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Governor Ricardo Rosselló.with the Tourism executive director, José Izquierdo, said is a very positive increase for Puerto Rico. (Juan Luis Martínez)

During July 2017, tax revenues for the hotel tax registered a 12.2% increase compared with the same date in 2016, which represents a historical figure, said yesterday Governor Ricardo Rosselló.

Tourism is one of the few economic sectors that kept growing during the ten-year economic crisis. Figures provided by the The Puerto Rico Tourism Company (PRTC)

indicate that tax revenues per room increased by 39% from July 2008 to July this year.

In the last three years, these collections increased by $ 6,654,561, in July 2015;  $ 6,167,585, for that month last year. In 2017, the figure totalled  $ 6,922,310.

 "This is a very positive increase for Puerto Rico," said Rosselló in an exclusive interview with El Nuevo Día in which he was accompanied by the Tourism executive director, José Izquierdo.

"We have had greatest collection month in the history of Puerto Rico. I recognize the excellent work the Tourism Company has done facing many challenges. Compared with July 2016, it represents a 4.2% increase over what is occupancy; a 5.3% revenue (demand, according to Tourism reports). What is being announced here is that tourism is developing the product of a great effort, "he noted.

In the library of La Fortaleza, Izquierdo said that since July, "our hotel business had 82.2% occupancy compared with July 2016, an increase of 4.2%, a figure that had not been achieved since July 2015. Therefore, the figure is a record, since it had not happened since July 2015 ".

The executive director said that from January to March this year, the government observed a decline in room tax revenues and implemented a marketing plan to bring recovery and immediate growth. From April to July, we saw the results, said Izquierdo.

He noted that the "improvement" in the figures has been reflected throughout the Island. "An interesting fact is that the average room rate has increased 9.9% in the metropolitan area and has also increased 1.4% in the rest of the Island. This improvement has gone beyond the metropolitan area. This should be framed in the fact that this growth in demand and interest is the highest within 18 months. We are comparing ourselves to 2015, which had been a very good year in terms of tourism, before the situation arose by the zika virus that we all already know, "Izquierdo said.

"This July is historic, never seen before. They are positive indicators for the tourism sector, compared with any year at any time, "said the official.

He indicated that the increase in occupancy in 2017 resulted in $ 66.1 million for the state, 6.4% more than those for July 2016.

External validation

Izquierdo noted that the figures were validated by STR Global, considered among the leaders in collecting information from the hotel industry. He stated that they measure hotel occupancy, income per room, hotel profit (RevPar) and average daily occupancy

"All the indicators have been positive - so that we have exceeded, in all those items, the projections of this Company," said Izquierdo.

The president of the Puerto Rico Hotel and Tourism Association, Clarisa Jiménez, said that the statistics they have also revealed an increase, but noted that she would not describe them as historical "because there are many things being said and have also happened on other occasions. "

However, she highlighted that in July, there was an increase in occupancy, in the average rate and in the profit of the hotel after payind everythig. That's what it indicates if the month was good or not. "

She agreed with the figures provided by the government for the month of July in terms of occupation (4.2%) and demand (5.3%). She added that RevPar increased 9.3%, the average rate 5% and the overall profit 10.6%. This contrasts with the numbers of July 2016 when occupancy was -6.4%, the average rate fell 7%, RevPar fell 12.9%, demand fell 5.6% and also revenues by 12.1%.

In July 2015, there was an increase in occupancy of 5% because it rose from 81.1% which was in 2014 to 85.2%. The average rate rose 5.8%, RevPar to 11.1%, revenues at 11.4% and demand at 5.3%.

The impact of zika

"We are very happy. We are glad that, finally, this situation (the impact of the zika virus) has been left behind, that we are recovering as destination. Now we have to work very hard to keep this trend and reach the numbers we had before. For example,  January 2016 was a great month and then zika arose. In that month, we had an increase of 11% in occupancy, "Jiménez said.

The first case of zika on the Island was registered in December 2015 and in 2016 the moved fast, which caused that thousands of tourists to refuse to visit the Island.

 "It was a really horrible year, because of the zika virus. We had cancellations had February (2016) ... we keept receiving cancellations throughout the whole year, "said Jiménez.

Last June, the Department of Health declared the end of the zika epidemic in Puerto Rico.

According to the governor, the efforts to combat zika, the specific promotion and this administration´s thrust to transform tourism with the help of the Destination Marketing Organization (DMO) are factors that have contributed to the increase in tax revenues in this economic industry.

A different history in paradores

However, for the president of the Paradores de Puerto Rico Association, Jesus Ramos, the figures provided by the government do not reflect "the behavior of the paradores".

He explained that, last month, occupancy was "worse" than that of July 2016. He promised to provide the statistics, but by press time, they had not arrived.

Nevertheless, he specified that the figures in paradores do not refute the statistics provided by the Tourism Company. He pointed out that this year hotels, even the big chains, offered good promotions and prices. "We have information from large hotels that are in critical situation because of  low occupancy," he said to explain the reasons of the promotions.

"So people chose those places," Ramos said.

Both Izquierdo and the governor were hopeful that the increase in room tax revenues would be continue because the $ 6.9 million collections of July do not include those generated by reservations made through digital platforms such as Airbnb.

Last July, the government and Airbnb signed an agreement to collect the room tax from this month and refer it to the Treasury Department. The contribution for every hotel, parador or hostel consists of 7% of the fee for rent. It can reach 13% if the place, like a hotel, has a casino.

Asked about how much the government revenues would increase when receiving the contributions of digital platforms, Rossello said: "It is difficult to estimate at this time." But with this agreement, more people are expected to participate in this effort, both those who rent their properties and visitors. "What we do expect is a significant increase in the room tax," said Rossello.

"It was estimated at about $ 3 million, but I think it is a amount, perhaps, conservative," said Izquierdo not without emphasizing that the agreement will identify the actual amount of places used as hostels or hostels.

Impact for the Island

Rosselló indicated that tourism is "one of the strategic bets" for the economic growth of Puerto Rico. He said that it goes together with the incentives that are already law. "Tourism is not an isolated thing. Every visitor, through Tourism, can realize that Puerto Rico is a destination for investment and to live, "he said.

The increase in revenues injects money into the Tourism Company which means benefits for the whole Island, Izquierdo noted.

He recalled that when he took office, the agency had a deficit of $ 12.3 million.

How does this additional income from Tourism help in this the fiscal crisis ?, asked El Nuevo Día.

"It addresses the deficiency that originally existed in Tourism and validates our strategic proposal that Tourism is one of the great areas of opportunity for growth and economic development," stressed the governor.

Besides, a portion of the revenues-by law-is left to the service of debt, the Convention Center and the promotion and marketing of Puerto Rico. "With more money to promote the destination, everyone benefits from what is the economy of the visitor," said Izquierdo.

Tourism represents 11.8% of total private sector employment, equivalent to 80,000 jobs. Hotel occupancy fluctuates between 68% and 70%.

 "The reality is that, and we have been consistent with this message, tourism activity in Puerto Rico is ready to grow. That is why we have always advocated for an organization such as the DMO to be created, out of partisan stands to be able to give continuity to the message. Once we achieve that, we have to grow to almost 30% (in employment) without having to invest in anything new, "said Jiménez.

The governor said that tourists are eager for new experiences. "There is a tourist that prefers what is called an autochthonous experience," he noted.

In that dynamic, the song Despacito, recently adopted by Tourism to promote the island, helps, added the president. He said the bet is that the tourist visit the Island for longer periods, that is, “slowly”.


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