Costa Rica Coffee Guide

Tourism Leaders Concerned

February 4, 2005

COSTA Rica is in danger of losing itssupremacy as Central America’s tourismleader, sector representatives said this week.Poorly maintained roads, a lack of hotelrooms and increased competition from otherLatin American countries are reasons forunprecedented concern, they said.But the main focus of Costa Ricantourism leaders’ concern is a recentComptroller General’s Office decision toeliminate tax breaks for tourist businesses.The incentives allowed for various taxexemptions on imports such as vehicles forcar-rental companies and furniture forhotels. After an extended disagreementabout whether the tourism incentive lawapplied only to new businesses for a shortperiod of time, or was a long-term supportfor existing businesses, the Comptroller’sOffice rescinded the benefits last week, tothe consternation of the Costa RicanTourism Institute (ICT) and other groups(TT, Jan. 28).THE decision could cause Costa Ricato lose countless millions in foreign investmentand 177,822 direct and indirect jobs,said William Rodríguez, president of theNational Tourism Chamber.Rodríguez said he calculated the numbersbased on last year’s hotel constructionrates. In 2004, 833 new hotel rooms wereconstructed here, he said – a rate unlikelyto improve in future years if foreigninvestors seek projects elsewhere.Continuing at that rate, the country will be6,880 rooms short within eight years, drivingdown sector growth and causing jobloss, Rodríguez said.AGUSTÍN Monge, a representative ofthe Costa Rican Hotel Chamber (CCH),said the fact that the comptroller can makesuch far-reaching decisions unilaterally isenough to scare away prospectiveinvestors.“How do we explain to the Marriott orthe Four Seasons… that the rules of playcan be changed on a whim?” he said.According to Monge, the Costa RicanTourism Institute plans to present a petitiontoday to the Comptroller’s Office, requestingclarification of the reasoning behindthe controversial decision.THE daily La Nación reported thisweek that other Central American countriesare poised to give Costa Rica unprecedentedcompetition.Guatemalan President Oscar Bergerhas declared tourism to be one of the pillarsof his administration; Nicaragua is discussingnew laws designed to attracttourists and foreign investment (see TheNica Times); and El Salvador recentlyfounded its own Tourism Ministry.Rodríguez compared the comptroller’stax law change to “sending someone to warwith a machete when all the rest have themost up-to-date weapons.”RODRÍGUEZ also referred to competitionfrom South America as a new threat.“When you see the efforts that (countriessuch as) Bolivia and Peru are making…we have to worry more than we havetraditionally worried,” he said.Costa Rica’s tourism industry generated$1.44 billion in 2004, making it theregional leader. Its Central Americanneighbors ranked in the following order:Panama ($850 million), Guatemala ($770million), El Salvador ($424 million),Honduras ($410 million) and Nicaragua($200 million), according to La Nación.

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