Uruguay’s tourism industry, a vital economic pillar, contributes 5.6% to GDP and employs over 104,000 people formally.It generates $1.3 billion in salaries and nearly $800 million in taxes annually.

However, the sector faces severe profitability issues threatening its long-term sustainability.Real tourism revenues have fallen by 24% over the past decade while operating costs have risen by 8%.

This decline in profitability raises concerns about the sector’s future viability.The situation demands urgent action from both the government and private sectors to reverse this negative trend.Despite challenges, the tourism sector holds great growth potential.

Recovering activity levels from 2017 could increase GDP by 2.8%, create 19,000 additional jobs, and contribute $220 million more in taxes.Uruguay’s Tourism Sector: Urgent Need for Revitalization.

(Photo Internet reproduction)However, government support has been scarce, with the Ministry of Tourism’s annual budget averaging only $16 million between 2016 and 2023.Recommendations for Boosting Tourism in UruguayKey recommendations include implementing a permanent 0% VAT rate for non-resident tourists.

Currently, tourism remains the only export industry in Uruguay subject to VAT.Eliminating this tax would make Uruguay more competitive and accessible compared to other international destinations.Increased investment in international promotion and marketing is crucial.

A robust strategy targeting key markets is essential to positioning Uruguay as an attractive global destination.Attracting private sector investments is also critical for sustainable growth, achievable through fiscal incentives and a favorable regulatory framework.A National Strategic Plan coordinating public and private efforts is recommended to align interests and optimize available resources.Tourism has the potential to generate significant economic benefits for Uruguay, creating jobs in various sectors and having a multiplier effect on other industries.With firm commitment from both the public and private sectors, tourism can become a source of sustainable growth and a key driver of Uruguay’s economic development.The country has a historic opportunity to relaunch its tourism sector and secure its position as a competitive destination.