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In times of crisis, it’s often the good things in life that must be sacrificed, and these include holidays. It’s no surprise, then, that when the global economic meltdown began in late 2008, the tourism industry took a beating.

Across the world people cancelled holidays, and those who did travel had less money to spend. In 2009, the number of tourists taking holidays abroad dropped by 4% year on year, after years of steady growth. And global revenue from tourism dropped by 6%.

The outbreak of swine flu in early 2009 compounded the problem. Mexico’s tourist industry was devastated, and soon the impact spread. In Chile, the ski season was particularly badly hit.

Then, just when things were getting better, Chile was rocked by February’s earthquake, which brought down the ceiling of Santiago airport and wrecked tourist infrastructure in the Maule and Bío Bío regions. The impact was immediate: in March, according to the national tourism service Sernatur, there were 21% fewer visitors to Chile than in March 2009 and 30% fewer than in March 2008.

In Santa Cruz, the picturesque but badly damaged wine town in the heart of the Colchagua Valley, income from foreign tourists plummeted by over 60% in the six months following the earthquake, and has yet to recover to pre-quake levels.

“These have been a difficult couple of years without a doubt,” said Andrea Wolleter, who heads the Chile Tourism department at national airline LAN. “First the economic crisis and the [swine] flu hit us really hard. Then the earthquake.”

But in 2010, the Chilean tourist industry has started to bounce back. In the third quarter, the number of foreign visitors was 12% higher than a year earlier. In some areas of the market, the figures are even back up to early 2008 levels.

In October, Chile’s efforts to market itself as a tourism destination received a welcome boost from an unlikely source – the 33 miners who were trapped underground in the Atacama Desert.

Never before has Chile been the center of so much international attention. According to the Chile Image Foundation, which coordinates among different government offices that have an influence on perceptions of Chile abroad, 12,000 photos of the country and the miners were printed in the world’s media during the single week of the rescue.

The well-organized and successful rescue of the men showed Chile in an extremely favorable light. Across the globe, people said they wanted to visit “the land of the miners”.

“It’s put the country on the world map in a way it never was before and we need to capitalize on that,” said Alvaro Castilla, general manager of Turismo Chile, which groups more than 100 private sector tourism companies.

Jesús Parrilla, commercial vice-president of the upmarket Explora Hotels group, said that during the miners’ rescue the company received far more requests than usual for information about the Explora Atacama hotel in San Pedro.

According to Parrilla, the miners’ saga has supplanted the negative images of the earthquake in the minds of foreigners when they think about Chile.

“The rescue of the miners showed Chile’s technological and logistical knowhow, planning and integrity to the world, and has helped us move on from the earthquake,” he said.

Bringing back the tourists

Although the Chilean tourism industry is recovering, it has been a patchy recovery so far. While the Argentines and Brazilians are coming back to Chile as the economies in their home countries grow, the long-haul tourists from the United States and Europe are still nursing a hangover from the global economic crisis.

Figures from Sernatur show that in the third quarter of 2010, the number of North Americans visiting Chile on holiday was roughly in line with the same period of 2009, while the number of Europeans dropped 4%. The number of Latin American visitors, by contrast, jumped 25%.

Argentines are still by far the most regular visitors to Chile, accounting for 37% of arrivals. Visitors from the United States, on the other hand, account for just 6%. But while Argentines tend to pop over the border for the weekend or even a day trip, North Americans and Europeans come for weeks, and spend more money. According to Chilean credit card administrator Transbank, the average Argentine spends only about US$60 on credit during his or her stay in Chile while the average American tourist spends US$1,500 (see table).

The recent strength of the peso has not helped Chile’s cause. It has made the country more expensive for foreigners while at the same time many Chileans are taking advantage of the favorable exchange rate to travel abroad for their holidays.

Niche markets

Given these challenges and increasing competition for the global tourist dollar, Chile’s tourism industry needs to work harder to adapt to the constantly changing profile of the typical visitor.

In October, the Chile Image Foundation launched a new international campaign with the slogan “Chile is good for you,” focusing on the country’s food, wine and scenery while also promoting it as a land of adventure.

“These days, people are looking for experiences rather than destinations,” said Jaqueline Plass, director of Sernatur. “Tourists are much more sophisticated than in the past and there are many more niche markets.”

For example, tourists might choose a destination based on a desired experience, such as going to a concert or paragliding, she said.

Turismo Chile has responded by tailoring its products to six distinct markets within the industry: sports and adventure; food and wine; natural inspiration; entertainment and lifestyle; culture and heritage; and health and wellbeing.

There are also niche markets sprouting up across the industry. Earlier this year, for example, a new association was formed specifically to promote Chile’s geothermal hot springs. It has pledged to boost the number of people who visit the country’s springs from 700,000 annually to 1 million by 2015.

Stargazing is another emerging market. Hotels in the Atacama Desert are touting themselves as the perfect place to gaze up at the heavens through the world’s clearest skies.

Even nudism is being used to seduce tourists - in March 2012, the country will host the Latin American Nudism-Naturism Conference, designed to encourage naked tourism.

With or without clothes, however, attracting tourists requires money, and many in the industry say Chile is not spending enough on promoting itself.

“I’ve been insisting on this for years: Chile has to spend more,” said Rudi Roth, executive president of one of Chile’s biggest and oldest travel agencies, Andina del Sud. “If not, the countries around us will wipe us off the map.”

“Take Brazil,” Roth said. “Every year thousands more Brazilians are lifted out of poverty and have the money to travel, but they won’t come to Chile unless they know about it. Argentina is invaded by Brazilian tourists these days, and so is Peru. Chile has to spend more to compete.”

Alvaro Castilla at Turismo Chile agrees. He estimates that Chile spends just over US$20 million on promoting itself abroad. “That’s significantly less than other countries,” he said.

Ecuador’s Ministry of Tourism has earmarked US$40 million to promote the country abroad next year, while in Peru the figure is over US$25 million, and if you go further afield the gap is bigger still - New Zealand’s government has assigned US$70 million for promotion not including money from the private sector.

Funding tourism promotion

The mechanism for financing the promotion of Chile as a tourist destination is complex – too complex, according to some.

Sernatur is given an annual budget by the Finance Ministry – currently around US$7.5 million - which the private sector matches through Turismo Chile. In addition, the government gives money to the national office for regional development, Subdere, to promote tourist attractions in Chile’s 15 regions. And finally, the Chile Image Foundation, the Foreign Affairs Ministry’s exports promotion arm ProChile, and the Wines of Chile industry association are also given funds to promote the country abroad.

This piecemeal funding system has prompted accusations that Chile lacks a coherent tourism policy.

Jesús Parrilla at Explora says Chile lacks long term policies and strategies to attract tourists, does not invest nearly enough in self-promotion, and needs better coordination between entities like Sernatur, Turismo Chile and the Chile Image Foundation.

“When it comes to marketing and communications strategy, I don’t think we’ve really started in earnest to think about the messages and tactics we want to use,” he said.

Jaqueline Plass says the government is addressing these shortfalls.

“Our big challenge is to ensure that the regions are part of a national tourism policy and that we speak with one voice,” she said. “That’s what we’ve been doing at recent trade fairs under the one banner of Chile.”

Tourism regulations

The introduction of a new tourism law should also help. The law was passed in February and is now being implemented. One consequence is that the Ministry of Economy and Development, is now the Ministry of Economy, Development and Tourism.

The law also describes tourism as a “strategic” economic activity and calls for the creation of a new tourism department (Subsecretaría), under the auspices of the Economy Ministry. That department is due to be launched in January.

The law aims to foment private investment in Chile’s protected nature areas and to improve the system used to classify the country’s hotels and other tourism service providers. At present, many hotels in Chile use their own classification system, describing themselves as, for example, three-star hotels with no independent verification.

Sernatur is working alongside the National Institute for Standardization (INN) to persuade more hotels to adhere to strict classification criteria so that tourists can be sure they get what they pay for.

“We’re very concerned about the issue of quality ratings,” Sernatur’s Plass said.

As an incentive, any hotel that registers with Sernatur will be eligible to participate in the various promotional events that it organizes around the world, she said.

More legislation is also in the pipeline to boost the local tourism industry. For instance, the government wants to change the law on the use of casinos on cruise ships. At the moment, cruise ships are barred from opening their casinos once they are in Chilean territorial waters. That has prompted many cruise companies to think twice before including Chile in their itineraries.

The other big disincentive for cruise operators is the high cost of docking in Chile’s ports and navigating its waters. According to a study carried out by the Universidad de Los Andes, docking in Valparaiso is three times more expensive than in Argentine ports and nine times more than in Uruguay.

Perhaps not surprisingly, some cruise operators have decided it is simply is not worth coming to Chile. Alvaro Castilla at Turismo Chile describes the drop in revenue from cruises in Chile in recent years as “dramatic”.

One world

The airline industry has fared much better with LAN and American Airlines – both members of the oneworld alliance - continuing to play a major role in enticing tourists to Chile.

In November, LAN signed a groundbreaking deal with Lonely Planet to publish content from the popular travel guide series on its website in English, Spanish, French and German so that customers can find out more about its destinations.

Meanwhile, LAN is continuing to expand its operations from its South American hub in Lima, Peru, with plans to start two new services in early 2011 designed specifically for tourists – Lima to Easter Island and Lima to Iguazú.

The airline is also in the process of merging with Brazil’s TAM to create one of the world’s biggest carriers. Although she says it’s too early to determine the impact of the merger, LAN’s Andrea Wolleter is “very optimistic that it will open new opportunities for tourists.”

But while LAN can bring more tourists to Chile, it can’t do much about the service they receive once they get here, said Wolleter, noting that this is an area where Chile needs to improve.

“If you look at the amount of money that the average foreign tourist spends in Chile compared to other countries, it’s very low,” she said. “We suffer from a lack of good products. Our hotels have got better, but there hasn’t been a great improvement in services like excursions and entertainment. Those are the things that persuade tourists to stay longer and spend more.”

The summer months of January and February are approaching with thousands of tourists packing their bags for Chile, but it is clear the country has plenty of work to do in marketing itself. Those of us who live here know it has a lot to offer - the big challenge is to get that message across to those who don’t.

Gideon Long is a freelance journalist based in Santiago. He also works for the BBC.