Analysis of the Chilean tourism market - products and opportunities for the destination Pucón and the IXth region

Table of Contents

Table of Figures

List of Abbreviations

1 Introduction
1.1 Subject and Objective
1.2 Approach

2 Fundamentals
2.1 The Chilean Market
2.1.1 The Historical and Political Background
2.1.1.1 Geography
2.1.1.2 The XIII Region
2.1.1.3 Short Description
2.1.1.4 History
2.1.1.5 Population
2.1.1.6 The Mapuche
2.1.1.7 Demographic Profile
2.1.1.8 The Structure of the Economy
2.1.2 Tourism Development
2.1.2.1 General Overview
2.1.2.2 Tourist Arrivals
2.1.2.3 Visitor Structure
2.1.2.4 Tourism Supply
2.1.2.5 Tourism Demand
2.1.3 Alternative Tourism
2.2 Pucón as Destination
2.2.1 Overview
2.2.2 SWOT Analysis
2.2.2.1 Definition
2.2.2.2 SWOT Analysis of Pucón
2.2.3 USP – Unique Selling Proposition

3 Benchmarking and Market Analysis
3.1 Benchmarking
3.1.1 Definition
3.1.2 Types of Benchmarking
3.1.2.1 Internal Benchmarking
3.1.2.2 External Benchmarking
3.1.3 The Use of Benchmarking in this Essay
3.2 Tourism Agencies in Pucón
3.2.1 Main Agencies
3.2.2 Overview of the Tourism Agency Ronco Track

4 Data Interpretation
4.1 Data of the Tourism Agency Ronco Track
4.1.1 Supply
4.1.2 Demand
4.1.3 Cost – Volume – Profit Analysis
4.1.3.1 Sales
4.1.3.2 Variable and Fixed Costs
4.1.3.3 Contribution Margin and Net Income
4.2 The Questionnaire
4.2.1 Target Definition
4.2.2 Kinds of the Surveys
4.2.3 Interview Rules
4.2.4 Structure of the Questionnaire
4.2.5 About the Analysis
4.3 Analysis of the Survey Results
4.3.1 Analysis of the Test Run
4.3.2 Problems and Difficulties during the Implementation
4.3.3 Single Question Frequencies
4.3.3.1 Customer Structure
4.3.3.2 Satisfaction with the Excursion
4.3.3.3 General Impression about the Agency

5 Opportunities for Pucón and the IXth Region
5.1 Eco and Cultural Tourism
5.1.2 The Growing Industry
5.1.2 Ecotourism
5.1.3 Cultural tourism
5.2 Different Aspects
5.2.1 Economic Point of View
5.2.2 Community’s Welfare
5.2.3 Development from within
5.3 Strategies and Solutions
5.3.1 IT as Solution
5.3.2 The “true” Price
5.3.3 Providing Knowledge and Financial Resources
5.4 Problem and Risks

6 Conclusion

References

Eidesstattliche Erklärung

Table of Figures

Figures in the Main Part

Fig. 1: Regions of Chile

Fig. 2: Important Facts about Chile

Fig. 3: New Forms of Tourism

Fig. 4: SWOT Analysis of the Destination Pucón

Fig. 5: Types of Benchmarking

Fig. 6: Range of Activities of the Agency Ronco Track

Fig. 7: Simplify Demand Calculation

Fig. 8: Simplify Sales Calculation (only Quad Bike)

Fig. 9: Simplify Sales Calculation of all Products

Fig. 10: Variable Costs Calculation

Fig. 11: Fixed Costs Calculation

Fig. 12: Contribution Margin Calculation

Fig. 13: Net Income Calculation

Fig. 14: Advantages and Disadvantages of Various Opinion Polls

Illustrations and Figures of the Appendix are separate

List of Abbreviations

illustration not visible in this excerpt

1 Introduction

1.1 Subject and Objective

On the economic front, tourism has the capacity to create jobs: jobs for the poor, jobs for women and young people, jobs in the indigenous communities, unskilled as well as highly qualified jobs, jobs in seaside resorts as well as in remote rural areas and in ecotourism activities. Tourism is a much more diverse industry than many others and can build upon a wide resource base. Diversity increases the scope for wide participation. Furthermore, most export industries depend on financial, productive and human capital. Indeed, tourism depends on these but also on natural capital, such as wildlife, scenery and beaches, and culture, vital assets of many developing countries in Latin America and the Caribbean. For these reasons combined, tourism should be considered as one of the important economic development opportunities available to developing countries in the region.

The United Nations declared the year 2002 as INTERNATIONAL YEAR OF ECOTOURISM. The development of ecotourism often involves precious and fragile natural resources and must be done with great sensitivity. Natural habitats have been diminishing at alarming rates and equally alarming reports are regularly published on diminishing water resources, deforestation, increases in pollution, the destruction of corral reefs and many more.

Ecotourism is a field of human activity where conservation and development can wisely and effectively be blended to achieve a mutual goal to the benefit of people and communities. This is why ecotourism should also be sensitive to local communities, their land rights, traditions, cultures and ways of life. Ecotourism in remote areas cannot be developed without the consent and active involvement of local peoples, who should become partners in the process.

For many countries like Chile, particularly in the developing world, tourism is one of the few meaningful sources of economic development and job creation. What would be the situation of countries like Cuba, Dominican Republic, Seychelles, Maldives, Vietnam and many others without tourism? Tourism can therefore play an important role in improving living standards and raising people above the poverty threshold.

Throughout this essay the example of the tourist destination Pucón and the IXth region will be used to explain the situation now and the opportunities for cultural and ecotourism. The destination is one of the famous tourism areas in Chile and well know for outdoor and adventure actitvities worldwide. Nevertheless the IXth region “Araucanía” in Chile is the area with the highest native population in this country. Moreover, its name is derived from the local native people named, "Araucanos"^[1], and it is nationally known for its various amount of volcanoes, lakes, woods and hot springs. For this reason, there are five national parks and seven wild areas to protect the long list of natural resources. This region has the best opportunities for the future development of ecotourism. The main components of this thesis are:

- The tourism development situation in Chile under the consideration of the native population
- What are the strengths and weaknesses of the destination Pucón and the unique selling proposition?
- Actual offers and analysis of an agency as economy example
- Visitor structure and satisfaction with the products
- New opportunities for the destination and the IXth region which are part of the sustainable tourism development – cultural and ecotourism

1.2 Approach

For this thesis the author has been three months in Pucón during the main season and worked for the tourism agency Ronco Track. It was part of this work to understand and analyze the actual situation on the spot. More than that, it was important to collect the different point of views from the locals and to comprehend their situation in comparison to the future developments of this region.

It was not often easy to get in contact with the native population called “Mapuche” and to win their confidence as an outsider. More than that, it was complicated to show them the “real willingness” for understanding their situation and problems. Normally the tourists never get in a real conversation with the native people, than they are shy and live a secluded live. With the help of a local friend from the native people the author had the change to spend one day with a Mapuche family and to learn more about them.

The essay is self-contained and structured consecutively to finally understand the chances, the possibilities and the advantages of a cultural and ecotourism for the destination Pucón and the IXth region. Furthermore, understanding the necessary of the “development from within” is a main element to comprehend the different aspects and strategies in chapter 5.

The fundamentals in chapter 2 are giving a background to understand the coherences. The historical and political developments are important components in the Chilean tourism development and it is essential to get an overview of the whole situation for understanding the actual problems and opportunities. Furthermore the critical situation of the native people is examined in this chapter as starting point for the opportunities. How important tourists are for the destination and which basic terms and conditions are leading to the further development of Pucón will be described, before the SWOT and the USP analysis worked out.

In chapter 3 a basic benchmark-study and market analysis helps to learn from other agencies. The main idea is to compare the products which already exist and to find the differences between the competitors. On the other hand, the example of the agency Ronco Track shows their USP and the different strategy for a successful business.

In chapter 4 the data analysis of the agency shows the relation between supply and demand. The survey explains the target group and their satisfaction with the products. After the cost – volume – profit analysis the reader will understand the necessity of new opportunities for the destination Pucón and the IXth region.

Chapter 5 regard the terms cultural and ecotourism on the side of the supply. After giving factors of this growth industry, different strategies are illustrated. The opportunities for the destination Pucón and the IXth are developed on the collected information and based on the worldwide ecotourism trend. The reader will understand the problematic and sensitivity of cultural and ecotourism. The chapter 5 will only concentrate on some solution ideas for a successful implementation and relationship between cause and effect between the tourists and the native people.

As result of this essay chapter 6 concludes with a summary of the different chapters and point out the main inference for opportunities of the destination Pucón and the IXth region.

2 Fundamentals

2.1 The Chilean Market

2.1.1 The Historical and Political Background

Chile is a country of startling contrasts and extreme beauty, with attractions ranging from the towering volcanic peaks of the Andes to the ancient forests of the Lake District. There are a multitude of very good parks, and plenty of opportunities for fine adventure travel. Chile is justly famous as the location of Torres del Paine, considered by many to be the finest nature travel destinations in all of South America.

“Chile – República de Chile means in the language de Aymará Indians the land where the world ends”^[2].

2.1.1.1 Geography

For anyone who has ever been fascinated by geography, the long, impossibly thin line of Chile has always produced a tiny moment of astonishment. Chile stretches over 4,300 km along the south-western coast of South America, a distance roughly the same as that from San Francisco to New York, or Edinburgh to Baghdad. At the same time, its width never exceeds 240 km, making the country more than eighteen times longer than its widest point (ill. 1). The most obvious factor in Chile's remarkable slenderness is the massive, virtually impassable wall of the Andes, a mountain range that is still rising and that contains more than fifty active volcanic peaks. The western border is of course the Pacific Ocean, but it is a misconception to picture Chile as nothing more than the steep western slope of the Andean peaks. Along its length Chile is marked by a narrow depression between the mountains and the sea. To the north the land rises and becomes more arid, until one reaches the forbidding Atacama Desert, one of the most inhospitable regions on earth.

To the south just the opposite transformation takes place: the land falls away, and the region between mountains and ocean fades into the baffling archipelagic maze that terminates in Chilean Patagonia. Chile's southern extremity is marked by Cape Horn, a treacherous headland surrounded by almost continuously storm-tossed seas and passable only through the foggy stillness of the Strait of Magellan. In the centre of the country, however, is a long and expansive river valley, a five hundred mile corridor occupied in the north by vineyards and great farms and in the south by primeval forests and enchanting lakes. Santiago, the capital, anchors the northern and more prosperous section of the central valley.

The lush Lake District to the south, however, is the homeland of Chile's indigenous peoples, the Araucanians. Also parts of Chile are two notable Pacific possessions-the Juan Fernandez Islands and the famous Easter Island, both of which are administered as national parks. The Juan Fernandez Islands are located about 670 km off the Chilean coast, while Easter Island is situated 3700 km distant. Chile's climate is as diverse as its geography. Aside from the obviously extreme climatic conditions of the Andes and the Atacama, however, the country enjoys a comfortable temperate climate^[3].

2.1.1.2 The XIII Region

Politically, Chile is divided into regions, which are subdivided into provinces. Forty provinces are listed in "Administrative Subdivisions of Countries". Over the years the number of provinces was increased to 51 but no later than 1993. The number of municipalities has also increased, to 345^[4]. The thirteen regions are divided into 51 provinces (provinces), which are further subdivided into communes (municipalities)^[5]. The table below shows all of the regions of Chile as they stand now (fig. 1 and ill. 2).

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Fig.1: Regions of Chile

Source: Stadoids^[6]

2.1.1.3 Short Description

In this essay it is important to understand the political and economical background. Therefore the fig. 2 shows the actual important and interesting facts about the Chilean economy. Furthermore in the following chapters 2.1.1.4 to 2.1.1.8 will have a closer look to the development over the last decades and analysis the reason of the fluctuation.

The flag of Chile was introduced on 17th of October in 1817. It shows two horizontal stripes in white and red, and in the white stripe near the pole a blue square with a white five jagged star (ill. 5). “The red stand for the blood, which was shed for the achievement of the independence. The white stand for the snow on the peaks of the Andes and the blue for the heaven above Chile. The white star is interpreted as freedom star, and stands for the honor of the land and the progress, too. The flag pictures a simplified form of the US American Stars and Stripes" ^[7] .

illustration not visible in this excerpt

Fig. 2: Important Facts about Chile

Source: Own Illustration, Data based on various References^[8]

2.1.1.4 History

“From one of the most neglected outposts of the Spanish Empire, Chile developed into one of the most prosperous and democratic nations in Latin America. Throughout its history Chile was dependent on great external powers for economic exchange and political influence: Spain in the colonial period, Britain in the nineteenth century, and the United States in the twentieth century”^[9].

Chile's dependence is made most evident by the country's heavy reliance on exports. These have included silver and gold in the colonial period, wheat in the mid-nineteenth century, nitrates up to World War I, copper after the 1930s, and a variety of commodities sold overseas in more recent years.

The national economy's orientation toward the extraction of primary products has gone hand in hand with severe exploitation of workers. Beginning with the coerced labor of native Americans during the Spanish conquest, the exploitation continued with mestizo peonage on huge farms in the eighteenth and nineteenth centuries and brutal treatment of miners in the north in the first decade of the twentieth century.

Politically, Chile has also conformed to several patterns. Since winning independence in 1818, the nation has had a history of civilian rule surpassed by that of few countries in the world. In the nineteenth century, Chile became the first country in Latin America to install a durable constitutional system of government, which encouraged the development of an array of political parties. Military intervention in politics has been rare in Chile, occurring only at times of extraordinary social crisis, as in 1891, 1924, 1925, 1932, and 1973. These interventions often brought about massive transformations; all the fundamental changes in the Chilean political system and its constitutions have occurred with the intervention of the armed forces, acting in concert with civilian politicians.

From 1932 to 1973, Chile built on its republican tradition by sustaining one of the most stable, reformist, and representative democracies in the world. Although elitist and conservative in some respects, the political system provided for the peaceful transfer of power and the gradual incorporation of new contenders. Under girding that system were Chile's strong political parties, which were often attracted to foreign ideologies and formulas. Having thoroughly permeated society, these parties were able to withstand crushing blows from the Pinochet regime of 1973-90^[10].

Republican political institutions were able to take root in Chile in the nineteenth century before new social groups demanded participation. Contenders from the middle and lower classes gradually were assimilated into an accommodating political system in which most disputes were settled peacefully, although disruptions related to the demands of workers often met a harsh, violent response.

The system expanded to incorporate more and more competing regional, anticlerical, and economic elites in the nineteenth century. The middle classes gained political offices and welfare benefits in the opening decades of the twentieth century. From the 1920s to the 1940s, urban laborers obtained unionization rights and participated in reformist governments. In the 1950s, women finally exercised full suffrage and became a decisive electoral force. And by the 1960s, rural workers achieved influence with reformist parties, widespread unionization, and land reform^[11].

Throughout the twentieth century, leaders outside Santiago also pleaded for administrative decentralization until the Pinochet government devolved greater authority on provincial and municipal governments and even moved Congress from Santiago to Valparaíso^[12].

The third issue dividing Chileans-social class-grew in importance from the nineteenth century to the twentieth century. Although both the Conservatives and the Liberals represented the upper stratum, in the nineteenth century the Radicals began to speak on behalf of many in the middle class, and the Democrats built a base among urban artisans and workers. In the twentieth century, the Socialists and Communists became the leaders of organized labor. Along with the Christian Democratic Party, these parties attracted adherents among impoverished people in the countryside and the urban slums.

In the twentieth century, three other issues became salient, although not as significant as divisions over social class, regionalism, or the role of the church. One was the cleavage between city and country, which was manifested politically by the leftist parties' relative success in the urban areas and by the rightist groups in the countryside. Another source of strife was ideology; most Chilean parties after World War I sharply defined themselves in terms of programmatic and philosophical differences, often imported from abroad, including liberalism, Marxism, corporatism, and communitarianism. Gender also became a political issue and divider. After women began voting for president in 1952, they were more likely than men to cast ballots for rightist or centrist candidates.

During the colonial period and most of the twentieth century, the central state played an active role in the economy until many of its functions were curtailed by the military government of General Pinochet. State power was highly centralized from the 1830s to the 1970s, to the ire of the outlying provinces.

Although normally governed by civilians, Chile has been militaristic in its dealings with native people, workers, and neighbouring states. In the twentieth century, it has been a supporter of arbitration in international disputes. In foreign policy, Chile has long sought to be the strongest power on the Pacific Coast of South America, and it has always shied away from diplomatic entanglements outside the Americas^[13].

2.1.1.5 Population

Chile's population is composed predominantly of mestizos, who are descended from marriage between the Spanish colonizers and the indigenous people. The surviving indigenous groups consist of the Aymara, in the north, and the Mapuche, who number roughly 100,000 and continue to inhabit the forested areas of the Lake District. Chile is also home to a number of significant immigrant groups, including minority populations from virtually every European country. There are significant numbers of Basques and Palestinians. The high proportion of mestizos among Chile's people has made race a minor issue in comparison to class, which continues to be a source of considerable tension. The great majority of Chile's people, as one might expect, are concentrated in the central valley. Spanish is the country's official language, but some of the Indian dialects remain.

In the north, they speak Aymara, in the south Mapuche, and on Easter Island the Polynesian language of Rapa Nui^[14]. During the nineteenth century, the newly independent government sought to stimulate European immigration. Beginning in 1845, it had some success in attracting primarily German migrants to the Chilean south, principally to the Lake District. For this reason, that area of the country still shows a German influence in its architecture and cuisine, and German (peppered with archaic expressions and intonations) is still spoken by some descendants of these migrants.

People from England and Scotland also came to Chile, and some established export-import businesses of the kind that the Spanish crown previously had kept at bay. Other European immigrants, especially northern Italians, French, Swiss, and Croats, came at the end of the nineteenth century. More Spaniards and Italians, East European Jews, and mainly Christian Lebanese, Palestinians, and Syrians came in the decades before World War II. Many of these immigrants became prominent entrepreneurs or professionals, and their numbers never exceeded 10 percent of the total population at any given time.

Thus, in contrast to Argentina, whose population was transformed around the turn of the century by numerous European immigrants, especially Italians, the Chilean population continued to be defined by the original Spanish and native American mixture. Acculturation was fairly rapid for all immigrant groups. Because second-generation residents saw themselves primarily as Chileans, ethnic identities had little impact on national society.

The term Mapuche ("people of the land") now encompasses most of the native Chilean groups. The number of Mapuche residing on the reservations that were set up beginning in the late 1880s has declined in recent years. About 300,000 were counted as living in the reservations by the 1982 census. The 1992 census asked respondents to identify themselves ethnically as Mapuche, Aymara (the native population of northern Chile whose main trunk lies in Bolivia), Rapa Nui (the Polynesian group that lives in or originates from Easter Island), and other. The results showed that 9.6% of the population over age fourteen self-identified as Mapuche, 0.5% as Aymara, and less than 0.25% as Rapa Nui. This means that about 1.3 million Chileans are native Americans, mainly Mapuche, or the descendants of one of the fourteen or so different tribal groups that occupied what is now Chile before the Spanish conquest.

With the partial exception of the indigenous groups, the Chilean population perceives itself as essentially homogeneous. Despite the configuration of the national territory, regional differences and sentiments are remarkably muted. Even the Spanish accent of Chileans varies only very slightly from north to south; more noticeable are the small differences in accent based on social class or whether one lives in the city or the country. The fact that the Chilean population essentially was formed in a relatively small section of the center of the country and then migrated in modest numbers to the north and south helps explain this relative lack of differentiation, which is now maintained by the national reach of radio and especially of television. The media diffuse and homogenize colloquial expressions^[15].

2.1.1.6 The Mapuche

Since Mapuche territory was incorporated into the Chilean state at the end of last century, Mapuche have systematically been deprived of their territory and been subject to racial discrimination. The majority struggles with poverty, deprived of the means to reproduce its culture. The southern region IX around Temuco (ill. 3), with the highest percentage of Mapuche population, is the poorest in the country and has the highest mortality rate (33% under poverty line in 1994, 36% in 1996)^[16].

Many Mapuche communities in rural areas became isolated islands surrounded by pine plantations. The native forest has been cut down by the forestry companies, and traditional means of survival have disappeared: the animals they would hunt, the plants they would gather for food and medicine. The fast-growing pines also dry out all ground water sources. The water which can be found moreover is likely to be contaminated by the chemicals used in forest management. These communities isolation is increased by the deterioration of the few available roads by the logging trucks.

In spite of over a hundred years of colonisation by the Chilean state, still around one million people, half of them living in urban areas, identify themselves as Mapuche (ill. 6). After having been lumped together with “the poor” and not being heard for many decades of political life in Chile, they are now in a process of choosing ways to relate as Mapuche to the nation-state of Chile. Different Mapuche groups have chosen different strategies and there is no one rallying voice which can speak for all of them.

Attempts were made by the first elected government after the end of Pinochet's regime in 1990 to improve the situation of Mapuche, which had been set back even more drastically under the dictatorship's nationalistic agenda. An Indigenous Act was passed in 1993 which provided for the set-up of a National Agency of Indigenous Development, but the necessary funding was never provided.

There were also serious internal differences between indigenous and Chilean board members. The most marked differences arose in the case of the required approval by the named agency, of indigenous land permutations necessary for the construction of a hydroelectric dam at Ralko, in Mapuche Pewenche territory. Thus, no significant improvements have been made by this Agency. The majority of Mapuche continue to be deprived of the necessary means for self-reliance and self-determination. In many cases, particularly for the Mapuche Communities in Conflict in the Malleco and Arauco provinces (north of Temuco), the situation got increasingly worse.

Additional Background Data

15% of Mapuche live in the Araucania, Chile's IXth region (the heartland of Mapuche territory), where they make up 26% of the total regional population, the highest concentration in Chile. Another 20% of Mapuche live in the adjacent VIII and X regions. In the Araucania 36% of the population lives under the poverty line. 44% of Mapuche live in the capital Santiago, where they make up approx. 10% of the population. Mapuche territory was never a Spanish colony. The colonial power is the Chilean state, has been since the 1880's^[17].

2.1.1.7 Demographic Profile

A new decennial census was taken in 1992. The total population was officially given as 13.348.401, of which 6.553.254 were male and 6.795.147 were female. According to that data, the average population density in 1992 remained 17.6 inhabitants per square kilometre. Population density varied greatly, however, from the sparsely populated far north and far south to the much more densely inhabited central Chile. In 1993 the figure rose to 18 inhabitants per square kilometre.

The National Statistics Institute (Instituto Nacional de Estadísticas) estimated the birth rate in 1991 at 22.4 per 1.000 population, an increase over 1985, when the rate stood at 21.6 per 1.000. This has led to a corresponding widening of the base of the age pyramid of the population, which had narrowed significantly with the decline in the birth rate that began in the mid- to late 1960s. The current increase in the birth rate is a slight demographic echo of the birth control programs that began in the mid-1960s. These programs reduced the fertility of women of childbearing age, causing the original drop in the birth rate, whereas the rise in the early 1990s resulted from children born to new generations of women who have reached the childbearing period of their lives. Whereas women of childbearing age (fourteen to forty-nine years) had had an average of 4.09 children in 1967; by 1992 this average had dropped to 2.39. Now a day the birth rate is 16.46 per 1.000 population.^[18]

With the declining birth-rate and no significant increase in immigration, much of the growth in the Chilean population over the 1970s and 1980s resulted from a decline in mortality. The mortality rate in 1992 was estimated at 5.6 per 1.000 population, whereas in 1960 it had been more than twice that, at 12.5 per 1.000. In 1990 life expectancy at birth was estimated at 71.0 years ( 68 for men and 75 for women), up from the 1960 figure of 57.1 years (57.6 for men and 63.7 for women). These improvements resulted in part from better health care beyond the first year of life, but they are explained primarily by a dramatic decline in infant mortality during the 1960-90 period. In 1960 infant mortality was 119.5 per 1.000 live births, and by 1991 it had declined to 14.6 per 1.000.

This latter rate, one of the lowest in Latin America, indicated the success of the various health programs for expectant mothers and infants implemented since the late 1960s. Now a day the infant mortality rate had declined to 9.05 per 1.000 live births. In the early 1990s, the Chilean population was older than it has been in the 1960s. The 1982 census revealed for the first time ever that the population included a majority of adults over twenty-one years of age. Yet it was still a very young population: 49 percent of Chileans were estimated in 1991 to be less than twenty-four years of age. Now a day the average population age is over twenty-nine years^[19].

2.1.1.8 The Structure of the Economy

Chile has a market-oriented economy characterized by a high level of foreign trade. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio Aylwin - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis.

A severe drought exacerbated the recession in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. Despite the effects of the recession, Chile maintained its reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America.

By the end of 1999, exports and economic activity had begun to recover, and growth rebounded to 4.2% in 2000. Growth fell back to 3.1% in 2001 and 2.1% in 2002, largely due to lacklustre global growth and the devaluation of the Argentine peso, but recovered to 3.2% in 2003. Unemployment, although declining over the past year, remains stubbornly high, putting pressure on President Lagos to improve living standards. One bright spot was the signing of a free trade agreement with the US, which took effect on 1 January 2004. In 2004, GDP growth is set to accelerate to more than 4% as copper prices rise, export earnings grow, and foreign direct investment picks up.

2.1.2 Tourism Development

2.1.2.1 General Overview

Tourism is one of the economic sectors most affected by the new trends of the global information society. Increasing disposable incomes, larger available leisure times, and steadily decreasing transportation and communication costs have allowed increasing numbers of people to travel and vacation throughout the world. More open boundaries and freer commercial policies in almost every region of the planet have facilitated the movement of larger contingencies of people across national boundaries.

It is difficult to define exactly what the tourism industry comprises. What it is called tourism really embraces a vast and diverse range of activities, from large-scale mass or package tours to small-scale, individually-tailored holidays; from internal domestic visits to family or friends, to international or intercontinental journeys, to business trips and “sun, sand and sea” recreational breaks; from activity, sports, nature, health, ‘green’ or alternative holidays, to culture or adventure. Therefore, there is some debate regarding the exact size and growth of tourism. In spite of the debate, however, there is a consensus that tourism is clearly one of the largest industries in the world, if not the absolute largest. For the year 2010, the WTTC expects that total tourism sector’s GDP will reach almost US$ 6,600 billion^[20].

For the Latin American region in particular, tourism GDP was amount to almost US$ 97 billion in 2000, and it would increase to almost US$ 190 billion in 2010, an increase of more than 95% in a decade or of 5.1% per year. Moreover, the jobs provided by the tourism sector today are 12.4 million, and will increase 2.6% annually during the next decade, to reach a total level of employment of almost 16 million people in the year 2010^[21].

Chile is one of the Latin American region's most dynamic and promising markets. Its strength and attractiveness lie not in its size, but in the energy and professionalism of its entrepreneurs, the transparency of its regulation and the predictability of its decision-makers. Market-led reforms adopted close to 30 years ago and an increasingly diversified economy with strong ties to buyers and suppliers in the Americas, Europe and Asia have given Chile a wide range of options for further growth. The slowdown in the US economy, coupled with the events of 11 September 2001 in the US and the particularly adverse regional economic conditions were all key factors adversely affecting the local travel and tourism market in 2002 / 2003. The continuous depreciation of the Chilean Peso in 2002 severely impacted Chile's tourism industry^[22]. High-income earners still travelled abroad, but for the less affluent sector of the population it became more expensive.

The recession in Chile impacted all sectors, particularly tourism. Hotels, restaurants and travel agencies experienced rocky financial situations. Historically Chile lacked a coherent national tourism strategic development plan, but the review period witnessed the first steps to generate a strategy joining public and private sector efforts. The idea that tourism could be a key economic sector began to take root. International promotion to attract long haul tourists was one sign of it but dedicated resources were still limited at the end of the review period.

2.1.2.2 Tourist Arrivals

Another area of significant new investment is tourism, which increased significantly during the 1980s, aided by government efforts to promote it both domestically and abroad through the National Tourism Service Sernatur. More than 1.5 million tourists visited the country in 1994. Sernatur reported that during 1994 a total investment of US$ 320 million in hotel construction had either already been made or was under consideration in Viña del Mar, Santiago, Cuenca del Sol in Coquimbo Region and the ski resorts of La Parva and Valle Nevado.

In 1998 the number of more than 1.7 million tourists was reaches (fig. A2 / A3). From that time the number of visitors was constant for the next four years until 2002; this is shown in fig. A2. In the year 2002 the number decreased until 1.4 million. The reason for this extreme decline was the 11th of September which had a strong influence on the whole tourism market and especially on the overseas trips. The market recovered fast from the tragedy and after this year the number was still growing.

The fig. A2 shows that in the year 2004 more than 1.7 million visitors came to Chile. It was the most successful year in the tourism business for Chile with the highest number of visitors. Probably during the next three years the border of 2 million tourists will be reached with this tremendously fast development. In 2000 the yearly income for the tourism sector was 830 million US$. For the 1992-2007 period, more than US$2 billion is expected to be invested in tourism infrastructure projects in Chile. In the year 2000 the investment amounted to 966 million Chilean Pesos (fig. A13).

2.1.2.3 Visitor Structure

The main target group for Chile is America which is divided into three parts and where South America has the highest number of arrivals in the country (fig. A3). For that the boundary countries have the largest influence on tourism economy. The second place is hold by Europe where in the year 2004 more than 326.000 visitors came to Chile. Only now North America takes the third place with less than 98.000 visitors in comparison to Europe. There are two main reasons for this difference. One the one hand is the entry fee for the U.S. citizen which had risen over the years to $100 nowadays. It has to pay in cash at the airport and is based on the principle of reciprocity. The previous-mentioned fee is paid only once and it is valid until the expiration of the passport. It is a lot cheaper for the Mexicans, Australians or Canadians but for others there is no entry fee^[23].

On the other hand is the travel behaviour of the U.S. citizens, which is characterized by a high number of inland travellers. They are less interested in other countries and culture. Compared to the year 1998 the distribution has not changed a lot. South America has been on the first places and followed by Europe on the second stages. Having a closer look to the Europe composition in figure A4 there is one country with a high potential for travelling to Chile. The number one is Germany with more than 58.850 visitors in the year 2004. Follow by Spain and Great Britain with more than 50.000 visitors in the same year (fig. A4).

2.1.2.4 Tourism Supply

Because of its various countryside Chile offers a wide range of activities which are not often found in other countries. Desert dominates in the north, tundra the south and at the final end of Chile there is “Tierra del Fuego” with extreme temperatures during the winter time. The centre has many fertile valleys and lovely scenery. The nation's coastline is indented by many bays and fjords, while the eastern frontier is the colossal mountain range of the Cordillera de los Andes. Some people associate all of South America with the Amazon jungle and heat, but there is no jungle in Chile - in fact, much of the land can be freezing cold. Although no one says no to a casual meander along its grand urban boulevards, travellers are mostly drawn to this string bean country because of its spectacular Pacific coastline and Andean highlands, and because of the opportunities it offers for adventure sports. Therefore the tourism and leisure possibilities are divided into several parts which give a better overview of the supply (fig. A1 / ill. 7). The following keywords are mentioned the main parts of the tourism supply:

- pleasure
- sports
- activities in combination with the production
- activities in combination with the nature
- activities in combination with historical culture
- interest in events
- other activities

2.1.2.5 Tourism Demand

C hile is a country of great beauty and contrasts that offers tourists, a safe and stable environment, stunning nature and first class services to enjoy incomparable and unforgettable holidays full of adventure and exciting experiences.

The travel behaviour of the visitor is an important element for analysing the strength and weaknesses for the tourism market in Chile. Therefore it is unavoidable to point out why people travel to Chile. The main reasons for more than 70% of visitors are their vacation (fig. A6). The main reason is for 41.5% the great beaches which is shown in figure A5. With a Pacific coastline measuring over 6,200 miles long, Chile is site of countless beaches, ranging from warm-water surf breaks in the north, hip resorts in La Sarena and Viña del Mar (VIth region Coquimbo and Vth region Valparaíso) and to remote wilderness beaches in the middle south and Patagonia. Chile accounts for more than half of the western coastline of South America.

But also the historical places and national parks are preferred by the travellers. The rest of the visitors came to see families and friends or they are on business. In comparison to the structure of the whole visitors, there is a difference on the German demand side which is show in figure A7. For the German travels the historical places and the national parks are more important than the beaches or other events. That is why more than 76% came for vacation to Chile and only 4.90% to visit families or friends (fig. A8). The rest of the group came for climbing in the Andes, for fishing in the great lakes (Xth region los Lagos) or for enjoying a cruise linier from Puerto Montt to Puerto Natales or around Cap Hoorn ( XIIIth region Magallanes y de la Antártica Chilena).

2.1.3 Alternative Tourism

The impressive increase of tourism in the last decades has implied a parallel growth of the so-called mass tourism, which many caricaturize as the “four Ss-tourism”: sun, sand, sea and sex^[24]. Some authors claim that mass tourism voraciously consumes places and cultures, transforming them into Disney-like extravaganzas were cultural in authenticity are actively promoted. For them, mass tourism would be a cultural order in which sophistication, difference and authenticity are increasingly denied and cultural homogenization is the norm^[25]. This type of large scale, invasive tourism has led to a range of problems in many places around the world.

Problems such as environmental pollution and destruction, social degradation, cultural alienation and loss of identity, increased income inequalities and conflict over land rights and access to resources, damage to attractions and facilities, the promotion of paternalistic attitudes, and the spread of diseases According to Mowforth and Munt, some of these problems have become matter of global concern, as in the case of the Mediterranean Sea, deforestation and the consequent soil erosion in the Himalayas, litter along the Nepalese mountain tracks, and the disturbance of wildlife by Kenyan safari tours.

There are multiple forms of alternative tourism, since they respond to a variety of different motivations of tourism demanders related with, among other things, nature, natural resources, cultures, history, arts, adventure, sports, etc. Fig. 3 present a list of the numerous terms used to refer to the various form of alternative tourism.

It seems that all forms of alternative tourism have some aspect that, at least theoretically, differentiates them from mass tourism and its negative effects on people, cultural heritages, environment and natural resources. The different forms of new tourism share, in varying degrees, the travelers’ new concerns regarding their individualism and identity, as well as their interests in the people, cultures and environment.

[...]

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^[1] Ruta de los Volcanos: available from: http://www.rutadelosvolcanes.com/about.php

(as of 21-Mai-2005)

^[2] NN.: Chile; available from: http://www.flyfishingtravel.com/chile.htm (as of 19-April-2005)

^[3] cp. Geographia: Chile; available from: http://www.geographia.com/chile/ (as of 19-April-2005)

^[4] cp. Stadoids: Regions of Chile; available from: http://www.statoids.com/ucl.html

(as of 19-April-2005)

^[5] cp. ibidem

^[6] Stadoids: Regions of Chile; available from: http://www.statoids.com/ucl.html

(as of 19-April-2005)

^[7] NN.: Chile / Meaning / Origin of the Flag; available from:

http://www.flaggenlexikon.de/fchile.htm (as of 19-April-2005)

^[8] cp.1 Theodora: Geographic / Chile 2004; available from:

http://www.theodora.com/wfbcurrent/chile/ (as of 19-April-2005)

cp.2 Travelblog: Chilean Background; available from:

http://www.travelblog.org/World/ci-info.html (as of 19-April-2005)

cp.3 CIA: The World Factbook / Chile; available from:

http://www.cia.gov/cia/publications/factbook/geos/ci.html (as of 19-April-2005)

^[9] NN.: The Library of Congress / Country Studies / Chile; available from:

http://workmall.com/wfb2001/chile/chile_history_index.html (as of 19-April-2005)

^[10] NN.: Historia de Chile; available from:

http://www.geocities.com/Athens/Acropolis/1004/cronologia.htm (as of 4-Mai-2005)

^[11] NN.: Chile / Geschichte; available from: http://de.wikipedia.org/wiki/Chile#Geschichte

(as of 4-Mai-2005)

^[12] cp. Guia del Mundo: Chile / Historia; available from:

http://www.guiadelmundo.com/paises/chile/historia.html (as of 19-April-2005)

^[13] cp. NN.: The Library of Congress / Country Studies / Chile; available from:

http://workmall.com/wfb2001/chile/chile_history_index.html (as of 19-April-2005)

^[14] cp. Geographia: Chile / History & Culture; available from:

http://www.geographia.com/chile/chilehistory.htm (as of 19-April-2005)

^[15] Geographia: Chile / History & Culture; available from:

http://www.geographia.com/chile/chilehistory.htm (as of 19-April-2005)

NN.: Chile; available from: http://www.shsu.edu/~his_ncp/labn.html#04 (as of 4-Mai-2005)

^[16] Mapuche International: News; available from:

http://www.mapuche-nation.org/english/html/news/n-72.htm (as of 4-Mai-2005)

^[17] Mortan, B.: In Defence of Rakgo Mapu; available from:

http://web.uvic.ca/igov/research/journal/articles_morton.htm (as of 4-Mai-2005)

^[18] cp. NN.: The Library of Congress Country Studies / CIA World Factbook / Chile / Society;

available from: http://www.photius.com/countries/chile/society/index.html (as of 19-April-2005)

^[19] cp. International Planned Parenthood Federation: Country Profiles / Chile; available from:

http://ippfnet.ippf.org/pub/IPPF_Regions/IPPF_CountryProfile.asp?ISOCode=CL

(as of 19-April-2005)

^[20] World Travel & Tourism Council: Blueprint for New Tourism / Case Study; available from:

http://www.wttc.org/frameset1.htm (as of 18-Mai-2005)

^[21] World Travel & Tourism Council: Tourism Satellite Accounting; available from: http://www.wttc.org/2004tsa/frameset2a.htm (as of 18-Mai-2005)

^[22] World Travel & Tourism Council: Regional Initiatives / Latin America Regional Programme; available from: http://www.wttc.org/2004tsa/frameset2a.htm (as of 18-Mai-2005)

^[23] Air Latino: Visa Requirements for U.S. Citizen; available from:

http://www.airlatino.com/visa-requirements.htm (as of 18-Mai-2005

^[24] Some people include a fifth S, for surf.

^[25] cp. Mowforth, M. / Munt, I.: Tourism and Sustainability; Routledge, New York, 1998