Costa Rica Tourism Report Q4 2009

After increasing from 2.06mn in 2006 to 2.29mn in 2007, the report expects tourist arrivals to have increased to 2.51mn in 2008 before dipping down to 2.29mn in 2009. Arrival numbers are forecast to tick up again in 2010, and to grow at an average rate of 2.2% until the end of our forecast period in 2013. The majority of tourists visit Costa Rica during the peak season (January-May) and come from the Americas. Arrivals from the country’s three most important source markets – the US, Nicaragua and Canada – increased steadily during 2004 to 2007. However, looking at the inbound tourism data by region, although 2008 continued to trend upwards in North America and Latin America, the report is forecasting arrivals numbers from both regions to decrease by 9.73% and 7.81%, respectively. The next most important source markets in terms of arrivals are, in order, Panama, Mexico and Spain.

The main growth drivers for the industry are ecotourism and health tourism. Costa Rica has 32 national parks, eight biological reserves, 13 forest reserves and 51 wildlife refuges. That said, the industry is forecast to suffer slightly in 2009 due to the ongoing recession, particularly in the US, and the H1N1 virus (swine flu). The planned development of the Caribbean Limón province, the continued expansion of the Daniel Oduber Quirós International Airport in the north and the growing amount of chartered flights from Europe all have the potential to drive growth in the market.

Costa Rica’s tourism industry is a major contributor to the economy, accounting for about 7.8% of GDP in direct terms in 2008 and nearly 3% of total employment in 2006 – 49,000 individuals – according to data from the World Tourism Organisation (UNWTO). Collective government expenditure on tourism was an estimated US$29.7mn in 2008, a 4% increase y-o-y. Collective government expenditure is forecast to slump slightly in 2009 to 27.9mn, bouncing back to 29.6mn in 2011. Expenditure is then forecast to rise to 33.1mn by the end of the forecast period in 2013.

The government has created a tax on inbound airfares to the country. The fee is US$15 per airfare and replaces the 3% hotel tax. Part of the revenue from the tax, which is expected to be more than US$80mn per year, will fund some of the activities of Instituto Costarricense de Turismo (Costa Rican Tourism Board, ICT), including marketing, promotion and planning. The change in taxation came about due to the increasing amount of condominium and other private rentals that were not included under the umbrella of the hotel tax. New hotel developments are ongoing in the country, with major international companies including Marriott Hotels & Resorts and Barceló constructing hotels near the beaches and in urban centres.