Despite Colombia’s extensive natural beauty and bustling cities, its tourism industry has traditionally underperformed relative to its actual potential. Much of the sector’s performance was previously tied to the security situation and the government’s long-running conflict with the armed militant group FARC. In recent years the security situation has improved greatly, and in November 2016 a peace agreement between the two parties was formally approved. Peace brought a new sense of dynamism to the sector, which is now looking beyond business visitors — a mainstay for the last decade — towards the development of natural and cultural assets to attract a broader variety of tourists.
An improvement in the country’s image on the international stage and the peace agreement are not the only factors that have driven growth in tourism, with a number of free trade agreements helping to attract more investment and business travellers. This influx and fiscal incentives transformed the hospitality sector, attracting international hotel chains and encouraging growth in domestic ones.
Competition also ramped up, with chains vying to establish themselves in popular leisure destinations such as Cartagena and the island of San Andrés, as well as business travel destinations including Bogotá, Medellín and Cali. Although the slump in commodity prices affected Colombia’s economy, the resulting devaluation of the peso makes the country increasingly attractive for foreign visitors.
Growth
According to government figures, international visitor arrivals rose by 70% between 2010 and 2015, contributing to the 17% increase in employment during those years. The sector was also the second-largest generator of foreign exchange in this period. The direct contribution of travel and tourism to GDP was COP18.6trn ($5.6bn) in 2016, and accounted for 2.1% of GDP, up from COP16trn ($4.8bn) – or 2% of GDP – in 2015. This figure is expected to increase by 3.7% in 2017. The sector’s total (direct and indirect) contribution to the economy stood at COP51trn ($15.3bn), or 5.8% of GDP, in 2016, down from 6.1% in 2015. This figure is forecast to increase by some 3% in 2017.
Travel and tourism is also an important employer, directly supporting 610,000 jobs (2.7% of total employment), and directly and indirectly supporting 1.4m jobs (6.1% of total employment) in 2016.
Progress in the sector underlines the potential of tourism as a driver of overall economic growth, especially at a time when lower oil prices resulted in reduced export earnings.
Visitor exports generated COP17.6trn ($5.3bn), or 16.3% of total exports, in 2016, and are expected to grow by 5.7% in 2017, according to World Travel and Tourism Council projections. Travel and tourism investment is also on the up, from COP7.9trn ($2.4bn) in 2015 to COP8.3trn ($2.5bn) in 2017.
Arrivals & Revenues
Between 2012 and 2015 international arrivals rose from 3.5m to 4.5m, according to the Ministry of Commerce, Industry and Tourism (Ministerio de Comercio, Industria y Turismo, MINCIT), which oversees the sector. However, this figure includes Colombians living abroad as well as foreign residents living in Colombia. More specifically, non-resident foreign arrivals grew from 1.6m to 2.3m over the same period and hit 2.5m in 2016. Bogotá welcomed the bulk of international arrivals, with nearly half entering through the capital.
The US is Colombia’s largest source market, with around 500,000 arrivals in 2016, followed by Europe, Venezuela and Brazil. Continued growth is expected, with the number of arrivals projected to reach 6m by 2018, pumping $6bn into the Colombian economy.
Tourism revenue hit a record $5.7bn in 2016, up 8.6% on 2015 and 87% higher than in 2010, when the sector generated $3.1bn. According to MINCIT, this put it near the top in terms of foreign exchange generation, coming second only to the hydrocarbons sector. The government set a target of $6bn in tourism revenue by 2018, which the country is set to meet in 2017 should the average annual increase from recent years be repeated.
Peace Dividend
Officials are optimistic about the peace deal’s effect on Colombia’s economy, predicting that it will add 1.1-1.9% to GDP. For the tourism industry, peace could result in a 20% rise in hotel occupancy and 30% growth for the sector overall, according to government estimates.
“Peace has the potential to really boost the sector,” Gustavo Toro Velásquez, executive president of the Hotel and Tourism Association of Colombia (Asociación Hotelera y Turística de Colombia, Cotelco), told OBG. “Several regions in the country that have seen little growth will be able to develop through the tourism industry.”
Competing Neighbours
As Colombia’s tourism sector struggled to develop in the shadow of the conflict with FARC over past decades, its neighbours established popular tourism offerings.
Often, these countries specialised in the same segments that Colombia is promoting today, ramping up regional competition. As Colombia is looking to capitalise on its wildlife and nature, Costa Rica is internationally recognised for its rich biodiversity, and Chile and Argentina for their natural parks. As Colombia looks to promote cultural tourism, Peru has established itself as one of the continent’s most attractive destinations for cultural and historical tourism. With coastline along both the Pacific Ocean and Caribbean Sea dotted with islands, Colombia is looking to compete with well-established Mexican and Caribbean beaches that have long catered to tourists from the US and Europe.
Competition is strong. Bancolombia, the largest commercial bank in Colombia, wrote in a note to investors that Colombia did not make the top 50 countries in a World Economic Forum (WEF) survey of global travel and tourism competitiveness released in April 2017. Six Latin American countries — Mexico, Brazil, Panama, Costa Rica, Chile, and Argentina — made the list. “For a country so rich in diverse destinations, such as the incredible Salt Cathedral, there is still so much to do in order to take its rightful position,” Bancolombia wrote.
Promotion Efforts
ProColombia, the government agency in charge of developing tourism and establishing the country’s profile abroad, leads the tourism promotion efforts. These are partially financed by the National Tourism Fund (Fondo Nacional de Turismo, Fontur) under MINCIT. Fontur is financed by taxes from companies linked to tourism activities, and channels the money into tourism promotion and infrastructure development.
In 2015, for example, Fontur signed an agreement to contribute COP5bn ($1.5m) to the construction of the initial phase of the Malecón Bahía de la Cruz, a project that will renovate the waterfront of Buenaventura, a port city on the Pacific coast. The first phase is estimated to cost COP23.6bn ($7.1m). Fontur is also participating in a project to maintain and promote 17 settlements in Colombia considered to be national heritage towns. The towns are part of the Tourist Network of Colombian Heritage Towns, a programme that was launched in 2010 by MINCIT to highlight the “jewels” of Colombia’s cultural heritage and stimulate tourism to these locales. Between 2014 and 2018, a total of COP35.9bn ($10.8m) is expected to be channelled into these towns.
Promotion efforts are paying off, with growing recognition of Colombia’s potential as a fun, safe tourist destination. In 2017 travel guide publisher Lonely Planet ranked Colombia second in its annual list of top 10 countries to visit, noting that the country’s history of civil war seemed “but a dust speck in Colombia’s rear-view mirror”.
The awarding of the Nobel Peace Prize in 2016 to President Juan Manuel Santos for efforts to end the long civil conflict garnered worldwide attention and further highlighted to the international community that Colombia was moving on. Looking to the future, a visit by Pope Francis – scheduled to take place in September 2017 and the first papal visit to Colombia in three decades – will further signal to the world that Colombia is moving forward.
Risk & Reward
In addition to highlighting off-the-beaten-path cultural heritage sites, tourism authorities have played on the country’s international reputation in promotion efforts.
The “Colombia, the only risk is wanting to stay” campaign, for example, was launched in 2007. The agency embraced what many thought of when it came to Colombia — risk — and turned it on its head to highlight the progress made in terms of security. The campaign focused on bringing tourists to specific areas, including Bogotá, Cartagena, Barranquilla and San Andrés. It sought to show a different side of Colombia – that of beautiful beaches, birdwatching, scuba diving, golf and rich cultural attractions – through an assertive social media presence. “That campaign created chatter and made people pay attention,” Toro Velásquez told OBG.
Magical Destination
More recently, in 2013 MINCIT and ProColombia adopted the slogan, “Colombia es realismo mágico” (Colombia is magical realism), a reference to iconic Colombian writer Gabriel García Márquez. The campaign was designed to attract tourists looking for “different”, “magic” or “unique” experiences, according to tourism officials.
“We want to send the message that if anyone wants to find … a magical tourism experience, there should be no doubt the answer is Colombia,” María Claudia Lacouture, then-president of ProColombia and current minister of commerce, industry and tourism, told local press at the time of the launch.
Development Strategy
Global recognition of the progress will assist the government’s overall strategy to establish the country as a competitive tourism destination. The 2014-18 Plan for the Tourism Sector recognises tourism as a priority and is based on three pillars, namely the development of a sustainable tourism sector, the creation of a tourism and hospitality culture across the country’s regions, and engagement of the sector in strengthening peace. Specifically, the plan aims to strengthen destinations such as Cartagena, and promote high-value products – including adventure and business tourism – domestic tourism and destinations through national and international promotion.
Training and education is a priority in the 2014-18 plan, which will encourage the sector workforce to develop language skills and provide funding for specialised training to ensure international quality and customer service standards are met. A $462m Friends of Tourism programme was created to provide such training and an additional $1bn earmarked for the development of 60 specialised educational institutions throughout 16 departments.
Hotel Offer
Sector growth is reflected in the development of the hotel industry. Cotelco estimated that COP4trn ($1.2bn) was invested in new hotels between 2003 and November 2016, with investment incentivised by a 30-year corporate tax exemption for hotel development. This influx of capital led to the construction of 43,700 new hotel rooms, taking total capacity to around 260,000 rooms. Over 5700 rooms were added in 2016 alone, with an additional 1540 refurbished. According to Colteco, 63 hotels will open in the coming years, adding a further 255,000 rooms. In 2017 up to 37 new hotels are expected to open across the country.
Occupancy rates are also up. National occupancy hit 58.3% in 2016, a 2.7% increase from the year before. An average occupancy rate of 56% is expected in 2017, a figure while lower than in 2016 above the historical average of 50%.
Although the majority of the hotel development is focused on larger urban centres, international hotel groups have also been positioning themselves in some of Colombia’s smaller cities, largely using mid-market brands to expand their network. The segment is expected to face headwinds, however, as a 30-year tax exemption ends in 2017, as part of recently implemented tax reform (see analysis).
Air Connectivity
Along with an increasing number of hotel rooms and improved infrastructure, a competitive air sector has sustained the influx of foreign visitors. As of the third trimester of 2016 there was a weekly capacity of 153,000 seats from international destinations to Colombia through a total of 25 airlines, according to ProColombia.
Up to 26 countries are now linked to Colombia through direct flights, and new routes continue to be added. In May 2016 Turkish Airlines started flying three weekly flights from Istanbul to Bogotá, with a capacity of 750 seats per week.
Another sizeable addition came with the arrival of Spanish-based Air Europa in September 2016, with daily flights between Madrid and Bogotá, and weekly capacity of 2000 seats. Further, Colombia’s flag-carrier, Avianca, has begun operating direct flights between Cusco in Peru and Bogotá three times a week. This route could be an important step towards allowing trips to Colombia to be packaged with other South American destinations. Cusco, the gateway to the ruins of Machu Picchu, Peru’s most recognisable tourist attraction, received over 3m visitors in 2016, according to the Peruvian government. Wingo, a subsidiary of Panamanian group Copa Holdings, which also owns Copa Airlines, began operating flights in Colombia in December 2016 as a low-cost carrier. The airline will link 11 international destinations with Colombia, serving airports in Barranquilla, San Andrés, Bogotá, Cartagena and Cali.
In addition to growing international links, Colombia is looking to develop domestic air travel to accommodate a rising number of tourists countrywide. The WEF recognised this effort, noting that tourism has been enhanced by “relatively efficient air transport infrastructure, which connects all domestic cities and main overseas markets effectively”.
Ecotourism
Sustainability is a key element of sector development, and Colombia’s mountainous regions, beaches and 59 National Natural Parks make it an ideal location for ecotourism.
Improved security has allowed authorities to better promote the country’s natural areas to both domestic and international tourists, and ecotourism is a development priority. The segment is also lucrative; ProColombia estimates that nature tourists spend as much as $400 per day, compared to a daily average of $80 spent by regular tourists.
Efforts to promote nature tourism are paying off. The number of visitors to Colombia’s National Natural Parks reached a record 1.4m in 2016, a 60% increase from 2014, according to MINCIT. The Colombian Association of Travel and Tourism Agencies (Asociación Colombiana de Agencias de Viajes y Turismo, ANATO) reported that 10% of tourism packages sold by Colombian travel agencies for the 2016-17 season were linked to National Natural Parks.
Visitor numbers to protected areas are climbing. A top attraction in 2016 was the 120,000-ha Rosario and San Bernardo Corals National Natural Park on the Caribbean coast, which received 846,000 visitors over the year. The park is located in Sucre and Bolívar, and allows access to a vast network of coral reefs and protected ecosystems. Also popular is Tayrona National Natural Park, a 15,000-ha protected area near the city of Santa Marta in northern Colombia. The park boasts a combination of beaches and forested areas, with abundant wildlife and flora. A total of 391,000 people visited the park in 2016, a 17% increase from 2015 figures.
Management of protected areas falls to National Natural Parks of Colombia, an administrative unit under the Ministry of Environment and Sustainable Development. In 2011 authorities launched a programme to promote sustainable tourism in the country’s protected areas. Among other things, authorities developed sustainable tourism certification for tourism operators servicing the country’s protected lands, as well as a communal ecotourism programme aiming to improve the conditions of local communities by involving them in tourism provision.
“Nature tourism has great potential in the country and is especially important in terms of tourist expenditure,” Toro Velásquez told OBG. “While there has been progress, some work remains to be done, such as guide training and language skills.”
MICE
Meetings, incentives, conferences and exhibitions (MICE) tourism is a growing segment and an increasingly important way for some of the country’s major cities to attract visitors.
The number of international events taking place in Colombia rose by 132% between 2010 and 2015 to 351, according to MINCIT. ProColombia, which has been working to attract international events, estimated that the MICE segment brought in $299m in 2015, a 12% increase from 2012.
“Events tourism has become a very important segment, and the government has been investing in venues to better adapt cities,” Paula Cortés Calle, president of ANATO, told OBG. A 2016 comparison by ProColombia found that with an average daily expenditure of $410, MICE tourists in Colombia outspend conventional tourists five-fold.
The country has hosted multiple major international events in recent years. In September 2015 Medellín staged the General Assembly of the UN World Tourism Organisation, the second time that the country has hosted the meeting. In June 2016 Medellín hosted the WEF on Latin America.
Authorities are working to expand MICE tourism infrastructure with the goal of accommodating increasing numbers of events. In September 2016 Puerta de Oro Convention Centre opened in the northern city of Barranquilla, with a total of 85,000 sq metres of exposition and meeting areas, accommodation and office space.
The centre was mostly financed by Fontur, which allocated COP187bn ($56.1m) to the project. The private sector contributed an additional COP6bn ($1.8m). Authorities expect the new convention centre to attract as much as COP2.3trn ($6.9bn) through hosted events up to 2023.
In Bogotá, a new $108m convention centre opened its doors in April 2017. Ágora Bogotá International Convention Centre has 65,000 sq metres of meeting and events space, and will house a 420-room Hilton hotel after construction is completed in 2018.
Alternative Segments
In addition to traditional tourism, Colombia is looking to alternative segments to diversify its offer. While development of these segments is still in the early stages, tourism authorities recognise their potential.
“Senior tourism is a segment with growth possibilities, as it encompasses those with the money and time to travel,” Toro Velásquez told OBG. “However, it is also a market that requires special conditions and comfort. Colombia needs to further develop its infrastructure to be able to cater to these tourists.” Wedding and lesbian, gay, bisexual and transsexual tourism are additional segments that have shown potential and for which Colombia is an emerging destination, Toro Velásquez noted, but additional market research must be carried out. “We need to get better knowledge of these trends and learn more about potential customers,” he said.
Cruise tourism also has considerable growth prospects. Nearly 400,000 cruise passengers are expected to arrive in Cartagena alone during the 2016-17 cruise season, 40.7% more than those arriving the season before. These travellers spend an average of $118 each in the port city, contributing $48.4m to the local economy.
Outlook
Overall, the coming years are expected to be marked by double-digit growth in tourism indicators. Forward-thinking public policy and continued private sector investment will be necessary to harness growth and develop a sustainable tourism sector that contributes to economic growth. The devaluation of the peso, ongoing promotional efforts and the country’s enhanced profile provide a window of opportunity for Colombia to attract more tourists. To solidify the sector’s contribution to GDP, continued investment in infrastructure and the development of varied segments will be necessary.
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