Uruguayan tourism operators are pushing for a sector-wide boost. To achieve this, they have been working with the Center for the Study of Economic and Social Reality (Ceres) for several years to diagnose industry challenges and propose key growth strategies. The recent inauguration of Yamandú Orsi’s government provided an opportunity to present new proposals for the industry.
Growth Projections and Economic Factors
The Ceres study, presented this Tuesday, forecasts that the tourism sector will grow from 5.8% of the Gross Domestic Product (GDP) in 2024 to 6.4% in 2025. This projection is based on both positive economic trends and emerging challenges.
Since Javier Milei took office in Argentina, Uruguayan tourism operators have welcomed the narrowing exchange rate gap between the two countries. Additionally, Argentine salaries measured in U.S. dollars have increased, and the number of Argentines traveling abroad in January was nearly the same as in 2018, with spending levels also comparable.
The Reduction of the Exchange Rate Gap
One of the most significant advantages for Uruguayan tourism is the elimination of Argentina’s PAÍS tax and the relatively high prices in Miami, a key competitor to Uruguay’s exclusive beach destinations. However, there is also a downside: Brazil has become a more attractive alternative for Argentine tourists.
Despite these improvements, Ceres concludes that “Uruguay still faces competitiveness issues, especially concerning Brazilian tourists.”
Local Economic Trends and Challenges
Within Uruguay, an increase in wage mass is a positive factor for domestic spending. However, while Uruguayan travel to Argentina has decreased, trips to Brazil have increased.
The tourism industry in Uruguay consists of over 25,000 businesses and generates approximately 121,000 jobs, according to social security contributors. It pays around $1.3 billion in wages annually and directly contributes $450 million in taxes—rising to $790 million when indirect contributions are considered.
Government Investment and Policy Prioritization
The Ceres report highlights a concerning trend: since 2013, the Ministry of Tourism’s budget has been decreasing in real terms. The study suggests that tourism has been deprioritized as a public policy.
According to the 2024 World Economic Forum Travel and Tourism Development Index, Uruguay ranks 103rd out of 119 countries in terms of policies supporting tourism growth. The index evaluates prioritization, openness, and pricing competitiveness. The report notes that while Uruguay performs well in cost control, it lags in promotion and openness compared to countries where tourism contributes more significantly to GDP.
Profitability Concerns and Infrastructure Gaps
Another key challenge for Uruguay’s tourism sector is low profitability. Since 2019, revenue growth has lagged behind rising costs. In 2024, profits remain 28 points below the 2011–2019 average, while costs have increased by 9%. The study warns that this long-term profitability decline threatens the survival of some businesses and limits investment potential.
In terms of tourist infrastructure, the sector presents significant disparities. While Uruguay excels in maritime and land-based accessibility, there are deficiencies in hotel capacity and airport connectivity, which hinder tourism growth.
Future Prospects
To ensure sustainable growth, Uruguay must address competitiveness issues, invest in infrastructure, and prioritize tourism as a key economic sector. Government policies, exchange rate stability, and regional travel trends will play critical roles in shaping the future of Uruguay’s tourism industry.