There are several factors driving the current economic growth in Latin America. Such factors include investment stimulation by regional governments and an increase in skilled labour; which, unsurprisingly is causing a surge in new business arrivals from outside the region. Simultaneously, the increasing wealth of the middle class and the elimination of visas required between nations, among other reasons, have caused an even greater spike in tourists who are venturing further than the confines of their national borders.
The growing number of travellers in Latin America has benefited both regional and international airlines, as well as hotel chains. According to a report by ALTA (Latin American and Caribbean Air Transport Association), by the end of 2018, fourteen new regional and international air routes were opened, with the goal of providing better connections between Latin America and the Middle East, Asia and Africa. Additionally, the hotel sector considers Latin America as a growth focus for their industry. Increased tourist demand in countries such as Argentina, Chile, Colombia, and Mexico has led international hotel chains to desire a stronger presence in the region. Rufino Perez, COO & Global Transformation Leader of the NH Hotel Group chain, affirmed that the group will open 11 new hotels in Latin America to cater to expected demand.
The tourism sector has been transformed by the use of e-commerce. In a population where 60% of people have access to the Internet, more and more Latin travellers are using different mobile applications and internet platforms to reserve hotels, book tours and organize transport, foregoing traditional travel agencies. Here lie opportunities for firms to enter the Latin American market to leverage technology and provide new and exciting platforms totravellerss.
Overview in Numbers
According to the last World Tourism Barometer compiled by the World Trade Organization (WTO), international arrivals to Latin America experienced growth of 3% during 2018. Despite various political and social problems that affected some countries of the region, Mexico, Brazil, Costa Rica, and Panama are in the top 50 nations with the most competitive tourism sector, according to the World Economic Forum.
Naturally, tourism boosts job creation and according to the WTO report, approximately 10.6 million jobs were generated in 2018, and the figure will rise to 13.2 million within ten years. Both the private and public sectors are receiving the benefits of increased tourism in the region. Foreign firms need to be sure to complete the correct procedures and regulations concerning work visas and recruiting staff in different countries.
What Does Latin America Have to Offer?
Despite social and political problems faced by Latin America, many nations have the chance to present their finest attributes through tourism. Visitors travel from Europe and North America to experience its natural beauty, landscapes, and rich history. According to a study conducted by Axon Latam, the top reasons for foreign tourists to visit Latin America are:
- Landscapes and nature accounted was 25%
- Adventure tourism, which included unique land and sea environments was 23%
- The historical significance of pre-Columbian societies and colonialism in Latin America was 22%
- Finally, the desire to experience and taste the vast cuisine of the different regions was 18%.
Recently, visitors from Asia have also grown, motivated by their taste for exotic multi-nation trips. Additionally, ethnic-tourism has been encouraged in places such as the Sierra Nevada de Santa Marta and parts of the Amazon rainforest in Colombia, along with the Cusco region in Peru. This gives visitors a closer look at the native and indigenous cultures, past and present.
Latinos are also traveling in greater numbers. Millennials are searching for destinations with a thirst for adventure and new experiences. Pensioners and retirees in search of tranquil destinations and a growing interest in luxury destinations by the middle class, add to the mix. Naturally, technology has been an important factor.
According to a study made by the Amadeus company on travel trends in Latin America, 58% of Argentines choose their destinations depending on recommendations from acquaintances and by word-of-mouth. In Brazil, there is a 43% trend in consulting social networks, when making travel decisions and 27% of travel is bought via smartphone. Firms in the industry need to have clear strategies set on how to best reach their customers. Additionally, a report published by Expedia Group shows that good deals, destination information, and advertising are the three biggest determining factors for Latino travelers. The use of social media and tourism portals through mobile phones, though still basic, are now the biggest sources for destination choice and trip activities.
Obstacles to Growth
Undoubtedly, the wide range of tourist attractions in Latin America offers a great opportunity for travel operators, tourism businesses and tech platforms worldwide. The increasing ease of travel and choice of accommodation within Latin America promises yet more growth. Likewise, it is important to be cognizant of Latino travelers and their preferences by offering them better tailored online platforms. Latinos make choices based on past experiences, suggestions, online advertising and security concerns on travel sites or mobile apps; the latter of which has particularly been a big hurdle for consumers, due to their reluctance to share credit card or banking information. To maximize travel growth fully in Latin America, a multifaceted strategy is required to address all the inhibiting factors above, whilst capitalizing on Latin America’s strongest assets.
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The Latin American tourism sector has evolved to be one of the most attractive sectors within the region. Market opportunities, especially in sustainable tourism and technological solutions attract the attention of local and foreign investors.
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