Travel and Tourism
A Top Export Prospect for Colombia

Statistics are unofficial estimates based on reports from the sector in terms of GDP percentage; 2011 data is estimated with an increment of 6% from 2010. Source: Colombian Civil Aeronautics Office; Proexport; DAS.

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Overview

Despite the severe impact of the global recession on travel and tourism, Colombia offers a promising market for U.S. exporters. In 2011, Latin American economies recovered quickly from last year’s recession and are now exceeding GDP growth predictions. Consumers are enjoying higher disposable incomes due to the favorable exchange rate of local currencies vs. the US dollar. Colombia and the region, therefore, promise to lead the growth in tourism over the next 10 years, according to the International Air Transport Association (IATA). The Travel and Tourism market represents approximately 1.9 percent of Colombia’s GDP. In 2010, Colombia ranked in the top 20 countries generating in-bound tourism to the United States and reflected the second highest percent change of total arrivals (19%) after Brazil (34%) in Latin America. In terms of outbound passengers, during 2010, the U.S. grew its market share to 40 percent from 36 percent in 2008. In second place was South America with 26 percent, followed by Central American countries at 19 percent, Europe at 11 percent and other countries including Canada at 4 percent.

Based on preliminary figures published by the Colombian Immigration Department (DAS), 793,000 Colombians traveled to the United States during 2011, three percent more than in 2009. This was the most popular destination for Colombians, who spent about US $1.65 million in the U.S. (excluding airfares) on food, car rental, hotel, sightseeing, and shopping. The usual length of stay is seven nights. For those with relatives in the U.S. the average stay ranges from two to four weeks. Colombians have 15 working days of statutory paid vacation per year. Tourism travel often coincides with school calendars (there are two calendars) and usually takes place from November to early February, during Easter week and from June to late August.

On November 11, 2010, Colombia and the United States signed an “Open Skies” air transport agreement that will take effect at the end of 2012. This agreement will significantly increase air traffic between the two countries. Currently, 200 weekly flights operate between Colombia and the United States. During the transition period before the “Open Skies” agreement goes into force, each country will be allowed to add another 21 weekly frequencies on currently operated routes and create new itineraries without restriction. Five U.S. airlines provide direct daily flights between Colombia and the United States; Delta (from Atlanta and New York), Continental Airlines (from Houston), American Airlines (from Miami), Spirit (from Fort Lauderdale) and Jet Blue (from Orlando). Non- U.S. airlines (Copa, Aires, LAN) also operate on some of these routes. Avianca initiated a non-stop flight to Washington-Dulles and Aires now LAN, began service to Ft. Lauderdale from Bogota and other Colombian cities in November 2009. Aero Republica was purchased by Copa in 2010, leaving SATENA, the government-owned and operated airline as the only non-affiliated carrier in the country.

Most Colombians organize their trips through a local travel agent, and are known be last minute planners, especially to overseas destinations. The Internet has begun to affect the competitive balance in the travel and tourism industry, as it provides an efficient vehicle for information access, marketing, purchasing and paying for services. Most of the local travel agents have developed their own travel websites to offer online flight booking, hotels and car rentals.

Colombians have significantly diversified their travel habits, selecting other countries for their vacation plans. South America, especially Argentina and Brazil, have become increasingly popular destinations. These destinations are attractive alternatives because no visa is required and promotional packages that include low airfares and all-inclusive hotel or resort rates are readily available. The strong competition from alternative destinations makes it imperative for the U.S. Travel and Tourism industry in Colombia to consistently promote travel opportunities.

The ratification by United States Congress on October 12, 2011, of the Trade Promotion Agreement (US-TPA) or Free Trade Agreement (FTA) between Colombia and the United States will foster a significant expansion of trade between the two countries that will result in the increase of Colombian business travelers visiting the United States.

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Sub-Sector Best Prospects/Services

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Opportunities

The total number of passengers traveling from Colombia to foreign countries increased an average of 14 percent between 2004 and 2008. From 2010 to 2011 the number of travelers grew approximately six percent. The growth rate for 2012 is expected to increase slightly to seven percent. There are positive factors that will help Colombia to augment the number of travelers going abroad for business and tourism purposes such as: (a) the revaluation of the Colombian peso that has reduced the cost of traveling abroad, (b) the “Open Skies” agreement (c) the ratification by United States Congress of the Trade Promotion Agreement (TPA) or Free Trade Agreement (FTA) between Colombia and the United States; (d) the implementation of trade agreements between Colombia and other countries, including Mercosur (2005), Central America, Asia, Canada (entered into force on August 15, 2011) and the European Union.

The increasing flow of foreign passengers coming to Colombia is creating a growing demand for hotel services. Several major international hotel chains have started construction of new facilities. Hilton opened a new hotel in Bogota with plans to build more in other cities. Additionally, Marriott, Sonesta, Hyatt, and Decameron have announced their plans to build hotels in the cities of Bogotá, Medellin and Cartagena. These hotels are expected to be completed by 2012-2013.

According to Invest in Colombia, there are incentives in the form of an income tax exemption for a determined period of time. This means that the companies which benefit from these incentives will pay 0% income tax rate for a period of time and once that term is over they will be subject to the general tax rate which is 33%.

In the tourism industry, the hotel services provided in new hotels constructed between 2003 and December 31, 2017, and hotel services provided in hotels remodeled and/or expanded until December 31, 2017, will receive this benefit for a period of 30 years. Also, ecotourism services will receive this benefit for 20 years, which began in 2003.

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Resources

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