Chavez’s death good for Venezuela tourism?
Politicians and historians will argue ad infinitum about whether or not late Venezuelan President Hugo Chávez improved his country’s fortunes during a reign that spanned 14 years. But there’s one area that inarguably suffered: tourism.
Almost immediately upon Chávez’s assumption of power in 1999, arrivals to Venezuela dropped precipitously, reaching a nadir in 2003.
Tourism appears to have improved nominally since, but has yet to reach pre-Chávez levels, with less than half of arrivals represented by vacationers, the majority instead being comprised of business travelers, students and those visiting family, according to Trading Economics.
All of this might be understandable if the setting was some benighted dump.
But it’s confounding when discussing Venezuela, a destination that offers travelers some of the most poster-worthy natural features in the world.
Among the list of wonders is included several of the Andes mountains, more than 140,000 square miles of Amazonian rainforest, the world’s tallest waterfall (Angel Falls in Bolívar) and the longest coastline in the Caribbean.
The capital of Caracas has recently suffered from a poor reputation, but many travelers still love the city, which, at its best, is still a terrifically vibrant Latin American center pulsing with history, architecture, art, culture, music and outstanding food.
A combination of factors directly traceable to policies enacted under Chávez has put Venezuelan tourism behind that of neighbor to the west Colombia, which has been wracked by a guerilla war since the 1960s, yet is seeing arrivals to the country nearly four times that of Venezuela.
Before Venezuelan tourism can bounce back it will need to reverse nearly a decade and a half of damage. That will take time.
Venezuela’s insular monetary policies have made exchange rates cost prohibitive for most travelers to the country and devaluation of the bolívar fuerte in 2010 did little to correct what is regarded as a vastly overvalued currency.
Combine that with an inflation rate around 22 percent and onerous foreign exchange controls that make swapping out cash more like filing for a home loan, and tourists aren’t the only ones who have kept their distance.
“Multinational companies find it difficult to operate in Venezuela as they are not able to exchange local currency into more stable foreign currency like the U.S. dollar, so that they can send profits back to their home office,” says Marco Salazar, Latin America Research Analyst for market intelligence firm Euromonitor International.
The infrastructure afforded by that foreign investment is vital to tourism in a nation that has enough trouble providing goods for its own citizens, let alone international interlopers.
Need for cohesive tourism strategy
It also explains the absence in Venezuela of one pillar of any tourism strategy in particular: multi-national airlines.
Their presence in the country is limited, and likely to remain that way so long as devaluations -- like the most recent one announced in February -- threaten to wipe millions in value off companies’ books.
That adjustment cost Halliburton US$30 million -- and they got off easy.
“Multinational companies are forced to swallow huge losses due to constant devaluations imposed by the government, as seen by Colgate-Palmolive’s announcement of a US$120 million loss as a result of the Venezuelan devaluation in 2013,” says Salazar.
And then there’s always the threat of expropriation -- the seizing and nationalization of corporate assets that socked more than 1,100 companies from 2007 to 2012, according to the Venezuelan Confederation of Industries (Conindustria).
The resultant chill effect on investment has left the country woefully behind in the kinds of infrastructure, accommodations and other basic appointments needed to support a robust tourism industry.
It also doesn’t help that Venezuela has one of the top five murder rates in the world, according to the U.S. Department of State.
Non-governmental organization Venezuelan Violence Observatory called 2011 the most “violent in Venezuela’s history,” with an increase in murders and kidnappings from the previous year of roughly 30 percent.
The United Nations Office on Drugs and Crime estimates that the homicide rate grew by 119 percent during the period between 1999 and 2010.
As alarming as these statistics are, the murder rate in Venezuela is still lower than that of Jamaica, which does brisk tourist business. But Jamaica welcomes outsiders, while Venezuela seems by its policies to be provoking them.
According to the State Department, since 2005 the Venezuelan government has prohibited the U.S. Transportation Security Agency from evaluating security standards of Venezuelan airports that provide direct service to the United States.
Cause for optimism?
All of these factors explain why Venezuelan tourism has stalled, but they also provide a road map to its resurrection -- if the country wants it.
Despite what appears to be a reluctance to cater to foreigners, Venezuela recently began increasing efforts to attract travelers and saw a 25 percent spike in tourism in 2012 for its efforts, according to the country’s tourism minister, Alejandro Fleming.
Though fraught with obstacles, the incredible natural and cultural upside to tourism in Venezuela paints a promising portrait for travelers eager to explore a place with unspoiled beaches, snow-capped peaks and lush rainforests.
“The future after Chavez will be very difficult to predict,” says Salazar. “Venezuela is a destination that is rich in natural beauty with lots to offer visitors, but current conditions will continue to limit the tourism industry.”