TFH01: HONDURAN TOURISM SUFFERS POST-COUP BLUES

C O N F I D E N T I A L TEGUCIGALPA 000745

SENSITIVE
SIPDIS

E.O. 12958: DECL: 08/13/2019
TAGS: BBSR EAIR ECON ETRD HO KDEM
SUBJECT: TFH01: HONDURAN TOURISM SUFFERS POST-COUP BLUES

REF: A. TEGUCIGALPA 712

B. TEGUCIGALPA 701

C. TEGUCIGALPA 680

Classified By: Ambassador Hugo Llorens, reasons 1.4 (d)


1. (U) Summary: Tourism, the third largest revenue source
in Honduras, is significantly down since June 28, having
borne the brunt of the economic impact of the coup d'etat.
Hotels report higher vacancy rates and airlines have noticed
a significant drop in bookings, which have led them to cancel
seasonal flights. Passenger ferry business between La Ceiba
and Roatan has also experienced a sharp reduction in
ridership. There are some signs that the industry is
beginning to rebound slightly. End Summary.


2. (C) In an August 6 meeting that the Ambassador convened
with President Zelaya's cabinet ministers who are residing in
Tegucigalpa (reftel A),Minister of Tourism Ricardo Martinez
pointed out that tourism, the third largest revenue source in
Honduras, is down 50 percent in the Bay Islands and 80
percent in Copan.


3. (SBU) Adolfo Facusse of the National Association of
Industries (ANDI) told EconOff that while the tourism sector
(primarily hotels and restaurants) saw an immediate decrease
in business because of travel warnings, curfews, and fear of
unrest, business is normalizing as customers get used to the
current situation and as the hospitality industry becomes
aggressive in offering discounts and other incentives.

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HOTELS STILL ROOMY
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4. (U) The hotelier industry in San Pedro Sula reported on
August 3 that room occupancy rates are at 30 percent, down
from the normal of 80 for this season. On August 12, The
Hilton hotel in San Pedro Sula told EconOff that rates have
improved, with occupancy rates now around 90 percent during
the week, and somewhat lower on the weekends.


5. (U) Meanwhile, because of their proximity to locations
where protesters gather, the major hotels in Tegucigalpa
continue to suffer losses. The Marriott hotel, which is next
door to the Presidential Palace, was closed for 11 days after
the coup. Since then, in spite of increased security, they
are averaging only about 25 percent occupancy. Other hotels
are faring better, although with significantly lower
occupancy rates when compared to July of last year. The
InterContinental is now at 60 percent occupancy, down from
its average occupancy rate of 90 percent.


6. (SBU) Hotels in tourist destinations are suffering the
most. In a meeting with the Ambassador and EconOff on July
21, a group of U.S. Citizens representing tourism-related
businesses owned by AmCits in Copan and the Bay Islands
estimated that tourism was down by as much as 40 percent
since the coup and that this was the first time they had ever
seen a decrease in the number of hits received on their
websites. Through aggressive marketing and discounts,
tourism in the Bay Islands has begun to rebound. The Mayan
Princess hotel said on August 12 that weekend occupancy rates
are at or near 100 percent, but remain low during the week.
On August 12, EconOff contacted Posada Real (whose clientele
is primarily French) and Hotel Plaza Copan (whose clientele
is primarily American). Both hotels continue to experience
cancellations from foreign visitors, resulting in
unseasonably low room occupancy rates of 10 to 15 percent.

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AIRLINES FLYING LIGHT
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7. (SBU) American Airlines country manager Verna Osorto
confirmed that due to a significant decrease in bookings
since June 28, they had to cancel their second daily
Tegucigalpa-Miami flight. This flight was a seasonal flight
that normally operates in June, July, and August. The
airline representative said that prior to June 28 flights out
of Tegucigalpa were about 70 percent full, but now only about
30 percent of seats are sold. American has not seen a
significant change in its flights in and out of San Pedro
Sula which are still 80-90 percent sold. American Airlines
does not fly to Roatan.

8. (SBU) Continental Airlines general manager Geovany Rosa
reported to EconOff that Tegucigalpa passengers are down 50
percent as a result of the political crisis. Continental
typically operates an additional afternoon seasonal flight in
Tegucigalpa on Fridays, Saturdays and Mondays, but cancelled
this flight due to lack of demand. Continental has seen a
reduction of almost 50 percent in San Pedro Sula as well,
however in San Pedro Sula the additional afternoon flights
are still operating. Roatan has also been affected, but not
as severely as Tegucigalpa and San Pedro Sula.


9. (SBU) Delta Airlines operates daily flights to
Tegucigalpa and San Pedro Sula and a weekly flight to Roatan.
Dina Morales, the local manager for Delta, told EconOff that
they have observed a 40 percent decrease in sales. The
majority of the decrease in passenger traffic is for its
Tegucigalpa route. Delta has no plans to cancel or scale
back its service to Honduras.

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FERRY BARELY AFLOAT
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10. (SBU) Passenger ferry business between La Ceiba and
Roatan has also been affected by the current political
situation. Galaxy Ferry told EconOff that during the first
four weeks after the coup, they experienced a sharp reduction
in ridership. In the last couple of weeks, they have
partnered with hotels to offer a 2 for 1 special, leading to
improved sales. Ferry company management noted that at this
time of year, they usually have large numbers of tourists
from El Salvador; this month they have had none.
LLORENS