February 19, 2009 / 4:47 PM / 10 years ago

Chile tourism cashes in on global crisis

RENACA (Reuters) - Chile’s $2 billion tourism industry has had a bumper summer season thanks in part to the global economic crisis as Argentines flood in, shunning more expensive locations, and more Chileans holiday at home.

Argentine tourists from the city of Mendoza enjoy the beach in Viña del Mar city, about 75 miles (120 km) northwest of Santiago February 18, 2009. REUTERS/Eliseo Fernandez

While the economy is slowing, hitting industries from mining to retail and construction, tourist arrivals have risen this summer as Argentina visitors skip long-distance air fares and cash in on Chile’s weak peso.

“We came by car, so our only cost was petrol,” said Argentine vineyard manager Angelica Ramos, sprawled in the sand at the upscale resort of Renaca 80 miles west of the capital Santiago, sipping at a gourd of Argentine herbal tea.

Ramos and her husband drove from neighboring Argentina’s San Juan province across the Andes, which is closer to Chile’s beaches than Argentina’s or Uruguay’s. In Renaca and nearby resorts, Argentine number plates pepper the roadside.

“Aside from the airplane ticket to go elsewhere, like Brazil for example, it is also more expensive there,” she said. Chile’s peso fell 22 percent against the dollar last year, making prices more competitive, although it has recently strengthened again.

Revenue from foreign tourists rose 9 percent in the peak month of January from a year earlier, with arrivals from Argentina up 22 percent. Domestic tourism revenues were up 8 percent.

But as in neighboring Argentina, the number of long-distance visitors fell off sharply as the global crisis took a hold, with arrivals from Germany, Australia and the United States down nearly 20 percent in January.

Argentina’s foreign tourism revenue, which totaled $3.3 billion in 2008, fell 8.5 percent in December.

Oscar Santelices, the director of Chile’s national tourism service, expects tourist arrivals for the year to rise around 5-6 percent from the 2.65 million seen in 2008. But Argentines and Chileans are replacing many higher-spending tourists from further afield.

And fewer tourists traveling from Europe, the United States and Brazil could mean trouble for the Easter period and the Southern Hemisphere ski season, which kicks off in June and depends heavily on foreign tourists.

Santelices hopes revenues will remain stable this year at 2008 levels of $2 billion, and is also hoping to see investment in tourism projects hold at around $800 million this year.

“On the negative side, we saw a 20 percent drop in long-distance tourist arrivals in January alone,” he said. “But we are managing to compensate for that with an increase in Argentine visitors ... We have also gained more Chilean tourists, who are rediscovering Chile and are also spending.”

Santelices says high-end tourism is suffering most.

Fernando Barrera, who offers well-heeled clients dinner on a platform suspended 45 meters (150 feet) above the beach on a crane in the nearby resort of Vina del Mar at $80 a head has had to rethink his format and slash prices.

“The crisis is hitting everywhere,” Barrera said, standing by the empty platform. “We have had to make adjustments... We are now offering shorter, different services that cost $30 a head,” he added. “The public is reticent.”

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But business has been booming for Cecilia Negrete, manager of Renaca’s mid-range Piero’s Hotel.

“From November through January we were at full throttle,” Negrete said. “It was much better than we had budgeted for with the crisis coming.”

“It was like going back to before the Argentine crisis of 2001,” she said, referring to Argentina’s economic implosion, record debt default and sharp currency devaluation.

With reporting by Hilary Burke in Buenos Aires

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