Among the many changes that the giant 2002 devaluation brought to Argentina was a sudden switch in the country’s relationship to tourism.
During the 1990s, with a strong peso legally tied to the value of one US dollar, the stories of Argentines travelling the world were in the hundreds of thousands. But when the crisis and the devaluation came, it wasn’t any more about your school or office buddy recalling the great time they had in New York, Miami, Rio or Paris, but about foreigners flooding Buenos Aires, Iguazú, the Andes or the Patagonia, as they found out they were now able to travel lavishly across the country for very little cash.
Now, as the Twin Peaks Giant eerily warned Kyle MacLachlan, it seems like this could soon be happening again.
Argentina is tangled in a brand new debt and currency crisis, but the devaluations they bring with them could have a flip side for foreign visitors, as well as those looking to serve them.
Of course, one thing isn’t the same this time around: the added small inconvenience of the COVID-19 pandemic, which has shattered the travel and leisure sector into pieces across the globe.
Slowly opening borders
Argentine authorities have already authorized visitors from bordering countries to Buenos Aires ports and airports, with no need for any isolation periods (only a negative PCR test), and the list of origins and destinations allowed is likely to expand over the coming weeks.
But with Europe and the United States looking into a frightening second wave of COVID-19 during their winters, it is hard to expect that people from those regions will be let in as freely during the Southern Hemisphere summer, as Argentina has to balance the need for income with the risks of fueling a second wave of its own now that its case load is finally starting to come down after a painful year.
So even though the country’s summer season is just about to start, much of this story might apply better for the next one, although the data could be useful for both travelers and businessmen that want to start thinking ahead.
Ten times cheaper
For a very basic idea of how cheap Buenos Aires is for foreigners at the moment, a mere back-of-the-napkin price comparison of similar products around the world paints a very compelling picture.
Whereas a simple cappuccino at Dunkin’ Donuts in New York can currently go for USD 3.50, sitting for some outdoors coffee at the traditional La Biela bar in the upscale Recoleta neighborhood, where Argentina’s intellectual, political and jet set circles used to hang in the 20th century, can currently be done for a mere 130 pesos.
At the current 80 to 1 peso-to-the-dollar exchange rate that tourists can get at any airport, those 130 pesos translate to USD 1.60. But using the alternative exchange rates available in the streets, which currently doubles the official value, that luxury coffee in the cool summer shadow of some of Buenos Aires’ oldest trees can cost as little as USD 0.80.
And if you want to enjoy a local specialty like stake, wine or empanadas, the differences can be even bigger. Restaurants offering Argentine food in the US put a bife de chorizo above USD 50, while it can cost no more than 900 pesos in La Biela (rising to 1600 if you want it with side dishes, dessert, coffee and a non-alcoholic beverage), and significantly cheaper in any middle-class restaurant across the city. That means you can get a better version of what’s available in the first world for one tenth the money, USD 5 or less in this case.
And although focusing on an Argentine export specialty like beef is not the most representative choice to compare prices, the difference is only somewhat smaller in other products and services.
McDonald’s Big Mac, which has historically been used by The Economist magazine to compare price levels and inflation in different cities due to how similar the product is across the world, cost 300 pesos in a Buenos Aires as of November 2020, while it stood at USD 5.71 in the US according to the latest Big Mac Index measurement. That means it costs 35 percent less in Argentina at the official exchange rate (USD 3.75), and a staggering 68 percent less (USD 1.81) when seen against the street price of the US dollar.
As for a cab fare, the comparison with a city like New York is simply not fair. Hopping onto a taxi costs 59 pesos in Buenos Aires (73 or 36 cents in USD), plus 30 pesos (18 cents) per km, compared to USD 2.5 plus USD 1.5 per km in NYC. Again, a stunning almost ten-time difference.
Basically, almost anything whose cost is mostly made of Argentine labor is historically cheap when measured in hard cash, although this comes with the caveat of Argentina’s complex multiple exchange-rate system.
The Argentine peso has multiple quotes depending on where you buy it. There’s an official price in banks and formal exchange houses, which is also used for credit card purchases, but also grey and (almost fully tolerated) black-market prices in the streets and in “cuevas”, a nickname for thinly-guised underground exchange houses, where tourists can get twice as much for their euros or dollars.
This is obviously far from ideal, and the COVID-19 pandemic is likely to make things even more complicated this year.
Consulted by The Bubble, Argentine tourism authorities said that the opening of frontiers for citizens of bordering countries was only the “first stage” and “in the next stage more authorizations will appear, although the final decisions are yet to be made”.
Basically, a lot is still up in the air for the 2020/2021 summer season, only one month before its usual start time.
Internal flights were reauthorized in October, while internal bus travel across the country is being progressively cleared to return in most provinces, using 60 to 80 percent of their capacity, demanding negative PCR tests and temperature checks to minimize risks of contagion. To make matters harder, foreigners remain more severely restricted to move across the country than Argentines for the moment.
As for bars and restaurants, outdoor tables are now the norm across the country, so food and drinks can be enjoyed with low risk, although Buenos Aires is now -somewhat recklessly- also progressively starting to authorize higher indoors attendance. Larger-scale gatherings, such as concerts, discos or high-attendance sports events, remain fully banned, as in most of the Western Hemisphere.
Better times ahead
Overall, the damage suffered by the tourism sector this year has been brutal across the country, with many hotels, restaurants and airlines downsizing or going bankrupt.
The summer should bring some relief to the sector, as Argentines looking to take a rest from this exhausting year are much less likely to travel abroad than in an ordinary summer, and a few Latin Americans are likely to take advantage of cheap prices and join.
But a fuller recovery is unlikely to come until next year, when the combination of global vaccination programs and a country that is very likely to remain extremely cheap will make tourism as attractive as it was at the dawn of the century, when the sector was truly booming.