Overcoming barriers: Opportunities in LATAM’s tourism sector

The tourism sector in Latin America holds significant potential as a key driver of economic growth. However, several challenges in LATAM tourism need to be addressed to fully unlock this potential. At the same time, these challenges offer opportunities in the LATAM tourism sector for stakeholders to implement strategic interventions, fostering sustainable growth.

Infrastructure challenges and investment opportunities

Infrastructure is the backbone of tourism, but in LATAM, it poses a major challenge. The region’s ground and port infrastructure rank poorly on the global scale, with many countries in the region featuring among the lowest. Issues like outdated airports, inadequate transportation networks, and inefficient visa and border processes significantly hinder the ease of travel.

Despite these challenges, there is a substantial opportunity for investment in the LATAM tourism sector. The region requires an estimated $94 billion in investment, particularly in new greenfield developments and improvements to existing facilities. For example, Chile's Tourism Infrastructure Masterplan is a forward-thinking initiative focused on national parks, scenic routes, and coastline recovery, setting a precedent for other nations to follow. Such investments, if coordinated effectively between governments and the private sector, can enhance the region’s appeal and accommodate growing tourist numbers.

Employment and skill shortages

The tourism sector in LATAM is a significant source of employment, supporting nearly 24.7 million jobs. However, the sector is plagued by skill shortages and high unemployment rates, especially among the youth. The gap between the skills required and those available in the labour market, coupled with the lack of job opportunities matching available qualifications, has created a bottleneck.

Addressing these skill shortages offers an opportunity for upskilling and the formal recognition of informal skills. Programmes like ChileValora, which certifies skills obtained outside traditional education systems, and Colombia’s SENA, which provides comprehensive training aligned with market demands, are excellent examples of how the region can bridge this gap. By focusing on skill development, LATAM can not only reduce unemployment but also enhance the quality of service.

High taxation

High taxation is another significant challenge, as it increases the cost of travel, making LATAM less competitive compared to other regions. Many countries in the region impose heavy taxes on air travel, accommodation, and other tourism-related services. Argentina’s departure tax, for example, is among the highest in the region, severely affecting the competitiveness of its tourism sector.

However, smart taxation policies present an opportunity to stimulate tourism growth. Governments can consider tax incentives, reductions, or exemptions, particularly for domestic travel and environmentally sustainable practices. In Ecuador, the government has replaced flat taxes on flights with a percentage-based fee, making air travel more affordable.  

Environmental sustainability

Environmental sustainability is both a challenge and an opportunity. The region is home to rich biodiversity, yet it has experienced severe environmental degradation, including deforestation and the impacts of climate change. The tourism sector itself can exacerbate these issues if not managed sustainably.

On the other hand, nature-positive tourism presents a significant opportunity. By adopting sustainable practices, such as those seen in Costa Rica’s Certificate of Tourism Sustainability (CST) programme, LATAM can protect its natural resources while promoting eco-friendly tourism. Investments in renewable energy, water conservation, and sustainable land use can position LATAM as a leader in eco-tourism, attracting environmentally conscious travellers.

The tourism sector in the LATAM region is at a crossroads, with significant challenges that, if addressed strategically, can transform into opportunities for growth. The path forward requires a concerted effort from governments, the private sector, and local communities. By investing in infrastructure, addressing skill shortages, implementing smart taxation policies, and embracing sustainability, the region can unlock the full potential of its tourism sector, driving economic growth and ensuring long-term sustainability.

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