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Chile Tourism Report Q1 2010
Business Monitor International, Dec 2009, Pages: 47
Business Monitor International's Chile Tourism Report provides industry professionals and strategists, corporate analysts, tourism associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Chile's tourism industry.
Chile has been suffering from the impact of the global recession but a reasonably strong recovery is now in sight. According to the publisher's latest projections, after contracting by 1.1% in 2009, the Chilean economy is set to grow by 1.5% in 2010 and 3.2% in 2011. Chile’s tourism industry is a recent development and has huge potential to grow. It had one of the best tourism outlooks for 2009, according to the Pacific Asia Travel Association (PATA). The number of Chilean tourists travelling inside the country reached 3,559,000 in January 2009, an increase of 8% yearon- year (y-o-y), and although the number of Chileans travelling overseas decreased in 2008, recovery looks imminent.
Summer 2007-2008 was exceptionally good for tourism in Chile, with Chileans travelling within the country and more tourists coming from Argentina. The three main Chilean tourist destinations – Viña del Mar, La Serena and Pucón – reported a 15% increase in the number of their visitors this season. A report by Reuters said high inflation in neighbouring Argentina drove many Argentinians to holiday in Chile. While tourists from within the region are helping to bolster numbers during the recession, the long-term growth potential for the industry will depend upon attracting tourists from North America, Europe and the Asia Pacific region.
In its ‘Plan de Acción de Turismo’ the government, in conjunction with Servicio Nacional de Turismo (Sernatur), plans to promote its development on a nationwide level and to increase the number of tourists in Chile from 2.5mn in 2007 to 3mn in 2010. Under the plan the government intends to promote the country’s profile overseas, in Europe in particular, to increase special interest tourism, develop a system of certification and quality and implement a new legislation for tourism. In recent years, investment has been targeted towards adding new destinations to the portfolio of attractions that the country offers to long haul tourists. Spas and resorts have started to appear nationwide and traditional thermal water centres lead the modernisation movement. Ecotourism and special interest destinations have improved the overall offer. Investment in accommodation, transport and staff training are helping to transform the category, including the addition of luxury facilities.
Political Outlook Coalición por el Cambio’s presidential candidate, Sebastián Piñera, is receiving high profile endorsement for his promises of change during his election campaign. With the ruling Concertación coalition continuing to crumble, the publisher sees little scope for a last minute comeback in the polls. Although Piñera is almost tied with Concertación’s candidate Eduardo Frei in the case of a runoff, the emergence of another candidate from Concertación’s camp may yet put any hopes of a Piñera victory to waste.
The Chilean political landscape is clearly shifted into a higher gear in the run-up to the general election (scheduled for December 13 2009, with a run-off date on January 17 2010). With President Michelle Bachelet constitutionally barred from another consecutive presidential term, the desire for change is rising among the electorate. Longstanding divisions in the ruling Concertación are reaching boiling point as Bachelet’s administration comes to an end. Bachelet will leave office on March 11 2010.
Economic Outlook Chile continues to have some of Latin America’s most impressive fundamentals, such as a highly attractive investment climate, stable government institutions and a high degree of transparency. Although the importance of the country’s mining sector and the integration of the country’s financial services sector with global markets will keep the economy exposed to external business cycles, Chile will remain a bellwether for the region in terms of consumer affluence and a favourable business environment. The publisher expect real GDP growth to average 3.4% beyond 2010 through to the end of their 10-year forecast horizon.
Currency Outlook Despite risks of resurgent financial market volatility and government interventions in the foreign exchange market, the publisher remains generally upbeat on the Chilean peso. They expected CLP535.00/US$ by the end of 2009. Sound macroeconomic fundamentals provide a strong case for early recovery, a factor which should keep investor confidence in the peso anchored. Notwithstanding downside risks to the publisher's economic growth forecast of -1.1% in 2009, ample room available to both fiscal and monetary policymakers should make the country a regional outperformer. The publisher continues to regard the peso as a regional safe haven at times of heightened economic uncertainty, which should support the currency in the event of a rapid emerging markets selloff.
Business Environment Anchored by a strong and efficient legal framework, the Chilean business environment is the most accommodating in the region and the government continues to place attracting foreign investment high on its priority list. A physical infrastructure network which rivals that of many in the developed world is a major asset to the Chilean business climate and, together with a very open foreign trade regime, helps to maintain the country’s reputation as an attractive foreign direct investment (FDI) destination. Although low by regional standards, corruption and criminal activity remains a nuisance and the government still faces significant challenges on these fronts. The Bachelet administration has drawn up a white paper outlining the need for US$5bn of investment in the country’s ports sector by 2020 to meet projected growth in the country’s foreign trade.
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