New Report Underlines Tourism’s Role in Economic Growth

Gustavo Vélez (Dennis Costa/CB)

SAN JUAN — The Puerto Rico Hotel & Tourism Association (PRHTA) unveiled Thursday a report that highlights the role that tourism has played in the island’s economy.

The report, prepared by economist Gustavo Vélez of local think-tank Inteligencia Económica, found that from 2006 to 2012 the tourism industry has carried out $3.3 billion in aggregate investment—mostly in new hotels and representing 44.1% of total private construction investment—and created 11,179 jobs.

In 2015 alone, the tourism segment generated $1 billion to the commonwealth’s general fund, or 11% of total tax revenue, as well as 8.1% of total employment—more than 80,000 jobs—and, in the form of visitor spending, 5% to 6% of total exports.

“Tourism is among the few industries that have outperformed the long-term recession that began in 2006,” Vélez said during a presentation before industry leaders and press at the Marriott Hotel in Condado. “The industry is a key driver for economic growth based on its core competitiveness and does not require any federal tax special treatment.”

Miguel Vega, chairman of the PRHTA, stressed the importance of establishing a destination marketing organization (DMO), essentially a private sector driven, fiscally independent entity in charge of branding and promoting the island as a tourism destination in offshore markets. The Puerto Rico Tourism Company (PRTC), a public corporation, currently carries out such a task.

For more than a decade, the PRHTA has lobbied for a DMO on the island, Vega noted. The PRHTA chairman added that the DMO mechanism, which has been implemented in several other jurisdictions worldwide, is the only way to ensure a long-term branding of the destination that is free from partisan politics.

The administration of Gov. Ricardo Rosselló, has taken early steps towards setting up a DMO, with a bill to that effect, specifically House Bill 4, being among the first ten that the governor has submitted to the Legislature earlier this month.

José “Joito” Pérez (Dennis Costa/CB)

However, H.B. 4 contains clauses that, in the PRHTA’s judgement, would not result in a full-fledged DMO. For instance, the DMO proposed by the bill would not be fiscally independent, and would instead make the organization dependent on a contract arrangement with the PRTC.

PRHTA’s Vega contended that the DMO’s funding must be provided through a formula, like for example a percentage of hotel-room taxes, instead of a contract that can be easily changed or canceled by the administration.

José Izquierdo and Gustavo Vélez (Dennis Costa/CB)

José Izquierdo, who has been nominated as PRTC executive director by Gov. Ricardo Rosselló, was on hand at the presentation, as was New Progressive Party Sen. José “Joito” Pérez, who was recently tapped to chair the tourism committee in the Senate.

Both Vega and Izquierdo said that conversations are taking place between the private and public sectors on changes that can be carried out on the bill. “What’s important is that the Rosselló administration has made good on its commitment to a DMO by coming out with a bill within days of taking office,” Izquierdo told Caribbean Business.

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