1.1 Motivation
Tourism in Nicaragua, despite being the least competitive in the region, tourist arrivals and receipts have been steadily growing, but the biggest challenge of tourism in Nicaragua is to diversify and improve the quality of supply, as well as improve infrastructure resorts and increase tourist expenditure. Average expenditure per tourist in Central America in 2014 was US$128, however according to Nicaragua Tourism Satellite Account published by the Central Bank of Nicaragua (BCN), the average spending by tourists who stayed overnight in Nicaragua decreased from US$41.8 in 2014 to US$41.5 in 2015, although the average length of stay increased from 7.7 days to 8.7 days, the average spend per visit in Nicaragua is well below half the average spending in Central America, which means that tourists are staying longer but consuming less (Banco Central de Nicaragua, 2015).
Due to a decline in prices of raw materials and unfavorable weather conditions, it has caused a decline in the value of Nicaragua’s exports, for example, in 2015 exports decreased 7.72% in price and 4.80% in volume compared to 2014, which meant US$212 million less to the country’s economy, even foreign aid has decreased from US$1,409.5 million in 2011 to US$1,106.7 million in 2015. According to the World Bank, Central America will benefit due to a recovery in the economy of the United States and the fall in export prices of oil, and also will help to maintain a level of inflation below 6% (World Bank, 2016a), Table 1 shows a forecast made by the World Bank forecasting that Nicaragua’s economic growth will be one of the best in the region.
Table 1: Latin America and the Caribbean GDP Growth Forecast
2013 2014 2015 2016 2017 2018
GDP at market prices (2010 US$)
Argentina 2.9 0.5 2.1 -0.5 3.1 3.0
Belize 1.3 4.1 0.9 0.8 1.8 2.2
Bolivia 6.8 5.5 4.8 3.7 3.4 3.4
Brazil 3.0 0.1 -3.8 -4.0 -0.2 0.8
Chile 4.3 1.8 2.1 1.9 2.1 2.3
Colombia 4.9 4.4 3.1 2.5 3.0 3.5
Costa Rica 3.4 3.5 2.8 3.3 3.6 4.0
Dominica 1.7 3.4 -4.0 2.5 2.0 2.0
Dominican Republic 4.8 7.4 6.9 5.0 4.3 4.0
Ecuador 4.6 3.7 0.3 -4.0 -4.0 0.0
El Salvador 1.8 2.0 2.5 2.2 2.3 2.3
Guatemala 3.7 4.2 4.1 3.5 3.5 3.6
Guyana 5.2 3.8 3.0 4.0 3.9 3.8
Haiti 4.2 2.8 1.2 0.9 1.9 2.2
Honduras 2.8 3.1 3.6 3.4 3.5 3.5
Jamaica 0.5 0.7 0.9 1.5 2.2 2.6
Mexico 1.4 2.3 2.5 2.5 2.8 3.0
Nicaragua 4.5 4.7 4.9 4.4 4.2 4.1
Panama 8.4 6.2 5.8 6.0 6.1 6.2
Paraguay 14.0 4.7 3.0 3.0 3.2 3.4
Peru 5.9 2.4 3.3 3.5 3.5 3.2
St. Lucia -1.9 -0.7 1.6 1.5 2.0 2.0
St. Vincent and the Grenadines 2.3 -0.2 1.8 2.4 3.1 3.1
Trinidad and Tobago 2.3 -1.0 -2.0 -2.0 2.0 2.5
Uruguay 4.6 3.2 1.0 0.7 1.6 2.5
Venezuela, RB 1.3 -3.9 -5.7 -10.1 -3.4 1.6
In a country where economy relies on agriculture, tourism in Nicaragua has become one of the main foreign exchange for the country, surpassing coffee revenues. Tourism in Nicaragua has a great potential, I believe that with the help of the Internet and digitization could raise its level of competitiveness. There have already been many developed and underdeveloped countries that are embracing Internet technologies, with the help of the Internet are generating new business opportunities, reaching more consumers, providing better value added and improving their services.
The Internet has made the world flatter and more democratic by allowing instant access to information; the Internet has created more jobs, has increased standards of living, and has
Source: World Bank (2016a)
contributed more to real economic growth. It has been claimed that the Internet is the greatest invention since the printing press and the telephone, because the Internet has a greater impact on society as compared to the printing press, the printing press ended handwritten books age and helped on the preservation and dissemination of knowledge. The Internet surpassed the way printing press spread information and communication, allowing people to get mass information in a matter of seconds.
It has not been more than 20 years since the World Wide Web was released and we can’t imagine how our lives would be without the Web. We are living in the information age, where everything is digitalized, the Internet is revolutionizing every industry and it is changing all as we knew it before, especially with the introduction of Apple’s first iPhone in 2007, the internet and mobile revolution have a faster and wider spread than any other revolution previously. Before the mobile revolution, the only way to connect to the network was using a computer, now with smartphones (cheaper than a computer) we can connect anytime and anywhere. Before the Internet and mobile revolution, we make phone calls using telephones from home or office, now we can make free calls from our mobile phones connected to the internet, without paying a telephone bill anymore. With the creation of Wi-Fi networks across the country allow many consumers to cut off expensive Internet bills and could lower costs for schools and businesses and help tourists easily find tourist spots, the Internet is benefiting everyone in the society, especially the poor (Kang, 2013).
The proliferation of smart phones has helped the development of any kind of application that make our lives more convenient, which has become an important strategy for every business since they can know more about the customer’s behavior through the data generated by the application.
Smartphones are overtaking computers in traffic to online stores, accounted for 45.1 percent of web-shopping traffic and computers at 45 percent in the first quarter of 2016. It is projected that this figure will continue to increase, with phones accounting for 60 percent of e-commerce visits by the end of 2017 (Harty, 2016). According to a research made to young people aged 19-26 stated that they prefer TripAdvisor for planning their trips on mobile applications and use Skycanner application for purchasing their flight tickets, they find their ways around cities more easily with GPS, find cheaper tickets on mobile applications, read user comments before making hotel reservations, compare prices among hotels using mobile applications and that mobile applications have a great impact on tourism (Bicen & Sadikoglu, 2016).
1.2 Background
Tourism is undoubtedly a solution to the economic recession in recent years caused by the fall in prices of raw materials (ex, coffee, oil) in Latin America. Tourism industry has become one of the three main export products after fuels and chemicals and ahead of food and automotive in many countries worldwide. On the other hand, in many developing countries as Nicaragua, tourism has
become the first export product, which is generating more foreign exchange from year to year, creating more jobs and attracting foreign investment, thus being a key sector to economic development and reduction of poverty in Third world countries (Lickorish, Jefferson, Bodlender, &
Jenkins, 1991). According to UNWTO, international tourist arrivals reached to 1,135 million arrivals in 2014 and forecast to increase to about 1,600 million tourists for 2020, furthermore tourism has generated revenues from US$475 billion in 2000 to about US$1,245 billion in 2014.
Many developing countries have taken tourism as part of its policy of national economic development; tourism in comparison with the other industries does not suffer from any kind of trade barriers such as the imposition of tariffs or quotas. According to World Travel & Tourism Council, (WTTC), the total contribution of T&T to global GDP was US$7,170 billion (9.8% global GDP) in 2015, and is forecast to rise by 3.5% in 2016, on the other hand in terms of employment including indirect jobs, T&T Industry employment contributed almost about 283 million jobs in 2015, that is 1 in 11 jobs in the world (WTTC, 2016).
Central America received 9.6 million tourist arrivals in 2014, which 1,329,663 tourists arrived in Nicaragua, an increase of 8.2% compared to 2013, generating US$445 million of revenues to the national economy. According to WTTC, T&T total contribution to employment, including indirect jobs, was a total of 212,000 jobs in 2014. In relation to tourist arrivals, compared to other Central American countries, Nicaragua is ranked in fifth place behind El Salvador, Guatemala, Panama and Costa Rica, and after Nicaragua followed by Honduras and Belize are the only two countries that did not reach one million of tourists in 2014, it is noteworthy that although El Salvador received 1,345,000 tourists, some 15,000 tourists more than Nicaragua, altogether contributed US$822 million to the country’s economy, almost double the amount than Nicaragua received, also it should be mentioned that Honduras with only about 868,000 tourists in 2014, earned an income of $630 million, a 42% more than Nicaragua received the same year.
According to this simple fact we can observe that Nicaragua still lags far behind with the development of tourism, and it is not for lack of natural resources or tourist attractions, neither by its geographical position, therefore the government has the right to establish authorities, institutions and agencies that work efficiently aimed at the developing of the tourism sector, as well as implement new policies and laws that provide attractive incentives to investors, working with other countries to establish new direct air routes to the country and present itself as a country with better attractions and tourist destinations, offering better infrastructure and better services, as well as putting more emphasis on promoting the image of the country, try to correct falsehoods or stereotypes that the international community has about the host country, with the help of travel agencies, media, tourist magazines, marketing programs and embassies in other countries (Britton, 1979). In recent years, due to the growth of international tourism, the Government of Nicaragua has put great importance on tourism, for that reason launched a campaign named “Orgullo de mi país”
in 2015, in order to promote tourism in abroad and increase awareness of the culture, gastronomy and tourist destinations, which is expected the arrival of 1.5 million foreign tourists, generating
about US$500 million in 2016.
1.3 Research Question
Tourism industry in Nicaragua has become one of the main industries that is generating more foreign exchange year by year. But one of the problem that Nicaragua’s tourism industry is facing is lack of competitiveness and promotion. Nicaragua compering to its neighboring countries provides almost the same tourism products, for example, beach, archeology, colonial cities, diving and Pre-Columbian history, it is also a country relatively cheaper and safer, but it has not been able to get the same amount of income and the same number of international tourist arrivals. One of the main problem is that the Institute of Tourism of Nicaragua has a shoestring budget for the promotion of the country in international markets, however in this digital era there are more tools whose marginal costs are nearly zero, we can see free online courses, people sharing free videos, music, information, people sharing cars, apartments, clothes at a nearly zero marginal cost. There are many developed and developing countries that are making use of these new technologies for their tourism marketing campaign and there are many new Travel Tech startups that are overstating by providing new creative services to customers. On the other hand, the tourism SMEs in Nicaragua hardly use these technologies and they ignore the benefits of the Internet. The purpose of this paper is answer the following questions:
1. What are the strengths, weaknesses, opportunities and threats of Nicaragua’s tourism industry?
2. What are the factors affecting the Internet adoption in Nicaragua’s tourism industry?
3. Does Nicaragua have the resources to implement an ICT plan in tourism industry?
4. If not, how can improve its actual situation?
1.4 Research Area
This study is based on the study of Internet plus tourism and the factors affecting Internet adoption in Nicaragua’s tourism, Internet plus and Internet plus tourism are the theoretical basis for this study. The research is aimed at collecting and analyzing data about the tourism development in Nicaragua, define its strength, weakness, opportunities and threats through a SWOT analysis and evaluate whether Nicaragua has or not the technology and resources to implement Internet plus in tourism industry, finally provide suggestions to improve the current situation. The research area of this study includes the follows:
1. Understand the influence of Internet in tourism.
2. Study the role of tourism development in Nicaragua.
3. Explain the factors affecting the adoption of Internet in Nicaragua’s tourism industry.
4. Explore the problems and shortcomings in the development of tourism in Nicaragua at present through a SWOT analysis, and put forward suggestions to implement the use of Internet plus for the improvement of the tourism’s service quality in Nicaragua.