Friday 2 December 2022

Tourism crisis does not yield at a time when assistance to the sector ends

More than 70,000 workers in the sector continue to be affected; Entrepreneurs request financial support due to difficulty in meeting banking requirements

Paying the bills


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2 December 2022 - At The Banks - BCCR

Paying the bills


QCOSTARICA – The crisis in the tourism sector does not give way and the recovery is slow, while the support of the Government has been insufficient to overcome the difficult situation, estimated both the leaders of the Chamber of Tourism (Canatur) and that of the Chamber of Hotels.

A 19 meters long Costa Rican flag is suspended by a horizontal steel cable line in the middle of the Central Pacific tropical forest is a symbol representing the recovery of tourism. Courtesy ICT

The panorama is that more than 70,000 workers in this sector continue to have some kind of impact on their labor condition; 55,000 of them with reduced working hours.

The main claims directed from the tourism sector to the Government are related to financing, economic aid, and the payment of debts, while the Executive concentrates on reactivating tourism through advertising campaigns and air connections.

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“To apply for a loan, the banks are measuring the payment capacity, the guarantees, and how we are going to get ahead with this. The reality is that there is no payment capacity or liquidity, it is impossible for us to get ahead if there is no real support from the banks,” said Javier Pacheco, president of the Chamber of Hotels.

Tourism entrepreneurs have found credit options at rates of 10% to pay within six months; Likewise, the moratoriums for many of them end in December and it is an obligation that they cannot assume until they reach a balance point in their finances.

Their moratoriums for electricity service, one of the most representative operating expenses for hotels, were also ended.

In addition, the term for the reduction of the minimum tax base for contributions to the Caja del Seguro Social (Social Security Fund) expired, pushing several companies towards informality, according to Pacheco.

“That there is no sense of urgency in the Government is what worries the most,” said Ruben Acón, president of Canatur, and Mauricio Ventura, former Minister of Tourism.

Mauricio Ventura, former Minister of Tourism. Image from La República

“The business graveyard is going to continue adding many crosses, because this lack of liquidity was predictable and in terms of financing, the Government has been an absolute failure,” said Ventura.

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The former minister claims that the US$350 million from the Banca para el Desarrollo (Development Banking) to be allocated to sectors that generate in dollars such as exporters and tourism, has not been used.

There is a high risk that many tourism companies will go bankrupt without an injection of funds since 90% of them are “mipymes” (small and medium-sized enterprises), Acón added.

The tourism sector is estimated to reach its pre-pandemic levels in 2024, according to the World Tourism Organization (UNWTO), the United Nations specialized agency entrusted with the promotion of responsible, sustainable and universally accessible tourism, and the International Air Transport Association (IATA).

Sector in Crisis

Tourism is the main generator of foreign currency in Costa Rica and one of the engines of the economy, however, it is going through a severe crisis caused by the pandemic (figures since April 2020).

  • Fall in Monthly Index of Economic Activity -53% (November)
  • Drop in air occupancy -94% (November)
  • Losses US$3 billion
  • Jobs affected 70,000
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