Nicaragua’s Tourism Industry: SWOT Analysis

Tourism industry in Central America is an industry full of competition and threats, especially when all the countries provide similar tourism products. Diversification and product positioning are the key factors for Nicaragua’s tourism industry to stand out among its neighboring countries, by planning in advance, making use of new technologies and taking effective strategies to innovate, Nicaragua’s tourism can surpass its competitors, create jobs and reduce poverty.

This research is aimed at understanding 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.

The results were obtained through the interpretation of books, national tourism statistics, newspaper, journals and research papers related to tourism development in Nicaragua.

7.1 Nicaragua’s Tourism Industry: SWOT Analysis

This chapter is based on the analysis of the data collected, we are going to discuss about what are the strengthens Nicaragua can take advantage of? And what are the threats it is facing? In order to better understand Nicaragua’s tourism actual situation and provide further suggestions. This research through a SWOT analysis will try to answer the question proposed at beginning of this research: What are the strengths, weaknesses, opportunities and threats of Nicaragua’s tourism industry? The results obtained through the document analysis method was summarized and interpreted as follows:

Strengths:

1. The government is developing new programs: In order to stimulate the public-private investment in the sector and improve the tourism offer, the Government of Nicaragua has been developing new strategies to boost the development of tourism industry and strengthen the country as an international tourist destination. It has been identified as priority to develop and expand the national strategy of tourism promotion to new destinations and increase the tourism offer by providing a better infrastructure and higher quality of the services (Gobierno de Nicaragua, 2012).

2. International promotion: Recent projects have been carried out for the promotion of Nicaragua’s tourism products in national and international markets through the production and maintenance of web pages, videos, magazines, media and fairs (INTUR, 2010).

3. Cheapest country in Central America: Nicaragua’s Consumer Price Index (CPI) is relatively low comparing to its neighboring countries, which can be a competitive advantage when choosing a tourist destination to go by international tourists (Marek, 2014).

4. A country rich in natural resources: Nicaragua is a country rich in resources and natural

attractions.

5. Third safest country in Central America and the Caribbean: Nicaragua is one of the three safest countries in Central America and the Caribbean (Institute for Economics &

Peace, 2016).

6. Beautiful paradises: Home of many beautiful beaches, best wind conditions and waves for surfing lovers.

7. Constant investment in the hotel sector: In recent years Nicaragua has experienced a constant wave of investment in the hotel sector, which has helped to improve the tourist offer and the quality of the accommodation facilities in the country. There have also been hotels that have improved their quality ranking (Bejarano, 2016).

Weakness:

1. Low-quality infrastructure and accommodation facilities: Poor quality tourism infrastructure, the surrounding landscapes of the tourist attractions are in bad conditions, as roads and transportation, making it difficult for tourists to get to those places (Usher &

Kerstetter, 2014). As well as the lack of quality of tourism accommodation facilities that don’t comply with minimum safety requirements (UNCTAD, 2013).

2. Low-quality service: Lack of quality in the tourism offer, for example the tourism service providers have very limited knowledge about the international tourist’s travel behavior, which affects when selling the right product in the right place and the right time to the right customer (UNCTAD, 2013).

3. Lack of diversification and appropriate supply for demographic segment: there is a lack of innovation in tourism diversification, for example Nicaragua still hasn’t been able to attract international tourists from different markets as Asia, Africa or Eastern Europe.

Nicaragua’s tourism market does not provide the appropriate supply for the demand generated by the demographic segment of all age groups. For example, according to the Service Policy Review of Nicaragua states that INTUR plans to increase tourism demand from the United States retiree market (estimated at 40 million persons), but at the present no national plan exists for the development of facilities for elderly people (UNCTAD, 2013).

4. Lack of tourism service center: it is need the implementation of tourism service center that provide information to tourists.

5. Lack of internationalization: English speaking environment needs to be improved. Tour guides that provide tourism service to international tourists should be trained with required knowledge in English, in order to provide a better service.

6. Insufficient budget for promoting tourism: the budget required for the promotion of Nicaragua’s tourism is relatively lower comparing to its neighboring countries as Costa Rica, Panama and Guatemala.

7. Lack of awareness of new technology: Low adoption of new technologies by tourism service providers due to lack of knowledge of how to use them and constraints in securing

financing for innovation (GSMA, 2016).

Opportunities:

1. Nicaragua emerging as a new tourism destination: Nicaragua has been claimed to be cheaper, safer, less crowded and less developed than its neighboring countries. This can be an opportunity to attract those backpackers on a limited budget (Marek, 2014).

2. Implementing new direct flight connections: With the implementation of new direct flight connections to the U.S, would increase the demand for Nicaragua’s tourism from that market (Blanco, 2015).

3. Construction of the interoceanic canal: With the construction of the interoceanic canal in Nicaragua (expected to be finished by 2020) and further improvement of the basic infrastructure would help to boost the country’s economy and expose the country as an international tourist destination among travelers (Yip & Wong, 2015).

4. Improvement of telecommunication and network infrastructure: With the goals proposed by the Government of Nicaragua on the improvement of telecommunication and network infrastructure will help SMEs and individuals in the adoption of new technologies (World Bank, 2016c).

5. New untapped market: Nicaragua is an untapped market with many opportunities for investment.

6. The development of tourism is helping to improve the infrastructure of the country:

The development of tourism in Nicaragua is helping to improve the country’s infrastructure, especially in rural areas. In the period 2007-2011, 155 projects were approved, with an investment of US$418.42 million. With the execution of these projects, 3,694 new jobs were generated. To improve the transportation of national and international tourists, airfields, airports and docks have been built (Gobierno de Nicaragua, 2012).

Threats:

1. Central America countries have similar tourism products: Nicaragua’s neighboring countries are also rich in natural resources and tourist attractions; they also provide similar tourism products and provide better quality of services.

2. Nicaragua’s neighboring countries have a higher tourism promotion budget: As Costa Rica, Panama and Guatemala, which can use for the better promotion of the country.

3. Politics could affect the image of the country: The President-elect of Nicaragua, after being re-elected to a third consecutive term, which has brought the attention of the international community, especially from the U.S where a bill called The Nicaragua Investment Conditionality Act (NICA) was passed and obliges the United States Government to oppose loans from the international financial institutions requested by the Government of Nicaragua. If this bill becomes law would affect the country economically, international investment and hurt the country’s image among travelers (Munguía Argeñal, 2017).

Because the threats come from the external environment, the government cannot control them, therefore, it must adopt to it or reduce their impact, while the internal factors are within the government’s control, it is needed to take advantage of its strengths, improve the weaknesses, create opportunities, so that Nicaragua’s tourism industry can continue growing and stand out. The results of the SWOT analysis is summarized in Table 13:

Table 13: Nicaragua’s Tourism SWOT Analysis

Strength Weakness

Internal Factors

1. The government is developing new programs.

2. International promotion.

3. Cheapest country in Central America.

4. A country rich in natural resources.

5. Third safest country in Central America and the Caribbean.

6. Beautiful paradises.

7. Constant investment in the hotel sector.

4. Lack of tourism service center.

5. Lack of internationalization.

1. Nicaragua emerging as a new tourism destination.

6. The development of tourism is helping to improve the infrastructure

3. Politics could affect the image of the country.

7.2 Analysis of the Factors Affecting Internet Adoption in Nicaragua’s Tourism