Increase in wages and inflation, the challenges of tourism in 2023

Increase in wages and inflation, the challenges of tourism in 2023

Traveling has become an increasingly expensive activity. However, in one year the increases have been significant in the pocket of Colombians. Now, in 2023, this situation becomes more acute with the return of VAT of 19% to tourism products and services.

(See: Learn about the most powerful passports to travel this 2023).

According to the last report of Consumer Price Index of the National Administrative Department of Statistics (Dane), the categories of tourist products presented an increase of more than 7% in the last year, to December.

The most representative increase in prices is for restaurant products, reaching 21.4% in December, a higher figure than in 2021 (9.9%), 2020 (4.26%) and 2019 (3.94%) .

This is followed by the rise in tourist packages, which presents inflation of 13.9%, this after a drop in this index for two consecutive years of -3.8% in 2021 and -0.66% in 2020. On this phenomenon, the Colombian Association of Travel and Tourism Agencies (Anato) forecasts a new year with great challenges for the sector.

(See: Sustainability and metaverse, tourism trends for 2023).

We have worked for the recovery of companies, to boost tourism and that has left us with very good results. However, we started 2023 with an unfavorable scenario, which will undoubtedly make it difficult to continue with the pace we had been having and that is why additional support is required to help us continue to recover“, he pointed Paula Cortés Calle, executive president of Anato.

The president hopes that, despite this, tourism will continue to grow, which is why companies will seek to tighten their belts and promote their services.

We hope that this situation does not discourage national and international travel and that the conditions are in place to support this important sector of the economy. After the pandemic, we received support from the Government that helped businessmen, from a seriously affected industry, to solve the complications in their sales and employed personnel. However, under this scenario we will have to reassess actions in search of promoting travel”, concluded the union leader.

(See: To which countries is it better to travel with Colombian pesos in 2023?).

In order to mitigate this effect, according to María Carolina Padilla, General Director of Civitatis in Colombia they rely on different strategies and thus optimize their cost chain.

We support suppliers from different regions and all this allows us to be very competitive in product, service and prices, which we consider is a measure to counteract, among others, these tax issues that are an integral part of our rates and the market.“, He says.

And it is that the tourist packages have not been the only ones with an increase of close to 14%, the prices of the accommodations (hotels, hostels, inns, among others) have had a growth of 12.9% as of December 2022. It is worth remembering that this item also presented an annual increase of 2.4% in the same period of 2021.

This rise, assures the hotel sector, has been seen above all byr the increase in the price of basic services, especially energy. In addition, the 16% increase in the minimum wage impacts the basket of employers, this in the midst of an inflationary scenario.

(See: How users will feel the increases that airlines are having).

We believe that employment will fall between 10 and 15% compared to 2022, as a result of the VAT increase to 19%, the transfer of costs due to inflation, such as energy, which has risen to double digits, and the increase in the minimum wage. , because it is difficult to absorb these costs”, indicates Alejandro Morales, president of the German Morales hotel chain.

The president of On Vacation, Laura Muñoz, supports what Morales mentioned, adding that the rises in the prices of food, beverages, transportation and construction materials (for maintenance) already reach double-digit increases in 2022.

The design of our products and way of distribution allows Colombians to go ahead with their travel plans, we facilitate vacations and under our installment payment model, we have reservations until 2025. However, due to the increases we have had, it will definitely be a challenge to maintain the volume of travelers in 2022 and reach pre-pandemic figures”, remarks Muñoz.

These increases in the cost basket of hoteliers not only affect this sector and are reflected in other entertainment spaces, such as in the products and services offered in nightclubs (inns, bars, taverns, among others), which accumulate an increase of 7.6% by December 2022 compared to the same period in 2021, the highest rise in four years, even higher than the one presented in 2019, where it was greater than 5%.

Given all this panorama, and adding the rise in both land and air transport services, the tourism industry has planned a clear roadmap: optimize their costs to generate savings and offer discounts to attract more tourists and thus not lose the growth curve that the sector had in 2022, especially in the low season.

Twitter: @Paula1GB

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