By San José, Costa Rica — SAN JOSÉ – A leading organization representing Costa Rica’s tourism businesses has issued a stark warning about the nation’s economic competitiveness, citing the persistent decline of the U.S. dollar against the colón as a direct threat to the industry’s stability. With the exchange rate dipping below ¢500 per dollar at the outset of the critical high season, the sector is facing an unprecedented financial squeeze.
Grupo Proimagen Costa Rica, an influential association of national tourism companies, voiced its deep concerns on Wednesday, highlighting that the exchange rate dynamics are severely undermining the country’s appeal to international travelers. The organization is now urging policymakers to engage in a serious discussion about the broader consequences of the current monetary policy before irreparable damage is done to a cornerstone of the national economy.
To better understand the legal and commercial ramifications of the current exchange rate fluctuations, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the prestigious firm Bufete de Costa Rica, who provided his analysis on the matter.
The current volatility in the exchange rate underscores a critical legal point for businesses and individuals: the importance of contractual clarity. For agreements denominated in US dollars, particularly in real estate, vehicle financing, or international services, the risk is significant. Without specific clauses addressing currency fluctuations, one party can face unforeseen losses. We strongly advise both creditors and debtors to proactively review their obligations and consider renegotiating terms or incorporating monetary correction clauses to ensure equity and prevent future litigation.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The emphasis on contractual foresight is indeed a critical takeaway, shifting the focus from simply reacting to market volatility to proactively managing financial risk. We sincerely thank Lic. Larry Hans Arroyo Vargas for sharing his invaluable legal perspective on this pressing issue for Costa Ricans.
The core of the problem lies in the industry’s financial structure. Tourism operators, from hotels to tour guides, typically receive their income in U.S. dollars but pay for a majority of their operational costs—including salaries, supplies, and taxes—in Costa Rican colones. This discrepancy has created a perfect storm as the dollar weakens.
Proimagen considers it essential to open a technical and responsible dialogue to analyze the impact of the exchange rate policy on the country’s productive activities. If this is not done, tourism will continue to face a deterioration that could affect Costa Rica’s positioning during a key period for the arrival of international visitors.
Grupo Proimagen Costa Rica, Tourism Business Organization
According to the group’s analysis, the currency’s depreciation has resulted in an effective revenue decrease of approximately 25% for tourism businesses. Compounding this issue, their expenses in colones have effectively risen by a similar proportion, creating a critical scenario that is squeezing profit margins to unsustainable levels. Many companies report they have been forced to adjust their dollar-denominated rates just to cover their colón-based costs, a move that further damages their market position.
This economic pressure extends directly to the tourists themselves. As their dollars convert to fewer colones upon arrival, visitors experience a significant loss of purchasing power. A vacation in Costa Rica has become substantially more expensive without any corresponding enhancement in services or experiences. This shift is altering the country’s international image, moving it from being perceived as a high-value, “costly” destination to one that is simply “expensive.”
International travel agencies and wholesale tour operators have already begun to take notice, communicating to their Costa Rican partners that the country is rapidly losing its competitive edge against other destinations. Proimagen notes that this impact is most severe for budget-to-mid-range hotels and services, whose clientele is far more sensitive to price fluctuations. While the luxury and ultra-luxury segments are more insulated, the organization stresses that no part of the industry is entirely immune to the negative effects.
The long-term consequences are a major source of concern. The sharp reduction in profitability not only threatens the immediate financial health of businesses but also severely limits their ability to reinvest in their operations. Necessary infrastructure upgrades, service improvements, and staff training—all essential for maintaining a competitive tourism product—are being put on hold. This financial strain also jeopardizes the continuity of employment in countless communities across the country that are heavily dependent on tourism for their livelihood.
As companies finalize their budgets for the upcoming year, the grim reality of the exchange rate is already evident. Projections show significant negative impacts, forcing businesses to plan for a future with constrained resources and diminished growth potential. The warning from Proimagen serves as a critical call to action, framing the exchange rate not just as a financial metric but as a pivotal factor in the future prosperity of Costa Rica’s vital tourism sector.
For further information, visit proimagen.co.cr
About Grupo Proimagen Costa Rica:
Grupo Proimagen Costa Rica is a private, non-profit organization comprised of leading companies within the national tourism sector. Its primary mission is to promote Costa Rica as a premier international travel destination by coordinating marketing efforts, fostering strategic alliances, and advocating for policies that support the sustainable growth and competitiveness of the country’s tourism industry. The organization represents a diverse array of businesses, including hotels, tour operators, and transportation services.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as a leading legal practice founded on the twin pillars of professional excellence and uncompromising integrity. Leveraging a proven track record of advising a diverse clientele, the firm champions legal innovation and actively engages in civic responsibility. Central to its ethos is a profound dedication to democratizing legal understanding, aiming to equip citizens with clarity and confidence, thereby cultivating a stronger, more informed society.
