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Progreso Economico Highlights Tourism Sector Growth

By on January 28, 2016

SAN JUAN – The January issue of Banco Popular’s monthly publication, “Progreso Economico,” identifies the tourism sector as one of the few areas in the local economy that is actually growing through the export of services.

According to government figures, regular and cruise ship visitors to Puerto Rico exceed 4 million a year, spending some $3.3 billion in 2014.

“While the Puerto Rico economy was contracting, the number of visitors and their expenditures were growing,” economist Vicente Feliciano, president of Advantage Business Consulting, who conducted the research, commented during a media roundtable. “At the same time, while property and lease prices have been decreasing in Puerto Rico, the average daily rate for hotel rooms on the island is growing.”

Puerto Rico Tourism Co. data show the average daily rate at local hotels grew steadily, from $117.62 in 2011, to $123.60 in 2012 and to $148.83 in 2014.

Feliciano said tourism is an important source of income for local residents as well as the island’s government, and contributes to the economic support of thousands of families in Puerto Rico.

The total annual production (direct and indirect) of this industry is around $1.7 billion, generating around 80,000 direct jobs and a little more than 73,000 indirect and induced jobs.

Total annual sales generated by these tourism-related jobs are around $4.8 billion.

“Also the tourism industry generates approximately $551 million in tax revenues to the local government, including excise taxes, income taxes and consumption taxes paid by employees,” Feliciano said.

The tourism industry is undergoing a worldwide expansion, with figures for the Caribbean reporting particularly strong numbers in recent years. According to the United Nation’s World Tourism Organization, tourism arrivals worldwide grew by 4.4% between 2013 and 2014.

“In Puerto Rico, the growth in the number of visitors during that same period was 5.1%, which confirms the validity of the local industry and reaffirms the importance of keeping the pace in a market that is growing,” Feliciano said. “Maintaining the competitiveness of this industry and the positioning of Puerto Rico as a tourism destination is crucial for the economic development of the island.”

Popular Supporting Tourism Sector

While not being an aggressive participant in the hotel tourism sector in the past, Eli Sepúlveda, Popular Inc. executive vice president of commercial credit, said that in the past two to three years, the bank has entered the sector.

“That’s because there have been several interesting transactions of new players entering the island, acquiring the San Juan Hotel in Isla Verde, La Concha and Vanderbilt hotels in Condado, Hyatt Place and Hyatt House in the convention district, to name a few,” Sepúlveda said.

Just three weeks ago, Popular provided financing for the new local owners of the Ambassador Hotel in Condado, which recently closed and will be remodeled and relaunched soon, the Popular executive indicated.

Currently, Popular has a loan portfolio of about $150 million involving hotel projects, which is part of a much larger, diversified portfolio, he said.

“Popular wants to be part of this new transformational era for local hotels involving new investors and product launches, thus bringing new offerings to the local market,” Sepúlveda added.

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