Market monitor: Colombia at a glance

As international arrivals increase, hoteliers expand to serve more business travelers.

Spending on corporate travel to, from and within Colombia was US$5 billion (15.4 trillion Colombian pesos) in 2017. Colombians’ business trips abroad accounted for half of that spending. Spending by all corporate travelers averaged growth of 9% a year between 2012 and 2017, with big increases in 2015 and 2016. Growth is expected to dip to 8% per year, on average, through 2020, but the performance of different business traveler groups should be more balanced. BCD Travel increased its stake in the Colombian market earlier this year.

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Economic environment

Economic growth and business travel spending

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Colombia is South America’s third-largest economy, but it is half the size of second-place Argentina and significantly smaller than regional powerhouse Brazil, according to economic data from the International Monetary Fund.
A 2016 peace agreement between the government and the guerilla group Revolutionary Armed Forces of Colombia (FARC) ended 50 years of internal conflict and paved the way for political progress and economic expansion.
Services lead the economy, accounting for just under half of output. Financial services is a rapidly growing sector.
Colombia’s gross domestic product is expected to increase 2.7% in 2018, according to Oxford Economics—up from the 2% growth recorded in both 2016 and 2017. Higher incomes and low inflation are supporting consumption, while infrastructure development is boosting investment. Growth is forecast to accelerate to 3.3% in 2019.

Air

International travel

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International arrivals to Colombia increased 24% in 2017, following 2016’s peace deal. Inbound travel is expected to grow 3% per year through 2022. Outbound travel by Colombians is forecast to grow 6% per year over that time.
The U.S. is the top source of arrivals to Colombia, accounting for 19% in 2017. It is also the most popular destination for Colombian travelers, accounting for 27% of departures.
Avianca is Colombia’s largest airline. It is part of a group which has airlines in Ecuador, El Salvador, Guatemala and Peru. Its owner, Synergy Group, also owns Avianca-branded carriers in Argentina and Brazil.
Avianca is exploring a three-way business agreement with United Airlines and Copa Airlines covering networks between the U.S. and Latin America.
The airline faces growing competition from two local low-cost carriers. Viva Air Colombia competes with Avianca on a number of domestic routes from Bogota. Easyfly’s domestic and regional operations cover markets that Avianca would like to develop.

Accommodation

Hotel demand

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Hotel demand increased 37% between 2012 and 2017, driven largely by domestic travelers. But their share of room nights fell from 79% in 2012 from to 67% in 2017, as more international travelers visited Colombia.
Mexico and the U.S. lead international demand for hotel accommodation, each accounting for 13% of room nights.
Between 2008 and 2017, government incentives supported a 142% increase in the number of hotels in Colombia. International chains are expanding to serve tourists in Cartagena, as well as business travelers heading to Bogota and Medellin.
With 26 hotels, Colombian upscale chain Hoteles Estelar dominates the market. Hilton is in second place with Colombian chain GHL Hoteles (Grupo Hotelero Londono).
Average daily rates should shift -1% to +1% in 2019, essentially remaining flat, according to BCD Travel’s Industry Forecast.

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