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Puerto Rico Tourism Co.’s fiscal 2006 budget reaches $119 million

Commonwealth’s tourism spending increases by 59% since 2001


June 10, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

With 654 full-time employees, an average salary of $51,000 per employee, and a $119 million budget, the Puerto Rico Tourism Co. stands as one of the Commonwealth’s wealthiest public corporations. The agency’s budget will reach $119 million in fiscal 2006, from $104.3 million in fiscal 2005, an increase of 14%. Since fiscal 2001, the Tourism Co.’s total budget has increased by 59%, from $74.7 million to $119 million.

Despite its multimillion-dollar budget, the Tourism Co. has fallen short of its expectations to increase the island’s tourism industry and its contribution to the local economy. Data obtained from the Tourism Co. indicate a mere 10.3% increase in hotel stays from fiscal 2001 to fiscal 2004. That is, there were 120,200 more tourists staying in Puerto Rico hotels over the past four years, for a total of 1,307,000 visitors.

The number of hotel visitors is the only sector within the local tourism industry reporting an increase. Cruise ships, paradors, and other forms of lodging have decreased by 18,600 visitors over the past four years. From 2001 to 2004, tourist expenditures in Puerto Rico have grown 25%, from $2.4 billion to $3 billion.

Puerto Rico’s tourism industry is certainly lagging, in comparison to competitors such as the Dominican Republic (D.R.) and Mexico. With a mere $36 million budget allocated by the government’s Ministry of Tourism, the D.R. is attracting more tourists and building more hotel rooms than Puerto Rico.

The D.R. isn’t the only one with better tourism industry results on a smaller budget than Puerto Rico. Mexico attracted over 10.2 million visitors from January to June 2004, while Puerto Rico only attracted 1.3 million in the entire fiscal 2004. Although Mexico ranks on the top-10 list of the world’s most-visited countries, and ranks first as the most-visited country in the Caribbean and Latin America regions, the country has succeeded in doing so with a total Ministry of Tourism budget of $110 million.

When examining the Tourism Co. budget proposal presented May 20, it reflects a $15.1 million increase in payroll from $23.8 million in fiscal 2001 to $38.9 million in fiscal 2006, an increase of 63.4%. Furthermore, the total budget presented by the Tourism Co. for fiscal 2006 reflects an increase of $41.9 million from fiscal 2001, for a growth of 56.1%.

In the form of "other operational expenses," the Tourism Co. also increased its spending by $23.8 million or 163% from fiscal 2001 to 2006. Héctor De León, Tourism Co. director of finance, said spending included in other operational expenses are for promotional booths, promotional activities, musical activities, audiovisual presentations, promotional material, commercials, photography, employee parking, car repair and maintenance, food & beverage, and American Express-card expenses. These are just a few of the 59 items reported as "other operational expenses."

The Tourism Co. report also showed a $29.7 million budget for fiscal 2006 in the form of "contracted services," including companies to manage marketing and promotional campaigns such as LIH Group Inc., which covers Puerto Rico, the U.S. mainland, Latin America, and the Caribbean; while BSB Publicidad S.A. does promotional work in Spain.

The Tourism Co. is a public corporation, hailing funds from the Commonwealth’s central government while at the same time generating its own funds. The Puerto Rico Tourism Development Act of 1993 was enacted to provide the government with adequate tools to develop tourism infrastructure, marketing, and promotional campaigns, as well as serving as liaison for business entrepreneurs in the hotel industry who want to invest in the island’s tourism industry.

This Caribbean Business article appears courtesy of Casiano Communications.
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