Jicaro Island Ecolodge - Granada Isletas, Nicaragua

Nicaragua: Socialism and Tourism

Travel Weekly

SAN JUAN DEL SUR, Nicaragua — Daniel Ortega is president again. The Sandinistas are back in power. But the country that many remember for its long civil war and for the socialist party the U.S. tried to oust in the 1980s is today better known to some as an international surfer's haven and a growing ecotourism destination.

Just a few hours north of Costa Rica's Guanacaste tourist area, Nicaragua, like neighbors Honduras and Guatemala, is trying to shake its image as an unstable, unsafe banana republic to give Costa Rica some competition in the tourism department.

Its efforts frankly pale in comparison to those of Costa Rica, even to those of Honduras. But paradoxically, the lag in tourism development is part of what makes this country so attractive. Besides being inexpensive, Nicaragua is unspoiled by the trappings of megaresort development.

From its multiple lakes and volcanoes to jungles, coffee plantations, world-famous Pacific surf beaches, the colonial city of Granada and perhaps its best-kept secret, the Corn Islands on the Caribbean, Nicaragua offers a full range of activities for both adventure tourists and those seeking more luxurious but remote destinations.

The latest version of Ortega's government has made tourism development a top priority. The big question is whether new political tensions reminiscent of those that recently put Honduras on the State Department's travel advisory list will affect Nicaragua's efforts to grow tourism.

"That really clouds the potential for any growth opportunities there," said Alvaro Diago, COO of the Latin America and Caribbean regions for InterContinental Hotels Group, one of the more dominant international hotel companies in Central America.

Others say that the real impediment to tourism growth is the country's infrastructure, or lack thereof. Although Nicaragua's Pacific coast has some of the finest beaches in Central America, most are accessible only by long rides on bumpy dirt roads.

The Corn Islands, described by some as being among the last undiscovered jewels of the Caribbean, are on the Miskito Coast, practically a world away from the rest of the country, cut off by its largely uninhabited central jungle region. They can be reached only by small planes out of Managua.

Simon Suarez, who oversees Latin America development for Hilton Worldwide, said the lack of "accessible infrastructure" was keeping Nicaragua from attracting major investments by international hotel companies. In addition to a few hotels with IHG and Hilton brands in Managua, the country has one large beach resort, the Barcelo Montelimar Beach, about 40 miles from Managua.

San Juan del Sur, Nicaragua's most popular beach and surf destination, has a modern condo-hotel complex overlooking a bay. The Hotel Piedras y Olas offers modern luxury accommodations, ranging from simple rooms to three-bedroom condos with large, modern kitchens and private hot tubs and pools.

But for now, most hospitality development is being undertaken by the country's elite and adventurous expatriates, who are snapping up properties at what would be bargain-basement prices in Costa Rica.

The environment takes center stage

Although the bulk of the hospitality offerings are hostels, there is growing emphasis on ecoresort development.

A recent trip sponsored by Nicaragua's tourism department highlighted the small, luxurious but sustainable resorts.

Our first stop was Punta Teonoste Nature Lodges and Beach Spa, which is about a two-and-a-half-hour drive from Managua, an hour of which is over a bumpy dirt road. Developed by Walter Buhler, who is half Swiss and half Nicaraguan — or "Nica," as they say here — the 2-year-old resort is about four miles from the country's famed Popoyo surfing beach and offers 16 bungalows constructed of wood and palm fronds.

Punta Teonoste offers no air conditioning or TV, but it features a spa and lots of outdoor activities, including surfing lessons, horseback riding, thermal baths and mountain biking.

Five miles south lies the country's famed Chacocente nature preserve, where some 60,000 sea turtles come each year to lay eggs. Punta Teonoste also features its own hatching ground and has built a sanctuary to protect the eggs until they hatch.

About an hour's drive from Punta Teonoste, closer to San Juan del Sur, is Morgan's Rock, a luxury ecoresort with 15 bungalows. The resort sits among trees on the side of the cliffs overlooking a secluded bay on the Pacific. A rope bridge carries guests from the main lobby, restaurant and infinity pool, which also overlooks the cove.

On the day we visited, the only guests were honeymooners from South Carolina who said they'd had the place to themselves for the entire week.

The resort grows its own food and boasts that not a single tree was moved or removed to build the bungalows.

A new ecoresort, Jicaro Ecolodge, recently opened on a small island in Lake Nicaragua that is just a short boat ride from Granada. The resort is now taking reservations on its website.

Several tour operators, such as Solentiname Tours, can help book packages to the country or day trips for a variety of adventures, including kayak trips in Nicaragua's many lakes and rivers, hiking its numerous volcanoes, zipline excursions, even sandboarding down the side of the Cerro Negro volcano near Leon.

Julio Videa, marketing director for Nicaragua's tourism department, said that in 2007, Ortega made tourism development a top priority for the country. Among his key goals is to develop small, sustainable businesses "that are going to help protect nature. … That's the kind of tourism that we want, the kind that helps protect our traditions and our culture."

Videa said the government is working on small-business development projects such as the "Ruta de Cafe," which trains people in the coffee-growing region of the north central part of the country — among the poorest regions of the poorest country in Central America — to do things like set up small inns and become tour guides.

Beyond that, Videa said the government is also working to lure bigger investors, particularly for its many miles of untouched beachfront. Those efforts include both paving Nicaragua's many dirt roads and new legislation designed to guarantee investors their land will be secure, he said.

The country has also removed the requirement that visitors from Costa Rica and many European countries have visas, which Videa said has resulted in a 59% increase in tourists coming across the border from Costa Rica. The country has also seen a rise in European visitors.

"Tourism, according to the Central Bank, will be, in this year and in following years, one of the main income-generating industries," Videa said.

When 2009 figures are complete, he said, tourism-related income for Nicaragua should total about $300 million, a 20% increase compared with 2008. Tourists are expected to number more than 935,000, up from 800,000 in 2007, when Ortega began his push, and from 857,000 in 2008, Videa said.

The bulk of the tourists, about 60%, are from Central America. About 27%, Videa said, come from the U.S., Canada and Mexico. Most plan their own travel, he said, but a growing number are turning to tour operators and travel agents.

Specialty hotels

Beyond beaches and ecoresorts, pioneering investors have begun renovating historical buildings in cities like Granada and Leon, which was the seat of the Sandinista revolution.

Nancy Bergman, who with her sister owns the Casa San Francisco hotel in Granada's historical center, said she came to Nicaragua eight years ago after she and her sister decided they wanted to move to Central America. She said she was in Honduras and her sister was in Costa Rica when they both heard about the beauty and the bargains available in Nicaragua.

They bought a small hotel and have renovated it. The colonial city, with two hotels on the main square and several other boutique hotels in historical buildings around town, is popular with tourists.

Bergman said she loves the authenticity of the town, where each mornings peddlers walk the streets, selling produce with shouts of "papayas, tomatoes." The horse-drawn buggies lined up along the square are not just a tourist attraction but a taxi service used by locals.

In Leon, James Petersen has developed the small Hotel LaPerla in what used to be a family palace. Across the street, he is building a casino.

Although Leon is off the general tourism grid, he said the hotel is popular with businesspeople. Petersen said he came to Nicaragua after he tried to develop in Las Vegas but was shut out by the politics.

Tourism officials tout the country as the safest in Central America. And even given the recent political protests, expats seemed unconcerned about safety.

The bigger impact on tourism this past year, Peterson said, was the political instability in Honduras, which often resulted in border closings.

As for development, he said the biggest impediment is trying to find parcels of beachfront property large enough to develop. Most would require deals with several families, he said, which is close to impossible.

Though entrepreneurs like Bergman and Petersen seem content with their investments, some of those who scout the region for major hotel companies are hesitant about Nicaragua's potential, at least in the short term.

Suarez and Diago agreed that Costa Rica and Panama remain the region's hot spots. Although Costa Rica is the most developed, Panama now has the most active hotel pipeline.

Even Dubai-based hotelier Jumeirah recently announced a deal in Panama, which, thanks to the commerce associated with the Panama Canal, has suffered the least among Central American countries from the global economic downturn.

The Jumeirah development in Panama is in Panama City, but Gary Schweikert, vice president of operations for the Americas, said the company was actively looking throughout Central America.

"It's a question of finding projects appropriate for the brand," he said. "But we are definitely interested in pursuing opportunities."

Even Honduras, which suffered a drop in tourism last year after the legislature ousted its president, leaving the country in political turmoil for much of the second half of 2009, is hot again, Diago and Suarez agreed.

The political unrest, Diago said, was merely a blip.

"It's a country where the government does a lot for development and tourism development … so it didn't really have any effect," he said. "People still want to develop there."

In contrast, he said, Nicaragua continues to represent a high level of development risk, so he is not currently looking at any opportunities there.

Suarez, on the other hand, says Hilton is keeping a close eye on Nicaragua.

"We are always looking at opportunities in Central America, and Nicaragua is one of the place we would like to expand," he said. "We are presently in Nicaragua in Managua with the Hilton, and we definitely believe that Nicaragua has development potential."

As for resort development, he said the biggest problem is infrastructure.

"Basically for international resort travel, the resort has to be not too much more than an hour away from the international airport. The more beautiful beaches in Nicaragua are south, and they are a bit far from Managua."

Still, Suarez said certain resort developers are looking very seriously at the San Juan del Sur area. Solutions include using Costa Rica's Liberia Airport, but that would require changes to expedite border crossings.

Once those issues are addressed, Suarez said, Nicaragua could quickly catch up with Costa Rica.

"Nicaragua is about 15 years away from Costa Rica, but that sort of time distance can be gained very quickly," Suarez said. "The experiences of Costa Rica is there, and Nicaragua seems to be keen on putting in the regulatory incentives that Costa Rica put in a long time ago. So there is already a lot of know-how there."

This article has been updated to correct the spelling of the Jicaro Ecolodge and add that it is now taking reservations.

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