Cablegate: Nicaragua: Tourism Official Paints a Rosy Picture

VZCZCXYZ0001
PP RUEHWEB

DE RUEHMU #1331/01 3052152
ZNR UUUUU ZZH
P 312152Z OCT 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 3323
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MANAGUA 001331

SENSITIVE
SIPDIS

USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR

E.O. 12958: N/A
TAGS: EIND EINV ECON NU
SUBJECT: NICARAGUA: TOURISM OFFICIAL PAINTS A ROSY PICTURE

REF: MANAGUA 122

SUMMARY
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1. (SBU) Mario Salinas, President of the Nicaraguan Tourism
Institute (INTUR), predicted that the tourism industry will grow 11%
in 2008, which would be higher than the 6% growth rate in 2007. To
ensure this growth, INTUR, the GON's tourism promotion agency, is
participating in more international tourism fairs to promote
Nicaraguan tourism. Salinas reports that he has approved new hotels
and beach resorts, is trying to attract more cruise ships to local
ports, and is providing technical assistance to diversify
Nicaragua's tourism sector. However, some industry insiders note
that sales for many tourism entrepreneurs have dropped by 15-20%
during the first half of 2008. They point out the growing negative
perception of Nicaragua internationally is scaring off tourists and
investors. The cautious optimism that industry representatives had
for Nicaragua's tourism sector in 2008 has changed to serious
concern about keeping their businesses alive. End Summary.

SALINAS PREDICTS HIGHER GROWTH IN 2008
--------------------------------------

2. (U) On September 18, Mario Salinas, President of INTUR, presented
a mid-year assessment of Nicaragua's tourism sector to local
entrepreneurs. Salinas predicted that tourism would grow 11% in
2008, a considerable jump when compared to 6% growth rate in 2007.
Salinas reported that 413,111 tourists visited Nicaragua during the
first half of 2008, an increase of 7% over the first half of 2007.
He estimated that 900,000 tourists would visit Nicaragua in 2008,
assuming the usual bump during the November and December high
season, and predicted that Nicaragua would earn a total of $290
million for the year.

3. (U) In 2007, tourism contributed $255.1 million to national
income; 510 new businesses were formed and 869 jobs were created.
Salinas asserted that growth in 2008 would result in 1,271 new
companies and almost 2,000 new jobs.

SALINAS SHARES PLANS TO BOOST SECTOR
------------------------------------

4. (U) Salinas reassured his audience that the GON was working
diligently to grow the tourism industry. This year, INTUR
participated in tourism fairs in Costa Rica, El Salvador, Guatemala,
Panama, Germany, Spain, and Venezuela, and will also attend a fair
in London in November. He said INTUR has increased its promotion
activities in the United States and Canada -- Nicaragua's most
important tourist markets -- but is also targeting Central America
and Venezuela, two markets with potential.

5. (U) With regard to new investments in tourism developments,
Salinas stated that he had approved 13 hotels and beach resorts
during the first half of 2008. He expects to approve 10 more
projects before the end of the year. These 10 new investments will
add 622 rooms and create 360 jobs. He said he is negotiating with
Carnival Cruise Lines and Royal Caribbean Cruise Lines to dock more
frequently at the ports of Corinto and San Juan del Sur.
Additionally, INTUR is providing technical assistance and limited
financial support to help local companies diversify Nicaragua's
tourism industry so that it includes ecotourism, agro-tourism,
rivers, nature trails, and historical sites.

INDUSTRY SKPETICISM
-------------------

6. (SBU) Alfredo Gutierrez, President of the Nicaraguan Association
of Tourism Operators (ANTUR), questioned the validity of INTUR's
data, pointing out that it is poorly prepared and does not
distinguish between family visits, business travel, missionary
groups, and leisure travel. While the main hotels in Managua may be
full, Gutierrez says they are not full of tourists. Most travelers
come to Nicaragua to conduct business, visit family, and/or
participate in community service or international development
projects. Gutierrez reported that the tourism operators and
businesses that cater to recreational or leisure travel are not
doing well: sales are down 15-20% so far in 2008 when compared to
2007.

7. (SBU) Note: Post conducted its own informal survey on the status
of the industry by talking to our contacts in Nicaragua's four
primary tourist destinations: Granada, Leon, San Juan Del Sur in
Rivas municipality, and the Barcelo-Montelimar Hotel in San Rafael
del Sur municipality. Owners and managers of restaurants and hotels
consistently told us that, when compared to 2007, sales had declined
by 15-20% during the first half of the year. Some are cautiously
optimistic that sales would pick up before the end of the year;
others are hoping that they will break even and keep their
businesses alive. More than one U.S. investor has informed us that
he is leaving the sector, citing poor market conditions and lack of
government cooperation as causes.

8. (SBU) Gutierrez criticizes the GON for not allocating sufficient
resources to promote Nicaragua as an international tourist
destination. INTUR's current promotion budget is a paltry $1
million, paling in comparison to Nicaragua's neighbors: Costa Rica
($12 million), El Salvador ($10 million), Guatemala ($14 million),
and Panama ($40 million).

SCARE TACTICS
-------------

9. (SBU) Raul Calvet, president of a tourism and real estate
services firm, stated the GON's image is scaring away tourists and
investors. He noted that he has lost at least three multimillion
dollar projects from U.S. investors this year as a result of
ideologically-charged rhetoric coming from senior GON officials,
especially President Ortega, against the United States, capitalism,
and free trade. This is coupled with the government's deliberate
policy of developing closer ties with Iran, Cuba, Venezuela, and
Russia. He said that he takes several calls each week from
potential tourists and investors from the U.S. and Canada to
reassure them that Nicaragua is a safe place to travel, and to argue
that the GON welcomes foreigners and their businesses. He added
that senior government officials appear not to understand the impact
that their rhetoric and misguided policies have on Nicaragua's image
and development.

COMMENT
-------

10. (SBU) The cautious optimism that industry representatives had
voiced for Nicaragua's tourism sector earlier this year (reftel) has
changed to serious concern about keeping their businesses alive. No
one in the industry expects the GON will take the necessary steps to
resolve the sector's problems - i.e., to maintain a welcoming
international image, promote Nicaragua as a tourist destination, and
improve infrastructure, i.e., roads, power, and water. Industry
experts believe that Salinas, who privately owns a business that
operates in the sector that he himself manages for the government,
understands their concerns. They do not believe, however, that
other government officials, including President Ortega, believe the
sector deserves more attention than it is already getting. End
Comment.

CALLAHAN

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