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Viewing cable 05SANJOSE1757, TOURISM SNAPSHOT IN COSTA RICA

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Reference ID Created Released Classification Origin
05SANJOSE1757 2005-08-05 14:18 2011-03-21 16:30 UNCLASSIFIED Embassy San Jose
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 SAN JOSE 001757 
 
SIPDIS 
 
WHA/CEN 
EB FOR WCRAFT 
E FOR TSMITHAM 
WHA FOR WMIELE 
WHA/EPSC FOR KURS 
H FOR JHAGAN 
CA/OCS/ACS/WHA FOR KDAVISON 
 
E.O. 12958: N/A 
TAGS: ECON EIND CASC EINV PGOV CS
SUBJECT: TOURISM SNAPSHOT IN COSTA RICA 
 
REF:  SAN JOSE 01491 
 
1.  Summary.  The tourism industry is king in Costa Rica, 
having been the nation's top revenue generator since 2001. 
The number of tourists coming to Costa Rica continues to 
increase, with hundreds of thousands of Americans, 
Canadians, and Europeans flocking to the beaches, 
volcanoes, and adventure- and eco-tourism sites every year. 
Despite the importance to the economic health of the 
nation, the tourism industry and infrastructure that 
supports it do not receive the attention they deserve. 
Public investment in infrastructure such as roads and 
communications lines is not sufficient to keep up with the 
increasing demand.  Despite this fact, the tourists keep 
coming, placing more wear and tear on the facilities and 
infrastructure in Costa Rica.  See Table One in Paragraph 9 
for tourism- related data.  End Summary 
 
2.  The tourism industry in Costa Rica has been booming in 
recent years, and since 2001, it has been the number one 
revenue generator in the country.  The industry brought in 
almost USD 1.1 billion in 2001, increasing to USD 1.4 
billion in 2004, according to the Costa Rica Tourism 
Statistical Yearly Report compiled by the Costa Rica 
Tourism Board.  Costa Rica is the most-visited country in 
Central America; approximately 1.5 million visitors in 
2004, according to the above mentioned report.  However, 
the tourism industry is not getting the serious attention 
that it deserves.  As an investment advisor for the Costa 
Rican Ministry of Tourism (ICT) points out, "The 
Administration doesn't appreciate tourism the way it 
should."  Other industries, such as the banana and coffee 
industries, despite declining in importance with respect to 
revenues and jobs, are still overshadowing the tourism 
industry in political culture.  This despite tourism's 
earning more foreign exchange per year than the entire 
agriculture industry. 
 
3.   According to Carlos Lizama, the Vice-President of the 
Costa Rican Association of Tourism Professionals, the 
tourism industry provides over 100,000 direct jobs, which 
is approximately 9 percent of the total employment of 
private Costa Rican businesses.  The available figures for 
the number of indirect jobs provided vary greatly and are 
estimated at between 200,000 and 300,000 jobs. This is not 
insignificant given that the total population is 
approximately 4 million and the labor force numbers 
approximately 1.7 million.  About 56 percent of the direct 
jobs are outside the San Jose metropolitan area, which 
gives the industry a unique role in boosting employment and 
income outside of the capital area. 
 
4.  The industry continues to grow, and in the first 
quarter of 2005, Costa Rica, according to the World Tourism 
Organization, received USD 89 million more from tourism 
than it did in the same quarter in 2004, which represents 
growth of 17 percent.  The growth has not only increased 
revenue but also has taxed public facilities, and has 
resulted in an inability to meet demand.  "La Nacin," a 
national daily newspaper, reported that 39,000 tourists 
were unable to book hotel rooms this past December through 
April because of an estimated deficit of 1,500 rooms.  This 
phenomenal growth has caught many off guard, and William 
Rodriguez, the Chairman of the National Chamber of Tourism, 
remarked that in order for tourism to remain a principal 
revenue generator and maintain growth, Costa Rica must 
invest in public facilities including roads and highways. 
 
5.  Tourism has consistently brought in more foreign direct 
investment (FDI) than any sector other than industry, even 
more than the financial and agricultural sectors (reftel). 
FDI in tourism reached an all-time high of over USD 111 
million (current) in 2001.  This increased investment 
helped spawn the explosion in the number of tourists coming 
to Costa Rica since 2001 (an increase in tourism of almost 
50 percent).  However, since the peak in 2001, FDI has 
declined and, at USD 51 million, has more than halved from 
its peak in 2001. 
 
------- 
COMMENT 
------- 
 
6.  At this time, Costa Rica has a comparative advantage in 
Central America in the tourism industry - it has an 
unequaled reputation regarding the protection of its unique 
biodiversity and has a long history of peace and stability. 
Costa Rica has become a victim of its own success: the 
increasing number of tourists make increasing demands on 
the infrastructure.  These increasing demands (rooms, 
facilities, roads, internet services, etc.) cannot 
consistently be met unless a concerted effort is put into 
place by the GOCR.  The decrease in public sector support 
evidenced not only by the neglect of infrastructure 
maintenance but also by the lack of attracting more FDI, 
will have a definite negative impact of the potential 
growth of the tourism industry in Costa Rica. 
 
7.  Despite the explosion in the number of tourist who 
visit Costa Rica, tourism revenues may soon reach their 
peak if the Costa Rican government does not pay attention 
to the needs of the tourism industry and invest in 
infrastructure, especially in roads and bridges that have 
been in disrepair for years and continue to deteriorate. 
Increasing investments by GOCR in tourism-supporting areas 
will attract more businesses who rely on efficient 
infrastructures and bring the Costa Rican hospitality 
industry up to the needed capacity.  This will generate 
more jobs and more revenue for the country. 
 
-------------------------------------- 
TOURISM FIGURES IN THE PAST FIVE YEARS 
-------------------------------------- 
 
8.  TABLE ONE 
 
                  2000     2001     2002     2003     2004 
                  ----     ----     ----     ----     ---- 
Total Tourists  1,088,07 1,131,406 1,113,35 1,238,69 1,452,92 
                      5                  9        2        6 
U.S. Tourists   429,725   429,093  422,215  510,751  633,640 
U.S. Tourists       47%       46%      46%      49%      52% 
(% of Total) 
Tourism          $1,229    $1,095   $1,078   $1,199   $1,357 
Revenues (USD 
mln) 
Tourism              8%        7%       6%       7%       7% 
Revenues (% 
GDP*) 
FDI** Directed    $52.1    $111.5      $76    $88.3    $51.4 
to Tourism (USD 
mln) 
FDI** Directed      13%       24%      12%      15%       9% 
to Tourism (% 
Total) 
*Gross Domestic Product, **Foreign Direct Investment 
KAPLAN