salary.
Mexico
In spite of allegations of corruption, drug trafficking, and high levels of crime, Mexico leads Latin America in terms of tourism revenue, foreign arrivals and hotel developments in the pipeline. Despite the controversy, the tourism office is effectively marketing their culture, food and resorts, providing a safe holiday environment for their visitors.
Argentina
Having one of the highest inflation rates, the Argentinian government faces a massive challenge to stabilize its economy. However, inbound tourism kept increasing in pre-pandemic years, generating revenues worth $5.2 billion in 2019, and welcoming more guests than New Zealand and Oman together.
Countrywide protests with up to 1.2 m participants did not stop international tourists from visiting Chile.
Chile
Despite the Chilean protests from October 2019 to March 2020, in which demonstrations and riots across the country caused several deaths and thousands of arrests, the seasonal pattern of international arrivals remained stable, and revenue increased by 2% per tourist compared to the previous year.
Venezuela
A country where, contrary to the previous examples, tourism suffers from an unstable political and economic environment. Over the last couple of years, tourist arrivals and income have significantly reduced due to the authoritarian regime.
The Angel Falls in Venezuela used to be one of the top tourist attractions in the country.
What does the future hold?
With the exception of Venezuela, it certainly appears that the tourism industry across Latin America isn’t hindered significantly by local, political, or economic issues, with many holidaymakers focusing on their broad relaxation opportunities.
Labour markets and economies now rely on tourism, with countries including Uruguay or Panama employing more than 14% of citizens across the industry, and smaller destinations such as the Dominican Republic, Belize, or Grenada, generating 23% of the country’s GDP from the tourism industry. Looking at these numbers, the question naturally arises; why are Latin American tourism statistics and the required infrastructure so far behind its northern neighbours, Europe and Asia? In 2019, tourism spend in the USA equated to a staggering $214.1 million, whereas Mexico, which generated the highest tourism spend across Latin America produced just $24.5 million, with Costa Rica producing just $4.0 million.
Despite particular success stories, the global perception of Latin America is challenged. Nonetheless, there seems to be an optimistic outlook with the big industry players identifying potential and together with international investors Hilton (105 projects), Marriott (103 projects), Accor (80 projects) and IHG (58 projects) are dedicated to expanding their portfolios in these markets. Moreover, Airbnb is committed to supporting local hosts in diverse and new destinations across the continent. This indicates the considerable opportunity for growth, enhancing both traveller experience and local economies.
What we, as possible visitors should endeavour to avoid, is to view Latin America as a single tourism destination and start recognizing the diversity of each nation. We must encourage ourselves to travel the continent and its many facets, to taste new flavours and experience authentic hospitality.
Author: Loris Knaus
Loris joined Hamilton - Pyramid Europe in March 2022 as an Operations Analyst, supporting the European team.
Before joining Hamilton, Loris gained operational experience in a boutique hotel in Switzerland and during the pre-opening and opening of a Swiss hotel in Dubai. Through his social commitment, he also worked for several humanitarian projects in Togo and Cuba.
Loris graduated with a Bachelor of Science in International Hospitality Management from Ecole hôteliere de Lausanne. During the last year, his focus was on Strategic Hotel Investments, Hotel Planning and Development, and creating a hospitality platform to connect start-ups with industry stakeholders.