Tourism in times of recession

Although the contemporary Puerto Rico tourism industry can trace its lineage to the late 1940s—when Hilton Corp. chose San Juan as the site of its first hotel outside the continental U.S.—the island has always been regarded a “sand and sun” destination. With this in mind, the opening of the Caribe Hilton in 1949 was the official birth of the island’s tourism industry.

Today, the island has 13,620 rooms endorsed by the Puerto Rico Tourism Co. (PRTC). They are distributed throughout some 163 big hotels and a few paradors or small inns. According to numbers provided by the Puerto Rico Planning Board (PRPB), tourism generated $3.4 billion in the Puerto Rico economy and more than 60,000 jobs in Fiscal Year (FY) 2007-2008.

In 2007, Puerto Rico had 5.0624 million visitors (an increase from 5.0221 million in 2006), of which 3.6870 million were considered tourists—those who stay more than a day but less than a year—1.3534 million staying in registered hotel and paradors while 2.3336 million were lodged in guesthouses or with relatives. This year, however, more rooms were available since most big hotels that were undergoing renovations—the Condado Plaza, El San Juan, El Conquistador, San Juan Marriott and La Concha—were fully functional.

Cruiseships

Cruiseships are another story. Since 2005, when an incentive for cruise lines was passed and signed, the industry has grown. During 2007, the island continued to see an increase not only in cruiseships but also in bigger vessels with larger passenger capacities as well as those that occasionally visited other parts of Puerto Rico besides San Juan. In 2007, 1.3754 million excursionists disembarked in Puerto Rico (the ones who spend less than 24 hours on the island). Through an alliance with Florida Caribbean Cruise Lines, around 75,000 new visitors arrived in Puerto Rico during FY 2007-2008, according to numbers provided by the PRPB. These excursionists accounted for $1.722 million in tourism expenditures in 2006.

“But that isn’t all,” explained Terestella González Denton, past executive director of the PRTC. “During the cruiseship season that started November 2008 and ends April 2009, Puerto Rico will welcome seven new cruiseships which, just counting their first trip here, will bring in around 20,000 tourists who will disembark on our shores. This portion alone could translate into $15 million more for the local economy,” she said.

The former head of the PRTC explained that during the part of FY 2007-2008 that has passed, the Port of San Juan received 1,489,853 passengers, representing an 8.9% increase, or 118,161 more passengers than the previous year, and had a $13.8 million impact on the local economy. These numbers are higher than those reported by the Cruise Line Industry Association, which saw a 5% global increase, 2% in North America and an especially low 1.7% for the cruise-line industry in eastern Caribbean.

Expenditures

Total expenditures were $3.4139 billion during 2007, an increase from $3.3693 billion in 2006. Of these totals, tourism expenses were higher in 2007, at $3.2417 billion, than the $3.2084 billion registered in the previous year. The maritime industry, however, has had a $91 million impact on the local economy for homeport visits and $107 million for transit visits, or a total of $198 million. This sector of the tourism industry generates 5,830 direct and indirect jobs with a nominal budget of $143.2 million.

More rooms, more hotels

Rooms have always been an eternal dilemma for Puerto Rico tourism. The island’s lack of rooms—along with the Mexican Caribbean’s and Dominican Republic’s double-digit growth each year—drags our tourism numbers to a modest one-digit or lower growth rate. However, the PRTC has been concentrating its efforts on improving the local room inventory. According to PRTC numbers, at the end of FY 2007-2008, Puerto Rico had 1,629 new, fully operational rooms, 2,376 rooms under construction and 2,159 rooms with all the necessary permits and ready to break ground. Adding all these numbers, we have 1,629 new rooms operating and 4,535 under construction or in the immediate pipeline (what the PRTC calls “encaminadas” in Spanish) for a total of 6,164 rooms. This means, in the next couple of years, Puerto Rico will have a more robust tourism room inventory, with new hotel chains arriving to the island and more possibilities for the tourism industry to grow.

“Creating the different tourism regions in Puerto Rico, each with its own hospitality venues and amenities, has been key for the new tourism era,” the former PRTC chief expressed, with Porta del Sol (in the western region) and Porta Caribe (in the southern region) becoming a hit among wholesalers. Equally impressive have been the visitors to the new Puerto Rico Convention Center, the island’s state-of-the-art Coliseum, all our beautiful golf courses and the possibilities of the eastern region, which includes the revamped Trump International Golf Course at Coco Beach, the environmentally friendly St. Regis Hotel, Golf Course & Residences and the JW Marriott Hotel (still to be constructed) also at Coco Beach. Other five-star venues already in the works are the Regent Punta Candelero and Mandarin Oriental, both at Palmas del Mar.