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Colombia weathers decertification
Hotel & Motel Management / April 21, 1997

By Larry Luxner

CARTAGENA, Colombia -- During most of its 465-year history, the ancient walled city of Cartagena has had to put up with Spanish conquistadores, hurricanes, pirates, civil war and disease. These days, Cartagena's biggest headaches -- especially for the city's once-booming hotel industry -- have more to do with U.S. foreign policy and Colombia's unfortunate reputation as the most violent nation in the world.

On Feb. 28, the Clinton administration "decertified" Colombia, saying its efforts to fight drug-smuggling were inadequate and lumping it with other decertified pariah nations such as Afghanistan, Burma, Syria and Iran. That infuriated President Ernesto Samper, who has been accused by the U.S. State Department and many Colombians of accepting up to $6 million in campaign money from the Cali cocaine cartel.

The fact that Colombia's homicide rate exceeds 88 per 100,000 (compared to 15 per 100,000 for Brazil and only 6 per 100,000 for the United States), doesn't help -- even though Cartagena, the jewel of Colombia's tourist industry, is relatively safe.

"We're aware that Colombia's image problem is tarnishing our ability to attract tourists from the United States," said Luis Fernando Cañizares, president of the local chapter of Cotelco, the Colombian Hotel Association. "It is very important to tell Americans that Colombia is not a city. It's a huge country. These incidents are happening very far from Cartagena."

Nevertheless, says Cañizares, hotel occupancy -- which had been running at 70-80% occupancy -- has dropped to 50-55% "because of all the political troubles we've been having." And while the U.S. decertification itself doesn't prohibit Americans from traveling to Colombia or investing there (as is the case with Cuba), that and Colombia's association with car-bombings and narco-terrorism has had a negative effect on leisure travel, which is Cartagena's mainstay.

"We do have an image problem," acknowledges Roberto Lemattre, director of Cartagena's Pro-Turismo organization. "We're conscious of certain factors that can help us bring visitors to Cartagena. Mainly we're thinking of Latin Americans or people with Latin roots in South Florida. We don't have the resources to target all of the United States. That would take millions and millions of dollars, and we don't have the resources right now."

To get around that, Cartagena has adopted a strategy of distancing itself from Colombia and marketing the ancient city as a Caribbean cruise-ship destination. Beginning Apr. 1, area hotels will also begin charging a "voluntary" 80-cent-a-night room tax. That, along with contributions from major airlines, will help fund a $1 million media promotional campaign aimed at luring U.S. visitors to this port city, famous for its Spanish colonial architecture and palm-fringed beaches.

Some of Cartagena's efforts clearly need polishing up. One municipal official told a group of U.S. travel writers last month that "we would love you to help us inform the American public of the differences between Cartagena and the jungles, where there are problems with drugs and violence." He added proudly -- without a touch of sarcasm -- that "Cartagena is the only place in Colombia where the U.S. ambassador is allowed to travel with only two bodyguards."

In 1995, around 500,000 foreign visitors came to Cartagena, 40% of them from Western Europe. Beyond that, accurate statistics are hard to come by. Cañizares says Cartagena has 8,000 hotel rooms, of which 4,300 are in four- and five-star properties. Jorge Valencia Caro, adviser to the Bogotá Hotel Association, disputes that, saying Cartagena has only 1,112 rooms in four- and five-star hotels, or 13.4% of all such rooms in Colombia (right behind Bogotá's 3,762 luxury rooms, or 45.4% of the national total).

Either way, says Jean-Pierre Etcheberrigaray, general manager of the 250-room Hotel Inter-Continental Cartagena, "the hotel industry is passing through its worst time because of many factors: decertification, narco-trafficking and the fall of (Venezuelan airlines) Viasa."

The $45 million property, inaugurated earlier this year, is owned by Inversiones Sedecio S.A., whose principals Etcheberrigaray declined to identify "for security reasons." It's currently running 40% occupancy. About 75% of its guests are Colombians; the remainder are other Latins, Europeans, Canadians and Americans -- in that order.

"We don't see too many Americans here. This is going to change when we become a cruise-ship hub," says Etcheberrigaray. "Cartagena is only two hours and 15 minutes from Miami. We have no hurricanes, no tornadoes and no crime. Why isn't tourism booming? I think it has to do with the culture. The Colombians have been keeping Cartagena as its best-kept secret."

Etcheberrigaray, who's worked for the Inter-Continental chain for 15 years -- including stints in Abu Dhabi, Kuwait and Baghdad -- says city officials are also trying to lure American Airlines to fly in and out of Cartagena instead of nearby Barranquilla, a business destination.

Interestingly, while Colombia's political problems have clearly put a dent in hotel occupancy, they haven't dampened plans by international hotel chains to add luxury properties here. Inter-Continental Hotels, for instance, has already signed a letter of intent to build a 400-room, $75 million property in northern Bogotá, to supplement the city's aging 600-room Hotel Tequendama Inter-Continental, which is owned by the Ministry of Defense and is still considered Colombia's flagship hotel.

In addition, Inter-Continental will build a new 300-room property in Barranquilla, and a 150-to-200-room hotel in Pereira, adding to existing properties in Medellín, Cali and Rionegro. "We will then have seven hotels in one country," says Etcheberrigaray, explaining that "besides new sites, we're looking at takeovers. This is a perfect moment to develop the Forum brand. I think Colombia has a lot of small hotels which sooner or later will have to compete with big hotels."

In the meantime, says Caro, "nothing grave" has happened to Colombia's hotel sector. "Things are still normal. Demand dropped in the tourist zones of Cartagena and San Andres, but we can't say for sure whether it was because of decertification."

In fact, says Caro, demand for hotel rooms in Bogotá, the capital city of 6.5 million inhabitants, jumped 11.5% last year while the supply of five-star hotel rooms surged by 34.5% with respect to 1995 figures. As a result, the average occupancy rate dropped from 63.% to 52.4%. At the moment, the average corporate tariff for a five-star hotel is $112, while the rack rate is $230. Says Caro: "I don't think there should be new big hotels built in Bogotá until there's stabilization between supply and demand."

Only a few months ago, the 251-room, 14-story Radisson Royal Bogota opened for business in the Teleport Business Park of Bogota's upscale Hacienda Santa Barbara district. The five-star property -- a joint venture between Radisson Hotels International and Colombia's Royal chain -- represents a $29 million investment, according to Emile Chehab, Radisson Latin America's vice-president for development. Later on, a 375-room Four Points Sheraton is to be built near Bogotá's Eldorado International Airport; Caro said Marriott will also build a 300-room airport hotel, though this couldn't be independently confirmed. In Cartagena, both the Dann Carlton and Hyatt chains plan huge hotel projects in the $100 million range.

Finally, as part of efforts to grab a bigger slice of the Caribbean cruise-ship market, the port of Cartagena wants to build a duty-free shopping center as well as a new passenger terminal. Construction on the shopping center -- designed by Miami-based architects Bermello Ajamil & Partners -- should begin early this year and finish by late 1998. Project manager Alfredo Sánchez says the center will accommodate 40 stores selling everything from leather, jewelry and tobacco to liquor, perfumes and handicrafts.

The retail center is part of a four-part master plan that also includes dredging the port to receive large cruise ships, as well as the development of a home-port cruise-ship terminal. Cartagena now gets 100,000 passengers a year, though this is projected to jump to 234,000 by 2000 and 548,000 by 2015.

"We're hoping that Cartagena can become a home port," says Cañizares. "Even though cruise-ship passengers spend only six hours here, it's good business for Cartagena just being touched by cruise-ship lines. Concerning Washington's decertification, the hotel executive says "the U.S. has acknowledged that Colombia has made a tremendous effort to try to contain the drug problem, but cannot accept that our president was elected with drug money. Once this guy is gone, Cartagena will take off again."

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