Excerpt from CoStar

Affluent Leisure Demand Drives Rebound from Downturn

During the worst of the pandemic-induced travel downturn of 2022, the widely held belief among hotel industry forecasters was that Latin America would be among the slowest global regions to recover from the crisis.

But the reality has been the exact opposite, with leisure travel fueling a boom for hotels across Latin America and the Caribbean, according to experts speaking at the SAHIC Latin America & The Caribbean conference.

Speaking during the "Economic Outlook for Latin America and The Caribbean" session, Adriana Arreaza, director of macroeconomic studies for CAF — Development Bank of Latin America, said the region has clearly surpassed economic projections.

"Latin America recovered faster than everyone expected," she said. "Most analysts actually expected that the region would have a very protracted recovery, and that was not the case."

Adriana Arreaza, director of macroeconomic studies for CAF — Development Bank of Latin America, speaks during SAHIC in Panama City. (Sean McCracken)

She said GDP growth was forecast for Latin America around 4.22% as of April 2021, but that number has been revised upward significantly to 7%. At the same time, early projections called for 3% GDP growth in 2022, but current expectations are for 2.3% growth.

In 2021, many Latin American countries rebounded to pre-pandemic GDP growth, although there will likely be a slowdown in growth going forward, she said. The strong rebound isn't expected to be universal across the region, with some countries projected to have a slower recovery.

Speaking during the "Air Travel Outlook and Key Tourism Trends in LATAM and the Caribbean – What’s on the Horizon?" session, Olivier Ponti, vice president of insights for ForwardKeys, agreed there are winners and losers in the recovery, but air travel to the region is also significantly surpassing expectations.

"In 2022, we expect Latin America and the Caribbean to remain at the forefront of the travel recovery," he said.

He said international air travel data shows the region as the clear leader in the global travel recovery.

For 2021, international arrivals were down 74% overall. Across the Americas, arrivals were down 59%, while in the Caribbean arrivals were down 44%.

That trend has continued into early 2022, with Latin America and the Caribbean collectively only 26% behind 2019 in terms of international flight arrivals.

"That's nominally the best-performing region in the world and a region that is performing much better than last year," he said.

In terms of flights in the first quarter of 2022, Ponti said the top five countries were:

  • El Salvador, up 39% compared to 2019.
  • Turks and Caicos, up 2%.
  • The Dominican Republic, down 4%.
  • Mexico, down 6%,
  • Costa Rica, down 9%.

He said that while leisure travel has clearly been the strongest among the travel segments, there are also clear signs of business travel returning.

"By the end of [the second quarter], we should be between 70% and 80% of 2019 levels [for business travel], while leisure travel will be much closer to pre-pandemic levels" he said.

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