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Chile Tourism Report Q2 2010
Business Monitor International, March 2010, Pages: 48
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 significant potential for growth as a tourist destination and economic indicators reinforce our positive outlook for the country. After contracting by 1.1% in 2009, the authors forecast that the Chilean economy will grow by 1.5% in 2010 and 3.2% in 2011. According to the Pacific Asia Travel Association (PATA), Chile had one of the best tourism outlooks for 2009. Internal tourist numbers reached 3,559,000 in January 2009, which was an increase of 8% year-onyear (y-o-y).
The three main Chilean tourist destinations – Viña del Mar, La Serena and Pucón – have all posted strong growth figures in recent seasons, with high inflation in neighbouring Argentina driving many Argentinians to holiday in Chile, Reuters reported. Long-term growth potential for the industry nonetheless depends upon attracting tourists from North America, Europe and the Asia Pacific region. The government, with Servicio Nacional de Turismo (Sernatur), have launched the Plan de Acción de Turismo (Tourism Action Plan) to promote the industry’s development on a nationwide level. The plan aims to increase tourist numbers in Chile from 2.5mn in 2007 to 3mn in 2010. The government is particularly focused on promoting the country’s profile in Europe and other overseas markets. The plan includes an increase in special interest tourism, the development of a system of certification and quality and implementing new tourism legislation.
Ecotourism and special interest destinations have been a key development within the Chilean market. Investment in accommodation – including the addition of luxury facilities – transport and staff training are helping to transform the sector. 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 have led the modernisation.
Political Outlook President Sebastián Piñera’s new cabinet, which took office on March 11 2010, reflects a commitment to business-friendly policies that bode well for the tourism sector. The changes are expected to bring a positive outlook for the business environment with professional experience in the private sector preferred to party loyalty. In keeping with the long-held view, Piñera is expected to reshape Chile’s policy to be more private sector-orientated. The new cabinet is notable for the prominence of high profile business figures, many of which have had major positions at some of the country’s foremost companies.
A split congress may provide some obstacles for policy implementation and potential downside risks however, with the greatest threat coming from Piñera’s own centre-right bloc. His decision not to appoint leading rightwing figures to cabinet could affect his popularity among his own supporters. This tension could be further exacerbated by his socially liberal agenda, especially his commitment to introducing legal rights for same-sex couples. Nevertheless, with a business-friendly cabinet taking office, we believe that the threats to Chile’s political stability remain distinctly muted, a view reflected in the country’s impressive score of 76 in our Short-Term Political Risk ratings.
Economic Outlook Chile scores well across all of the economic indicators and as a result it has one of the most impressive economic outlooks in the Latin American region. Mining continues to be dominant in the country’s economy but factors such as a highly attractive investment climate, stable government institutions and a high degree of transparency provide more long-term impetuses for growth. The authors expect real GDP growth to average 3.4% after 2010 to the end of our 10-year forecast period.
Currency Outlook The outlook for the Chilean peso is generally positive despite issues about financial market volatility and government intervention in the foreign exchange market. Since the end of 2009, the peso has continued to strengthen against the US dollar and is trading very close to our second target of CLP495.00/US$. Although there is the potential that the currency may be overbought, it is not expected to make any major movements in the short term but trend down towards the CLP485.00/US$ level last recorded in July 2008. We continue to regard the peso as a regional safe haven currency at times of heightened economic uncertainty, which should support it in the event of a rapid emerging markets selloff.
Business Environment Chile’s business environment is by far one of the most transparent and open in Latin America. A strong, efficient legal framework and government commitment to attracting foreign investment puts it high up in regional ratings. Despite its varied geography and landscape, Chile has a physical infrastructure network that rivals that of many developed countries and this is a major asset to its business climate. Although low by regional standards, corruption and criminal activity is still a nuisance and the government still faces significant challenges on these fronts. The previous government composed 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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