TOURISM LAGS IN COSTA RICA

UNCLAS SAN JOSE 000213

SIPDIS

WHA/CEN

SIPDIS

E.O. 12958: N/A
TAGS: EINV ETRD ECON CS
SUBJECT: TOURISM LAGS IN COSTA RICA


1. Summary: Costa Rican tourism officials recently released data
for the first eight months of 2006 which suggest that tourism growth
is slowing in Costa Rica despite apparent gains elsewhere in Latin
America. In addition, the data indicates that tourism from North
American markets to Costa Rica has actually declined. In 2005
tourism represented 7.9% of GDP and employed approximately 365,000
people. End Summary.


2. GOCR recently released tourism data for the first eight months
of 2006 indicating that versus the same period in 2005 tourism grew
only 1.8% in 2006. Tourism from North America actually declined
3.3% during that period. Note: entry figures by foreigners
overstate real tourism since many "tourists" are in fact residents
who simply leave and re-enter the country four times each year
rather than pay for the much more complicated and expensive process
of actually getting official residency status.


3. The nearly 650,000 North Americans who entered Costa Rica in the
first eight months of 2006 represent 50% of all tourist entries into
the country. GOCR spent heavily on advertising in Germany before
and during the 2006 Soccer World Cup in an attempt to increase
tourism from Germany with disappointing results. Costa Rica dumped
$4.5 million into an advertising blitz during the World Cup games in
June. Although there may be some lag time before a visible return
on investment, tourism officials are chagrined that the latest
statistics show a 2.6 percent decline in visitors from Germany
during the first eight months of 2006.


4. Tourism operators are impatient with the slowness of data
collection since they must rely upon it for planning purposes. In
addition, some traditional operators are concerned that tourism is
shifting away from the Central Valley and Caribbean coast to the
Pacific coast, especially the Guanacaste region, due to increasing
use of the airport at Liberia. The shift in tourism to Guanacaste is
likely to accelerate with the establishment of U.S. chain hotels
such as Hyatt, Hilton, St. Regis and Holiday Inn, all of whom have
development plans at various stages.


5. The growth in Guanacaste masks serious declines in other areas of
the country. The minister of public transportion has expressed
interest in developing several new international airports in areas
currently difficult to reach in order to disburse the economic
benefits of tourism.

LANGDALE