Source: http://www.journalcr.com
Posted by Roger Vlasos
Broker/Owner
Century21 At the Beach
Playas del Coco, Guanacaste, Costa Rica
Website: http://www.century21incostarica.com
Email: roger@century21incostarica.com
(Infocom) — The Costa Rican Chamber of Hotels (CCH) recently unveiled the study “Impact of Hotel and Real Estate Growth on Some Coastal Areas of Guanacaste,” which outlines a series of recommendations for regulating the hotel industry in the region. The study was conducted by architect Alberto Salas Roiz, a tourism consultant.
Guanacaste was chosen for the study for being the province with the biggest tourism potential, in addition to the fact that Liberia’s Daniel Oduber International Airport is experience explosive tourist demand and Guanacaste is today the province with the largest number of high-standard hotel rooms. Other factors include the challenges the province’s development may cause in the future in relation with natural resources and the availability of drinking water, a major concern here. Moreover, Guanacaste is where the tourism business sector has the most activity among all provinces, has the most tourism mega-projects, and previous tourism-related studies have been conducted here by entities such as the INCAE Business School (Guanacaste Cluster), the University of Costa Rica (UCR), the National University (UNA), and the Costa Rican Tourism Institute (ICT).
Among other goals, the study seeks to learn how hotel and real estate growth is taking place in some coastal areas characterized by constant change; determine the impact of the competition between the hotel and real estate sectors; and analyze the consequences of mixed tourism-residential projects and the proliferation of second homes in tourist destinations. Additionally, the study attempts to diagnose the province’s overall growth and assess its environmental, social and economic impact, placing emphasis on the interaction between these variables; outline actions to be taken and offer recommendations that would help with coastal planning in Costa Rica; and propose actions that could be implemented to minimize negative impacts on the tourism and hotel industries, making a mark on the government entities charged with drafting tourism-related policies.
The study found that there has been a sharp increase in the permits issued in the past year and a half, compared to the 2002-06 period, when the first study in the region was conducted. The increases were 171 percent in homes; 10.5 percent to 38 percent a year for condominium complexes; 10.7 percent to 60 percent for apartments; and 6.6 percent to 27.3 percent a year for hotels. The districts with the highest growth are Liberia and Nacascolo (Liberia); Sardinal (Carrillo); and Tempate, Cabo Velas and Tamarindo (Santa Cruz). There’s important activity in other districts such as Nosara and Samara (Nicoya); Bagaces and Fortuna (Bagaces); Tronadora, Tierras Morenas and Arenal (Tilaran).
“The strongest cantons are Liberia, Carrillo and Santa Cruz, as the three of them encompass 90 percent of the total rooms to be built. However, other cantons such as Hojancha, Bagaces and Tilaran are showing important activity, and others waiting to wake up are La Cruz, Abangares and Nandayure, depending on whether certain future projects materialize,” Salas pointed out.
According to the CCH study, an adequate follow-up on the ground is not given to hotel activity due to the province’s deficient municipal operation, as neither municipalities nor government institutions represented in the region provide enough resources to technical teams. Other limitations found by the study include lack of information by local governments and state entities; strong lack of statistics in research topics and detailed information about the real estate industry.
GROWTH FORECAST
Regarding the prospect for hotel and real estate growth in Guanacaste, the study indicates that there are still many holes in available information that would boost forecasts. Likewise, the report points out that in the big projects being built or proposed, both hotels and residences will complement each other — such as in the case of Peninsula Papagayo and Reserva Conchal, just to cite two well-planned developments.
“Most of the rooms will have good tourist quality, regardless of whether or not they have an ICT tourism certification, which is key to turning Guanacaste into a luxury destination at the international level,” the report stated. “Upcoming construction projects go from the short and medium terms (the Costa Rican Chamber of Construction estimates that this boom will cover the next two years, despite the real estate crisis in the United States) to the long term in the case of the large tourism projects, which will be developed gradually.”
Added Salas: “It has been observed, and this trend continues, that small and mid-sized developers don’t appear to be very interested in the hotel business, but in real estate, because it produces profit in the short term. This is illustrated by comparing the previous study (which encompassed six Guanacaste districts, all of them in Carrillo and Santa Cruz), which registered 36,665 rooms, while in the past year a half there have been 77,726 rooms reported. This is an increase of 211 percent in projected rooms.”
The study concludes that the various sets of data available regarding the hotel and real estate industries point to the fact that there are no adequate inter-institutional mechanisms to measure this sector of the economy, and that projects in rural subdivisions tend to evade infrastructure-related requirements and responsibilities of a formal residential development.
Regarding the fiscal arena, the report indicates that collection of construction taxes are affected by under-reporting, whether in the number of square meters of projects or the total costs that are disclosed, as many projects are conducted without official permits or are built and then pay fines. “In the municipal records you find construction permits that were given for social-interest (low income) housing when the houses are really for tourist lodging,” Salas said.
Additionally, the report came to the conclusion that ICT still hasn’t taken strong actions to lower negative impacts on the hotel sector. The tourism board needs to revise both the concept and the scenario for growth outlined in the National Tourism Development Plan (PNDT), and the report add that its strategy for creating so-called Sustainable Development Centers appears to be in contradiction with the accelerated growth of real estate currently taking place.
The study also offers a forecast of what the region might look like in the future. It predicts that in the coastal area between Cabuyal, north of Papagayo, and Junquillal, a dense tourism corridor will consolidate that will compete with other international destinations such as Cancun-Mayan Riviera in Mexico and the Florida coast between Ft. Lauderdale and the Keys. As this occurs, the predominance of natural tourism will give way slowly to a more “artificial” tourism, and the acceleration of urbanization will be inevitable. This, in turn, will gradually result in the loss of tourism market, although the interest of people to come and live in the country will increase.
“In other coastal areas, for example from Soley to Playa Rajada in the canton of La Cruz, from Junquillal to Bejuco in Nandayure, and in the periphery of Lake Arenal there will be other less dense corridors, where the presence of nature and natural landscapes will be more significant. There will also be a consolidation of a tourist corridor along the highways between Liberia and the intersection to El Coco and, with less density, between Liberia and Bagaces,” Salas said.
CONCLUSIONS AND RECOMMENDATIONS
The consultant recommended to carry out a larger analysis of the complex topic of hotel and real estate development in Guanacaste, with the consensual participation of various sectors (private, public and social). He also recommended asking ICT to revise and update official development plans that take into consideration the growth of both hotel and non-hotel projects.
“(It’s important) to ask INVU (the National Housing and Urban Development Institute) to move from a merely urban concept in its regulatory plans to one that considers an integral organization of municipal territories, the tourism space considered among them,” the report indicates. “All of this needs to be done through the above-mentioned multi-sector participation, which implies a paradigm shift involving an emphasis on land-use sustainability.”
Another recommendation is to request INVU, ICT and the Municipal Promotion and Consultation Institute (IFAM) to conduct a study of how projects proposed and approved by local governments and state institutions as part of coastal regulatory plans will impact the country’s coasts. It’s important, the report adds, that all players involved coordinate planning actions in consultation with the Land Registry Regularization Program, as well as with other government entities, including the ministries of transportation, environment and planning.
The study also suggests supporting the companies involved in the Land Registry Regularization Program and asking them to take in consideration these recommendations when drafting regulatory plans for Guanacaste; and supporting approval of the Water Resources Law in Congress and a possible moratorium in future land-use permits in the most affected areas, at least while the regulatory plans previously mentioned are complete; and supporting the recently passed executive decree that establishes regulations for constructions in coastal regions beyond what’s stipulated by the Land-Maritime Zone laws.
The study also calls on a variety of public and private entities to promote participatory planning. These entities include ICT, INVU, IFAM, the ministries of transportation and the environment, and municipalities; the National Chamber of Tourism, the Federation of Regional Chambers of Tourism, the Costa Rican Chamber of Construction, and the Costa Rican Development and Investment Board (CINDE); plus universities, NGOs, and community development associations.
Other recommendations deal with supporting the reorganization of efforts to attract investment for the hotel and real estate sectors within a framework of sustainability that would help keep Costa Rica competitive as a privileged tourism destination worldwide; and supporting improvements in the existing mechanisms for monitoring sustainability, whether by the state or by the Administrative Environmental Court, the Environmental Technical Secretariat, ICT, the private sector, and other sectors such as universities and civil society organizations.
Finally, the study proposes reviewing current legislation in the leasing of real estate properties in order to incorporate variables of rentals to foreign visitors, this with the goal of achieving more tax fairness; seeking to create a broader alliance between organizations representing the hotel and real estate sectors to seek integral solutions to issues affecting both of them, with a focus on sustainability.
According to Tourism Minister Carlos Ricardo Benavides, “it’s very important that these recommendations are presented early. I continue to believe that Costa Rica must bet on sustainability in its development, and I’m not only referring to tourism development. For that, we need clear rules.”
