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Uruguay: Luring the international tourist
Travel Markets Insider / March 2001

By Larry Luxner

MONTEVIDEO -- Uruguay, long a favorite of wealthy Argentines on holiday, is now trying to put itself on the world tourist map as a destination for Americans and visitors of other nationalities as well.

Casinos, cruise ships and 19th-century ranches are all being used to lure tourists to what many consider the smallest yet most politically stable country in South America.

The Uruguayan Tourism Ministry estimates that 65% of the 2.2 million tourists who visited the country last year were from neighboring Argentina. Another 10% were from Brazil, and the remaining 25% were other Latin Americans as well as Europeans and a handful of visitors from the U.S. and Canada.

"We are quite dependent on those two countries, Argentina and Brazil," Tourism Minister Alfonso Varela told us in an exclusive interview. "The Brazilian economy is doing better, and so we expect more tourism from Brazil. That's good, because Brazilian tourists are A and B-level tourists."

Interestingly, about 30,000 Paraguayans visited Uruguay last year. While that's a relative drop in the bucket, the Paraguayans spend more than anyone else per-capita, and far more than Uruguay's average $43 per-day expenditure excluding hotels.

Uruguay, a country of 3.2 million people, has around 3,600 hotel rooms in 408 establishments; 10% of those rooms are in four-star and five-star hotels. The most important are the 256-room Radisson Montevideo (formerly the Victoria Plaza Hotel); the 302-room Conrad Resort & Casino in Punta del Este, and the 210-room Termas del Arapey in Salto.

Casinos, which are legal in Uruguay but not in most of Brazil, have proven to be a "big attraction for Brazilians, especially at the Conrad because it's a well-managed business," said Varela, a 48-year-old lawyer by profession who became tourism minister in March 2000. He said that last year, tourism generated $750 million last year, or about 3.5% of Uruguay's total GDP.

"The regional economy is not great," he conceded, "though tourism from Europe and the States is increasing." Last year, about 100,000 Americans visited -- many of them attracted by airfares as low as $399 round-trip on Argentine carrier LAPA.

"The price is not the problem," said Varela, who oversees a promotional budget of $3.5 million a year. "The problem is that Uruguay is not very well-known in the States. We are trying to attract people who want special activities, like ecotourism, fishing, hunting and estancias."

The cruise-ship business is booming, and in January 2001 alone, nearly 30,000 cruise-ship passengers stopped in Montevideo and Punta del Este, the country's most important resort.

"People are finding that Uruguay is very charming, and that it's a nice contrast from Buenos Aires," says David Michaels, president of the New York-based Uruguayan-American Chamber of Commerce.

"When I was in Montevideo in February, I saw one or cruise ships in the port every day. And practically every day, there was a cruise ship or two calling on Punta del Este," he said. "I think cruise ships are a very important public-relations tool from the point of view of developing future tourism for people who actually come to Uruguay and stay there."

The government is also working with wine exporters such as Establecimiento Juanicó to offer wine-tasting tours of Uruguay, which is famous for its Tannat varietal. Estancias, or ranches, also offer tourists a unique way of exploring rural areas, and many of them have already been turned into bed-and-breakfasts -- providing a novel alternative to the glitzy hotels of Punta del Este.

Tourism promotion hasn't been without its ups and downs, however. A planned privatization of Montevideo's congested Carrasco International Airport, approved by the previous Sanguinetti government, was cancelled by incoming President Jorge Batlle -- as was the privatization of Montevideo's container terminal.

The new government also issued a decree limiting incoming visitors to two liters of Scotch and two cartons of cigarettes. The decree was approved despite opposition from Montevideo-based duty-free association ASUTIL, as well as local operators who argued that it would hurt their sales and prejudice the Carrasco airport privatization.

"It used to be that you could buy duty-free with practically no limits on your way into Uruguay, and people were obviously abusing it," said Michaels. "Now they've put it on an international standard."

Another contentious issue is the planned construction of a 50-kilometer bridge linking Buenos Aires and Colonia, a charming town on the Uruguayan side of the Rio de la Plata. The bridge, known in Spanish as the "puente," is projected to cost more than $1.2 billion, and would be paid for by truckers' tolls ranging from $60 to $110 each.

Under a plan proposed by Louis Berger International Inc., Bear Stearns & Co. and Latham & Watkins, the bridge will be bid as a concession with private risk capital, with the winning bidder responsible for the design, construction, operation and eventual transfer of the bridge to the two nations. These same consultants also recommend that "the bilateral commission consider the inclusion of complementary projects related to travelers' services, such as service stations, duty-free shops, hotels and restaurants."

The bridge has long been delayed by critics who say it's an expensive boondoggle that'll bring delinquents and drugs from Argentina, and destroy Colonia's charm in the process.

In the absence of a bridge, most people make the trip by ferry. Several companies including Ferrylineas and Buquebus ply the 45-minute route between Buenos Aires and Colonia, and all of them have duty-free luxury shops on board.

Nevertheless, says Varela, "I think someday it's going to happen. The bridge is important for tourism. The cost is going to be paid by those who use the bridge. The project is waiting for the approval of the Argentine parliament, though Uruguay will benefit more."

He adds: "Most people in Colonia want it. Colonia is going to be preserved as it is. You have many small towns in Europe the same size as Colonia, and they haven't been destroyed. The bridge is a very good option for us. If we had the bridge, there would be more tourism, because it's easier to come by road than by ship."

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