Colombia 2017 | TOURISM & RETAIL | REVIEW

Ushering in nationwide integration, Colombia's tourism and retail sectors are expected to not only boost the economy, but also play key roles in promoting and sustaining peace.

Signaling a new era of growth for Colombia's tourism industry, the country received more than 2.6 million foreign visitors in 2016. According to the Ministry of Trade, Industry, and Tourism, the number of tourists increased by 13% and was projected to grow at a CAGR of 6.7% from 2016-2020 to reach 3.2 million by 2020. In 2017, the country is preparing to welcome increased tourism inflows as new areas of the country open up for development and infrastructure. At the same time, the Lonely Planet's ranking of Colombia as the world's second-best country to visit in 2017 heralds good things for the economy, especially for destinations such as Bogotá, Barranquilla, Medellín, and Cartagena.

At the forefront of boosting tourism in the country is President Juan Manuel Santos. The Santos administration recently announced that 2017 and much of 2018 would be dedicated to promoting tourism in post-conflict areas of Colombia, with the aim of increasing visitor numbers by 30%. One of the ways in which the government plans to increase inflows is through a commitment to building up niche segments, especially medical tourism and ecotourism. While the vast majority of visitors came to Colombia for vacation, 37.6% more visitors came for medical tourism in 2016 than in 2015. In regard to ecotourism, quality over quantity is what counts. In a speech made in January 2017, President Santos explained, “While a regular tourist spends an average of USD80 per day in Colombia, eco-tourists spend over USD400." In order to capitalize on this potential, however, the tourism sector should form close partnerships with entities in transportation and mining, as well as with environmental organizations.

To this end, the Colombian government has already started a slew of new initiatives, including a campaign launched in March 2017 to rediscover and engage with destinations across the country that were affected by conflict, such as Boyaa, Santander, Cauca, and the Western Plains. Through these various programs, the Santos administration is promoting national integration by focusing its attention specifically on areas that were previously inaccessible, have experienced a lack of infrastructure, or have historically not participated in the government. Attracting tourists to these areas in particular, experts agree, will be a huge step toward unifying the country and building mutual understanding.

Parallel to the increase of foreign visitors, foreign retailers are moving into Colombia as it grows. According to a research from international consulting firm AT Kearney, Colombia weighed in as the second-most attractive country to invest in retail in Latin America. Known as the Global Retail Development Index, the research also highlights Colombia's rapid rise through the ranks; in 2007, Colombia ranked 30th in the world in terms of retail investment potential, but climbed 15 spots in under a decade to reach 15th in 2016.


Colombia remains most popular with visitors from the US, which brought nearly 500,000 visitors to the country in 2016. Meanwhile, 400,000 Europeans, 350,000 Venezuelans, and 180,000 Brazilians visited Colombia during the same period. Traditionally attracting male tourists, Colombia saw a rise in female visitors of nearly 17% in 2016, illustrating the rapid diversification of the sector. Figures demonstrate that the tourism sector is also expanding horizontally to distribute the share of visitors more evenly across the country, as well as a balance between domestic and international tourists in each zone.

Up until 2015, Bogotá received more than 50% of all international visitors in Colombia, but by 2016, that number had dropped to 46%. Bolívar province, home of Cartagena, saw its share increase by the largest amount to reach 14.2%. Meanwhile, Medellín's province of Antioquia received 13.2% of foreign visitors.
Although the number of outbound trips fell in 2015, domestic tourism was projected to grow at an average annual rate of 5.7% over the 2016-2020 period to reach 32.6 million by 2020. Meanwhile, the Ministry of Trade, Industry, and Tourism predicts that outbound tourism trips will number approximately 5 million by 2020.


Over the 2012-2016 period, investment in the hotel sector grew by 740%. Reflecting the growing demand for bilingualism in the industry, during 2016 alone, 10,000 English-speaking hospitality professionals were hired at hotels. Overall, there are 1.8 million Colombians employed in the sector, making it the second-most important source of foreign exchange for the economy after oil and gas.

One of the major contributors to the hotel sector's rapid rise in investment is Hilton. Along with local contractor Constructora Colpatria, Hilton announced the signing of a franchise license agreement in March 2017 to open the upcoming Hilton Medellín. The multimillion-dollar project is expected to become one of the largest real estate investments in Colombia in 2017. Comprising 25 floors and 206 rooms, the hotel is set to open its doors in 2Q2019. In 2016, the hotelier opened the DoubleTree Bogotá Calle 100, Hampton by Hilton Bucaramanga, and Hampton Inn by Hilton Medellín. Hilton currently boasts a portfolio of 14 properties in the country in addition to nine projects in the pipeline. The newest addition to the lineup will be located on the Avenida de las Palmas, offering accessibility to one Medellín's busiest strips. Hilton Medellín will be part of a mixed-use development, to include retail, office space and non-branded residential units in a complex with a parking garage with more than 450 parking spaces.

Ever a tourist hotspot owing to its historical charm, Cartagena is another popular investment destination for hotel operators. “We realized that Cartagena can offer our guests multiple services in one visit. Our guests can enjoy the city, and our private beach provides a more exclusive experience for visiting Cartagena's world famous coast," Miguel Díez Trujillo, President of Hoteles Estelar, explained to TBY. The Estelar Cartagena de Indias hotel offers 338 rooms, two restaurants, a swimming pool, and a convention center with the capacity to host 1,200 people. Standing at 202m high, the hotel has 51 floors and 47,000sqm of room.


To attract investment and ensure best practices are employed, Colombia plays an active role in the international community when it comes to tourism sector policy. As an important member of the United Nations World Tourism Organization (UNWTO), Colombia nominated a representative to run for the office of Secretary-General for the upcoming 2018-2021 term. Unfortunately the candidate, Jaime Alberto Cabal Sanclemente, was unsuccessful.

The UNWTO acts as an advisory body for specific tourism laws, exerting influence on destination marketers and tourism organizations around the world. If elected, a Colombian Secretary-General would have guided the future of global tourism in dozens of countries. Sanclemente is the Ambassador of Colombia to Austria. In various leadership positions in Colombian tourism organizations over the past 20 years, he has focused on sustainability.

Domestically, Colombia plays host to the annual Colombian Association of Travel Agencies (Anato) travel and tourism conference. The 2017 edition marked the 36th anniversary of Anato, and attracted over 34,000 to the exhibition center in Corferias. Compared to the previous year, 20% more tourism professionals participated from over 40 countries and 32 departments of Colombia. According to local press, approximately USD150 million in business deals were established at the conference in early March 2017.


As activity in the tourism sector heats up, new opportunities have arisen for retailers seeking to get ahead of the curve. Colombia's prime environment for business, stability, and overall macroeconomic performance have afforded it high marks in terms of low risk. Moreover, Colombia's population size, urban ratio, number of cities, retail sales per capita, infrastructure, and regulatory framework have boosted market attractiveness. Two other criteria identified by the Global Retail Development Index are sector saturation and historical growth.
Despite the fact that Colombia's retail market has been affected by the decline of the local currency and inflation rate, local brands are starting to see competition stiffen. Chilean retail chain Falabella recently announced plans to invest USD4 billion into its outlets across Latin America during the 2017-2020 period, including the addition of 114 stores and nine shopping malls. The chain currently has 25 department stores across Colombia, many of which will be refurbished along with Falabella's investment plans.

The North Face has eight stores in Colombia, including in Bogotá, Medellín, Manizales, and Chía. As of 2016, the company was in negotiations toward finishing a major retail deal with Colombian department stores. Off to a good start, the company posted growth in sales of 40% in 2015.

With over 60 stores in Colombia and the region, Mario Hernández reduces the cost of doing business by controlling the entire supply chain and producing 100% locally. “As the country becomes more open and more international products come in, the company needs to compete with the other brands that enter the country." Mario Hernández Zambrano, President & Founder of Mario Hernández, told TBY, adding “That is why we are trying to bring a new level of quality, as well as the manufacturing and knowhow that we have, for leather and the artisans that are working with us."

New for 2017 in the retail sector is the pop-up store trend. Already a well-established practice in Europe and North America, pop-up stores boost sales and assess markets based on customer habits. The pop-up format is proving to be very effective for local labels and is conducive to SMEs that seek to enter the retail sector with minimal upfront capital without compromising on profitability and high sales figures in a short period of time. However, the main advantage for the pop-up format is for companies to guarantee market presence prior to opening a permanent store. With the right infrastructure in place and consumer demand increasing consistently, the retail sector is set to diversify and expand rapidly.