Costa Rica COVID-19 Archives - Costa Rica Expat Tours

I got involved in Costa Rica tourism way back in 2004 when I launched a web site to sell package tours, with hotels, transport and activities included. The web site endeavor eventually became a full-blown agency with an office in San Jose…

There are a couple of things about my experience running a Costa Rica travel agency that are highly relevant to the situation of Costa Rica tourism during COVID-19.

Tourism represents 6 to 7% of Costa Rica’s GDP. It has literally put a number of small Costa Rica communities, like La Fortuna and Manuel Antonio, on the map. These communities survive on tourism in almost every respect. Right now tourism has been grounded to a halt. That situation probably won’t change for months. Costa Rica closed its borders to tourists on March 16 and that’s scheduled to last at least until April 30. And who knows how long it will take before North Americans and Europeans, who make up the bulk of Costa Rica’s tourism, will be willing to run the risk of flying again?

This crisis couldn’t have hit at a worse time. The high season for tourism in Costa Rica coincides with Costa Rica’s summer, or verano, which lasts from the last part of December to the middle of April. I remember back when I was running my agency, which I boot-strapped financially, I would sometimes get into cash-flow trouble when I had a large influx of arrivals and no sales. For instance, in June, July and August we would have a lot of arrivals by families, with kids out of school, but folks really didn’t begin to book for the coming high season until later in the year, around October. So, all the future debt generated from the sales made months before those families arrived would come due. I would often be forced to tap into reserves, along with whatever current cash flow I could eke out, to make ends meet.

Well, that’s sort of what is happening to Costa Rica tourism during COVID-19, but on a scale that’s dramatically worse. The COVID-19 crisis is happening right at the mid-point of the high tourist season. Agencies, hotels and tour operators are having to deal with a massive wave of cancellations and refund demands at a time when sales have completely halted. I am sure most, except for the big boxes, have exhausted reserves trying to handle this situation. Many have resorted to a campaign of begging customers to postpone trips rather than cancel and seek a refund.

In short, it’s a mess…

I recently listened to an episode of the podcast, The Costa Rica Experience, featuring an interview with Casey Halloran, discussing Costa Rica tourism during COVID-19. Casey is one of the founders of Costa Rica Vacations and Namu Travel. Costa Rica Vacations is probably the largest independent agency in the country. They always set the standards I tried to emulate back in the days of running my agency. They are one of the few who were able to compete when big box travel moved into the Costa Rica tourism space. I highly respect Casey. And he is deeply concerned about the situation for tourism in Costa Rica, but also optimistic.

One of his chief concerns is what Costa Rica tourism might look like at the end of this crisis. Who will survive and who won’t? You see, Costa Rica tourism has historically been a story of success by the little guy. By that I mean the small (and tiny) boutique hotels, the rural tourism experiences provided by locals, the locally owned shops, restaurants, and bars, etc., etc. These are what make Costa Rica the truly special experience that it is…well, in conjunction with the incredible flora and fauna. One bright note that Casey is quick to point out, is that the natural attraction of Costa Rica isn’t going anywhere as a result of COVID-19. In fact, due to the absence of humans, the natural part will probably get even better!

I remember that when Costa Rica reached a world-wide level of popularity, I guess around 2012, the big box travel companies began to move onto the scene in a big way. I’d done fairly well the first several years of my business. My web site ranked well in searches related to Costa Rica tourism and travel. Most of my leads came from organic Google searches, which cost me zero once I was able to get my page ranked well enough to appear in them. Then all of a sudden, almost in the blink of an eye, my site just disappeared from those searches. And in its place all I could see were the big boxes, like Expedia, Travelocity, and, well, Casey’s Costa Rica Vacations! In short, my site got kicked by the way-side and my sales evaporated. I was forced to down-size more and more. These days I’m downsized to the point of only offering vacation consulting to the occasional repeat customer or referral.

Granted, what I was basically selling back then was knowledge to folks who wanted info about Costa Rica travel. In those early days you could make a business consolidating that info. Now, not so much. Nowadays, travelers are content to go to a big box site, book a flight, rental car and hotel and just wing it on their own from there. Even though small agencies like mine are pretty much non-existent these days, the small boutique hotel, or the local tour operator in La Fortuna or Manuel Antonio, they’ve still managed to thrive as Costa Rica has become an increasingly popular tourism destination…that is, until COVID-19 came along…

In the midst this crisis, the big box travel companies, like Expedia, Travelocity, etc., etc., are flexing their financial muscles, as the little guys are wondering how they’ll put food on the table tomorrow. It would be a shame to see Costa Rica effectively be turned into Cancun/Cozumel by this crisis, with nothing left but internationally owned big box operators, giant hotels and large/regional tour operators.

But it could happen and Casey sounds that warning…

So, what can be done about it?

Costa Rica is a poor country and there’s only so much the government can do. I believe the answer lies with the millions of Costa Rica lovers out there, maybe like you!

So, I am here to make this plea: as soon as possible book your Costa Rica trip. Show support for the industry by booking with the little guy, the small and independent in-country agency, the small boutique hotels and the local tour operators. The big boxers don’t need your help. They have access to all the money needed to survive this. But the little guys are hurting. And they are the ones that make Costa Rica the special experience that it has been for millions…

So, let’s keep it going…

Please put Costa Rica on your post-crisis travel calendar and book in advance! If you have to postpone, I am sure local operators will be very flexible in giving you all the time needed.

Save Costa Rica tourism during COVID-19 by booking your trip now, or as soon as the airlines start offering viable flight options once again.

And please book with an eye for the small guy!

https://youtu.be/Iqwf5c4Khk8

COVID-19 and Costa Rica Real Estate - A Silver Lining?

The COVID-19 pandemic has realtors the country over quaking in their flip-flops. Not so much from fear of contracting the virus, but from fear of never seeing another contract for sale of a property again, or at least not for a while.

And that fear is probably well-founded. Nevertheless, perhaps there’s a COVID-19 and Costa Rica real estate silver lining that’s being missed here…

How so, you ask?

Let me caution you first by saying I am an eternal optimist. There’s a fair degree of hope baked into my analysis. So, take the following opinions with the grain of salt they are due…

One can’t be an entrepreneur for as long as I have (22 years and counting) and not be an optimist, or at least a realistic optimist. And that’s especially true for one who has seen as many dark clouds pass overhead as I have, with dot.com bubbles bursting, twin towers falling, great recessions, and now a freaking pandemic the likes of which hasn’t been experienced since 1918!

Important Note: This COVID-19 and Costa Rica real estate analysis is specific to the “expat real estate market.” It does not necessarily apply to the vacation/rental home market, which operates according to different dynamics and is highly dependent on tourism. Please see caveat lector at end of post!

I don’t know about you (speaking now to my fellow Costa Rica realtors), but most of my clients have been (and I believe will continue to be) retirees. I looked back and verified that just before writing this. For sure, the vast majority of my deals have been with retiree buyer clients.

How will retirees be affected by this crisis? Well, for starters they can’t really lose their jobs, now can they? The thing we keep hearing most about is the “Great Depression” level of unemployment that could result from this crisis, if it keeps dragging on much longer.

Most of my retiree buyers have been from the U.S. or Canada. I’m not going to say anything about Canada, because, heck, I’ve never even been there! But I can tell you that I feel strongly that this crisis is not going to cause U.S. retirees who were contemplating Costa Rica moves before COVID-19 to (permanently) change their minds now. I wrote a post when this whole crisis began stating that this thing will probably only deepen the hostility and political division that exists in the U.S. And from the news reports I’ve been watching and reading about, I’m only more convinced about that.

This morning I read an article by Yuval Noah Harari (the author of Sapiens). Harari believes that this crisis will embolden governments world-wide to create surveillance states. I can easily see what he warns about actually coming to fruition, especially in the U.S. But not here in Costa Rica. Not a chance.

I just really feel that as this crisis drags on and ultimately the post-COVID-19 economic and social reality takes over, many retirees who were contemplating expat moves will be ready to get the hell out of an increasingly ugly situation, socially, politically, and economically.

But will they have the financial means to do so?

That’s a good question. Perhaps not, but I believe enough of them just might. Between February 12 and March 23 of last month, the Dow Jones fell from a high of 29,551 to a low of 18,592, a drop of 10,959 points, or 37% off its high point. That’s scary. However, since then it is back up to 23,719, a recovery of 5,127 points, or roughly 1/2 of the previous losses sustained.

But we are nowhere near the end of this crisis…it only seems to be worsening. So, what does the stock market see that the rest of us don’t?

I read another article about this and what it comes down to is that corporate America is awash with cash. There’s plenty of cash out there and the U.S. government seems intent on increasing it even more, deficits be damned. It seems to be the one thing democrats and republicans have been able to reach agreement on.

One thing that might cause my beloved Costa Rica interested retirees to put on the brakes is if their nest eggs begin to drastically shrink in alarming proportions. That happened in the immediate days of the crisis and I indeed lost deals as a result. But that trend seems to now be reversing and I believe the U.S. government, headed by none other than Donald Trump (who happens to be up for election later this year), will do everything in its power to keep cash pumping in and the market going up.

This crisis is different from the 2008 crash in that it is an artificially imposed economic downturn. In other words, we’re doing it to ourselves, on purpose (to keep millions from getting sick and a percentage of those from dying). The 2008 crash was preceded, and in large part caused, by an underlying collapse in the housing market. That’s not the case this time around. At least so far, the housing market in the U.S. seems to be in OK shape. Now, there is a real risk of another collapse, if we begin to see a rush to dump properties in order to raise cash to meet living expenses, as well as widespread foreclosures, but so far we haven’t. And, again, I believe the U.S. government will do as much to prevent a dreaded housing collapse as they will to prevent one occurring in the stock market.

So, it might just turn out that the precious retirement nest eggs of my potential retiree clients won’t suffer so much as a result of this crisis, or at least not enough to dissuade them from their expat plans.

Now, a lot of this COVID-19 and Costa Rica real estate analysis depends on what happens with the virus here, in Costa Rica. And actually, so far so good. Costa Rica has taken some fairly draconian measures to prevent spread of the virus and those seem to be working. As of this writing we have 558 confirmed cases and 3 deaths. 90% of the cases are in the densely populated area around the capital of San Jose, with the rest of the country so far generally un-infected. If that maintains and Costa Rica is able to escape the threat of country-wide out-of-control infection, then I believe it will be viewed as a safe-haven, all the more attractive to wannabe expats in places that haven’t been so fortunate, like the U.S.

What about the economic effect on Costa Rica?

Well, this is going to hurt tourism, pure and simple. Whether or not that will be short or longer-term damage remains to be seen. Costa Rica has had a travel restriction (denying entry to foreigners) in place since March 16. It was initially imposed through April 12, but that has been extended to April 30. Tourism represents 6 to 7% of Costa Rica’s economy. I hope Costa Rica does as much as it can to save this vital industry, just like the U.S. will do anything it can to save the stock and housing markets.

Property values in Costa Rica will more than likely go down as a result of this. It will be that healthy dose of reality that many sellers of properties in Costa Rica perhaps needed. How far will they go down? That depends on how long this crisis drags on and supply continues to exceed demand. The point that I have made in this post is that, hopefully, we’ll begin to see a turn around in the supply/demand relationship in the near future. I believe in the meantime, there will be good deals out there and sellers are probably going to have to get more creative in offering financing to buyers. This actually could bode well to attract that influx of retirees I am opining about here.

When will this influx of retiree expats from the U.S. begin?

Any serious answer would require a crystal ball that I simply do not possess. However, I believe it could start as early as the second half of 2020. The next few months are going to be tough for us realtors down here, so best to just hunker down and ride it out. Hell, there sure ain’t much these days to spend money on. It pays right now to keep “overhead” to a bare minimum, while we wait for this hopeful influx to begin showing up. I know that I’m already getting a lot of online interest that bolsters the opinions stated herein.

Remember, even though we don’t have clients in country right now, there are plenty of potential clients at home on their computers, dreaming about Costa Rica. So, even though property showings are very light these days (to put it mildly), we can be dangling that carrot of Costa Rica expat bliss on the computer screens getting stared at during these boring stay-at-home days.

COVID-19 and Costa Rica real estate – Caveat Lector: Due to its heavy reliance on the tourism market, the high-price luxury vacation rental home market in Costa Rica may be in for difficult times. It remains to be seen how much ongoing affect COVID-19 will have on people’s willingness to travel unnecessarily. Unless and until a viable vaccine is available, tourism the world over could suffer. However, I don’t believe getting on a plane to start a new expat life can be placed in the same category as “tourism.” This article should be read as applying only to those homes and locations within Costa Rica that are attractive to expats who want to actually live in Costa Rica.

Costa Rica Tourism During COVID-19

COVID-19 and Costa Rica Real Estate – A Silver Lining?

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