Colombia’s economy is one of the strongest in Latin America, thanks in part to its natural resources (coffee, oil, coal), the size of its domestic market, and the influential growing middle class. This gives it the edge it needs to be a key player in different industries on the rise in the country. One market trend we have had our eye on is the growth of the Colombian hotel industry. Here, we outline the recent history of Colombia’s economic growth, the reason the industry is growing, and the opportunities and incentives for those looking to invest in Colombia.
Brief Overview of Colombian Hotel Industry
Although Colombia has experienced an economic slowdown due to the drop in oil prices and has tightened its budget in order to reduce inflation, the situation is stabilizing as the country increases public infrastructure projects and sees a growth in private investment.
In various industries, the economic gains to be capitalized on are impressive while Colombia makes the comeback so many have been waiting for. This positive outlook is evident in the increase in the amount of hotels being erected in light of the growing tourism and stability in the country.
The hotel industry boom is directly related to the recent surge in tourism that the country has experienced in the last few years. This offers advantageous opportunities in the industry that many are making the most of. Here, we briefly explain the reason for this surge, and more importantly, why you don’t want to wait til the last minute to make your reservation at the oasis of prosperity awaiting this growing economy.
Tourism Boom in Colombia = More Hotels
According to the Colombian Ministry of Tourism, in 2015 almost 2.5 million foreign tourists traveled to Colombia, a number representing a 12% increase from 2012.
Some of the factors which contribute to the development of tourism in the country include the following:
A Decrease in Crime Rate. This stimulates the tourism boom in certain areas such as Bogota, Cartagena, and Medellin. This is has been reinforced by the peace negotiations by President Juan Manuel Santos in 2012
- Devaluation of the Colombian Peso. A week Colombian Peso means more purchasing power for foreign tourists
- Connectivity. Colombia finds itself in close proximity to large traveling markets like Brazil and the US. Located just 3 hours from Miami, Florida and having had 52 airport expansions in 2016, Colombia makes itself easily accessible by all who want to enjoy its wonders.
Colombia Hotel Investment Incentives
Over the past few years, Colombia has positioned itself as one of the most favorable places to do business in Latin America. According to ProColombia, the country has opened 22 new hotels in 2016. Encouraging this industry investment are a number of favorable tax and legal incentives for those wanting to build hotels in the coming years. Some of these include:
- All hotels built before 2018 will have income tax exemption for the next 30 years
- Tax duty exemptions and VAT postponements for all capital goods in tourism exports
- Tax discounts for investors who hire employees that are under 28, handicapped, displaced, or are women over the age of 40
The Colombian hotel industry attracts investors from all around the world to thriving cities like Bogota and Cartagena. These two dynamic cities hold large amounts of wealth due in part to foreign buyers and business investors making the most of the tourism boom in Colombia.
If you would like to learn more about the hotel industry in Colombia, the business opportunities present in Colombia for creating a business, and how you can make the most of the market trends for your own business, please reach out to David from BizLatinHub here.