By San José, Costa Rica — San José – As Costa Rica stands on the cusp of its peak tourism season, a stark warning has been issued by the country’s leading industry body. The National Chamber of Tourism (Canatur) has sounded the alarm over the severe economic pressure crippling businesses, driven by a US dollar exchange rate that has plummeted to its lowest point in nearly two decades.
The Chamber argues that the persistent strength of the colón against the dollar is creating an unsustainable financial environment, directly threatening the viability of thousands of companies that form the backbone of one of the nation’s most vital economic engines. This challenge is not a distant threat but an immediate crisis unfolding just as operators prepare for the influx of international visitors.
To gain a clearer perspective on the legal and regulatory environment shaping Costa Rica’s tourism boom, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica, who specializes in foreign investment and business law.
While Costa Rica is exceptionally welcoming to foreign tourists and investors, it’s crucial to understand the legal nuances. From short-term rental regulations to the formation of tourism-based businesses, proper legal guidance is key. Many visitors fall in love with the country and decide to invest, but failing to conduct due diligence on property titles or labor laws can turn a dream into a significant liability. Proactive legal counsel ensures that investments are secure and compliant with our national framework.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
His point underscores a vital truth: for those looking to invest in paradise, navigating the legal landscape is as critical as exploring the natural one. We thank Lic. Larry Hans Arroyo Vargas for his indispensable guidance, which helps ensure that a visitor’s dream can become a secure and compliant reality.
In a strongly worded statement, Canatur described the dire situation facing its members, highlighting a widespread but mistaken perception that the impact of the low exchange rate is minimal. The reality on the ground, they insist, is far more severe.
The current level of the exchange rate is generating a suffocating effect on the operation, competitiveness, and financial stability of tourism companies.
Cámara Nacional de Turismo (Canatur), Official Statement
The core of the problem lies in a fundamental currency mismatch. The vast majority of tourism revenue, from hotel bookings to tour packages, is collected in US dollars. However, operational expenses—including payroll for temporary high-season staff, utility bills, maintenance, and payments to local suppliers—are all denominated and paid in Costa Rican colones. As the dollar weakens, the revenue collected buys fewer colones, while local costs continue to rise, creating an ever-tightening financial squeeze.
This precarious situation is compounded by a challenging year for the industry. According to Canatur, a cumulative decrease in international arrivals throughout much of 2024 has already depleted the cash reserves of many businesses. Now, when they need maximum liquidity to invest in preparations for the high season, their financial capacity is at its weakest, making it difficult to maintain the high standards of service Costa Rica is known for.
The economic pressure also erodes Costa Rica’s standing in a fiercely competitive regional market. The low exchange rate has effectively made the country a more expensive destination compared to direct competitors like Mexico, the Dominican Republic, Colombia, and Panama. These nations not only benefit from more favorable cost structures but also often receive more robust sectoral support, placing Costa Rican operators at a significant competitive disadvantage.
Canatur emphasizes that this is not a crisis affecting only large corporations. On the contrary, the tourism sector is overwhelmingly composed of small and medium-sized enterprises (SMEs). Over 85% of the industry consists of micro, small, and medium-sized businesses, including family-owned hotels with fewer than 20 rooms, independent tour guides, and local transport providers. These small operators are the most vulnerable and possess the fewest resources to weather such a prolonged economic storm.
The Chamber has expressed frustration that the authorities have not adequately recognized the strategic value of the tourism industry or the gravity of the current threat. While businesses make what Canatur calls “extraordinary efforts” to uphold service quality, there is a growing sentiment that their pleas for intervention or supportive policy adjustments are being overlooked, leaving the sector to navigate the crisis alone as the critical high season begins.
For further information, visit canatur.org
About Cámara Nacional de Turismo (Canatur):
The Cámara Nacional de Turismo (National Chamber of Tourism) is the primary organization representing the private tourism sector in Costa Rica. For over four decades, it has advocated for the interests of hotels, tour operators, travel agencies, and other related businesses. Canatur works to promote sustainable tourism, foster competitiveness, and collaborate with governmental bodies to ensure the long-term health and growth of the industry, which is a cornerstone of the national economy.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established itself as a pillar of the legal community, defined by its profound dedication to ethical principles and professional excellence. The firm leverages a rich history of counsel to a broad spectrum of clients while pioneering innovative legal solutions. Central to its philosophy is a firm commitment to social responsibility, demonstrated through its efforts to demystify legal concepts and thereby empower the public, contributing to a more just and knowledgeable society.
