Ecuadorian tourism hit hard by the dollar economy

The leisure industry, Ecuador’s fourth hard-currency maker, is enduring the aftermath of a dollar economy implemented four years ago by the administration of former president Jamil Mahuad, sources close to the local travel industry informed.

Ecuador’s former Minister of the Economy, Rocio Vasquez, admitted in an interview with Management magazine that foreign tourism is taking a very slow burn, mostly as a result of pricier services within the sector.

Official reports indicate that the number of foreign tourists to the country grew 2.3 percent in 2003 compared to the year before. In contrast, the amount of Ecuadorians that traveled abroad was up by 7.3 percent, a trend that’s likely to remain growing at that neck-breaking pace.

Freddy Eguez, leader of the Quito Tourist Entrepreneurial Guile, told Management magazine that the country’s all-time occupancy rate dipped from 86 to 52 percent over the last year.

However, official sources believe the number of sunbathers that came to Ecuador through Quito and Guayaquil –the nation’s two major cities- soared from 392,000 in 2001 to 416,000 in 2002 and on to 440,000 in 2003.

Experts point to Ecuador as a country with huge tourist potentials, an assertion they base on its natural scenery and weather conditions despite being one of South America’s smallest nations. In the same breath, Ecuador boasts a one-and-only cultural and artistic legacy.

The Galapagos Islands –the country’s premiere tourist attraction- the Amazon Basin, the warm shoreline and jaw-dropping landscapes are part of the many attractions Ecuador has to offer.

In keeping with the Ministry of Tourism, the travel industry accounted for 3.1 percent ($1.16 billion) of the country’s GNP in 2003.

Management magazine reports that the dollar economy –an issue the publication has riled against every so often- could give businesspeople in the sector to cut down on operational costs and raise profitability by means of devaluation.

Nevertheless, the publication admits “the dollar economy could also have some negative effects on mom-and-pop companies, part-time workers and other employees linked to the sector.

Ecuadorian President Lucio Gutierrez, who blasted the dollar economy during his presidential campaign, is now standing up for the greenbacks as the right tool to steer the economy back on track, even though experts believe the whole system has already caved in.

Former Minister Vasquez mentioned other factors that are putting a spoke in the industry’s wheel such as the lack of federal funds for promotional and advertisement efforts, and the withdrawal of incentives within the sector, two conditions that comply with the government’s belt-tightening policy.

In 2002, the Ecuadorian travel industry churned out some $570 million, trailing being oil drilling with $1.8 billion, money remittances from overseas ($1.4 billion) and bananas that harvested $981 million.