Despite the ongoing global economic troubles, international tourist arrivals in Peru rose by 9.53% in 2012 to reach 2.85m. The industry expects these numbers to continue rising at a steady rate, forecasting the total to exceed 3m visitors by the end of 2013; from January to August 2013, 2.1m tourist arrivals were recorded, a 11.55% growth on the previous year and a 21.77% rise over 2011 figures. The government hopes to increase annual tourist arrivals to 5.1m by 2021.
Of the source markets, Asia displayed an impressive leap of 16.75% in 2012, led by Japan and Thailand, which provided 29.1% and 28% more arrivals, according to figures from the Ministry of Foreign Trade and Tourism (Ministerio de Comercio Exterior y Turismo del Perú, MINCETUR). Though Asia is not a traditional market, such as the US and European countries, these growth rates will influence the direction tourist promotion takes.
Revenues from foreign tourists amounted to $3.23bn in 2012, representing an 11% increase from the previous year, and are expected to surpass $3.5bn by the end of 2013. Jorge Alejandro Ponce, former private investment manager at MINCETUR, believes this growth in visitor flows will help boost tourism investment in the country. “The increasing number of tourists is creating a demand that is not currently covered, in terms of both figures and quality,” he told OBG.
Markets
Over the past eight years, Peru has focused on 14 primary source markets. Among regional countries, these include Brazil, Colombia, Chile, Argentina and Mexico, which together account for about 45% of foreign arrivals. Outside of Latin America, the US still represents the main source of tourists, amounting to nearly 450,000 in 2012. Canada is also a large contributor and European countries, such as the UK, France, Germany, Spain and Italy, are key markets for tourism too. Japan and Australia are considered more alternative sources, but contribute significantly as well.
While the Latin American market represents a stronghold in volume and has helped lay the foundations for the tourism industry, European and North American tourists spend more during their trips. Peru’s Export and Tourism Promotion Agency (Comisión de Promoción del Perú para la Exportación y el Turismo, PromPerú) calculated that in 2012 European and North American tourists spent an average of $1524 over 18 days and $1265 over 14 days, respectively, during their stays, more than double the average spending of Latin American visitors. However, spending among Asian tourists reached $1586 over 11 days, which is a daily average of $145, higher than Europeans and North Americans, who spent averages of $87 and $88, respectively.
Asian Markets
Peru’s many free trade agreements have not only helped economic relations abroad but also aided in attracting new markets for tourism. Asia is a prime example, showing the largest growth in 2012. While arrival numbers for Asians are still lower than traditional markets, future potential is promising and the industry will continue to invest in this segment.
Japanese arrivals represent an interesting case, with increased travel overseas following ongoing efforts to recover from a devastating earthquake in March 2011. Around 13,000 more tourists arrived that year, amounting to 43,794 in total, a growth trend that has continued through 2012 to reach 56,526 arrivals. Roxana Pérez Guevara, former market research coordinator at PromPerú, told OBG, “Japanese tourists take an interest in cultural tourism and search for relatively peaceful environments.” For these reasons, many travel to Machu Picchu and the Nazca Lines. PromPerú will continue to invest heavily in Japan in 2013 to attract more tourists and further consolidate this market potential.
Exploratory
Apart from the main source markets, PromPerú considers many countries to be exploratory, including China, Russia, Switzerland and the Netherlands. China represents much potential in terms of spending power, but the current visa requirement deters many Chinese from travelling to Peru. “It is not really the cost, rather the pure obstacle of having to go through the procedure,” Pérez Guevara told OBG. PromPerú has carried out studies with tour operators and airlines in China to determine the extent to which visa obligations deter visitors. Often, tours that cross several countries have to adjust their schedules and operators sometimes decide to exclude Peru in their regional itineraries. “It is not a very attractive factor for business and as long as there is a visa requirement, the Chinese market will not be that favourable,” Pérez Guevara added. An issue left solely to the government’s Department of Foreign Affairs and Trade, the visa requirement for Chinese tourists is due for the most part to a reciprocity measure. MINCETUR has pushed for discussions over eventually lifting the visa requirement and introducing a one-time entry fee.
Although Russia remains a tentative possibility due to its growing middle class, no budget has been designated to attract this market, which accounted for 8469 visitors in 2012. “Russian tourists currently do not meet the profile since they tend to look for high-end luxury facilities, such as those offered in Dubai,” Pérez Guevara told OBG. If Peru decides to invest in attracting Russians in the future, it would be through a limited niche market, she said.
While Peru is intent on attracting new foreign markets and building up its potential as a leading tourism destination globally, domestic tourism should not be overlooked. In the past couple of years, PromPerú and MINCETUR have worked closely with the private sector to develop special campaigns and travel packages to stimulate local tourism (see analysis).
Lima
Tourism in Lima is changing along with the face of the city. Increased investment, heightened security and a growing middle class are some key factors behind development. The National Chamber of Tourism (Cámara Nacional de Turismo, CANATUR) focuses most of its efforts on Lima with the aim of transforming it into one of Latin America’s top destinations. Lima conjures up a mix of archaeological sites, historic monuments from colonial times, modern architecture, gourmet cuisine and improved safety. Commerce has also revived, as is evident in the number of malls sprouting up around the city. One of them, Larcomar, is embedded in the cliffs of Miraflores and overlooks the Pacific Ocean, a unique characteristic that may explain its 7.5m visitors in 2012, of which 1m were foreigners. Carlos Canales, president of CANATUR, pointed out that these figures represent a larger number of visitors than those to Machu Picchu, the country’s iconic tourist destination. He also attributes Lima’s attractiveness to prices remaining low compared to the rest of the region’s capital cities.
Business Tourism
The early part of 2013 displayed unusually high hotel occupancy rates in Lima. These figures partly reflect a significant number of visitors attending the Dakar Rally, which began in Lima and boosted occupancy rates in four- and five-star establishments up to approximately 95% in the opening days of the event, according to CANATUR.
January ended with around 60% occupancy as opposed to the normal rate of 40%. These figures are especially encouraging considering the first months of the year correspond to summer vacations in Peru, low tourist season for Lima and less business travel.
Notwithstanding the Dakar Rally, an influx of business tourists contributed to boosting occupancy in January and February, a trend Luis Villa Prado, the general manager of CANATUR, has been observing for some time now. “With the number of investments occurring in Peru, more visitors come for business and look to stay in luxury establishments,” he told OBG, explaining that growth in this segment is the vehicle behind the prime hotel construction currently taking place in Lima and several other cities. According to PromPerú, business tourists accounted for 18% of international arrivals in 2012, contributing 15% to revenues. PromPerú figures from that year indicate business tourists spent an average of $1016 during their stay, with daily expenses amounting to $131, not including hotel fees. The percentage of tourists who spent more than $1500 grew from 18% in 2010 to 20% in 2012.
Villa Prado pointed out that Peru’s leading tour operators, including Condor Travel, Lima Tours and Viajes Pacífico, have all incorporated divisions specifically aimed at business tourists. “We expect the flow of corporate tourists to increase by 15-20% in 2013,” Villa Prado said. “This presence is creating a healthy market.”
Hotels
Expected to experience a hotel boom in the near future, Peru has stepped up efforts to improve its hospitality industry and many construction projects are currently under way. Occupancy rates remain high, primarily in hot destinations like Lima and Cusco, where the luxury segment has significant potential.
According to STR Global, Peru reported July 2013 occupancy at 65.9%, down 1.6% over 2012. However, the average daily rate was up 18.3% to PEN407 ($153), increasing revenue per available room 16.4% to PEN268 ($101), in part due to the 2012 South American Hotel and Tourism Investment Conference taking place at the Westin Lima Hotel and Convention Centre.
Lima currently lacks a sufficient supply of four- and five-star hotels. With less than 20 in the five-star category and around 30 four-star establishments, occupancy rates for both combined reached nearly 65% in 2012, with rates surpassing 75% during the high season from June to November. A large proportion of the demand currently comes from business tourists, who are driving current hotel expectations. “There is much room for luxury hotels, but they need to be larger, with at least 200 rooms,” Tibisay Monsalve, general manager of the Peruvian Hotel Society (Sociedad Hoteles del Peru, SHP) told OBG. “Most five-star establishments barely have 100 rooms.”
Global Brands
Major hotel brands have already begun arriving in Peru and are looking to expand operations. Marriott International has a presence in Lima with its 300-room JW Marriott, overlooking the Larcomar mall and the Pacific Ocean, and another JW Marriott in Cusco, with 153 rooms. At the beginning of 2013, the chain revealed plans to construct two new 150-room Courtyards (four stars), one in Miraflores and another in San Isidro, to be undertaken jointly with the Peruvian Inversiones La Rioja, which operates both existing Marriott establishments.
According to CANATUR’s Canales, this forms part of the chain’s plan to construct seven new establishments throughout the country within the next five years. Canales said the San Isidro and Miraflores hotels will require an estimated investment of approximately $50m and should be operational by 2014 and 2015, respectively. This expansion is indicative of the growing overall confidence of hotel chains in Peru.
Other new additions to the market include a Hilton with 207 rooms and a Four Points by Sheraton with 134 rooms, both in the district of Miraflores. Several prime hotels are also considering expansion projects, such as Delfines and Swissotel Lima, which have 206 and 244 rooms, respectively. “All this construction is despite not having a law that promotes hotel development, as is the case in Colombia, Brazil and Argentina,” Canales told OBG. However, the tax regime does allow for the recovery of value-added tax whereby the project has a pre-operation phase of at least two years and a minimum investment of $5m, according to the state investment promotion agency ProInversión. The only exception is the agriculture sector, in which it can be applied regardless of the investment amount. Canales estimated that within the next five years there will be $1.6bn-1.8bn in foreign investment in hotel construction.
Orient-Express may be the most emblematic case of foreign success, having begun operations in Cusco in 1999 and expanded to construct four more establishments. Its Hotel Monasterio del Cusco is situated in a renovated colonial monastery. Even so, the hotel business has much more room to grow in Cusco. Evidence can be seen in 2012 occupancy rates, which for four-star hotels were recorded at an average of 74.6% for the year, reaching its highest point in October at 88.88%.
According to Expo Hoteles & Cubiertos Internacional (EHCI), an international exhibition for equipment, furniture and supplies for hotels and restaurants, the tourism industry will attract $1.76bn in hotel investment in 2015, with $697.5m going to the central part of the country, in particular Lima and Huaraz, and 32% and 28% for northern and southern regions, respectively. These figures are based on the hotel sector’s strong growth so far in 2013, private consumption, employment growth and the arrival of more than 3m foreign tourists. “We need a number of measures that ensure the sustainability, development and consolidation of this sector, especially in the short and medium term, in order to meet the demand for corporate tourism,” said Manuel Fazio, general manager of EHCI. He also predicted a rise in the corporate travel segment due to consolidation of the Pacific Alliance and rising GDP.
Key Player
As a government authority which assists the sector, MINCETUR simultaneously regulates and promotes hotel development. “This dual function allows us to discuss issues with the sector and integrate their concerns into our policies while enforcing quality and standards,” Ponce, former investment project manager for MINCETUR, told OBG. Currently, the ministry is performing a study to determine real hotel supply and demand in seven major tourist areas. “The private sector is not going to perform these sorts of studies since it does not have the resources or time,” Ponce said. “So, the government is trying to close the gap on that information and we hope to finish by the end of 2013.” This initiative will back up sector perceptions with quantitative results gathered from fieldwork, and aims to be a tool to promote future investment.
Economising
More modest options exist in the three-star segment, which also shows potential, especially for increasing domestic and regional tourism, as well as tourists travelling on a limited budget. The France-headquartered Accor Group, owners of the Ibis brand, has already announced the construction of seven new hotels, five of which are going to be in Lima. According to Canales, Ibis plans to open a new establishment at the Jorge Chávez International Airport (JCIA), in line with airport expansion plans, and another two hotels in Surco and Miraflores. “Three-star establishments need to have a minimum of 150-200 rooms, since the majority of hotels in this segment only have 50-60 rooms. These larger establishments should see returns in less than eight years,” Canales said.
ProInversión has received interest from many Latin American companies eager to enter the three-star segment, notably from Ecuador, Colombia and Central America. Several Peruvian construction and real estate companies are also being drawn to this opportunity, according to Milagros Rasmussen, investor services consultant for ProInversión (see Construction & Real Estate chapter). “Much of the three-star developing goes hand-in-hand with other construction projects, such as strip malls or banking centres that require quality hospitality establishments nearby,” she told OBG. “The operators tend to be smaller, but have sufficient experience in operating hotels regionally. They look for a franchise with which to participate.”
General trends for this segment are heading towards the provinces, in particular along the northern and southern coasts. In the north, beaches such as Má ncora attract a significant stream of visitors from Latin American and Peru throughout the year, offering leisure activities such as adventure sports, snorkelling and whale watching, among others. Rasmussen said there are many investments related to aquatic sports in general, which is also a trend along the southern coastline, near cities like Paracas. In the cultural tourism segment, many tours are already available, such as the Moche route that traverses the northern regions of Lambayeque and La Libertad. These areas have a diverse supply of hotels, with a number of operators offering high-end accommodation entering the market recently, including Royal Decameron at Punta Sal, located in the region of Tumbes on the border with Ecuador, where many business tourists stay in this sort of establishment.
Another leading operator, Inkaterra, which focuses on environmentally sustainable tourism, has also set forth plans for expansion in Tumbes, involving a marine life reserve, according to the SHP.
Labour
The professional labour supply has been growing significantly over the past few years, partly due to the interest universities have taken in preparing the workforce. Institutions such as Peru’s Tourist Observatory, run by the School of Tourism and Hospitality at the Universidad de San Martín de Porres, and the influx of students studying hotel management, are evidence of this trend. Even gastronomy studies have left the confinement of institutes and have become degree programmes at universities such as San Ignacio de Loyola – although two-year courses exist at leading institutions such as D’Gallia and Le Cordon Bleu Perú as well.
However, one current problem is that students are required to complete an internship in order to receive their diplomas and the government requires interns to be paid the minimum wage, currently PEN750 ($282). This as an obstacle for hotels which are glad to work with students, but are not willing to pay professional wages. Proficiency in a second language also needs to improve. While English dominates, and most tours cover a variety of languages, it is expected that more educational programmes oriented towards Asian languages such as Japanese and Mandarin will come on-line as tourists from Asia increase.
Obstacles
The largest obstacle for hotel development has generally been the process of obtaining construction licences. The application includes a variety of conditions that a contractor must adhere to with the overall aim of constructing responsibly. However, since each condition must be approved by its respective governing authority, procedures often get delayed for long periods of time, stalling many projects and deterring others. Many conditions have been added to the process over the years, and recent ones include the issue of fire hazards, which are dealt with through the fire department, and environmental regulations, which have to be cleared by the Ministry of the Environment. “The state is not structured well, causing bureaucratic holdups to drag on,” Monsalve told OBG. “It almost seems as though every year additional procedures are added to the application formats.” On top of that, the law does not establish any time frame for local governments to respond to applications.
One project that has been on hold since 1995 due to bureaucratic procedures is Hyatt’s attempt to construct a hotel among the ravines below Larcomar. According to Jorge Muñoz, the mayor of Miraflores, the project has taken so long to approve due to technical issues, since construction is planned for cliffs, which are a complicated terrain to work on. Graña y Montero, the contractor in charge of the $60m endeavour, must wait for these issues to be resolved.
However, losing time is not a welcome concept for one of Peru’s biggest contractors, which already has another major project in store for Miraflores. Slated for a 68,000-sq-metre plot of land, the former San Martín military barracks are to be transformed into an urban centre equipped with several residential skyscrapers, office and retail space, restaurants, a convention centre and a five-star hotel.
Once finished, the project is expected to generate a new focal point for the tourism industry. However, while construction was scheduled for the beginning of 2013, work has been delayed due to procedural obstacles.
Nevertheless, relations between the hotel industry and the government have improved considerably under the current administration. Over the past 12 months, the SHP has been meeting regularly with authorities from MINCETUR, which has sought greater participation from actors involved in issuing licences, such as regional and municipal governments, the National Institute of Civil Defence, and other ministries.
“With previous governments we were not able to do this, but the current administration is receptive, although work could speed up a bit,” Monsalve said.
Regulation
Improved government relations have resulted in the streamlining of regulation standards. Indeed, a number of specific requirements from inspection standards have been eliminated and are no longer required. For example, former regulations required five-star hotels to have a bathtub in every room, despite very few people actually take baths, making this an obsolete requirement that wasted space.
Possibly the most significant change in the regulation procedures involves simplification. “With so many different kinds of hotels being developed – boutique, museum, barge, eco – not all require their own procedure,” Monsalve said. “We have managed to establish certain categories in which several types of hotels fit and the process is simplified.” Even so, there is much to improve. For instance, more qualified personnel in municipal posts or on the committees that evaluate documents in licence applications are needed. Nonetheless, the government is making a greater effort to understand the private sector’s needs.
The government has specific programmes to assist investors. Tramifácil, an initiative that works with the private sector to simplify investments by reducing extraneous procedures for licence applications and other obstacles, is an example. Since 2006, Tramifácil has undergone several structural changes. Whereas previously the programme worked on transversal procedure obstacles, it has now organised issues by sector, aiming to address more specific problems affecting development projects, according to ProInversión’s Rasmussen.
Another initiative to complement this work is the recent appearance of a public survey called “The Needless Procedure” (El Trámite de Más), launched by Peru’s Council of Ministers, in an effort to determine and eliminate the most senseless obstacles that arise within public administration, including investment projects. All citizens can enter to voice their opinions and propose a solution. The author of the most viable solution is awarded up to PEN30,000 ($11,298).
Rasmussen believes these sorts of initiatives will result in improved relations between private investors and governing authorities.
Strategies
For nearly a decade, authorities have worked to implement the National Strategic Tourism Plan, continually revised and updated according to the sector’s needs. Drafted with the help of Argentine consultancy group Hermes, the plan includes strategies until 2018, aimed primarily at diversifying the tourist supply. In 2012 government efforts focused on developing destinations that had previously not attracted a large number of tourists, including the Moche route, Lake Titicaca, Paracas-Nazca, the northern beaches and the Amazon River, among others. Along with this, MINCETUR has identified and begun promoting niche markets, such as birdwatching, golf and thermal spas.
New Openings
One major niche market expected to expand in the near future is convention tourism (see analysis). The government has several campaigns to promote and stimulate the sector.
Meanwhile, PromPerú recently launched a video campaign, “Perú, Empire of Hidden Treasures”, expected to reach 245m people across the world. Advertising strongly in the main source markets and in a number of exploratory places, the campaign aims to promote Peru’s multi-faceted characteristics, appealing to emotional connections, particularly with the slogan, “Do not watch the movie, live it for real!” There is also a Spanish version, which aims to attract tourists from Spain, Colombia, Argentina and Chile. Pérez Guevara told OBG that the campaign has been successful to date, with the government also working on future strategies to target greater penetration of the domestic market (see analysis). The campaign began in August 2012 and has continued during 2013, focusing on 10 countries prioritised by PromPerú: Germany, Spain, France, UK, Canada, US, Argentina, Brazil, Colombia and Chile, through video and graphic materials.
The country logo, inaugurated in 2011, has played a significant role in positioning Peru throughout the world, accompanying many export products and trade delegations. Peruvians are also said to have taken a liking to the logo, found abundantly on apparel, stickers and advertisements, among other places. Pérez Guevara is among the sector specialists who believe the logo has helped Peruvians take more pride in their country and will be a key tool for future development. “It is very much centred on the country’s identity, which is now being valued more,” she told OBG.
Amazon
The Amazon rainforest is central to Peru’s efforts to decentralise destinations and diversify the tourist supply. Although the Peruvian Amazon forms part of 10 regions in the country – including Cusco and Amazonas – the vast majority of rainforest is located within the three regions of Madre de Dios, Ucayali and Loreto. Of these, Loreto, the largest and least populated region, is the main entry point to the Amazon River through its capital city, Iquitos. There are a number of opportunities in ecotourism, river expeditions and cuisine, aimed at the primary markets of tourists from Europe and the US, although recent arrivals of Asians have increased, adding to the mix of tourists searching for eco-friendly holidays (see analysis).
The Amazon presents a combination of environmental awareness and tourism, an idea that several companies have explored for some time now. Inkaterra, a luxury hotel chain, runs campaigns for environmental protection in different areas, including Cusco and Madre de Dios, in the southern Amazonian jungle.
According to José Koechlin von Stein, president of Inkaterra, ecotourism continues to expand and offers a valuable opportunity for the private sector to cooperate with local communities towards future development. He told OBG that many tourists are looking for more than just relaxation and luxury on their trips, favouring involvement in indigenous communities and even educational experiences. Although Inkaterra at present does not operate hotels or programmes in the Loreto region, a number of companies have adopted eco-friendly policies, catering to these emerging trends.
Connectivity
According to the 2012 annual report for Lima Airport Partners, the operator of JCIA, international flight frequencies have risen to 553 which includes 38 direct international destinations, with better connectivity contributing to a higher number of foreign arrivals. Further, JCIA was named the best airport in South America at the World Travel Awards in 2013.
Meanwhile, Korean Air, which has been operating cargo flights since December 2011, is set to inaugurate its commercial route between Seoul and Lima, boosting the potential for new visitors. The latest route to be inaugurated was recently announced by JetBlue, a low-cost US carrier, with a new daily direct service commencing on November 21 between Fort Lauderdale-Hollywood International Airport and JCIA. In addition, provincial airports have already begun expanding services and installations with the hope of gaining more independence from Lima as a connection. Such is the case of the Iquitos International Airport, which has added new direct flights from Panama City.
The largest airport expansion plan involves Chinchero-Cusco International Airport, a greenfield project already up for tender by ProInversión. While Cusco has an airport in the middle of the city, its capacity is insufficient to fully accommodate the growing demand for international flights. Estimated at $659m, this project will become the country’s fifth international airport after Lima, Arequipa, Iquitos and Piura. According to Ponce, all technical studies have been carried out and the project is awaiting a bidder to be announced in the first quarter of 2014. The airport, set to be fully operational by 2021, will provide service to major cities such as São Paulo, Buenos Aires and Santiago. “Once this project is consolidated, there is going to be an explosion of hotels in Cusco due to heightened demand,” Ponce told OBG. “This will allow for strong growth in tourism, not only for Cusco but for Peru on a larger scale.” MINCETUR is currently working alongside PromPerú to establish connections with airlines from priority source markets.
New Projects
Along the southern coast, renovation of another airport in Pisco began in September 2012. Formerly used for military purposes, the complex has much of the infrastructure required to become a major international airport. A new terminal with facilities suitable for commercial use is to be added. Tendered to Aeropuertos del Perú (AdP), investment of PEN153m ($57.62m) is required and the airport is expected to be operational by 2015. By 2017 AdP hopes to fly 400,000 people on an annual basis to Pisco. According to Rasmussen, this project is related to heightened investor interest in nearby tourist attractions, such as the Nazca Lines and the Bay of Paracas.
“Investors from Latin American countries have been exploring the options of developing along the southern coast, in areas like Ica and Nazca,” she told OBG. “The new airport will serve the interests of these investors.” Some national carriers already signed up for service to the airport include Star Perú and LC Perú.
By Land
One area of connectivity that is still lacking investment is land transport. According to Canales, the state should sponsor more projects for bus terminals and service. “Peru requires more buses with the capacity of at least 30 seats to safely transport tourists to all destinations around the country,” he told OBG. These would be aimed at domestic tourists travelling along the coast, where highways are well connected and in better shape. However, there are plans to construct major thoroughfares across the Andean highlands and areas of the Amazon, in addition to the Initiative for the Integration of the Regional Infrastructure of South America projects to connect Peru with other regional countries like Brazil (see Transport chapter).
Closing the Gap
In general, gaps in the country’s transport infrastructure limit diversification of the tourism sector. Much work needs to be done, especially to access destinations with major potential.
The Kuélap Fortress, in highland jungles of the northern Amazonas region, is a prime example. The site has been on the sector’s radar for years as a complement to Machu Picchu, but it is extremely difficult to access. ProInversión’s tendering of a cable car to reach the fortress has encountered problems since the route runs over private property and many issues still need to be defined before finding a suitable investor. AdP has invested in renovating the nearest airport in Chachapoyas to improve access to Kuélap, but still no commercial flights go between the city and Lima.
Additionally, in August of 2013 it was reported that the government is planning to install the country’s first cable car connecting Choquequirao – the ruined city known as the “cradle of gold” – to the nearest highway. After its inauguration, the $54.3m project could attract as many as 3000 tourists a day, according to official estimates. Currently, the site receives an average of five tourists per day due to limited access; tourists must fly to Cusco, drive four hours on mountain roads and then hike another 19-26 km, or 12 to 16 hours.
Outlook
Surpassing expectations in arrivals and hotel occupancy rates, the tourism industry has shown positive indicators during 2013. Peru is applying promotional strategies that appear to be unlocking further growth, generating demand for facilities to receive and entertain tourists, which, along with destinations and products, are becoming more diverse each year. Globally recognised icons such as Machu Picchu help to maintain this drive, proving that cultural tourism will never lose its appeal. However, heightened economic activity and investments are also building up a large corporate segment that is pushing industry standards. Major upcoming events like the IMF and World Bank annual meetings in October 2015 and the 2019 Panamerican Games, all to be held in Lima, will help to raise the country’s profile as a tourism destination and provide the sector with a welcome fillip.
Peru has high demand for hotels and there has been an improvement in the bureaucracy concerning planning and permits. However, there is still room for further streamlining. One option not currently on the table is direct state subsidies for new hotels, not least as government sources are adamant in pointing out that the notion runs against basic economic policy. The government has been careful in handling tax incentives, showing commitment to prudent fiscal policy to encourage growth and build a strong economy.
Regardless, the will to continue improving is embedded in government discourse, constantly reiterated by President Ollanta Humala in public addresses. This determination and positive quantitative indicators show that tourism is becoming an essential economic activity and a key factor in the country’s future development.
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