The tourism entrepreneurs of Maldonado are preparing for a summer season that will have its challenges and opportunities: on the one hand, the expectation of a large flow of Brazilian tourists who choose the main beach resorts in Uruguay for vacation; but, on the other, the exchange difference with Argentina which will also affect tourism in the east of the country, both internal and inbound. In this context, the proposal to implement a differential exchange rate to encourage tourist consumption this summer reached the president’s desk Luis Lacalle Pou in the preview of what, from the sector, they already warn as a problem.
In Maldonado and, specifically, in Punta del Este, expect two parallel and opposite scenarios for this summer season. From a positive perspective, they are already preparing to receive a “captive audience”, those who have houses in the Uruguayan resort and who will spend at least part of the season in the country or, in any case, will rent their properties to other potential tourists.
Along the same lines, the expectation for Brazilian tourism – characterized by its short stays of no more than a week but with high consumption and a large proportion of participation in parties – is exciting with an influx “unprecedented in Punta del Este,” according to what he said. to Ámbito.com the president of the Maldonado Business Chamber, Rolando Rozemblum. “It is a very intense consumption in a short period of time” concentrated at the end of the year and the first days of January which, in addition, will also be accompanied by upper-class Argentine visitors.
On the other hand, the department’s tourism sector knows that Argentine influx will decreaseespecially those from the middle class, due to the situation of great exchange rate difference that exists with the neighboring country, which makes Uruguay be very expensive for its currency—strongly devalued and with a very high parallel exchange rate. This phenomenon will also impact the internal tourism, according to Rozemblum, since many Uruguayans will choose Argentine prices, favored by the important dollar gap.
The eyes of the tourist businessmen of Maldonado: “an intense season is what gives the economic condition that we can stay active all year round, if we have a shorter season it is a yellow light that must be observed and taken care of,” explained the president of the departmental Business Chamber.
In that sense, the union chaired by Rozemblum together with the Punta del Este Promotion and Tourism Leaguehe Punta del Este Hotel Center and the Gastronomic Corporation of Punta del Este —representing all the business associations and institutions of the tourism sector of Maldonado and Rocha—presented a series of proposals to address and prevent what they already understand as the doors to a tourist crisis.
Differential exchange rate, the common formula for all items
Faced with this situation that the sector warns about, one of the proposals with the greatest impact—along with the request to declare the state of Tourism Emergency and extend the zero rate VAT for foreign tourists and Uruguayan residents—is the implementation of a differential exchange rate during the season, between December and Tourism Week.
The initiative consists of raising the price of the dollar to around 50 pesos —yesterday it closed at almost 39.4 pesos—, a value calculated based on the nominal exchange rate that would result in tourism spending in current dollars remaining at summer 2019 levels.
According to Rozemblum, the highlight of the proposal is its representativeness, due to the number of organizations that gather behind the request: “all the union institutions that sign the document They represent 80% of Maldonado’s GDP“said the president of the Business Chamber, who also emphasized the fact that the “greatest challenge was to find a proposal formula to the government that did not privilege any specific sector, but rather prioritized the consumption before the interests of the industries, businesses or entrepreneurs linked to the unions.”
The answer was the differential exchange rate, a measure that, for the unions, will significantly affect cross the entire economy. The key point of the proposal is that it will be applicable only in the tourist regions of the country, and for a clearly delimited time. Likewise, it would be implemented in the payments with credit and debit cards made by foreign tourists, but also by national tourists and residents in the departments covered by the measure.
The government’s response was positive in terms of analysis: President Lacalle Pou promised to work with his economic team on this request, and the unions expect the response to arrive next week. In the decision, surely, despite the consideration of the fiscal waiver that the government must make, calculated in a 22.8% of collection —in case of consumption in 2019, a full year for the tourism sector—; that is, some $37.2 millionaccording to the report that accompanied the proposal in question.
In this regard, Rozemblum sees a precedent in previous occasions in which the government faced emergency crises quickly and with good results. He hopes the same thing happens now, and the reaction for the tourism sector is up to par. This will depend, he pointed out, on “whether the government understands that there is a tourism crisis or not”. “80% of the regional GDP of Maldonado understands that yes” there is a tourism crisis, he added. A good performance of the summer season will depend, in turn, on whether there is a social problem in the department.
A parallel with Argentina?
Asked about the very fact of implementing a differential exchange rate in the country – with the reminiscences that this may bring with the economic situation in Argentina, overcoming the obvious differences—Rozemblum assured that the proposal is a “perfect formula” because “it puts consumer interests before private interests.”
The discussion about the social perception The measure was also contemplated in the construction of the proposal. “I’ve seen comments on networks saying ‘now we are Argentina’, ‘now we are on that path’. Many are going to use that against us, but we understand that there is no other possible mechanism and that, furthermore, it will be something absolutely temporary, with start and end date“said the president of the Business Chamber. The perspective, likewise, is that by 2025, the regional situation will stabilize and Uruguayan tourism will have better projections than this upcoming season.
“It is not a definitive situation nor does it generate a point of no returnlike in Argentina,” he insisted.
Furthermore, on the other side of the balance is the possibility of maintaining a certain tourist balance and, with it, income and collection. “If you bring a tourist, you are exporting services; and if you send a tourist, you are importing. So, in the trade balance, the dollar that goes is your dollar that does not come, there is a difference of two and the double impact”Rozemblum emphasized.
Source: Ambito
