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Chile: Chile Tourism Profile

2015/03/05

Easter Island CHILE

Macroeconomic conditions in Chile push domestic and outbound tourism

GDP increase and a reduction in unemployment enabled Chileans to increase their travel in and outside the country in 2013. Within the country, the region of Valparaiso maintained its leadership as the majority visited tourist destination, while the fastest growing domestic destination was the region of Atacama. Regarding outbound tourism, for the initial time, Peru was the majority popular outbound destination, leaving Argentina in a close second place. Tropical and Caribbean locations were part the fastest growing outbound destinations, inclunding Mexico, Venezuela, Cuba, Ecuador, Panama, Colombia and the Dominican Republic.

Visa Waiver Program expected to continue supporting an increasing number of trips to the US

Trips to the US grew significantly in 2013 and this destination led outgoing spending in 2013. Trips to the US are as well expected to grow over the estimate period. In May 2014, Chile became a member of the Visa Waiver Program, which enables Chileans to travel for up to 90 days to the US for business or tourism without the need of a visa, provided that they meet the program’s requirements. Before this program, the cost of visas to the US was relatively high. Regarding this change, United Airlines announced that in December 2014 it will start to connect Santiago with Houston with non-stop flights, next 10 years of being absent in the country.

Among tourist attractions, casinos are affected by a new law, while national parks grow

In 2013, casinos declined the strongest part the types of tourist attractions, both in number of visitors and sales. These entertainment locations were strongly affected by a new tobacco law that began in March of the same year, which prohibited smoking in enclosed spaces. At the same time, national parks/areas of natural beauty recorded higher current price increase than in the previous year, mainly because of an increase in arrivals by Chileans, influenced by a higher awareness of their environment. The national parks most visited in 2013 were Vicente Perez Rosales, Los Flamencos, Torres del Paine, Villarrica and Puyehue.

Air transportation increases and additional international airlines arrive in Santiago

Air transportation is responsible for the majority of transportation price sales in Chile, and in 2013, it as well registered the highest increase. LAN Airlines maintained its leadership in price share terms, but a lot of foreign airlines arrived and are expected to arrive in the country, inclunding BQB airlines, Peruvian, Gol, KLM, Air Europa and United Airlines. Prices of international flights are expected to fall because of this competition. Domestic flights are as well expected to grow. The development of the mining industry is having an impact on air traffic to a lot of Chilean airports, inclunding Iquique, Calama, Antofagasta, Copiapó, La Serena, Santiago and Concepción.

Many international hotel chains set to arrive in Chile in 2014

Several hotel chains are planning to either arrive or expand in Chile in 2014. In Santiago, Marriott International opened a Renaissance hotel and is set to open a Courtyard hotel; Hilton Worldwide plans to open a DoubleTree hotel; Hyatt Hotels Corp will open the initial Hyatt Place in South America; and Meliá will open the initial Innside by Meliá in Latin America. In addition, a new hotel from the Chilean chain Plaza El Bosque opened its doors at the beginning of 2014. Away from Santiago, Wyndham Worldwide will open a Ramada Encore in Rancagua. Finally, in the neighbourhoods of Lastarria and Bellavista in Santiago, seven hotels “boutique” are expected to open in 2014. With all these new hotels, the quantity of available rooms will increase, thus affecting occupancy and average daily rates.

 

Global recession hurts travel and tourism

 
Chile was not isolated from the international economic crisis and by 2009 it had entered a recession that severely hurt production, employment and consumer confidence. A rising middle class, which has driven consumption, stopped its self-improvement process as families suffered from the effects of an economic downturn and unemployment. Chileans, even upper-income consumers, reduced their expenditure on goods and services, including tourism. Exports, imports and domestic production declined, therefore most companies recorded a decrease in sales. Many companies faced financial difficulties and/or cut investment projects. In this depressed environment companies reduced their travel and entertainment budgets. The H1N1 flu pandemic reinforced the negative movement in international arrivals, for example, fewer Brazilians visited Chilean ski centres. Only the Dakar Rally attracted a significant number of new tourists to the country in 2009.
 

Argentinian arrivals rocket

 
Chile has worked hard to position itself as a long haul destination. These efforts paid off over the review period, stimulating the arrival of European, Asian and North American tourists. The international crisis has reversed this effect, however, and the numbers of visitors from almost all long distance countries decreased. The effect on inbound tourists was partially offset by the increase in Argentinian tourists, who chose destinations closer to home to escape domestic inflation.
 

Casinos adds dynamism to destinations

 
By 2009, 15 of the 18 new casinos had started operations, creating a new and more dynamic tourism environment in the areas in which they are based. Casino players have invested heavily, to the tune of around US$850 million, to create a highly attractive offer, including 4- and 5-star hotels, restaurants, gyms, shopping centres, events centre, spas, food courts, amusement parks, cinemas and theatres etc. Additionally, a wide range of small independent enterprises are emerging in the slipstream of casinos, for example retailers of typical local products, especially food, wines and artisanal goods. Casinos are based in areas with high tourism potential that have yet to be exploited. Thus, they are incorporating new tourism zones, but their main effect has been to improve general service standards.

 

Why drive if you can fly?
 
Lan Airlines SA has invited Chileans to fly instead of travelling by land and they have made the necessary preparations to stimulate such a migration. Lan Airlines’s strategy has driven a 31% average tariff reduction on domestic routes, supported by a cost control programme, online transactions and heavy promotions. As a result, the number of domestic passengers has increased and Chileans have started to travel to distant places in the country at the weekend. Lan Airlines’s proposal also attracted business tourists, who can schedule daily travel, saving time and money. In late 2009, the company extended the strategy to flights to Mendoza (Argentina), and demand more than doubled. Copying this low price strategy will not be easy for smaller competitors. Lan Airlines has laid down a huge challenge to other airlines, but also to bus/coach, car rental and even hotel operators. These players should adjust their business models to deal with the changing travel habits of Chilean consumers. Fertile ground has been found among more price conscious consumers who are looking for cheaper and effective alternatives when planning their trips.
 

Earthquake deters tourism in 2010

 
An earthquake measuring 8.8 on the Richter Scale hit Chile on 27 February 2010, devastating the central region of the country. The epicentre of the earthquake was 115km northeast of Concepción and 325km southwest of the capital city, Santiago. Strong aftershocks reaching a magnitude of 5.5-and-over occurred in several cities, including Santiago, along with tsunami flooding. The government declared six regions of the country - Valparaiso, Metropolitana, Libertador O'Higgins, Arucania, Bio Bio and Maule –a “disaster zone” and estimated that the disaster had killed at least 800 people. The earthquake and subsequent tremors deterred international arrivals and domestic tourism. As a result, a decline is expected in terms of arrivals while the number of domestic trips is expected to slow down in 2010. However, the impact is expected to only be short term, barring more significant earthquake activity.