Entrepreneurs in the tourism sector expect a difficult season due to exchange rate appreciation and the tax burden. Refferents of the sector anticipated to this medium that reserves for the first quarter of 2025 fell by 20% compared to those they had last year. In some segments of the City of Buenos Aires it reaches 34% due to the lower influx of foreigners. Brazil concentrates 50% of searches to travel outside Argentina. Businessmen ask to equalize tax conditions with their competitors and eliminate distortive taxes.
The main leaders of the tourism sector predict a difficult summer for the sector. With data collected directly from the hotels, they observe a 20% drop in reservations for the months of January, February and March, compared to what there was last year at this same height.
In this average there are some destinations that maintain the usual level of occupancy and others that are in critical condition. The City of Buenos Aires, for example, shows a 34% drop in 3 and 4 star hotels, driven mainly by the drop in foreign tourism.
In the case of Patagonia there are also pronounced declines. Ushuaia and Tierra del Fuego, fall around 24%. Bariloche between 20% and 25% depending on the accommodation category. Returning, these are destinations especially impacted by the decrease in the arrival of foreigners.
The data is not encouraging. According to INDEC, hotel occupancy fell for nine consecutive months. The accumulated decline between January and September reaches 13.7% compared to the previous year. Sector leaders expect a rebound with tourists who decide at the last minute and reverse the negative trend.
Between the recession and the cheap dollar
Thin pockets and a cheap dollar appear as the two central challenges. A recent survey carried out by the Department of Public Opinion of the Inter-American Open University (UAI) indicates that 50% of Argentines do not plan to vacation. The main reason for this phenomenon according to the respondents themselves is lack of money.
Among those who do plan to do so, within the country the Atlantic Coast rules and Among those who have the possibility of traveling abroad, the preference for Brazil is growing. It went from 27% to 48.9% according to the same study. The data returned by the UAI coincides with that managed by Despegar.
Alejandro Festa, manager of the company’s tourism services, confirmed that “Brazil is consolidating itself as one of the destinations most chosen by Argentines and concentrates 50% of searches abroad.” On this point, he explained that “traveller interest continues to grow driven by the favorable exchange rate, direct flights and the possibility of paying in three interest-free installments that the platform presents.”
In the Belo application, which allows payments to be made through Pix, the most popular system in Brazil, they see a growth in the number of users that is around 50% monthly. The cause? Again, the weakening of the Real, which is around 13% so far this year and the appreciation of the peso: “This time to vacation in the Brazilian market is the cheapest since the exit of convertibility,” its CEO Manuel Beaudroit explained to Ámbito. The Brazilian Ministry of Tourism announced a record season, with the largest number of scheduled flights in its history and the highest foreign exchange earnings in the last ten years.
Business orders
The representatives of the Hotel and Gastronomic Business Federation of the Argentine Republic (FEHGRA) asked the Government to review the current tax scheme. The main demand was aimed at “eliminating distortive taxes that undermine the productivity of companies.” This group includes the Gross Income Tax, Bank Debits and Credits, the PAIS Tax, Export Duties and the different municipal taxes without compensation.
President Javier Milei announced on December 10 on national television that he plans to lower taxes by 90%. Deregulation Minister Federico Sturzenegger clarified that the reference aims more to reduce the amount of taxes than to tax pressure. The list includes several of those referred to by the tourism sector.
Businessmen also ask to review the current VAT scheme: “In Europe, the general rate is 21%, but hotels and gastronomy are taxed with a reduced rate of 10%, while in Argentina the general rate is applied, that is, 21%,” said the vice president of FEHGRA, Rafael Miranda.
Tax losses also occur with closer competitors such as Uruguay, a destination where a flood of Argentines await. On other occasions this difference was compensated with greater exchange competitiveness, something that will not happen this year. Appreciation is here to stay. The Government anticipates a drop in crawling to the 1% area by the beginning of 2025. The peso strengthens, Argentina becomes expensive in dollars, but: At what cost?
Source: Ambito
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