Multimillion dollar commitments of large investors in mining and energy projects naturally attract plenty of attention. But Peru is just as interested in the millions of people who have perhaps just a few thousand dollars to spend: tourists.
Last year, they topped one million for the first time, many of them vacationers heading for sites such as the Inca ruins of Machu Picchu. Their interest in the Peru of yesterday will be increasingly important for the Peru of tomorrow, according to José Miguel Gamarra, tourism vice minister. He says tourism receipts reached $1 billion last year, and the sector already sustains 450,000 jobs, many in rural areas where other opportunities are scarce.
Yet Gamarra believes Peru has enormous potential. “We’ve simply reached the point where we should have been about 12 years ago,” he laments. He says Peru suffered a lost decade of tourism through the early 1990s when visitors shunned the country, frightened by guerrilla violence. Visitor numbers have quadrupled since 1992, but Gamarra says Peru still lags its neighbors. “With all due respect to fantastic countries like Chile, when you start comparing the attractions that each country has, Peru should be doing much better. Mexico already has more than 20 million visitors.”
Peru’s tourism master plan maps out development through 2015. It emphasizes diversification away from traditional sites such as Cuzco and Machu Picchu, and the need to channel investment into new areas such as adventure tourism.
“We have been working very seriously trying to give the sector a clear legal framework and attractive scenarios for investment,” says Gamarra. “If we have those in order, we can definitely bring investors to Peru. The most difficult thing is to have the right attractions – and Peru definitely has them.”
Investors have responded to the recovery in tourism. Gamarra estimates that investments worth at least $500 million have gone into four- and five-star hotels in the past eight years. Most of the new construction has been in Lima, but the jungle city of Iquitos has benefited from a $15 million, five-star hotel development, while Accor, the French hotel chain, has spent $8 million building a Novotel hotel in Cuzco.
Concessions to operate tourist sites are also in the pipeline. They include the search for an operator for a convention center in downtown Lima, badly damaged by fire in the 1970s; a contract to build a beachside holiday center in southern Peru; and a project to develop a theme park adjacent to Lima’s zoo. The aim is to complete all bidding processes within the next 12 months and combined investment for the three sites is expected to top $9 million.
An earlier project to build a chairlift near Machu Picchu – awarded through concession to a Peruvian investor – has run into strong environmental opposition. “It has not been shelved. We are trying to seek a solution,” says Gamarra.
Improving tourism-related infrastructure is also seen as a key. The recent award of a concession to operate Lima’s Jorge Chávez airport, granted to a consortium led by Frankfurt Flughafen, is expected to improve the airport’s image. This could end the problems of long lines and bureaucracy that can often deter repeat visits. Anticipated cuts in airport landing fees and the completion of a second runway should prompt growth of routes and reduce traffic. Among regional airlines, Taca is already using Lima as a hub and LanChile has considered doing likewise. Gamarra says, “It is a good sign for us. It is another form of investment. It generates more flights to and from Peru.” The government is considering the best way to offer concessions to run several regional airports, which could also help attract tourist development to new regions.