Devaluation Complicates Tourism in Costa Rica

Two thirds of the country's tourism businesses have been negatively affected by the 15% increase in the value of the Colon.

Friday, November 5, 2010

The tourism industry in Costa Rica, which represents 7% of the GDP, receives most of its revenue in Dollars and pays most expenses in Colones. This puts them as one of the sectors most affected by the sharp appreciation of the Colon.

A year ago, if a tourist paid $ 1,500 in a hotel for a stay, the establishment received C 862,500 Colones to cover their costs. That same tourist generates today C 757,500 Colones, a decrease of about $ 200, explains in an article the Tico Times.

Juan Carlos Ramos, president of the National Chamber of Tourism, said many hotels are in a precarious situation and may have to close their doors if the situation does not improve.

More on this topic

Currency Appreciation in Costa Rica

October 2012

While interest rates for local currency remains at current levels, dollars will continue to enter the Costa Rican economy, which will prevent its devaluation.

Analysts believe that in Costa Rica the exchange rate will remain near 500 colones per dollar at least until 2015.

Costa Rica: Exchange Rate Overwhelms Tourism Industry

February 2013

The National Chamber of Tourism said that the appreciation of the colon against the dollar is hitting the sector hard in terms of competitiveness as a tourist destination.

A statement from the National Chamber of Tourism (CANATUR) reads:

The country's monetary policy is asphyxiating tourism.

Costa Rican Tourism Affected by Volatility and the Fall of the Dollar

September 2010

Volatility in the foreign exchange market and a dollar priced under 500 colones are strongly affecting the Costa Rican tourism industry.

For example, lack of stability in the currency exchange rate is preventing tourism companies from evaluating how profitable an investment could be.

The Effects of the Exchange Rate Flexibility

January 2013

The latest announcements in Costa Rica about greater exchange rate flexibility to appreciate the colon are worrying exporters.

An article on Crhoy.com reported that "Late last year, the president of Costa Rica’s Central Bank (BCCR) Rodrigo Bolaños announced that the monetary authority will continue the transition announced in 2006 seeking to lead the country towards greater exchange rate flexibility consistent with the full adoption of inflation targeting."

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