After a complete shut-down of international travel and tourism in most Latin American countries over the past year, signs point to a rebound as borders reopen and economies stabilize. While the large majority of travel and tourism assets continue to operate with limited visitors or operation hours - such as many airports and major attractions across Latin America, there are some signs that the region has begun a recovery.
"As the pandemic subsided in most of Latin America, 2021 was a year of slow but continued improvement for travel and tourism assets across most markets." - Hector Medina (Senior Director, Turnaround & Restructuring)
As governments across Latin America reopen their borders - reopening airports that had closed due to COVID-19 concerns or near-daily outbreaks - many markets are now working towards improving their national pandemic response plans. International travel is likely still months away from returning to pre-pandemic numbers but movement in the travel and tourism industry is beginning - with hotels having higher average occupancy rates and continued growth in inbound and domestic tourism.
With the pandemic having a significant impact on Latin American economies, governments are now focused on improving infrastructure and travel routes to make travel safer. To improve tourism across the region, local governments are looking at ways to reduce any potential risk of future outbreaks, with many taking steps towards increasing vaccination rates.
"Latin America has made strides towards containing the pandemic but still has to overcome some obstacles. Many people are more comfortable with COVID-19 and are likely to travel more in the future." - Manuel Bremont (Managing Director, Turnaround & Restructuring)
The vaccine rollout progress has varied widely across the region
As of August 2021, Latin American countries began to administer booster doses. Early recipients varied by country, frequently including frontline workers, vulnerable populations, and those who received a less effective vaccine. Overall vaccination coverage in Latin America and the Caribbean currently stands at approximately 60% and many countries, including Argentina, Chile, Cost Rica, and Cuba, boast some of the highest coverage rates in the world.
That said, the relaxation of public health measures coupled with unvaccinated people have created the perfect environment for the virus to spread.
- Caribbean: Puerto Rico and the Dominican Republic have experienced hikes in new infections, as well as Jamaica, Aruba, Curacao and Martinique.
- Central America: Belize and Panama are reporting the highest incidence of COVID.
- South America: noticeable increases in Bolivia, Ecuador, Peru, and Brazil. In Argentina and Paraguay new cases have increased by 300%.
“Throughout this pandemic, Europe has been a window into the future for the Americas,” said Carissa F. Etienne, Pan American Health Organization Director. “The future is unfolding before us, and it must be a wakeup call for our region.” 
Consumer travel sentiment is recovering alongside vaccinations but will deteriorate with new restrictions and colder weather
As Covid cases rise in many parts of the world, and as the new Omicron variant spreads, the travel industry may need to brace for another period of disruption, especially as we enter the winter season. As countries apply new measures to tackle new Covid variants, traveler sentiment is likely to deteriorate as people become more insecure about long-haul flights and destinations, and as certain countries reimpose/reinforce COVID-19 restrictions.
Other key factors that will drive the near-term deterioration of consumer travel sentiment:
- Seasonality issues due to general anxiety caused by the winter weather;
- Government-imposed restrictions;
- Imposed quarantine concerns; and
- Vaccination status of other travelers.
The above seems to be reinforced by the fact that 78% of recent respondents noting that they believed that a vaccination document should be required for all travelers, suggesting that travelers are becoming more comfortable with new travel restrictions.
A Tale of Two Regions - Comparing the recoveries of Central America and South America
The story of how the travel and tourism industry will recover from the COVID-19 pandemic is being played out differently across the region. In Central America, political stability is impacting traveler perception. In South America, international tourism has been slow to rebound.
The region is comprised of small and relatively open economies, imperiled with distinct levels of political instability that have an impact on traveler perception, especially for the international traveler. Over the last few years and most notably in Nicaragua, Honduras, Guatemala, and El Salvador, there has been some democratic erosion. Pending the degree of instability this causes, it will create a perception of high political risks in the immediate to long-term. The most notable and current example is Nicaragua. The region has a heavy U.S. reliance for both exports and imports, especially when it comes to business and leisure travel. While the Caribbean is the most tourism-dependent region, Central America also has a high tourism dependency index.
“North and Central America’s greatest advantage over South America is its more developed infrastructure, especially air and ground transport infrastructure.” (World Economic Forum, Travel and Tourism Competitiveness Report) 
Compared to the Caribbean where tourism is completely dependent on international arrivals (the U.S. being a key feeder market), across several South American countries, such as Argentina, Brazil, Chile, Colombia, and Peru, domestic tourism plays a similar crucial role for the sector. However, the lack of international demand to certain key markets such as Bogota, Buenos Aires, Quito, Lima, and Montevideo coupled with lack of flights and a potential oversupply in certain markets will delay the recovery.
“South America has a relatively small travel and tourism economy, defined by disproportionally low international tourist arrivals, which explains the subregion’s dependence on domestic travel and tourism markets. This can be due to the region’s underdeveloped air and ground transport infrastructure.” (World Economic Forum, Travel and Tourism Competitiveness Report) 
The road to recovery for the Latin American tourism and travel industry will be long.
While international tourism is still largely absent, domestic tourism continues to drive the recovery in many destinations, particularly those with large domestic markets. Expectations are that in 2022, the region should experience a slight recovery in inbound arrivals, but still well below pre-pandemic 2019 levels. This largely due to the belief that the global pace of recovery will be delayed due to the varying degrees of mobility restrictions, delayed border openings (i.e., land borders), vaccination rates, potential new covid variants, and reduced traveler confidence. in addition, the recent rise in Covid cases due to Omicron will delay the recovery timeline and have an impact on traveler confidence at least during the first quarter of 2022.
To read our full analysis of the Latin American Travel & Tourism industry, please download the report below.
© Copyright 2022. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.