Latin America could be home to the world's next great tourism economy. There's just one problem, according to a new report from the World Travel & Tourism Council (WTTC): its infrastructure stinks.
The report -- "Travel & Tourism Investment in the Americas: Will the Region's Infrastructure and Investment Constrain or Support Future Industry Growth?" -- studies the link between updated infrastructure and the proven economic benefits of travel and tourism. The latter, it concludes, cannot exist without the former.
"The current state of travel and tourism related infrastructure within Latin America is relatively poor compared with many mature travel and tourism economies. Forecasts of tourism demand are greater than forecasts of travel and tourism investment growth. This means there is a strong possibility the sector's growth within parts of the region over the next decade will be limited," WTTC President and CEO David Scowsill said in a statement. "Given the large footprint and growing dependence on travel and tourism within much of the region, the ongoing development of and support for the sector will be central to the future broader economic prosperity of Latin America."
WTTC forecasts that $46 billion will be invested in travel and tourism in Latin America over the next decade, with an annual growth rate of 5.2 percent. With the current state of infrastructure in many countries, however, that investment likely will fall short next to future demand, suggests the organization, which identifies Colombia, El Salvador, Nicaragua, and Venezuela as particularly poor performers, and Costa Rica and Panama as strong performers. Chile, Mexico, Argentina, Brazil, and Ecuador have poor infrastructure now, but are poised for growth thanks to planned investments.
In order to claim their fair share of the global tourism economy, Latin American countries must take a three-pronged approach, according to Scowsill.
"Firstly, countries need to maintain and grow their market share from their competitors and appeal to evolving consumer tastes. They need to build, upgrade, and expand visitor facilities. Secondly, they need to increase airport capacity, as insufficient capacity can lead to bottlenecks and a limit on growth, as well as an upward pressure on prices which will affect competitiveness. Thirdly, visitor attraction capital projects should be considered as a way of generating additional demand," he said. "With confidence being restored to the financial sector, Latin American countries have a crucial chance to attract much needed investment for travel and tourism infrastructure. Governments within the region need to ensure that they are an attractive location for this investment."