VZCZCXYZ0003
PP RUEHWEB

DE RUEHMU #0122/01 0311647
ZNR UUUUU ZZH
P 311647Z JAN 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 2022
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MANAGUA 000122 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR 
 
E.O. 12958: N/A 
TAGS: ECON EINV NU
SUBJECT: NICARAGUA: SLOWER GROWTH IN TOURISM SECTOR IN 2007 
 
REF: A) 07 MANAGUA 2551,  B) 07 MANAGUA 1789, C) 07 MANAGUA 452, D) 
 
07 MANAGUA 341,  E) 07 MANAGUA 2376 
 
SUMMARY 
------- 
 
¶1. (SBU) The Nicaraguan Tourism Institute (INTUR) reported that the 
tourism industry grew 6% in 2007, down from 2006's 8.6% and did not 
fulfill industry's expectations.  Some industry experts question the 
veracity of INTUR's data, noting that sales for many tourism 
entrepreneurs have dropped by an average of 30-40%.  The reasons for 
the sector's slowdown include unreliable electricity and water 
supplies, policymaking paralysis at INTUR, and unhelpful political 
rhetoric by senior Government of Nicaraguan (GON) officials that 
have scared off foreign tourists and investors alike.  Granada, a 
bellwether for the industry, has been particularly hit hard and many 
businesses have either closed or laid off workers.  Entrepreneurs 
are cautiously optimistic that the tourists will come back in 2008. 
 
 
TOURISM SECTOR GROWS -- BUT BELOW EXPECTATIONS 
--------------------------------------------- - 
 
¶2. (SBU) On December 27, Mario Salinas, Executive President of the 
Nicaraguan Tourism Institute (INTUR), reported that  Nicaragua's 
tourism income grew by 6% in 2007, versus an 8.6% hike in 2006.  The 
government counted 819,801 foreign visitors to Nicaragua in 2007 
(including family visits, business travel, and leisure travel) who 
spent $244.8 million.  In 2006, 773,398 foreigners visited Nicaragua 
and spent $231 million.  Salinas conceded that INTUR and industry 
had hoped for 12% to 16% growth in 2007 -- and reported that INTUR's 
goal for the tourism sector in 2008 was 10% to 11% growth. 
 
SOME INDUSTRY EXPERTS SKEPTICAL OF INTUR'S DATA 
--------------------------------------------- -- 
 
¶3. (SBU) Raul Calvet, president of a tourism and real estate 
services firm, noted that INTUR data is poorly prepared and does not 
distinguish between family visits, business travel, and leisure 
travel (tourism).  According to Calvet, failure to disaggregate 
these types of visitors makes it difficult to identify industry 
trends.  For example, experts suggest that business travel was 
strong in 2007; the managers of three major hotels in Managua report 
that hotel occupancy rates across the city were very high during the 
year. 
 
¶4. (SBU) Leisure travel, on the other hand, appears to have 
declined.  Alfredo Gutierrez, President of the Nicaraguan 
Association of Receptive Tourism (ANTUR), and Ivan Bugna, President 
of the Nicaraguan Chamber of Small and Medium Tourism Companies 
(CANTUR), both were publicly skeptical of INTUR's claim that the 
tourism sector achieved even 6% growth.  Gutierrez reported that his 
contacts in the tourism industry have complained that their sales 
were down by an average of 30-40%. 
 
REASONS FOR THE SLACK IN TOURISM 
--------------------------------- 
 
¶5. (SBU) Lucy Valenti, President of the National Chamber of Tourism 
(CANATUR), identified the primary reasons for slowing tourism growth 
in 2007 were unreliable electricity and water supplies, unhelpful 
political rhetoric from senior Government of Nicaragua (GON) 
officials that scared off foreign tourists and investors, and 
policymaking paralysis at INTUR.  This paralysis has affected the 
active promotion of Nicaragua's tourism sector, the approval of 
projects in a timely manner, the compilation of statistical data, 
and the formation of a strategic vision for the industry (Ref A). 
Valenti and Calvet added that property claims disputes in areas such 
as Tola (Ref E) had a negative impact, particularly on U.S. 
investors interested in the tourism sector.  Communities that rely 
on leisure travel, such as Granada and San Juan del Sur, were 
especially hard hit. 
 
GRANADA HIT HARD 
---------------- 
 
¶6. (SBU) Granada, a colonial city located 20 miles south of Managua, 
is Nicaragua's leading leisure tourist destination and a bellwether 
for the sector.  According to INTUR, 80% of all foreign tourists who 
come to Nicaragua visit Granada during their stay.  The town is also 
a popular weekend destination for Nicaraguans.  However, the lack of 
reliable electricity and water supplies, coupled with political 
uncertainty, took their toll on Granada in 2007.  Granada tourism 
experts and entrepreneurs told us that sales dropped by an average 
of 30%, and that more than 230 small businesses closed their shops 
last year.  Businesses that remain open have reduced their 
inventory, especially for perishable goods, and some have had to cut 
staff. 
 
¶7. (SBU) Several hotels in Granada that normally operate at full 
occupancy in November and December -- the beginning of the high 
season for tourists in Nicaragua -- experienced higher vacancy rates 
than anticipated.  The manager of Hotel Alhambra estimated that his 
sales were down 20% because of unreliable utilities, noting that 
many foreign tourists visited only for the day.  The manager of 
Hotel Casa de Alto reported that his sales dropped 60% because of 
unreliable power and international visitor perceptions that the 
Ortega administration is hostile to foreigners.  The manager of 
Roadhouse Bar and Grill, one of the most popular restaurants in 
Granada, said his sales were down between 40% and 50% because of 
unreliable electricity and water supplies.  Blanca Coronel Kautz, 
INTUR's local representative in Granada, dismissed these concerns, 
claiming that tourism for 2007 was normal -- and that the businesses 
had closed their operations because of bad management. 
 
COMMENT 
------- 
 
¶8. (SBU) Business owners are cautiously optimistic about prospects 
in 2008.  They believe that tourists will return to Nicaragua after 
they realize that the Ortega administration's "bark is worse than 
its bite."  However, they doubt that the GON fully understands or 
can take the necessary steps to resolve the sector's problems -- the 
importance of maintaining a welcoming international image, improving 
electricity and water supplies, and the crucial need for building 
better roads.  If Granada is any indication about the trajectory of 
the sector, the outlook is indeed bleak.  End Comment. 
 
TRIVELLI