Checking in

Hopes for Colombia's hotel industry as pandemic restrictions are lifted.

Colombia has lifted most COVID-19 travel restrictions as the country continues to progress with its vaccination rollout and the government has already allowed the immunisation of the entire population over 12.   

In this context, the hotel and restaurant sector is expected to grow by 40% in 2021. The National Statistics Administrative Department of Colombia reported that hotel occupation is progressively growing, reaching 25.6% in May 2021 and 36.1% in June. However, sector experts expect hotel occupation to reach pre-pandemic levels only after 2023.

The CEO of a large hotel chain in Colombia gave us his view, “In 2020, hotel occupancy, at least for our chain, reached a figure close to 0%. It’s a totally different picture now, over the last few months we are 50% up on 2019, which was a good year! We hit a new monthly sales record in July.”

“In 2020, hotel occupancy, at least for our chain, reached a figure close to 0%. It’s a totally different picture now, over the last few months we are 50% up on 2019.”

CEO, hotel chain, Colombia

The Ministry of Tourism of Colombia has launched a new strategic plan led by ProColombia, a government agency, which has divided the country in six regions to combine a diverse, cultural, geographic and gastronomic offer to appeal international travellers. A senior ProColombia executive told us, “Our tourism industry plays a very important role in the economy, it represented about 4% of GDP in 2019, generated 8% of employment, had an annual growth rate of 3% and in a transversal way (hotel, gastronomic sector, etc.),  became the first generator of foreign currency in Colombia. Ultimately, the industry is seen as a key enabler of economic reactivation, which is why it has been prioritised in the reactivation plan.

The reactivation plan includes a number of incentives and tax breaks, as the ProColombia executive detailed, “There are many VAT exemptions for hotels, bars, restaurants and tourism services. Furthermore, the government has given a 9% tax income tax incentive for four years for the construction and expansion of hotels, ecotourism activities, etc to attract direct investment. Sustainable tourism can access a 25% reduction in income tax.”

An industry executive hailed the incentives as a huge success, “Government support has been key to our survival, it exempted hotels from VAT from May 2021 to December 2021. At the beginning of the pandemic, this allowed us to subsidise expenses and it has stimulated the recent recovery.”

“Government support has been key to our survival […] At the beginning of the pandemic this allowed us to subsidise expenses and it has stimulated the recent recovery.”

Hotel industry executive, Colombia

Such incentives have captured the attention of some investors as one explained, “There are plenty of opportunities in infrastructure, especially in tourism projects that have a social component, sustainability, community and regional development, job creation etc. Today, we are in three large project with other investors from the continent and they are a priority for the government.”

The recovery has not been even, as the hotel chain CEO commented, “You need to note that there are two types of hotels and markets: corporate and vacations. Hotels catering for corporates have recovered a little but no where near the rate of vacation hotels. Large events used to drive most of the profits of the corporate hotels and who knows when they will return. We expect this uneven recovery to continue for the next two or three years when consumer behaviour normalises and we move from survival to investment. On the short-term we are trying to diversify income streams as much as possible e.g. brunches, hourly room bookings etc.”

 

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