VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #0713/01 0572140
ZNR UUUUU ZZH
R 262140Z FEB 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 1547
INFO RUEHCV/AMEMBASSY CARACAS 0012
RUEHPE/AMEMBASSY LIMA 5947
RUEHZP/AMEMBASSY PANAMA 1299
RUEHQT/AMEMBASSY QUITO 6587

UNCLAS BOGOTA 000713 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV CO
SUBJECT: COLOMBIA BANKING ON TOURISM BOOM -- BUT IS IT 
READY FOR PRIME TIME? 
 
REF: A. (A) 07 BOGOTA 8592 
     ¶B. (B) BOGOTA 540 
 
¶1.  (SBU)  SUMMARY:  A record-breaking 1.3 million foreign 
visitors traveled to Colombia in 2007.  Improved security, 
better  facilities, and a booming cruise business contributed 
to the growth.  With a new master plan for tourism, more 
hotels under construction, and increased flights to the U.S. 
and Europe, Colombian officials believe the number will 
continue to grow, perhaps reaching four million by 2010. 
Still, Colombian needs more tourist infrastructure, security 
problems could hurt the industry, and the number of overland 
visits might dry up if relations with Venezuela continue to 
deteriorate.  END SUMMARY 
 
Record-Breaking Number of Tourists 
---------------------------------- 
 
¶2.  (SBU)  Travelers arriving by air and sea hit a record 1.3 
million in 2007.  In addition, 825,000 overland visitors 
entered Colombia in 2007, raising the total to over 2.1 
million.  Oscar Rueda, Vice-Minister of Tourism, estimated 
that the industry generated close to USD 3 billion in 2007, 
or just over two percent of GDP, and directly employed 
400,000 Colombians.  While tourism's contribution to GDP in 
Colombia grew, the numbers remain low compared to other 
Latin American destinations such as the Dominican Republic, 
Mexico and Argentina where tourism accounted for 6.3, 4.9 and 
2.8 percent of GDP respectively in 2007.  Rueda noted that 
tourism to much of Latin America has been flattening in 
recent years, opening more space for the Colombian market. 
He predicted that the total number of visitors to Colombia 
will grow to four million by 2010, with corresponding 
increases in revenue and jobs. 
 
"Real" Tourist Potential Even Greater 
------------------------------------- 
 
¶3.  (SBU)  Jean Claude Bessudo, the president of Colombia's 
largest travel agency Aviatur, noted that up to now only a 
fraction of 2007's 1.3 million foreign visitors were "real" 
tourists, i.e. those who come solely for pleasure.  Bessudo 
explained that the GOC does not distinguish between those 
coming to Colombia for family reasons, business or pleasure. 
Bessudo estimated the number of "real" tourists in 2007 at 
100,000, while Rueda estimated closer to 400,000.  But both 
agreed the percentage growth in such tourists since 2003 far 
exceeded the growth in overall visitors.  More importantly, 
both said that while the market for business tourists would 
continue to expand with increasing economic growth and 
security, the pleasure tourist market offered Colombia the 
greatest upside potential for substantial increases in the 
overall number of visitors. 
 
Security and GOC Support Critical 
--------------------------------- 
 
¶4.  (SBU)  Rueda called improved security the key to the 20 
percent annual increase in tourism since 2003.  He noted that 
the number of homicides and kidnappings has declined 
dramatically since 2002, creating a more positive 
international image that has helped alleviate tourist fears. 
Rueda added that the GOC also offered incentives to the 
industry through legal and regulatory reforms.  In 2006 the 
GOC enacted a comprehensive tourism law with mechanisms to 
regulate and rate hotels, and established a fund to promote 
Colombia as a tourist destination.  Jaime Alberto Cabal, a 
former Minister of Economic Development and the head of the 
hotel association COTELCO, expects the fund to grow from USD 
1 million in 2007 to USD 15 million in 2008. 
 
¶5.  (SBU)  Cabal described Law 788 of 2002 as critical since 
it created "the world's most attractive hotel operating 
environment."  Under the law the national government waives 
all hotel income taxes for 30 years for new hotels and a 
percentage for remodeled hotels (e.g. if a hotel owner spends 
USD one million renovating a hotel worth USD two million then 
the GOC waives one-half of the tax).  Cabal noted that law 
788 sparked an explosion in hotel construction -- from USD 4 
million in annual investment prior to the law to over USD 150 
million in 2007.  Occupancy rates also increased from 45 
percent in 2002 to 58 percent in 2007. Cabal projects 
construction of 25,000 new rooms between 2007-2010, with each 
new 100 hotel rooms generating 76 jobs.  Planned hotel 
investments include a USD 33 million Royal-Radisson in 
Cartagena, a USD 27 million Hilton Hotel in Bogota, two new 
Marriotts in Bogota, and a new Holiday Inn in Medellin. 
Colombia is also focused on increasing conference tourism, 
recently inaugurating a new convention center in Cali, with 
 
others planned for Santa Marta, Barranquilla, Armenia, 
Popayan, Villa de Leyva and San Andres. 
 
Easier Access By Air and Sea 
---------------------------- 
 
¶6.  (SBU)  From 2003-2007 international and domestic air 
passengers increased an average of 15 percent and 5 percent 
per year, respectively.  Bessudo said these numbers should 
accelerate with a new U.S.- GOC aviation agreement that 
increases flights by 50 percent (ref A) and other agreements 
to increase flights to Spain and Brussels.  Bessudo added 
that the addition of low cost carriers, such as Spirit and 
Jet Blue from the U.S. and Colombia's EasyFly, should reduce 
costs for both international and domestic flights. 
 
¶7.  (SBU)  Bessudo noted that although cruise ship passengers 
represented less than 10 percent of tourists in 2007, they 
nonetheless climbed significantly from 50,000 in 2006 to over 
125,000 in 2007.  Bessudo, whose agency handles 98 percent of 
all cruise ship passengers arriving in Cartagena (the 
destination of 75 percent of incoming cruise ships), expects 
the number of port calls to increase from 75 in 2007 to 125 
in 2008.  He said that while ships land for only 3-4 hours, 
each visit contributes an average of USD 200,000 to the local 
economy.  In addition, Bessudo estimates that ten percent of 
all ship passengers who visit Cartagena return as tourists. 
He highlighted last year's return of Royal Caribbean stops in 
Cartagena after a six-year absence, and the company's recent 
decision to initiate cruises from Cartagena, as factors 
further contributing to substantial cruise tourism growth. 
 
Developing a Master Plan 
------------------------ 
 
¶8.  (SBU)  Bessudo complained that the lack of a master plan 
has hurt the tourist industry.  He called the two year-old 
"Colombian is Passion" country brand "ambiguous," and felt 
the new slogan for tourism, "The biggest risk is that you'll 
never want to leave," had negative connotations given 
Colombia's kidnapping history.  Ricardo Galindo, 
vice-president for event tourism at Pro-Export Colombia, said 
the GOC had recently started developing a tourism master 
plan.  Under the plan, Colombia will move from 
"destination-driven" to "product-driven" tourism focusing on 
eco-tourism (the Amazon, two coastlines, the coffee country), 
cultural tourism (colonial cities, museums, fine 
restaurants), and adventure tourism (scuba diving, sailing, 
mountain sports).  Pro-Export is working with the hotel, 
airline and tour industry to put together product packages, 
and Galindo hopes that within a year a tourist who wants to 
scuba dive will be able to buy a single package with lodging, 
in-country transportation, and diving.  While recognizing 
that Colombia cannot yet compete with Costa Rica for 
eco-tourism or Mexico for cultural tourism, Galindo  hopes 
Colombia can become a second destination for experienced 
travelers interested in something new, and offer the best 
overall combination of multiple products. 
 
But Challenges Still Exist 
-------------------------- 
 
¶10.  (SBU)  Cabal recognizes that for Colombia to become a 
prime destination it desperately needs to improve its tourist 
infrastructure.  The GOC's plan to build USD 6.5 billion 
worth of better roads, and close to USD one billion in 
airport improvements (ref B) should help.  Still, Cabal 
worries that the use of private concessions to fund most 
projects could prove problematic given their checkered 
history in Colombia.  He also notes that additional flights 
will generate increased pressure on Bogota's overtaxed El 
Dorado international airport.  While the airport started a 
USD 650 million upgrade in September 2007, Cabal said tourism 
will suffer if the upgrade fails to deliver a world-class 
airport, or if construction problems make the airport worse. 
The quality of the tourist product is also of concern; while 
the GOC claims that one-half of the projected new 25,000 
hotel rooms will be in four and five star hotels, Cabal 
admitted that this is an internal Colombian rating and that 
rooms and services regularly fall short of international 
standards. 
 
¶11.  (SBU)  Cabal, Rueda, Galindo and Bessudo agreed that if 
security worsens all other efforts to strengthen tourism 
would likely be for naught and terrorism directed against 
tourists could crush the industry.  While foreign government 
travel warnings, particularly that of the U.S., hurt tourism, 
they acknowledged that foreign governments were not likely to 
remove warnings in the near future, particularly after events 
 
such as such as January's kidnapping of six tourists from a 
beach on the Pacific coast.  Bessudo suggested creating 
"Tourist Safe Zones" that had a GOC-guaranteed level of 
security that foreign governments might agree to specifically 
recognize in their travel warnings. 
 
And Venezuelan Visitors Could Dry Up 
------------------------------------- 
 
¶12.  (SBU)  Rueda said that the 825,000 overland visitors who 
stayed at least three nights in Colombia in 2007 were not 
technically considered "tourists."  Still, he said they play 
a significant role in the economies of border departments as 
many, particularly the 60 percent from Venezuela, come to 
Colombia to buy goods not available in their countries. 
Rueda noted that the number dropped from 875,000 in 2006 to 
825,000 in 2007, and expressed concern that Venezuela might 
restrict overland travel if bilateral relations continue to 
deteriorate. 
 
COMMENT:  Not Yet Ready for Prime Time 
-------------------------------------- 
 
¶13. (SBU)  With Caribbean and Pacific coastlines, an Amazon 
port, colonial towns and biodiversity second to none, 
Colombia offers a potential tourist package that could be the 
envy of the region.  President Uribe recognizes this, and has 
made tourism development a focal point of the GOC economic 
development plan.  But years of industry neglect have taken 
their toll on infrastructure, hotel space, and a service 
culture not up to international standards.  Colombia is 
determined to have the same tourist cache as Costa Rica, 
Mexico and the DR -- and it can get there over time -- but 
only if progress on security remains unabated.  Despite the 
security gains familiar to insiders, there is little margin 
of error for a country whose international image is still 
dominated by images of drugs and violence. 
Brownfield