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Published Friday,
April 17, 2020
Costa Rica tourism
crisisand the solution By Peter van Hussen We think that the tourism market will not return to the level the country has experienced in the past for many years, if ever. People have long memories and there will be a large percentage of the potential tourists who will not get on an airplane for years to come. The media in the U.S. has been quite clear on this, suggesting tourism in the U.S. will be oriented toward local state parks and Florida beaches. Donald Trump has suggested this is the best way to help the economy of the country, as a measure of protectionism for the economy in the United States. For the last 35 years of working in the Tourism industry and being a real estate broker selling hotels and real estate, along with being the vice president of the Central Pacific Chamber of Commerce in the Jaco area makes this very clear to me and many others in this industry. How do I help my adopted country of Costa Rica avoid the financial crisis? There is an estimated 14% of total cash flow not being available to the economy of the country since the thousands of hotels, tour operators, restaurants, car rental agencies will not see clients like in past years The answer is obvious to me: we need a new paradigm to make up for the loss. If we do not, there will be a domino effect, this will crash real estate values and cause huge unemployment. The latest Congressional Budget Office of the U.S. estimates that the unemployment in that country will be 9% at the end of 2021. If the U.S. is at that level what will be the rate in Costa Rica? I fear much higher. The media in the U.S. projects as much as 30% of the mortgages will default. I believe this may be higher for the hotels and various tourism operators in Costa Rica. The media in Costa Rica almost ignores the distress in prices of the international bonds of this country, which have crashed like the stock market in the U.S. What will happen in a few weeks when the tourism operators are not able to pay their employees or their debts, and neither receive tourism dollars in the country? There is one serious idea and solution on how to restart the predictable cash flow in Costa Rica. It gets back to what happened almost 40 years ago when our country was inviting retirees to make a new home here with special incentives as they called them the "pensionados rentistas" which brought tourism and many dollars into the country. Our family arrived in Costa Rica, under this program in 1981. One of those is very simple: stop the bureaucracy and make a “Welcome to Costa Rica” sign. The first is to stop making retirees inscribe in the caja since the ones with higher income want private hospitals. Instead of the caja make them inscribe with our government insurance company (INS) which most people do not realize that it reinsures the risk with reinsurance companies and the INS really is just getting a commission without the risk of loss. Let those retirees get the same incentive as the past of bringing one car with a "pensionado plate" which cannot be resold for at least 7 years. And if resold the import tax must be paid at that time. Let them bring their household furniture without tax. Make it easy to open a bank account here. With these incentives the real estate market will rebound and all those empty condos and the housing market may fill up with retirees who have cash flow to keep restaurants above water, doctors and dentists able to keep doors open, working people being able to find a job. The local hotels will also start to fill up with the local retirees and extended families and friends who will start to visit them to influx dollars into the country. Comments on this article can be sent to the author's email peter@c21jaco.com. ----------------------
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