While winter records in tourism exceeded expectations in Argentina, particularly to a devaluated peso, there’s some more good news out of the travel sector. Argentina has officially robbed Brazil’s historic spot as the destination to receive the most tourists in South America – 6.7 million tourists in 2017 to be exact. Forecasts show this figure should increase up to 7 million this year, representing a growth rate close to 5 percent.
Brazil took second place, with 6.5 million people visiting the country. Chile also sustained a high level of tourism, primarily due to shopping trips by Argentines when the exchange rate worked in their favor, receiving a total of 6.4 million tourists. Additionally, Peru and Colombia saw 4 million pass through their borders. Meanwhile, tiny Uruguay finished last, with 3.7 million travelers.
Gustavo Santos, the Minister of Tourism, told the Economist: “The 6.7 million in 2017 marked a record in receptive tourism.”
He also added: “Last year was very good for tourism as an industry. [With] 21 million tourists staying in hotels and 13 million passengers traveling on domestic flights, it reached the highest historical record.”
Santos explained that this could be due to “greater air connectivity and the development of more destinations, as well as the implementation of a digital promotion strategy that did not exist before. We know that 70 percent of travel decisions are made in the digital space, although some are made through the purchase of packages in physical [travel] agencies.”
The devaluation of the peso has also led to increased incentives to travel to Argentina, but also stunted many locals hoping to travel abroad. Santos conveyed that “the [number of Argentine tourists traveling abroad] fell by 20 percent in comparison with the same month last year,” and as such, many turned to domestic tourism. “So, if competitiveness remains, we could see a summer with even more important figures than last year,” he concluded
Moreover, the reimbursement of the 21 percent VAT paid by foreigners to stay in hotels has made traveling to Argentina even more affordable.
Regarding how much foreign spending contributes to the country’s economy, it currently sits in fourth place; after soybeans, cereals, and cars. Last year the tourism sector was responsible for the injection of US $5.4 billion into the country; however, this figure is a lot less than the capital outflow, as Argentines spent US $11 billion on traveling abroad. That’s a lot of Uniqlo jackets and Ugg boots.
“As of June, of this year we have accumulated a growth of 4.2 percent in foreign income. Our goal is to exceed 7 million travelers this year. To achieve this, we would have to achieve an average of 5 percent growth, a little bit above the current level, “says Santos. This is looking promising with the purchase of domestic flights increasing by 10 percent. He adds: “If this rhythm is sustained, this year we will be between 14 and 15 million passengers in 2018 of domestic travel, 50 percent more than in 2015.”
This winter saw increases of 20 percent in some destinations – with ski resorts such as Cerro Catedral at almost full capacity, receiving 10,000 skiers daily. If trends like this continue into the summer months, the tourism forecast should remain sunny and bright, no matter the weather.
An issue that has been speculated is that increased demand will lead to higher prices. This could be potentially harmful, not just to the tourism sector, but the economy in general. Argentines are already battling with increased expenditure, while their salaries are being eaten away by high levels of inflation.
However, Santos believes this will not be the case, but rather it will lead to “a better distribution of demand.” Agreements are in place to prevent the extensive transfer to prices with two major hotel federations, which should act as a reliable preventative measure. The Minister also added: “We are optimistic, there is a great commitment by the entire sector to take advantage of this situation. We are working to improve real competitiveness in everything that helps to reduce costs.”
Juan Paredes is the Development Manager for the Southern Cone at Accor. The French chain has ten hotels in Argentina and another three under construction: two in Buenos Aires and one in Salta. He has commented: “We are analyzing other opportunities in Bariloche, Tucumán, and Rosario. With [the peso’s] devaluation, we’re betting a lot on regional synergy. This makes us more competitive. The projection is good and this change obviously helps.”
Competitive pricing between hotels should see prices staying relatively stable in the future; but also, with the construction of new hotels and development in the tourism sector, there should be increased levels of employment throughout the country which will also help the economy.