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Cablegate: Higher Growth in Nicaragua's Tourism Sector in 2009

VZCZCXYZ0009
PP RUEHWEB

DE RUEHMU #0799/01 2251337
ZNR UUUUU ZZH
P 131337Z AUG 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 4435
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MANAGUA 000799

SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: ECON EINV NU
SUBJECT: HIGHER GROWTH IN NICARAGUA'S TOURISM SECTOR IN 2009

REFS: A) 08 MANAGUA 1331, B) MANAGUA 753

SUMMARY
-------

1. (SBU) The Nicaraguan Tourism Institute (INTUR) reported that the
tourism industry grew 10 percent during the first half of 2009, up
from 8 percent growth during the same period in 2008. Some industry
experts believe that INTUR's data, however, may not be accurate
because it does not distinguish among family visits, business
travel, missionary groups, and leisure travel. Industry experts
said the reason for the sector's growth is that Nicaragua offers
tourists an inexpensive destination for vacation. They are
optimistic that 2009 will be better than 2008, but they are
concerned that the Honduran crisis will have a negative impact on
the tourism sector for the remainder of the year.

STATISTICS SHOW GROWTH - BUT EXPERTS SKEPTICAL
--------------------------------------------- -

2. (SBU) On August 4, INTUR released its 2009 mid-year report on the
tourism industry. INTUR reported that tourism grew by 10% during
the first half of 2009, versus an 8 percent hike during the same
period in 2008, and 10 percent growth in 2007. The government
counted 456,873 foreign visitors to Nicaragua during the first half
of 2009 (including family visits, business travel, and leisure).
During the first half of 2008, 416,242 foreigners visited Nicaragua.
During the first trimester of 2009, INTUR reported $87 million in
revenues for the tourism sector, up from $75 million in 2008 when
compared to the same period. The report concludes with a projection
that revenues will grow by 16 percent in 2009.

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3. (SBU) Alfredo Gutierrez, former president of the Nicaraguan
Association of Tourism Operators (ANTUR) and owner of a small
tourism company, noted that INTUR data is poorly prepared and does
not distinguish between family visits, business travel, and leisure
travel (tourism). He added that INTUR's failure to disaggregate
these types of visitors makes it difficult to identify industry
trends. For example, experts suggest that business travel declined
slightly during the first half of 2009; the managers of three major
hotels in Managua report that hotel occupancy rates across the city
were very low compared to the first half of 2008 (Ref A).

TOURISM INDUSTRY: STRUGGLING BUT SURVIVING
------------------------------------------

4. (SBU) Despite some skepticism concerning INTUR's statistical
data, leisure travel appears to have increased. Lucy Valenti,
President of the National Chamber of Tourism (CANATUR), explained
that the global economic crisis has compelled many tourists to look
for inexpensive destinations, such as Nicaragua, for their
vacations. She said the elimination of tourist visas for Costa
Ricans has increased the number of visitors from their neighbor to
the South. In addition, cruise ships are docking more frequently at
Nicaraguan ports. During the first half of 2009, cruise ships made
over 40 port calls, a 5 percent increase compared to the same period
in 2008.

5. (SBU) Gutierrez said that he and others in the tourism industry
have lowered their prices to attract customers, and these
adjustments have helped to maintain their businesses. In Granada
and San Juan del Sur -- the most popular tourist destinations in
Nicaragua -- hotels, bars, and restaurants report that their sales
are either as good as last year or better. These companies noted,
however, that tourists are looking for bargains and are not willing
to spend as much money as they did in previous years. A majority of
leisure travelers are also staying in smaller, inexpensive hotels
for vacations of 5-7 days, instead of 10-14 day vacations, to save
money. The bigger and more expensive hotels and resorts are
attracting fewer customers compared to last year. Many
tourism-related businesses have had to either reduce their operating
expenses or dismiss staff in order to stay afloat.

HONDURAN CRISIS NEGATIVELY IMPACTS TOURISM
------------------------------------------

6. (SBU) Mario Salinas, President of INTUR, expressed concern that
the Honduran crisis will affect tourism. Salinas stated that 60
percent of the tourists who come to Nicaragua in June, July, and
August -- the industry's high season -- come from Honduras and El
Salvador. He opined that the Honduran crisis not only adversely
affects the Nicaraguan economy, but also gives the entire region a
bad image. Tourism companies report that they have canceled
organized tours to Nicaragua because of their customers' security
concerns. Industry representatives said their sales have dropped by
60 percent since the Honduran crisis began on June 28. The months
of June, July, and August normally attract a large number of
tourists because of the holidays and festivities that occur in
Nicaragua and the region during this period (Ref B).

OPTIMISM FOR 2009
-----------------

7. (SBU) Industry representatives are optimistic that 2009 will be
better than 2008. Entrepreneurs are encouraged that there has been
a slight increase in the number of tourists so far in 2009. They
also report that the government is beginning to listen to their
complaints about electricity and water supplies, and the crucial
need for better roads. They are concerned, however, about the
Honduran crisis' negative impact on tourism during the high season.
They fear that if this crisis is further prolonged, and the GON
continues to allow Honduran President Manuel Zelaya to heighten
tensions along the border, the tourism industry will suffer for the
remainder of the year.

CALLAHAN

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