SAN JOSE, Costa Rica — “When the United States sneezes, we catch a cold,” a Costa Rican hotel owner said recently.
He wasn't talking about swine flu.
The tourism industry, vital to the Costa Rican economy, has been reeling from the global downturn, with estimates of up to a 13 percent decline in visitors in the first quarter from the same period in 2008. Now, with the onset of the low season, hoteliers and tour operators are bracing for an even harder fall.
Casa Roland Hotel Group has definitely felt the hit. The company has watched room occupancy plunge by as much as 40 percent, according to Christian Castro, the group's corporate marketing and sales director.
More than two-thirds of businesses in the tourism industry have reported a slower-than-normal first quarter and nearly a third reported layoffs in the past few months, according to the National Tourism Chamber. (Costa Rica lacks up-to-date unemployment figures, but analysts estimate it has risen to more than 7 percent from less than 5 percent last year.)
All told, economic activity has slowed for six months in a row, prompting a growing number of economists to cry recession. Tourism, along with manufacturing and construction, is among the hardest-hit sectors.
Despite promising headlines on the travel pages of the U.S. press, like The New York Times' recent "Costa Rica Any Way You Want It," businesses like Casa Roland fear that cash-strapped Americans and their counterparts in Europe and around the world won't visit this tropical paradise anytime soon.
"I've never seen a year tougher than this," said the Costa Rica Tourism Board's deputy manager and marketing director, Maria Amalia Revelo. Her department is equipped with a $20 million budget to promote this destination worldwide.
Meanwhile, some of Costa Rica's neighbors are enjoying sustained growth periods. Panama's visitor numbers are up 3 percent, Guatemala’s 4 percent and Nicaragua's surged by 11 percent. Juan B. Pasos, general manager of Hotel Alhambra in the colonial city of Granada, Nicaragua, said the crisis has hardly made a dent in occupancy at his 60-room hotel.
Looking at the numbers alone, it almost appears as if somebody lured away Costa Rica's tourists — the country hit a record of 2 million total tourists last year.
But it isn't so, said Coralia Dreyfus of the Central American Tourism Council. She said Costa Rica's principal visitors are Americans, "who are suffering more severely the effects of the economic crisis." The most frequent visitors to the rest of the region are Central Americans, for whom it's an easier, more affordable journey, often made by land.
However, the numbers do not tell the whole story. A lot of Guatemala's visitors come for two or three days, whereas the average length of stay in Costa Rica is 11 days.
Many businesses have moved swiftly to react to the new economic reality.
Recreo Costa Rica, a collection of luxury villas on the northern Pacific coast, offers a “Layoff Layback Promotion,” offering one to two nights free (depending on the length of their reservation) to recently laid-off employees.
“We were finding that some of our friends who were laid off here (in New York City) were given some very healthy severance packages,” said Will Candis, of the New York-based Canis Communications, which represents Recreo Costa Rica. He said thanks to that and other marketing pushes, the villas have remained full.
Castro, of Casa Roland, also said his hotel group has implemented certain feel-good measures, including a bottle of wine with dinner and other complimentary measures depending on the length of stay.
“All this added value is very important so the customer feels content at Casa Roland, and so that, through word of mouth, people help Costa Rica by visiting Costa Rica,” Castro said.
Meanwhile, beyond discounts and “layoff” deals, promoters of Costa Rica’s eco-friendly businesses argue that the country needs to stick to its forte, ecotourism, in order to succeed.
For Ronald Sanabria, vice president of sustainable tourism at the international NGO Rainforest Alliance, the crisis should act as a “reality check” to a global industry that is verging on an explosive tipping point.
“We were growing too fast,” he said. “In a way, I think this came at the right time for many destinations that were just on the verge of becoming non-sustainable [because of] overdevelopment.”
He said he thought companies that have already adopted sustainable practices such as renewable energy — about 100 businesses are certified under the national sustainability program — are reaping the rewards from their investment with lower expenses, and will see further benefits as “the trend toward the more environmentally conscientious consumer continues growing.”
Overall, Sanabria seems optimistic Costa Rica will get over its travelers' cold.
“I think that the tourism industry has the great ability to be extremely resilient to changes,” he said. “This industry has gone through hell. You name it: wars, terrorist attacks, tsunamis … and it recuperates quickly.”
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