The conclusion of the 38th Congress of Tourism and Travel agencies, AAAVYT found that tourism to Argentina is rapidly declining. The country is becoming increasingly expensive with inflation adding to the international financial crisis.
According to the latest statistics, presented at the congress, the number of foreign tourists arriving in the city of Buenos Aires (by air) in the first four months of the year was 936,000 – 3.1% less than the same period a year ago. In April, the fall was 5.6%. The number of Brazilians, which have become the main source of tourists (30%), dropped 8.8% in April over a year ago.
Mario Lielman, chair of the Buenos Aires Tourism and Travel Agencies Association stated, “Inflation, even high, has not been enough to counter the appreciation of the Argentine peso and tourist think twice before planning a trip. Likewise for Argentines, a strong currency and more accessible prices in the US and Europe have become a magnet.”
Domestic flight costs are on the rise after an increase this week of between 10% and 20%, with longer distance flights rising by 30%. This is the case for sought after destinations such as Patagonia, Tierra del Fuego or Salta and the Iguazú falls.
These deterrents, combined with the ongoing financial crisis tightening belts globally, has worked to deal a significant blow to the Argentine tourism market.
That said, these same forces seem to be working to increase Argentine travel abroad. From April 2011 to April 2012, 31% more Argentines have travelled overseas.
Is it the inflation proper ? Tourists usually exchange their foreign currency at or near the official rate. If they use plastic, they get the official rate, too.
The wide gap between official rate and the real dollar value of the peso (closer to the black market value) means that everyone exchanging foreign currency at the official rate effectively pays a surcharge of at least 20%. Foreign currencies other than the dollar usually track the dollar’s behaviour, so you get the same pattern with euros, pounds, or reais.
The gap’s side that is visible in Argentina exists mainly thanks to the exchange restrictions implemented at the end of 2011. The side that is visible outside Argentina, i.e., the exchange rate offered by foreign banks, is caused by the government artificially keeping the dollar from following inflation. At the moment, both sides produce similar results, but one can tell them apart because the external exchange rate took off already long before the exchange restrictions.
So, while inflation provides the motor for this phenomenon, it’s the government messing with statistics (the infamous INDEC) and insisting on maintaining an adulterated official exchange rate that allows inflation to have this sort of effect.
The current inflation rate per se, about 25% p.a., would only cause a cost increase of less than 1% for most tourist, even if they bring a bundle of cash, exchange it for pesos on the first day of their visit, and then stay for a whole month.
- Werner