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Document ot )1 , :) " The World Bank ,,"rt- )" FOR OFFICIAL USE ONLY ')~'-0 DRAFT CONFII>E~lL-\L Public Disclosure Authorized -_Report ~o. ..182J-GU - i GUATDf.ALA Public Disclosure Authorized TOURISM SECTOR REVIZW ~~ PROJECT IDENTIFICATION December 7, 1977 Public Disclosure Authorized Public Disclosure Authorized Tourism Projects Department This document h:J..S a restricted distribution "lnd may be used by reCIpients only in the performance of their official duties. Its ~Qntents may not otherwise b~ disclosed without World Bank authorization. -"-. - 1\.'R QFf1CIAI.: D5~ ONLY CONFIDENTIAL GUATEMALA TOURISM SECTOR REVIEW AND PROJECT IDENTIFICATION TABLE OF CONTENTS Page No. s~~~Y ---------------------------------------------------------- i-iii :Ct:RISM ASSETS 1 ~EVELOPMENT OF DEKA.J.'ID ~::';ELOPMENT OF SUPPLY 3 ~CO~OMIC AND SOCIAL ASPECTS OF TOURISM ---------------------------- 8 SECTOR ORG&~IZATION AND POLICY ----------------------------------- 10 :~O~!H PROSPECTS ------------------------------------------------- 12 ?~.OJECT IDENTIFICATION ------------------------------------------- 14 Lake Atitlan ------------------------------------------.----- 14 Antigua ---------------------------------------------------- 14 Tikal ------------------------------------------------------ 15 Hotel Credit ------------------------------------------------ 16 Hotel Training --------------------------------------------- 16 Handicrafts ------------------------------------------------ 17 ,·';-:'r.'S ~ I - Tables 1 - Climatic Data ------------------------------- 18 2 - Foreign Visitor Arrivals ----------------~---- 19 3 - Foreign Visitor Arrivals by Nationality ------ 20 4 - ~oreign Arrivals by Means of Transport ------- 21 5 - Foreign Arrivals by Month -------------------- 22 6 - Regional Distribution of Accommodation Capacity 23 7 - Mission Estimates of Operating Results for Selected Types of Hotels ------------..---- 26 8 - Comparative Hotel Rates ---------------------- 27 9 - Tour Prices in Guatemala --------------------- 28 10 - Comparison of Tourist Expenditure and Other Exports of Guatemala ------------------ 29 11 - Annual Investments in the Tourism Sector (Pre-earthquake) ---------------------- 30 -.------------------------------------------------------------------------------------------------ -.•• \\~on consisted of Messrs. lain T. Christie (Financial ..!..Iialysi:) I 'l'~~akopoulos (Engineer/Planner) I Sisinio Flores (Tourism Specialist), ,. ~~~rard (consultant)~ and Sheldon Annis (consultant). ~---------------------------------------------------------------------------------------------•• • "'.'Jment has a restricted distribution and may be u.5~ by recipients only in the performance ... ~ Official duties. Its contents may not otherwl~ be di.sclosed without World B.lnk luthorizstKlO. --.-----------------------------------------------------------------------------~ TABLE OE CONTENTS - Page 2 Page No. ANNEXES II - Table' 1 - Tourist Typology ------------------------------- 31 III - The Const~uction Industry -------------------------------- 34 IV - Handicrafts ------------~--------------------------------- 37 Chart 1 - Distributional Flow of Handwoven Indian Textiles 46 Chart 2 - (Added Value, Expressed as % of Input) --------- 47 V - Assessment of Existing Infrastructure -------------------- 48 Tables 1 - Principal Airports ---------------------------- 53 2 - Water Supply Systems on Selected Locations ---- 54 3 - Sewerage Systems on Selected Locations -------- 55 VI - Organization for Project Planning, Implementation and Land Control ----------------------------------------- 56 VII - Table 1 - Tourist/Host Interaction ----------------------- 59 VIII - Instituto Guatemalteco de Turismo (INGUAT) Corporacion Financiera Nacional (CORFINA) ---------------- 60 Table 1 - CORFINA Hotel Credit Terms (1976) -------------- 63 Chart 1 - INGUAT - Organization Chart -------------------- 64 Chart 2 - CORFINA - Organization Chart ------------------- 65 IX - The Market ----------------------------------------------- 66 Tables 1 - Total Number of Visitors to Ce~~~?~_~erica According to Region of Origin - 1974 ,--------- 73 2 - Comparative Growth Rate and Market Share Data - 74 3 - American Travel Abroad: 1960-1975 -----~------ 75 4 - Visitor Arrivals. Actual & Projected (1965-1985) ----------------------------------- 76 5 - Breakdown by Nationality and Type of Tourists (1975-1985) -------------------------- 77 6 - Additional Rooms Required for 1977-1985 ------- 78 GUATEMA.LA TOURISt·! SECTOR REVIEW Al.'1D PROJECT IDENTIFICATION A C RON Y M S CABEI Central American Bank for Economic Integration (Banco Centroamericano de Integracion Economica) CACM C~ntral American Common Ma~ket (Mercado Comun - Centroarn-eric-ano) CORFINA Nutional Financial Corporation (Corporacion Financiera Nacional) IFES Women's Institute for HIgher Studies (Instituto Feminino de Estudios Superiores) IRA Institute of History and Anthropology (Instituto de Histori~_y_.Antropologia) INAFOR Forestry Commission (Instituto Nacional Forestal) L.'WUAT Guatemalan Tourism Commission (Instituto- - -._- - -- Guat.emalteco_de....-TurismO-f--- INFOM Institute for Municipal Development (Instituto de Fomento Municipal) INTECAP Technical Training Institute (Instituto de Educacion y Capacitacion) GUATEMALA TOURISM SECTOR REVIEW &~ PROJECT IDENTIFICATION SUMMARY i. Guatemala has remarkable touristic assets. The most noteworthy are its archaeological and cultural attractions including the pre-Columbian civilizations, best represented by the Mayan city of Tika1, and the Spanish colonial period, preserved intact in Antigua. The Indian culture, though in many ways modernized, has retained much of its tradition including methods of agriculture, bright handwoven clothing, colorful markets, and re~igious fiestas. Mountains, volcanoes and lakes provide a varied and dramatic land scape for the tourist; the climate, especially in the highlands where the temperatures average 20 0 C year round, is well suited for tourism. The Five Year Plan (1975-1979) accords high priority to tourism as a sector with great potential for diversifying the economy, inducing regional development, increasing foreign exchange earnings, and generating employment. ii. In 1965, gross foreign exchange receipts from tourism totaled U5$18.5 million; in 1975, the figure had risen to US$85.9 million, and tourism ranked second only to coffee as a foreign exchange earner. It is estimated that tourism generates at least 25,000 jobs, about 1.3% of the labor force. iii. Foreign visitor arrivals increased from 174,000 in 1970 to 454,000 in 1975, or about 56,000 per year on average (21% growth rate) excluding regional travelers using a pase local. In 1975, over half were from Mexico and other Central American countries (predominantly El Salvador), 25% from North America, and the balance mainly from Europe and Latin America. As a result of the earthquake early in the year, arrivals dropped to 403,000 in 1976. Hotels have expanded from less than 2,000 rooms in 1969 to just over 4,000 in 1976. They operate at occupancies of over 70% in Guatemala City and _.5~~6~~__ i~_o~~~r p1c:.c.es; a~ c~rtain_perio.~s .of the year, it is n.ear~'y imposs ibl~ _t.o . _ find_accommodat~on. The ayerage length of stay of visitors is estimated at 4.5 days, iv. The long run growth prospects for the sector appear to be good. Tourism in Central America overall has shown strong gro\vth (17% annually in the period 1971 to 1975). Guatemala has the assets, a developed structure of wholesale and retail travel service outlets, a relatively low cost structure and is in an excellent position as a gateway to Central America,· quite close to major generating markets. Within Central America, Salvadorian traffic should continue to be the major market (for trade and shopping). North Amer~can travel should continue to be a leading market with growth in business travel following the growth of the economy. The pleasure market estimated by the mission at 150,000 visitors is expected to expand by about 7-8% annually, particularly (small) group travelers from North America and Europe. Corporate business traffic, which now accounts for about 90,000 visitors, is estimated to grow at a much slower pace, 5.2% per annum in line with the histoFic growth rate in GDP of 5.7%. The mission believes that an annual increase in - ii - total arrivals by 40,000 is a realistic assessment of the potential growth of demand for Guatemalan tourism. v. ' Whether-this denand can be realized will depend primarily on the development of suitable' acc~~odation capacity and promotional activities. The 1975-1979 Plan envisag~5 the construction of 5,700 additional rooms. Of these, 1,100 are already u~:er construction, mostly in the first-class category. The mission estimates that :~ly another 1,000 rooms will be completed before 1980. Consequently, this lack of accommodation capacity will most likely constrain visitor arrivals (especially group travelers) in Guatemala. It is unlikely therefore that the number of total arrivals will exceed 600,000 by 1980. (The Plan's target is 750,000 arrivals by 1979.) Over the longer term, -Guatemala can achieve highe= gro~th rates if adequate supply is developed. vi. The Instituto G~atemalteco de Turismo (INGUAT) and Corporacion Financiera Nacional (CORFI~A) are responsible for formulating and carrying out tourism policy and promoti~; travel to Guatemala. INGUAT also is responsible for carrying out physical p:anni~g, project preparation and execution functions but cannot do so as