Beyond Machu Picchu: New options for tourists and investors

There is much evidence in the tourism business to suggest that Peru is performing well below its potential when it comes to visitor numbers. While Machu Picchu stands firmly on the list of the New Seven Wonders of the World, the site’s restriction to 2500 people on a daily basis limits the possibilities for growth. The numbers are pegged to prevent environmental damage to what is regarded as a national treasure as well as an international attraction. Neither the authorities nor the private sector are seeking to pack more visitors between the ancient Incan walls – the main attraction for around 70% of tourists that visit Peru – since attention has been turning towards other areas of the country as well as niche segments that have just as much or even greater potential for the industry.

DIVERSIFYING SUPPLY: Some 2.5m tourists visited Peru in 2011, an increase of 9% compared to 2010, considerably higher than the world average of 4%. Foreign arrivals collectively spent $3.3bn in 2011, marking a 16% rise on tourism revenues for the previous year, according to the Ministry of Foreign Trade and Tourism (MINCETUR).

In keeping with this upward trend, the government expects to see a 12% rise in the number of tourists entering the country in 2012, bringing the total number of foreign visits to 2.8m. To diversify the options available for tourists and strengthen provincial economies, MINCETUR in 2011 invested heavily in the development of eight tourist destinations across the country. While many of the places included were already tourist destinations, either access or services available lowered their market value. The new initiative aimed to concentrate specific interests on different products so as to better publicise each destination and add organisation to the map. This move was long overdue, according to those involved in the industry, and should help to not only diversify the country’s overall tourism offering, but to strengthen each individual component of it as well.

THE NORTH: Already prized among tourists and locals, the Moche Route in northern Peru is one of eight destinations included in MINCETUR’s remodelling plan. Around PEN60m ($21.98m) was invested to transform existing archaeological sites into museums, improve street signs, pave roads and enhance local town services, among others. These transformations will create a platform for receiving much larger groups of tourists, according to ProInversión. Tourism has long been an attractive sector for Peru, but this has not been translated into a proper strategic plan. Organising these routes and destinations is a way of improving conditions both for public use and for potential investors.

FINDING KEY GROWTH AREAS: Along with the development of each destination, MINCETUR has invested in research to provide investors with profitability statistics for key areas that require expansion as well as possible investment projects. A single project can often coincide with several of the priority tourist destinations. One example of this includes MINCETUR’s tendering for mini-cruise ship services along the northern coast from Puerto de Paita to Salaverry Port, which would incorporate both the Moche Route and the northern beaches, destined to receive PEN18.1m ($6.63m) in investment. MINCETUR suggests a cruise ship with 25 cabins for some 50 people would attract a hefty amount of leisure beach goers and provide dynamic hospitality options for those interested in anthropological tourism. These sorts of services are currently not available and would be aimed primarily at the upper-middle classes.

The increase of visitors to northern Peru is a positive sign at least. In 2010 the two regions that figure into the Moche Route, Lambayeque and La Libertad, received some 1.75m visitors – mostly Peruvian – which represents an increase of 58% compared to 2005.

In general, many sector professionals interviewed by OBG agreed that there is development potential in the north, covering a range of segments. The president of the Peruvian Hotel Society, José Koechlin von Stein, attributes the surge of tourist activity in northern Peru to the government’s initiatives. The president of his own eco-friendly hotel chain, Inkaterra, currently plans to open up new Inkaterra properties at Cabo Blanco in Piura, and he said there is interest to create new conservation areas nearby.

ECOTOURISM: With some 18m ha of natural reserves that range from high Andean plateaus to the swelling Amazonian jungles, Peru offers a vast diversity not found in neighbouring countries. Some of the latest trends that have caught on include advertising to bird watchers and orchid buffs. According to ProInversión, Peru offers some 1730 bird species and more than 3000 varieties of orchids.

In the Amazon jungle, particularly in the northern region of Loreto, ecotourism is becoming a popular and sustainable new trend. A part of MINCETUR’s alternative destination plan, areas along the Amazon River have received PEN67.2m ($24.62m) to support accommodation for more environmentally conscious tourists, who in 2010, numbered just 238,130, of whom 8150 were foreign. This is due mainly to the relative isolation and high costs of visiting this part of the country. Prices tend to run higher as well, involving costs for permits to enter national reserves and tours that can include biologists who offer informed explanations of the surroundings.

Currently, Loreto has only one five-star hotel that has 90 beds. For more budget-oriented travellers, there are 13 three-star hotels, adding 910 beds to the mix . However, with nothing in between, and heightened awareness of this area, there is much potential for future development. On the other hand, any hotel investor must be prepared to develop sustainably since environmentalists and indigenous groups alike are keen to preserve the land.

SOUTH: Nature seekers are not just restricted to Peru’s jungles. The country’s southern coastal region, in particular Ica, offers many protected areas that are home to an array of diverse marine life. With PEN45.2m ($16.56m) destined to develop the Paracas-Nazca circuit, MINCETUR is promoting this area along the lines of nature, adventure and archaeological tourism.

Carved out cliffs line the ocean near Paracas, which serves as the embarkation point to visit the Islas Ballestas, a group of three islands where Humboldt penguins, sea lions and the blue-footed booby, among other species, roam freely. Currently, tour operators ship groups to the islands, but, with an increasing number of visitors, these services will need to expand and incorporate modern boats to their fleet. Nearly 1m tourists visited Ica in 2010, an increase of 50% compared to 2005. Humongous sand dunes also make this part of the country unique and diversify the opportunities available for adventure tourism.

However, the region’s leading attraction remains the mysterious Lines of Nazca, declared by UNESCO as one of the 11 World Heritage sites in Peru. Light aircraft run services for visitors to view the pre-Incan geoglyphs from above, presenting an opportunity as tourist numbers are sure to increase.

Amidst expectations, the high-end hospitality sector offers the most room for development as Ica has just one five-star hotel with a total of 120 beds at present, and one four-star facility with 260 beds. Whether ocean, sand or archaeology interest visitors, the southern coast offers activities for all and significant potential for boosting services and hospitality.

RISING PROFILE: Along with anthropological tourism, ecotourism and adventure tourism, the government has also been paving the way for new tourism niche segments such as gastronomy, fashion and sport. As part of efforts to raise Peru’s profile internationally and exploit the potential offered by niche markets, for the first time in 2012 the country took part in the Dakar Rally, an annual long-distance, off-road race which was moved to South America in 2009 due to safety concerns in North Africa. According to the foreign trade and tourism minister, José Luis Silva Martinot, the race injected $520m into the economy, and estimates by MINCETUR put the figure of Peruvian nationals that travelled to watch the rally at 500,000. The country will also participate in the 2013 race, hosting the first leg of the rally. Over 100,000 foreign tourists are expected to come to the country for the event, which will be watched by millions across the globe, helping to promote Peru as a tourism destination.

Providing a further boost to the tourism sector, the 2011 Lima Fashion Week generated more than $80m in revenue for the country, according to Peru’s Export and Tourism Promotion Board. Around 1400 international buyers from Latin America’s fashion industry are estimated to make the trip to the capital for the three-day event, which takes place every year in April.

Meanwhile, Peruvian chef Gastón Acurio, who has plans to establish a gastronomic complex in the San Isidro district of Lima, is heading campaigns to put Peru’s cuisine on the map (see The Guide chapter). “Just as the Louvre’s pyramid or the Pompidou Centre in an old Paris neighbourhood gave new life to these spaces, the combination of modernity and tradition allow (....) Lima to acquire a new gastronomic value,” he told local media. Given time, Acurio believes Peru’s cuisine could go global. “It’s only a matter of time,” he told OBG. “We are building a market. It may not be for five or 10 years, but it will happen.”

INVESTMENT MAP: To boost visitor numbers further, these sorts of activities will need to be exploited. The government has made clear its intentions, and in 2011 MINCETUR released an investment map, highlighting different areas and activities for opportunities. The map, however, is only available in print or CD, and will need to be accessible by internet to attract more investment. This would solidify MINCETUR’s work to diversify tourist destinations. Decentralisation of the sector is also key for developing potential niche segments and capitalising on the interest being generated internationally among potential visitors. “We have seen there is a special interest in Peru and its nature around the world,” Silva told local media. “But if we want to keep growing above other countries and maintain an expansion of 9% in this sector we have to develop new activities.” If the government continues its policies of promoting collective investments as well as its work to decentralise the sector, Peru’s lesser-known areas will become tourist hotspots worthy of investment.