Over the past decade and a half the long-kept secret of Colombia’s cultural heritage and natural beauty has spread throughout the international tourism circuit. The country’s potential as a regional tourism hotspot has been recognised by organisations and publications worldwide, with business-focused media outlet Forbes listing Colombia as one of the 10 “coolest places” to visit in 2019, citing the “breezy appeal of Cartagena”, the “financial might of Medellín”, a “celebration of life” in Bogotá and the “guarded optimism of the Colombian people”.
Much of the sector’s historical underperformance was tied to the government’s long-running conflict with the armed militant group FARC. In recent years the security situation improved greatly and in 2016 a peace accord was signed between the government and FARC, laying the groundwork for expansion in the sector after the official end of the decades-long civil war. The end of the war, which disproportionately affected rural areas, opened swathes of previously FARC-held territory to an increasingly dynamic tourism sector. Although tourism in Colombia is still concentrated along the Caribbean coasts and in larger cities such as Medellín, destinations open to tourists, both domestic and international, are becoming increasingly diverse, with offerings now including activities such as ecotourism and birdwatching in rural and previously closed areas.
Performance & Size
The peace dividend brought almost immediate results to the tourism sector. According to the 2018 edition of the “World Tourism Highlights Report” published by the UN World Tourism Organisation (UNWTO), Colombia collected the third-highest tourism receipts in South America after Brazil and Argentina in 2017, at $4.8bn. Additionally, the organisation noted double-digit growth in arrivals, from 3.3m in 2016 to 4m in 2017. The UNWTO forecast an increase in total contribution to GDP, from COP53.4trn ($18.3bn), or 5.8% of GDP, in 2017 to COP78.5trn ($26.8bn), or 6.1% of GDP, in 2028. This figure is up from the COP51trn ($17.4bn) seen in 2016.
Arrivals & Spending
The turnaround in the sector continued into 2018, with the country seeing record numbers of international visitors. That year 4.3m visitors entered the country, according to statistics from the Ministry of Commerce, Industry and Tourism (Ministerio de Comercio, Industria y Turismo, MINCIT). This was up 10.4% from 2017’s 4m arrivals and over double the 1.7m visitors seen in 2010. The increase in visitors in 2018 outperformed many tourist markets around the world, notably above the regional average of 3% and international average of 6%. Recent growth in the sector is not a short-term anomaly, as between 2011 and 2017 international arrivals grew by 69%, foreign currency income by 52%, new job creation by 19% and 74% more companies became active.
Expansion has been fuelled by increased air and cruise arrivals. In 2018 over 6.1m passengers arrived via the country’s airports, an 11% increase from 2017. Cruise passenger arrivals also increased, with 344,624 visiting in 2017 and 379,906 in 2018, a 10% increase from the year before with around 95% of passengers arriving via Cartagena. However, the number of ships fell from 234 in 2017 to 232 in 2018.
Tourists are also spending more. From 2004 to 2018 income from foreign visitors grew by over 400%, from $4.7bn in 2004 to more than $20bn. According to the central bank, Banco de la Repú- blica de Colombia (BRC), around 80% of funding that entered the sector in 2018 came from visitor spending. International tourists spent an average of COP4.3m ($1470) per person, excluding flights. What is more, the central bank found that 90% of travel revenues were generated by tourists arriving by air. The analysts at the BRC noted the flux of passengers was due to economic growth in their home countries, proximity to and business with Colombia, an increase of Colombians living abroad visiting, and perceptions of improvements in both internal security and general infrastructure.
Government Plans & Oversight
The government has ambitious plans for the sector, with President Iván Duque referring to it repeatedly as the country’s “new oil”, with Cartagena at the centre. The government’s Plan for the Tourism Sector 2018-22 aims to boost international tourist numbers by 12% in 2019 and maintain momentum over the subsequent four years through a variety of initiatives, policies and programmes (see analysis).
The MINCIT has authority over the tourism sector, most specifically though the Vice Ministry of Tourism. The Vice Ministry of Tourism is responsible for the formulation and evaluation of policies relating to security, air access, infrastructure and accommodation development, marketing, human capital, incentives and financing for the sector.
Spending & Investment
In line with the aim to further develop tourism, the government is earmarking substantial funds to help the sector meet its goals. In 2019 tourism was allocated $95m, with 45% of the funding going to infrastructure, 25% to enhancing competitiveness and 25% to tourism promotion. Although more limited than government spending, total foreign direct investment (FDI) in Colombia for tourism rose sharply in 2018 to $1.3bn, a 60% increase from 2017 that accounted for 12% of the $11m in FDI that flowed into Colombia that year. According to tourism officials, the increased investment highlights the potential of the sector to drive economic growth and diversification.
Occupancy
Countrywide hotel occupancy in 2018 hit 56.8%, the highest level recorded since 2005, according to the National Statistics Bureau. Improved occupancy rates were driven by the increased number of tourists and better-quality infrastructure. In terms of year-on-year (y-o-y) figures, in December 2018 occupancy hit 55.8%, up 2.1% on the same month in 2017. Occupancy rates for 2018 were highest in coastal areas, with the Caribbean island of San Andrés at 79.3%, a modest 1% growth from 2017, according to the Hotel and Tourism Association of Colombia. The country’s fourth-largest city and UNESCO World Heritage site Cartagena posted the second-highest occupancy rate at 66.7%, with a 5% y-o-y growth. The third highest was the Department of Antioquia, with a 61.3% occupancy, down 1.9% from the year before.
Employment
Higher occupancy rates have created incentives for hotels to bring on new employees and create jobs. Travel and tourism’s direct contribution to employment measured in at 541,500 jobs, or 2.4% of total employment, in 2017 and is expected to increase to 648,000 jobs, or 2.6% of total employment, by 2028, according to the World Travel & Tourism Council’s 2018 economic impact survey on Colombia. The sector’s total contribution to employment measured in at 1.3m jobs, or 5.8% of total employment, with that figure expected to increase to 1.5m jobs making up 6.2% of total employment by 2028. Colombia’s push to formalise the economy, including the government’s renewal of the National Tourism Registry, is also reflected in the sector’s employment figures (see analysis). The percentage of Colombians who worked in the tourism sector in a formal capacity was 46.1% in 2018, up from 41.3% in 2010 but down from 46.8% in 2017, according to MINCIT. The ministry also found men made up 62.4% of the tourism workforce.
Source Markets
Growth in the sector has been fuelled by visitors from a wide variety of countries, from the Americas to Europe. The US was the largest source market with 646,296 tourists in 2018, a 22.2% increase from 529,013 the year before. The size of the market and the spending power of its outbound tourists make the US a key contributor to tourism. Arrivals from neighbouring Venezuela came in second, at 398,587 in 2018, although this can largely be attributed to Venezuelans arriving as tourists but choosing to stay to escape the humanitarian crisis at home. Regional tourists made up the next largest contingents of visitors, with Argentina coming in third, Brazil fourth, Mexico fifth, Ecuador sixth, Peru seventh and Chile eighth.
High-value tourists from elsewhere in North America and Europe also saw growth. Arrivals from Spain increased 13.8%, from France 15.3%, from Germany 11.2% and from Canada 15.2%, according to MINCIT’s Colombia Centre for Tourism Information.
Budget Airlines
Over the last decade the number of passengers travelling domestically via air transport has grown rapidly, an expansion that developed in parallel with the introduction of lowcost airlines. Viva Air Colombia, previously known as VivaColombia, expanded aggressively in recent years. Together with Wingo, another successful low-cost carrier and subsidiary of Copa Airlines of Panama, the two airlines increased passenger numbers by 17% in 2018 from the year before, with Viva Air increasing by 13% and Wingo by 21%.
With the arrival of longer-range, more fuel-efficient and narrow-bodied aircraft, US low-cost carriers such as Jet Blue and Spirit Airlines have also entered the market, the former of which flies to Bogotá, Cartagena and Medellín, and the latter of which flies to Armenia, Cali, Bogotá, Cartagena and Medellín. Colombia’s Viva Air flies to Miami, the US hub for Latin America and the Caribbean.
Low-cost carriers’ extensive networks have led to increased competition on both domestic and international routes, forcing legacy carriers to drop their fares. As a result, intercity air travel in Colombia is now comparable or sometimes more affordable than the cost of bus travel. The mainstreaming of travel coincides with government plans to boost domestic tourism, exemplified by the #YoVoy (“I am going”) programme (see analysis).
International Connections
The air travel industry is not only seeing expansion in the budget segment, but also in traditional carriers. In 2018, 17 new routes opened connecting the cities of Medellín, Bogotá, Cartagena, Pereira, Cali, and Santa Marta to destinations in Peru, Ecuador, El Salvador, the US, Germany, Bolivia, Mexico and Venezuela. In total these routes represent an increase of 500,000 seats on flights to and from Colombia. At the same time airlines in multiple continents increased connections with Colombia. In March 2019 Aeromé xico airline introduced four weekly flights between Mexico City and Cali, with a nod to passengers from the US and Canada flying onwards. The airline also increased capacity between Cancún and Medellín. As of May 2019 American Airlines operated 66 weekly flights between Colombia and the US, and Colombian flag carrier Avianca operated over 200 weekly flights between the US and 12 cities in Central and South America. Flights to and from Europe have also increased, with Dutch national carrier KLM adding Cartagena to its Colombia network in March 2017 as an additional stop on its Bogotá route. The new KLM route was also the first direct connection from Europe to the burgeoning coastal tourist city.
While short-term pressure on airlines is likely to continue in 2019 and 2020, air travel in Colombia – Latin America’s third-largest aviation market – is likely to continue to grow to accommodate more tourists. The increase in routes is a key factor in boosting visitors from the US, according to Karol Fajardo, deputy minister of tourism. “In 2008 there were five airlines connecting Colombia with seven US cities, and today there are seven airlines serving 11 cities,” he told OBG. “Overall, greater connectivity and competition has led to a decrease in fares, making Colombia a more accessible destination to visit from people across the US.”
Business Tourism
In 2018 Colombia was ranked within the top-30 nations out of 165 for meetings, incentives, conventions and exhibitions (MICE) segment, according to the International Congress and Convention Association (ICCA). That year saw the country host a total of 147 events, putting it above Chile, New Zealand and Russia and third in South America, after only Brazil and Argentina. Bogotá hosted the most events that year, at 46, making the Colombian capital sixth in Latin America for MICE tourism after Buenos Aires, Lima, Sao Paulo, Santiago de Chile and Panama City. In Colombia Cartagena followed Bogotá with 35 events and Medellín with 25. The report also found the 147 events generated $84m in revenue and the average visitor spent $465.60 over visits of 3.6 days.
In 2018, 39.8% of hotel guests travelled for pleasure and 46.7% for business. Given the high average spending of business travellers, the MINCIT is looking to become the leader in Latin America for business tourism by 2027. The country is already building momentum, with Cartagena set to host a number of important meetings, including the World Pharmaco Vigilance Conference, the World Maritime Summit and the World Independent Advertising Awards in 2019, followed by the World Assembly for the Inter-American Development Bank and Fiexpo, one of the largest tourism fairs in Latin America, in 2020. For 2021 Cartagena was chosen over Athens and Rotterdam to host the ICCA World Congress.
In addition, major hotel chains are betting big on the segment in the capital. In April 2019 Hilton announced it would be investing $57m to construct a business and convention complex in Bogotá. Citing promising indicators about growing activity in the pharmaceutical, oil, automotive, technology and public sectors, Hilton said the hotel will be constructed to capture demand from Colombia’s impressive economic growth. The hotel, in the Corferias area of the capital, will have 410 rooms and eight business centres in a total area of 2400 sq metres. Ultimately, the aim is to leverage Colombia’s advantageous location in the Americas to attract business tourists from Mexico, Brazil and the US. Hilton is the third-ranked business hotel provider in Colombia, with 20 hotels in 10 cities. The leading business hotel chain is GHL, with 33 hotels across 16 cities, followed by Estelar, with 26 in 11 cities.
Ecotourism
While business tourists may flock to the cities, Colombia is looking to its rural areas to diversify tourist offerings to capture a different segment of travellers. Colombia is the world’s second-most biodiverse country, with 10% of the entire planet’s biodiversity. Because of this it has an unrivalled opportunity to promote itself on the lucrative global ecotourism market. Visitors are already taking notice: from 2010 to 2018 visits to Colombian national parks grew by 172%. What is more, ecotourists are a high-value niche, spending an average of $3000 during an average stay of eight days. President Duque pointed to the fact that Colombia hosts 50% of the world’s tropical highlands as part of a bid to attract foreign tourists. Ecotourism was strengthened by the 2016 peace accord, which opened swaths of territory to economic activity and tourism. This opening, however, has not come without side effects. According to the Humbolt Institute, 79% of deforestation in Colombia in 2018 took place in former FARC-controlled areas. As such, ecotourism is being eyed as an alternative to environmentally destructive businesses such as logging, cattle ranching and mining.
Birdwatching
Areas formerly affected by the conflict include Caquetá, Guaviare, Meta and Putumayo, where long-term low population density resulted in high levels of biodiversity, in particular when it comes to birds. Colombia boasts the world’s largest variety of birds and the opening of these areas has led to a sharp growth in foreign tourists coming to spot rare species such as the Andean cock-of-the-rock and the multi-coloured tanager. This has led to a sharp increase in demand for tour guides, and particularly those who speak English. As with ecotourism, birdwatching offers a source of income and encourages environmental protection.
Medical Tourism
Medical tourism is another niche segment Colombia is eyeing to drive growth. Colombia accounts for around 5% of the global medical tourism market and hopes to increase this up to 30% by 2032. According to the Medical Tourism Index, as of May 2019 Colombia was ranked 10th overall out of an index of 41 countries for its medical tourism and second – behind Canada – in the Western hemisphere. In terms of the performance of its medical and tourism industry, the organisation ranked Colombia second in terms of cost and attractiveness of the destination for tourism alongside treatment. The index noted the government needed to do more to leverage Colombia’s potential and low costs, with costs 10-35% below those in the US. Additionally, Dental Tourism Colombia noted dental procedures can be up to 70% cheaper than in the US.
Colombia also offers highly sophisticated treatments and is a world leader in transplants, keyhole surgeries and pacemaker development. According to the MINCIT, over 50,000 medical tourists travel to take advantage of these offerings a year and authorities are looking to increase this figure to 2.8m tourists by 2032 to generate $6.3bn. This push falls in line with the government’s Plan for the Tourism Sector 2018-22, which aims to boost preventative and curative medicine, cosmetic and medical operations, and well-being tourism. “The main challenges of developing the health sector relates to competitiveness gaps associated with human resource shortages, multi-lingual staff skills needed to treat foreign patients, strengthening the norms and mechanisms needed to guarantee quality services, and the development of service provision models,” Fajardo told OBG. “The government’s strategy is based on closing these gaps, identifying key strengths and tailoring them to target markets.” Recent efforts to address this include a Colombia Productiva programme to boost bilingual skills among health workers in cities such as Bogotá, Barranquilla, Medellín and Cucutá, among others. In 2018 they trained 310 people in the field.
Leveraging Peace
While progress is slower than many would have hoped, after the 2016 peace accords FARC-controlled areas were opened to tourism and local economies started to shift towards those with varied tourism offerings and sufficient infrastructure. The benefits are twofold for Colombia: by opening new areas of territory to tourism, it is possible to market more destinations that were previously off limits because of safety concerns while at the same time providing local communities with new sources of income. “Travellers’ perceptions, in particular those of the international tourist, have improved because of the peace process, and this has allowed tourists to discover new destinations,” Fajardo told OBG. “At the same time, communities have seen tourism as an opportunity for rural development and transformation. As a result, these communities have started pursuing projects around ecotourism, birdwatching and adventure sports.”
Marketing
The government’s Plan for the Tourism Sector 2018-22 focuses on the potential for tourism to act as a catalyst to boost the country’s image around the world and notes the integral role promotion plays in spreading the word. One of the plan’s pillars is marketing, with an aim to strengthen national and international tourism promotion through the use of advertising, new technologies, and the implementation of effective campaigns that spark interest and connect customers with service providers. The plan looks to use IT to make both strategic decisions about the sector while carrying out promotional activities to boost awareness of Colombia’s offerings. In partnership with ProColombia, the country’s trade promotion agency, and the National Tourism Fund, the MINCIT created a marketing and promotional strategy that identified key existing and potential new markets and analysed trends.
The government also aims to integrate the country into regional tourism circuits, especially those in Andean countries, the southern Caribbean and South America. One of the ways they seek to do so is by convincing agencies, tour operators and other stakeholders operating on a regional level to include Colombia in packaged offerings. Campaigns will be varied in content but many will leverage the highest-value tourist activities and products, from food to festivals and UNESCO World Heritage sites.
Officials are also updating campaigns to catch the attention of a wider variety of tourists. In January 2019 the MINCIT rolled out the Colombia, Siente el Ritmo (“Colombia, Feel the Rhythm”) campaign using music from notable Colombian artists promoted on digital platforms such as YouTube, Spotify and Deezer. Officials, however, recognise that while marketing campaigns can attract attention, one of the most powerful marketing tools is word of mouth. Given that concerns from travellers in the past about security and violence created a barrier into the mainstream market, double-digit growth from high-income countries in North America and Europe are a promising for the future of the sector.
Outlook
While recent years have been challenging for Colombia’s exporting sectors, tourism has been a consistent contributor to the economy and a catalyst for development in not only large cities, but also in areas formerly controlled by FARC. As the state regains control and opens up new areas, tourism is one of the most significant opportunities to boost rural infrastructure and socio-economic well being. It will be imperative that officials maintain momentum and convert the increasing number of visitor arrivals at traditional destinations into a viable source of development for more rural areas previously considered beyond state boundaries.
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