THE TELA BAY RESORT PROJECT AND TOURISM ON

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 002057

SIPDIS

E.O. 12958: N/A
TAGS: EIND SENV HO
SUBJECT: THE TELA BAY RESORT PROJECT AND TOURISM ON
HONDURAS' NORTH COAST



1. Summary: Honduran investors and government officials
continue to market the USD 280 million Tela Bay project, a
luxury resort that has been in the pipeline for more than
thirty years and has yet to break ground. The resort,
projected to include four hotels, 250 residential lots, and
a golf course, will cover approximately 1000 acres of land
on Honduras' Caribbean coast, on a site bracketed between
two indigenous villages. The project investors group FITH
has announced that construction will begin in November 2005,
and that the USD 127 million first phase will be completed
in September 2007 with the opening of the first two hotels.
Meanwhile, smaller tourism projects are also in development
along Honduras' North Coast, including World Bank-financed
sustainable tourism projects in six coastal communities.
These projects seek to promote economic growth along the
coast by developing a strategy for coastal tourism that
takes into account natural resources and attractions along
with social, environmental, and conservation concerns. End
summary.


2. The Tela Bay project has undergone a number of revisions
since its conception in 1972, although it has never
progressed beyond the planning stages due to lack of
organization and insufficient funding. In its present
incarnation, the USD 280 million project is being funded by
the GOH Institute of Tourism (IHT),which has already
contributed USD 2.7 million in start-up costs; a sustainable
tourism loan from the IDB; and private investment, including
major Honduran banks and businesses and US-owned Resorts of
the World, which will invest USD 11 million. These public
and private investors will collectively hold a 51% share of
the resort, with the GOH holding the remaining 49%. (Note:
The list of private Honduran investors includes businesses
owned by a wide range of the most politically influential
families in the country, with direct connections to several
members of the current administration. End note.) Hector
Rodriguez, the IHT Tela Bay investment manager, says that
the present design of the resort, with two four-star hotels,
two five-star hotels, 250 residential lots to be sold as
sites for luxury villas, an 18-hole golf course designed by
Gary Player, a tennis club, horse stables with riding
trails, beach access, and nature trails through the Jeanette
Kawas National Park, suits the profile of the "ideal" type
of tourism that Honduras should be attracting to the North
Coast.


3. The site of the project has been somewhat problematic for
the planners. The resort will run along 3.2 kilometers of
Caribbean Sea beachfront, verge into Jeanette Kawas National
Park, dislodge a number of property claimants, and border
two indigenous villages inhabited by the Afro-Honduran
Garifuna community. Rodriguez told Econoffs that all
property concerns have now been resolved. (According to
Rodriguez, the land, which the GOH has been reclaiming since
1992, was never legally owned by private citizens.) To
adhere to Honduran law that cedes beachfront property to the
public, plans for the project call for a set back from the
beach to ensure continued public access to the beachfront.
No construction will take place on the beach itself.
Rodriguez also said that the planners have taken natural
resource protection into account, and will include a buffer
zone to ensure that the construction and usage of the resort
does not interfere with or damage the national park's
ecosystem. And lastly, Rodriguez says that they anticipate
no problems with the local Garifuna villages, as the resort
will attract tourist revenue, provide employment, and add
services to the communities.


4. In a visit to the coastal towns of Omoa and Tela, Econoff
spoke to local tourism authorities who were less optimistic
about the Tela Bay project. Both towns are among the six
coastal communities that have received World Bank funding to
develop sustainable tourism projects. Although the tourism
coordinators in both communities agreed that an influx of
wealthy tourists could benefit their local economies, they
also expressed concerns over the potentially negative
environmental and social impact of the resort. They fear
damage to the protected areas of the national park as well
as to the beachfront, question the resort's capability for
handling services such as sewage, and are uneasy about
possible exploitation of the Garifuna communities as tourist
attractions. (According to the IHT, the Garifuna
communities are in favor of the project as a means of
employment and tourist revenue. Andrea Valerio, a leader of
the Garifuna community of Tornab, told Econoff that while
the Garifuna communities do not directly oppose the project,
their support is tempered by caution. Lacking the resources
to carry out their own studies, the communities have had to
rely upon impact studies done by the IHT, and they are not
confident that the project proposal adequately addresses
their social, economic, and environmental concerns.) Both
tourism coordinators also worried that the self-contained
nature of the Tela Bay resort could prevent tourists from
visiting other coastal communities, and thus stall local
tourism projects.


5. The sustainable tourism projects underway in Omoa and
Tela, in contrast, aim to strengthen local economies by
promoting the communities' natural assets and involving
residents in the tourism industry. In Omoa, the project has
helped to organize a collective of women embroiderers,
reclaim for public use some of the beachfront lost to small
business sprawl, and outfit a bicycle rickshaw taxi service.
The tourism coordinator is also working to improve the
quality of local restaurants and clean up the streets to
make Omoa more attractive to the cruise ship passengers who
occasionally visit when ships dock at nearby Puerto Cortes.
(The GOH port authority is also extending Omoa's local dock
by 150 meters, which could provide docking facilities for
smaller cruise ships.) In the much larger community of
Tela, the tourism coordinator has focused upon providing
better information and materials at the tourism office,
training workers for the tourist industry, and developing
programs to attract festivals and fairs to the city.


6. Comment: Given the decades of delay in getting the Tela
Bay project off the ground, Post remains quietly skeptical
about the prospect of construction beginning on schedule.
While the IHT claims that conflicts over land ownership and
usage have been resolved, land issues are a perennial source
of controversy in Honduras, and environmental protests over
the resort's location close to the beach and within the
boundaries of a national park seem at the very least a
possibility. The lineup of influential private investors
also gives pause as a potential source of rivalries instead
of partnerships. It would not be a stretch to envision
squabbles and territoriality overtaking working
relationships to cause further delays. The potential for
corruption also cannot be ignored. Post will continue to
follow and report on the development of this project as
events warrant. End comment.

Williard