November 22, 2004
Investments that are as bright as the Sun

A wealth and wide variety of natural attractions and an extremely favorable geographical location make Venezuela a "multidestination" tourism package where the ecotourism, business, and sun and beach niches are open to foreign capital interested in working in this sector

(Conapri Newsletter, Year 9, Nº 45) - "A country cannot develop unless it is able to attract foreign capital. In order to effectively achieve this goal, given other attractive destinations in Latin America, Venezuela must focus on a three-pronged strategy (short, medium and long term) that takes advantage of its competitive and comparative advantages.

The sectors offering the most opportunities for local businesses are: telecommunication, gas, chemistry and petrochemicals, mining and electric power. Nevertheless, in the short term, our spearhead activity is tourism, an activity that currently accounts for 5% of the country's Gross Domestic Product (GDP) (...)

Venezuela has great potential for attracting foreign visitors, thanks to the wide variety of natural resources to be found in a single country, due basically to its three geographical regions (Andean, Amazon and Caribbean). Major investors from other countries, such as the Spanish hotel chains Barceló, Hesperia and Sol Meliá, can vouch for the fact.

Spain accounts for close to 35% of all investments from Europe, and the hotel business is one of the main sectors in which that capital is invested, according to the Spanish Foreign Trade Institute. It is not in vain that the Executive Branch took advantage of a meeting of Spanish and Venezuelan businessmen held in Madrid this week to speak of the country's interest in fostering tourism taking advantage of Spain's experience in this field.

"As a product, tourism is relatively new and quite undeveloped in Venezuela. The Spanish experience can be of great assistance in this area of activity, where we have many natural resources in addition to oil," in the words of the Minister of Production and Trade, Wilmar Castro.

Business center
Venezuela can be described in mathematical terms: 3,500 km of coastline, three mountain ranges (the Andes, the Eastern Caribbean and the Central Caribbean ranges), 430,000 km2 of rain forest, 300,000 km2 of plains and a rich array of animal and plant life.

According to a study carried out in 2003 by the Deputy Minister of Tourism, visitors' reasons for coming to the country can be broken down into the following categories:

Reason
for the trip
Number
of tourist
Percentage
%
Business and professional reasons
165,239
49.04%
Vacation
80,466
23.88%
Visit relatives and friends
74,038
21.97%
Studies
3,606
1.07%
Health
3,591
1.07%
Sports
1,752
0.52%
Other
8,283
2.46%
Total
336,975
100%

Most of the existing tourism services cater to businesspeople (49.04%), the reason being the country's favorable geographic location and the many foreign companies that it houses. From this standpoint, the most important cities are Caracas, Maracaibo, Valencia, Puerto Ordaz, Barquisimeto and Maturín.

Vacation (23.88%) comes in second place as a reason for visiting the country, and in this case the main destinations are coastal. Seventy percent of the national lodging facilities are for the Sun and Beach crowd; in this case the principal destinations are the coastal areas of Nueva Esparta, Vargas, Miranda, Sucre and Falcón, as well as the Henry Pittier, Morrocoy, Mochima and Los Roques national parks.

One niche that has been gaining ground is Ecotourism, given the wide variety of destinations to be found in Venezuela. This type of tourism is on the rise worldwide and our country, with its 39 national parks, 41 natural monuments as well as unique species of wild and plant life, is an attractive destination.

Investment opportunities
According to Wilmar Castro, investment in the tourism sector is needed for the construction of lodging in unexploited areas. Thus, greater investment in tourism would mean greater diversification of capital towards other sectors of the economy, "following the example given by Spain in recent years."

In addition there are also investment opportunities for purchasing major real estate assets, both for lodging and commercial use:

  • Anzoátegui: Grand Hotel Hesperia Puerto La Cruz (five-star hotel), and apartments at Doral Beach Golf and Tennis Club Tourism Complex.
  • Aragua: Maracay Hotel (four-star).
  • Bolívar: Intercontinental Guayana Hotel (five-star).
  • Carabobo: Intercontinental Hotel in Valencia (five-star).
  • Falcón: Morrocoy Coral Reef Hotel (three-star).
  • Nueva Esparta: Centrum Mall and Tamarindo Guacuco Hotel (four-star).
  • Táchira: Aguas Calientes Hotel (three-star).
  • Vargas: Gran Caribe and Guicamacuto Hotels (five-star).
  • Zulia: Intercontinental del Lago Hotel (five-star).
In the case of business tourism, these guests need specific services that will help them carry on the business that brought them to the country. In this niche, there is a need for interpreters, guides, telecommunication and Internet centers, drivers, executive assistants, photocopying facilities, and personal security, among others.
The evolution of ecotourism in Venezuela will depend on managing to increase specialized services in such specific areas as bird watching and plant life, spelunking and botany, among others.

Tax incentives
According to Article 310 of the Constitution, tourism is a priority item and a matter of national interest and, therefore, the Ministry of Production and Trade expects to work together with other government and private entities to set up tax incentives that will help foster these activities.

Current tax laws and regulations, designed to help increase the share of private capital in the tourism business, provide for income tax reductions of up to 75% on the amounts spent on new investments. These incentives apply to projects involving construction of hotels, inns and guesthouses, other types of tourist services and manpower training.

A similar tax reduction also applies to new investment earmarked specifically for tourism or recreation purposes, in rural or suburban areas, even investments in expansion, improvements, equipping or re-equipping existing services in this sector.

Tax exemptions are also being considered for imports of boats, aircraft and land vehicles to be used in tourism. The government will offer preferential rates for the fuel used by these vehicles and for utilities in the case of establishments that offer lodging for tourists during specific seasons of the year".