Panama put the real estate cart before the tourism horse

For the past 5 years, I have shouted to the rafters my beliefs on the vital role that tourism must play in Panama’s economic development.  When putting forth this concept here in Panama, I am often met with the following reactions:

• Blank stares
• Laughter
• Anger

Some of these reactions seem to stem from a common belief among locals that Panama is destined for greatness, with or without tourists.  Heck, even my long-time Panamanian girlfriend is quick to strike back during my touristic sermons with her own version of, “Tourists? We don’t need no stinkin’ tourists!”  I DO understand that with 100 years of U.S. occupation, Panama has a justifiable chip on its shoulder.  Perhaps I should be more culturally sensitive about what I perceive to be xenophobia, but that’s a different article.
A lot of folks here hold fast to the belief that since Panama has done fine without much attention to tourism, it’ll do just fine in continuing to ignore it.  Maybe they’re right, if only in the sense that Panama’s multi-pronged economy will likely be OK without fostering a pro-tourism environment.  BUUUUT, I argue that Panama could be far more than OK.  It could GREAT if the country’s new leadership takes measures to develop a cutting-edge tourism industry, focused on 4 simple concepts:

1. Culture – stress the incredibly rich and diverse culture of Panama
2. Eco-Friendliness – lower pollution, improve national parks and train quality nature guides
3. Low Impact – focus on smaller and more “boutique” hotels, rather than 1980’s style giants
4. Authenticity – don’t copy the architecture or style of Cancun or Miami…be PANAMA

Creating a Tourism Master Plan for Panama has to start with Panama defining success. Although former IPAT Minister and salsa legend Ruben Blades DID go about that task (with zero input from the private sector), the result was a convoluted and overly-expensive document that did little more than establish the Tourism Zones on a map with pretty colors. I’m curous to see whether this new administration uses it for anything more than a bird cage liner.

FIRST STEP: define the endgame!  Until we are clear on the local leadership’s tourism goals for the country, it’s hard to know whether we in the private sector are rowing in the same direction.  Were I Martinelli’s Tourism Czar, here would be my pitch for a vision of the “near-Perfect Panama”, achievable by the year 2020:

• A Shining Capital — A vibrant, healthy and safe Panama city with lots to see and do and great transportation
• Tourism Booming — A tourism industry that is thriving, with annual arrivals and average per-customer spend figures competing head to head with Costa Rica’s (dare I say the name!?).
• A More Eco-minded Nation — Fantastic national parks system, better eco-education among all citizens, public pride and rewards for being a clean and tidy town.
• More Prosperity in “The Interior” — Thanks to greater availability of jobs, products, services, health care and schools in remote parts.
• Rock solid financial and real estate sectors — I realize I’m asking for a lot here, but tourism can help stabilize these areas, especially if it helps to stem the bleeding from the inevitable real estate collapse in Panama City.

I have spent a decade in Costa Rica working in tourism and real estate.  I myself, along with dozens of business contacts have enjoyed the benefits of the intertwined nature of the two industries.  The tourism/real estate connection is pretty simple: first they visit, then they fall in love, and THEN they invest.

Despite this formula being well known, few in Panama seem to give a rats behind about the tourism portion of this equation.  I’ve said before and will say again that I believe that Panama was wrongheaded to put the real estate cart before the tourism horse.  Long and short, you’re supposed to build 100 condo towers AFTER the tourists decide they want to live here!  That’s how it worked in Florida, Hawaii, south of France and just about every other warm weather retirement destination on the planet.  The Dubai model that Panama seems intent to pursue, as  seen by their common pursuit to build the world’s guadiest swimming pool,  has already proven a disaster in the UAE.  Style is cheap and cannot compete with substance.  Tourists seeks SUBSTANCE, not brass and glass. Deliver that, then you’ll get real investors and not speculators.

So, what can more tourism do for Panama?

• Attract Future Business – Most business people come to a foreign country first as a tourist, and then decide it’s a place they’d like to do business.  In other cases, before taking a job or moving to a country, a person calls a friend who went there on vacation.  If that friend says, “oh man…it’s AWFUL”, you probably aren’t as bullish about dumping your money there.  See Mexico for muliple examples.

• Serve As A Way To Retain Talent – with so many multinationals eyeballing Latin America for new HQ’s, certainly “quality of life” is a factor for their top level employees. That means things to do and places to go.  Internal tourism in Panama has to improve in order to attract top level talent.
• Sell Those Condos! – The #1 challenge facing Panama in the immediate future is how to unload all those City condos. You need to GET the people here in order to permit them to fall in love with the country, AND THEN buy. Anybody in sales will tell you that it’s a numbers game.  Without the numbers, it’s hard to get the sales.  Get more folks here and increase the odds that the sellers, developers and banks might get out of this situation with their shirts on.
• Raise Rural Incomes – As mentioned above, prosperity in remote areas can increase dramatically and WITHOUT government handouts if tourists are visiting regularly. Tourists appreciate these off the beaten path areas that would otherwise be black holes for job seekers.  Eco and cultural tourism will permit some of these country folks stay near their beloved home provinces and have a shot at making a good living.  As it stands, anyone taking a quick tour of Panama’s interior will notice there’s a huge disparity in age.  You’ll find babies and grandparents, but few working age 20 or 30-somethings.  This can and MUST change.
• Preserve Nature, Culture, History – Tourism can serve as the ultimate time capsule for Panama’s great culture and history. Today’s tourist is well-traveled.  They don’t want another cookie cutter experience or tourist trap.  Panama has an incredible opportunity here if it takes the steps to preserve, celebrate and teach its culture to the outside world.
• Make Panama A Better Place To Live – One of the great things about spending half my time in Costa Rica is that on any given weekend, I can hop a plane to one of a dozen or more fantastic destinations, each unique in their own way.  If Panama can create multiple destinations in its many beach, mountain and jungle towns, it will mean a more interesting and rich experience for all those who live here.  Through stressing the value in preserving nature for direct profit through tourism, you also receive the benefit of a greener, cleaner country.

Sectors That Will Benefit From Increased Tourism

So, you don’t think tourism can benefit YOU and your biz?  Well, not unless you are somehow tied to any of the following:

1. Real Estate – more tourists = more sales and more rentals
2. Medical – more tourists = more “medical vacations” for plastic surgery, dentistry and other costly procedures
3. Free Zone – more tourists = more sales of duty free goods
4. Dining – more tourists = more fine dining
5. Banking – more tourists = more bank accounts opening
6. Entertainment – more tourists = more income at bars, restaurants, night clubs
7. Retail – more tourists = more sales of all types of retain items, especially souvenir items like Coffee, Panama Hats, Cigars

SUMMARY

Panama is a country whose labor force is already service-focused (if not yet service-minded).  Tourism is a logical next step and a perfect complement to and catalyst for its other industries.  I truly hope that President Martinelli and new tourism minister Salomon Shamah see the connection and take steps to make Panama a model for sustainable tourism.  It will be interesting to hear Mr. Shamah speak publicly at the upcoming AMCHAM Tourism Forum. For those of you interested it’s Thursday, September 10th at the Hotel Miramar in Panama City.  See more here.   Sam Taliferio of the famous Valle Escondido project in Boquete is a featured speaker and I’m intrigued to see how his speech on “What Panama Needs To Do To Become The World’s Best Place to do Biz” (a stated goal by Martinelli) is received as well.  There’s a very active thread on the subject on his forum.

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Filed under: Business, Politics, Real Estate on August 27th, 2009