International Sales down 40 Percent in May through July: Argentina, a Top 15 overseas source market for the United States that hasn’t seen a serious decline in the number of visitors it sends to the U.S. in more than a decade has suddenly experienced a perfect storm of economic currents that seem certain to drive the country into an economic recession and have a significant impact, as well, on outbound tourism drive visitation down for the rest of 2018 and into 2019. In doing so, it will do damage to the upcoming 2018-2019 peak summer travel season
Here is a quick digest of what’s been recently reported concerning the economic condition, as well as its impact on the tour and travel industry in Argentina. (Remember that summer in the southern hemisphere extends from Dec. 21, 2018 to March 20, 2019.)
—The consensus opinion of economists in the past several years was that Argentina’s peso currency was overvalued, with the government acknowledging that it would depreciate gradually over the years. But no one expected the speed with which the peso has plummeted against the dollar—down by more than 115 percent in the past year and down by more than 30 percent last month alone. The depreciation made Argentina’s dollar debts more expensive for the government, prompting it to turn to the International Monetary Fund (IMF) for a $50 billion loan.
According to the Argentine edition of the trade journal REPORTUR, a group of travel agents it contacted said that, for the three months prior to August, “We have seen a reduction of 40 percent in sales in relation to the same period of the previous year.”
Further worsening the situation, especially for agents and operators who sell long-haul travel, there has been an elimination of interest-free installment payments for consumers to pay for their holidays. A significant portion of Argentines pay for their vacations via 12-month installment plans.
The group of agents contacted by REPORTUR expressed the hope that the slide in value of the peso vs. the U.S. dollar would stabilize at 28 or 29 percent. That is now seen as an impossible dream and one could safely expect that the inflated peso will push above beyond the 40-peso-to-the-dollar.
Who knows where all of this will end?