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Tuesday, May 17, 2022

The outlook for Costa Rica’s hotel industry post Covid-19

This is Part 3 of a three-part series. Read the first installment here and the second installment here

In my first article I laid out the grim picture of the impact of Covid-19 on the hotel industry and tourism in general in Costa Rica. The second article in this series detailed the necessary lengths hotels had to go to stay afloat and how building for the future is the key to recovery. 

In this final article in the series that looks at Covid-19 and the hospitality industry in Costa Rica, I will look at a brighter future for hotels and the hospitality industry as Covid-19 loosens its grip on the world.

Perhaps it’s a little early to forecast what comes next for the hotel industry in Costa Rica as we currently struggling with a third wave of Covid-19, but there are indicators and trends that predict a brighter future as the world moves to a new normal.

First, there are a number of short-term forces that indicate that tourism will return stronger than ever once people feel safe again.

Pent up travel demand. The world has been suffering from the largest case of cabin fever  known in our lifetimes. Whether it’s short haul or international travel, people can’t wait to get back out into the world again. This is being noticed already. It’s not a flood, but more tourist faces are around again. April 2021 saw 90,000 tourists arrive to Costa Rica’s airports, the most since the start of the pandemic in March 2020.

People have more disposable funds to travel with. The Federal Reserve Bank has noted a sharp increase in savings as a percentage of disposable personal income, from 7.2% in December 2019 to a record high of 33.7% in April 2020. From March to April of 2020 alone, the savings rate nearly quadrupled.

The travel industry, anticipating the loosening of restrictions, is offering more flights. All U.S. airlines have already resumed flights to Costa Rica, with several carriers adding new routes.

So hopefully we will see a welcome tourism rebound later this year. Will these factors drive increased tourism for years to come? Probably not. But take heart, as there are other major trends that could fuel a longer term increase in foreign visitors to our fair land.

The world is an unsettled place, and Covid-19 has increased that fear factor for some. U.S. Americans saw murders increase in 51 major cites 36% in 2020 as compared to 20191. Brits are suffering through a 12-year high in robberies2. Canada’s Crime Severity Index is the highest it’s been in 10 years.3 People are craving a haven of safety and stability.

In this writer’s opinion, political parties are making matters worse by pitting people against each other (right vs. left, poor vs. rich, haves vs have-nots, etc.) instead of bringing them together.

These forces combined with the fear of future pandemics and lack of trust in societies institutions mean that people are looking for a place where they can go to escape from the pressures and problems of where they come from. I expect to see an increase in people coming to Costa Rica to enjoy all we have to offer but also to look for a destination they can call their second home or maybe eventually just home. This trend will see an increase in real estate sales and perhaps the return of timeshare condos (now called fractional home ownership).

The second major trend that will play out in the coming years is that Covid-19 has proven that many jobs don’t need to take place in a fixed office. Modern technology has made it possible to be productive from wherever you can get a good Internet connection. This is a sea change for work in general. Digital nomads will not be an oddity but very much mainstream. A recent study found that the number or people describing themselves as digital nomads in the United States doubled in just one year (2020) to 11 million. In one year! Expect this trend to continue. See the world and work to pay for it all at the same time.

And what better country to have on your must visit list as a digital nomad than Costa Rica: beautiful, safe, well connected to the world and welcoming of foreigners.

Finally the values that Costa Rica has always held dear: stable democratic governance, protection of the environment, peaceful and sustainable energy production are increasingly becoming more center stage in the world. More and more people are drawn to the ideologies that Costa Rica embraces and put in place decades ago.

These longer term trends and factors will mean more visitors coming to learn all that Costa Rica has to offer, many buying places to live or have as a second home. This will mean more foreign-born people becoming nationals and perhaps starting businesses here, contributing to the overall financial health of Costa Rica.

All in all the future is bright. The past 18 months have been incredibly difficult and trying times but Covid-19 had changed the tourism playing field in some positive ways, and for those that have managed to weather the storm, the sun is breaking through the clouds.

1 https://www.vox.com/2020/8/3/21334149/murders-crime-shootings-protests-riots-trump-biden

2 https://www.statista.com/statistics/303349/robberies-in-england-and-wales-y-on-y/

3 https://www.statista.com/statistics/525603/crime-severity-index-in-canada/

(Crime Severity Index (CSI) measures changes in the level of severity of crime. In the index, all crimes are assigned a weight based on their seriousness. More serious crimes are assigned higher weights, less serious offences lower weights.)

 

Garry Wallace is a managing partner at Serenity Boutique Hotel in Quepos, Puntarenas.  Learn more at www.serenityhotelcostarica.com

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