With over 41 million international arrivals in 2015 and an average growth of 5%, Latin America’s travel and tourism industry has incredible potential to help generate growth, create jobs and enable regional development.
But which countries are best positioned to benefit most from the industry? You might not be surprised to find out that beautiful natural sceneries like the Iguazu Falls and iconic cultural landmarks like Machu Picchu aren’t the only factors that determine whether a destination is competitive.
Every year, we release the Travel and Tourism Competitiveness Report, which ranks countries based on a range of polices in place to enable the sustainable development of the sector. The report looks at factors such as how easy it is to do business in a country, specific travel and tourism policies, infrastructure, and natural and cultural resources.
So which are the 10 most competitive countries in Latin America? And more importantly, what do they all have in common?
The majority of Latin American nations rely on rich natural resources and good hospitality (what we refer to as “tourist service infrastructure”) to appeal to tourists. They also tend to be internationally open, through their visa policies. Governments in the region realize the strategic role tourism plays in creating jobs (10% of global GDP) and support the sector proactively. At the same time, the region shares some areas for development, such as ground infrastructure and the opportunity to better value cultural resources.
While the best-performing countries have many features in common, they each have their own specificities that set them apart.
Looking at the results, you’ll see that Mexico leads the way, ranking 22nd globally and toping Latin America. It is one of the most improved countries in the index, rising eight positions this year. The government’s prioritization of the sector and the great use of both natural and cultural resources have paid off.
To continue enhancing its competitiveness, Mexico should focus on making the country safer, and further commit to improving environmental sustainability and preserving its natural resources.
Brazil took the second spot in Latin America, ranking 27th globally. The country is blessed with the largest and more diverse natural resources on the planet, and strong cultural resources. Brazil also benefits from good tourist service infrastructure and air connectivity, while remaining a price competitive destination.
Unfortunately, the security and business context have worsened. The homicide rate remains high and the business environment continues to worsen due to inefficiencies in the legal system, red tape and high taxes. At the same time, the sector has not received much governmental support, with little investment and marketing activity.
Argentina is another country in Latin America that made significant progress, rising seven places in the global rankings to reach 50th position. The country, which is already endowed with exceptional natural and cultural resources, has significantly benefited from improvements to its “enabling environment” – factors such as its labour market and ICT infrastructure.
Still, Argentina could better seize the momentum by investing more in the travel and tourism sector. Today, less than 2.5% of its government budget is invested in the sector, while the taxes and charges levied on tickets are among the highest in the world. Changing these policies could have a swift and direct effect on boosting the industry.
Read the Travel & Tourism Competitiveness Report 2017 here.