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Upheaval downs tourism in Ecuador
Hotel & Motel Management / March 18, 1996

By Larry Luxner

QUITO, Ecuador -- Hoteliers say an unlucky combination of war, political scandal, power blackouts and a mini-uprising in the Galápagos Islands hurt business by as much as 35% last year.

That -- combined with an almost non-existent budget for tourist promotion -- is having an unfortunate effect on this small Andean country, where tourism is the fifth-largest foreign-exchange earner after oil, banana, shrimp and coffee exports. Officials hope a glitzy ad campaign and tourist investment law will reverse the negative trend and encourage hotel construction throughout Ecuador.

"We have to create a positive image," says José Luis Alvarez, general manager of the five-star Hotel Alameda Real in downtown Quito, and president of both the Pichincha Hotel Association and the Fundación Ecuatoriana de Promoción Turistica (Feprotur). "Nobody wants to visit a country at war, or a politically unstable country."

Early last year, Ecuador fought a month-long Amazon border conflict with Peru, a skirmish that cost an estimated $1.5 billion and scared tourists away from both countries. Then came electricity cuts of up to eight hours a day, triggered by the lack of rains that normally keep the nation's hydroelectric plants functioning. To top it off, a power struggle erupted in the Galapagos Islands -- 625 miles west of mainland Ecuador -- during which locals threatened to kidnap foreign tourists unless their demands for greater autonomy were met. No one was ever kidnapped, but the incident did receive widespread publicity and helped further to erode Ecuador's image in the international arena.

In 1994, according to the government's Ministry of Tourism, Ecuador received 482,000 foreign visitors, up 2.3% from the previous year. Of that total, 33.1% came from neighboring Colombia, 19.3% from the United States and 16.7% from Western Europe.

While 1995 statistics are unavailable at this time, government officials say they expect the numbers to be 30% to 35% lower.

Not surprisingly, two prestigious bodies -- the Organization of American States and the World Bank's Multilateral Investment Guarantee Agency -- were forced to postpone a meeting late last year on "Partnerships for the Sustainable Development of Tourism" that was to have taken place at the Hotel Oro Verde, Ecuador's most expensive hotel.

Conference organizers, who were expecting 250 tourism ministers, hotel officials and travel writers from at least 20 countries, said the XVII Inter-American Tourism Congress was canned because of Ecuador's worsening power shortages and embarrass-ment surrounding the pending impeachment of the country's vice-president, Alberto Dahik.

When the meeting does take place in April 1996, say OAS sources, it probably won't be in Ecuador but in Costa Rica.

Compounding the problem is a perceived lack of interest on the part of those very officials whose job it is to promote Ecuador's image abroad. According to an English-language newspaper published in Quito, the World Travel Market held in London last November attracted dozens of tour operators to the Costa Rica and Peru stands, while the Ecuador stand was hardly visited. "Meanwhile," claimed the newspaper, "Ecuador's tourist minister, Armando Espinel, was notable by his absence, as he preferred to spend his time on a shopping trip with his wife."

At press time, Espinel was traveling and unavailable for comment, though the No. 2 official at Ecuador's Tourism Ministry, Pedro Chiriboga, offered some ideas of his own.

"The problem isn't that the ministry doesn't have the capacity or desire to promote tourism, but that it doesn't have the money," he said, adding that his agency's entire promotional budget for 1996 is only $650,000. By comparison, neighboring Peru spends $8 million promoting Machu Picchu alone.

That's why Feprotur was formed in 1991 by private business executives.

"Feprotur was established to help the government promote tourism, because the government doesn't have the resources," said Alvarez, whose company, Apartec S.A., owns not only the 150-room Alameda in Quito but also the smaller Rumipamba de las Rosas, the Puerto Lago and the Hostal Andaluza, all in the Andes.

In 1994, according to government statistics, Ecuador had 1,652 lodging establish-ments containing a total of 34,900 rooms, up 9% from the 1993 figure of 1,516 establish-ments. Of the total, 17.5% of all hotel rooms are in Quito, 15.5% in Guayaquíl and 4.9% in Cuenca. Quito, the capital, has 1,026 rooms in five-star hotels, while Guayaquíl, the largest city, has 840, and Cuenca has 171.

That number will undoubtedly increase once Ecuador passes a long-awaited tourist investment law, though Chiriboga says all hotel projects have been frozen pending passage of the new decree, which among other things offers generous tax incentives for hotel con-struction and establishes criteria for ranking properties according to international standards.

At the moment, two five-star projects are in the works. The first involves Minneapolis-based Radisson Hotels, which is building its first hotel in Ecuador. The $11 million Radisson Royal Park Quito, located at Calle Cordero and Avenida 12 de octubre, is part of the World Trade Center-Quito complex scheduled for completion in late 1996. Each of the hotel's 112 guest rooms and suites will feature three telephones, a personal fax line, computer access, hair dryers and deluxe furnishings.

The second is the 252-room Quito Marriott, set to open in 1997. Located on a five-acre site at the intersection of Francisco de Orellana and Río Amazonas, the hotel has been under construction since August 1994 and is owned by Amazonas H.O.T., a joint venture between El Juri Group and Dirección de Industrias del Ejercito, the commercial arm of Ecuador's armed forces. Upon completion, the Marriott will have three restaurants, a health club and spa, an indoor/outdoor pool, two tennis courts and a business center.

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