Your Patagonian Hideaway

Six years ago, in the aftermath of Argentina's unprecedented economic collapse and a dramatically devalued peso, my wife and I bought an apartment in Palermo, one of Buenos Aires's finest neighborhoods. At the time, we thought it was a stretch for us but, with an inheritance and some equity in our California house, it was not out of reach. I don't want to broadcast what we paid for it but, in retrospect, we regret we didn't buy two.

Given the depressed peso, quite a few foreigners have bought into the Argentine real estate market since then, with greater or lesser success. I analyzed some of the rewards and pitfalls in Buenos Aires in an earlier post, but that dealt with existing housing. Getting something built can be another issue entirely, as my friend Patrick Symmes, author of Chasing Che, found when he set out to build his dream fishing cabin near the Patagonian town of Trevelin, in Chubut province.

In the course of researching his book on Che Guevara's 1950s motorcycle trip through the Americas, Patrick became enamored of the region - and who wouldn't, given landscapes like those of nearby Parque Nacional Los Alerces (pictured above)? The reality of getting his cabin built, though, was a real challenge, as he details in the October issue of Outside Magazine. Anybody considering a similarly adventurous project would do well to read his good-natured, but ultimately serious, account of his experience.

Mendoza's No. 10!

The November issue of National Geographic Traveler - for whom I am currently writing a new guidebook to Argentina that will come out next year - has just published its annual "destination scorecard" of historic places around the world. This index rates 109 places according to half a dozen criteria: 1) environmental and ecological quality; 2) social and cultural integrity; 3) condition of historic buildings and archaeological sites; 4) aesthetic appeal; 5) quality of tourism management; and 6) outlook for the future.

By these standards, Traveler places Argentina's "Mendoza Wine Estancias" as the tenth-best-rated of 109 destinations, "in excellent shape, relatively unspoiled, and likely to remain so." It describes the city of Mendoza, whose Plaza España is pictured here, as "a pleasant walking city with lots of cultural activities and nice parks," and notes an "amazing number of first-rate restaurants in both the city and countryside."

The wineries, meanwhile, come in for similar praise: "The green of the wine estates in the middle of the arid desert is moving. The people are very welcoming, excellent tourist information is available, accommodations range from boutique hotels to simple posadas." At the same time, the "View of the Andes is a great background to the wineries," as pictured here from Bodega Ruca Malén. For a more detailed description of an individual winery, see my Moon Handbooks account of Bodegas Salentein.

It's odd, though, that Traveler would describe these institutions as "wine estancias," when in fact they are wineries and vineyards. Widespread throughout Argentina, the estancia is normally a livestock ranch, for beef cattle in the Pampas heartland, and sheep for wool and meat in the Patagonian south. Aside from this odd use of the terminology, though, I concur with Traveler's opinion of Mendoza.

Air Antarctica

In 2004, I made my only visit ever to Antarctica with the Chilean operator Antarctica XXI. This was a "fly-cruise," including a three-hour flight from the Patagonian city of Punta Arenas, in which passengers landed at the Chilean base at King George Island (pictured here). We then walked from the airstrip to the shoreline to board the chartered Russian vessel Grigoriy Mikheev for a week exploring the Antarctic Peninsula and vicinity. For the 45 or so passengers, this saved a potentially gut-wrenching two-day crossing of the Drake Passage and, instead, let them enjoy sailing through the Peninsula's relatively sheltered waters.

According to Mercopress, citing the Punta Arenas daily La Prensa Austral, Chile will soon spend US$9 million to build a new Antarctic terminal at the city's international airport to "confirm Punta Arenas as the real door of access to Antarctica, a condition it disputes with neighbouring Ushuaia in Argentine Tierra del Fuego." While this might sound appealing, Ushuaia is likely to remain Antarctica's "home port" - according to my friend Jeff Rubin, editor of The Polar Times, upwards of 95 percent of Antarctic cruises now leave from Ushuaia. As Ushuaia's a day's sailing closer to Antarctica, Punta Arenas is unlikely to replace it, except for emergency services and the niche market of Antarctic air visitors.

Travel v. Crisis

Yesterday I got a note from the operator of a small tourist lodge in Tierra del Fuego asking me what I thought the impact of the current global economic crisis might be on this summer's season. On the surface, of course, it makes sense that people whose mutual funds have lost a third of their value might be reluctant to spend money traveling great distances but, at the same time, there's a certain logic in going against the grain. I'd never suggest that people should throw away their retirement funds on a two weeks' vacation but, just as investor Warren Buffett recently said he's moving his money into U.S. stocks because of the financial meltdown, international travelers may find they'll get more for their money in traveling to the Southern Cone countries.

That's partly because, against all odds, the U.S. dollar is actually strengthening against the currencies of Argentina, Chile, and Uruguay, and there are other favorable signals as well. When I was last in Chile in April, the peso was at roughly 430 per dollar, and the 2000-peso banknote illustrated here was worth about US$4.65; last Friday, with the peso at 617 per dollar, that same banknote was only worth US$3.24. As in the stock market, there have been some fluctuations, but the bottom line is that the dollar is worth 30 percent more than in April.

The case is slightly different in Argentina. When I last wrote about the topic about a month ago, the Argentine peso was only slightly above three per dollar, but now it's above 3.2 per dollar. That's a devaluation of roughly seven percent, but inflation - official figures are unreliable - is likely to eat up most of those gains. In neighboring Uruguay, meanwhile, the peso has lost about 15 percent against the dollar since early September.

Another favorable circumstance is that foreign travelers do not pay Chile's 19 percent IVA (Value Added Tax, or VAT) on accommodations - thus reducing the cost of a US$100 hotel room to US$81, for instance. Uruguay already offers a partial IVA refund to foreign visitors who pay their restaurant bills with credit cards, and is considering expanding the measure.

Argentina, however, does not do this - in fact, as I mentioned in a recent post, foreigners often end up paying more than Argentines in many cases. In this regard, Argentina's pending imposition of reciprocity fees is a further step in the wrong direction unless accompanied by an IVA policy similar to Chile's that could cancel out the negative aspects. Otherwise, as a US correspondent noted in yesterday's Buenos Aires Herald, "even if tourism levels were unaffected, I would expect that aggregate visitor spending on restaurants, entertainment, hotels, etc. would decline by an amount approximating any visa fee increase."

I would go even further in suggesting that, if Argentina persists in its "reciprocity" folly, it might undercut the future for far longer than the current economic crisis. Many of today's backpackers, though their low budgets may make only a minor contribution to the travel and tourism sector at the moment, will eventually be affluent job holders. If a visa fee discourages them from visiting the country now, it'll never occur to them to think about coming back when they're prosperous heads of families.

Welcome to Argentina? The "Reciprocity" Conundrum

Nearly thirty years ago, when I first visited Argentina during the "Proceso" military dictatorship, an apparently drunken policeman in the Patagonian town of Puerto San Julián insisted in telling me how much he loved Americans. In those days, any such attention from an official figure made you uncomfortable and, as it turned out, the policeman in question was heavily medicated - having literally shot himself in the foot the day before.

Fortunately, Argentina is a stable democracy now, but that doesn’t mean the country doesn’t shoot itself in the foot sometimes. Earlier this week, interior minister Florencio Randazzo announced that the country would institute a “reciprocity fee” - similar to the one collected by neighboring Chile - on foreign tourists whose governments impose visa fees on Argentine citizens. This would mean, for instance, that US citizens entering Argentina would have to pay US$131 per person for the right to enter Argentina, while Canadians would pay even more. Australians and Mexicans will pay correspondingly less.

This is not unfair, of course. Not only do Argentines seeking tourist visas for the US need to pay the said fee, but they also have to provide bank statements and other supporting documentation to prove they have stable employment and resources for their trip, and that they will not overstay their welcome. An applicant from, say, the southern city of Ushuaia will have to fly four hours to Buenos Aires and then back for a perfunctory personal interview at the US consulate. If the visa is not granted, there is no refund. It’s no surprise that Argentines (and other foreigners) resent the expensive, laborious and almost humiliating process, and many of them consider the new measure long overdue.

On the other hand, Argentine tourism operators are up in arms, and rightly so. Their sector has boomed since the 2002 economic collapse made Argentina an affordable destination, but rising international airfares, high domestic inflation, and the deteriorating international economic environment have put their livelihoods - and that of all Argentines directly and indirectly involved in tourism - in peril. Today's Buenos Aires Herald editorializes that the government "now risks discouraging tourism during a global crisis when few enough people feel inclined to travel." The measure, adds the Herald, "is jeopardizing a tourist revenue of potentially billions for the sake of 40 million dollars," the estimated amount of revenue that it would raise.

A US family of four would thus pay more than US$500 additional in “reciprocity fees” for a two-week Argentine holiday, and may well decide to go elsewhere in the current economic crisis. According to Ricardo Roza, president of the Asociación Argentina de Agencias de Viajes y Turismo (Argentine Association of Travel and Tourism Agencies), “In addition to being inconvenient, [the measure] seems dubious and difficult to apply. The world economic crisis is already affecting the arrival of tourists. There’s no reason to impose any more obstacles. In reality, this will limit the country’s foreign exchange earnings.” Another private tourism official added that “This charge is punitive, a very inhospitable measure.”

Originally, it was announced that the measure would take effect on January 1, 2009, but there are rumors it may be postponed until March - which would at least give operators one less worry for the upcoming summer high season. The details are yet unclear as well - who will collect the fees and how? Chile, for instance, collects its reciprocity fee only at Santiago’s international airport, as it’s utterly impractical at some remote border posts, so that overland travelers are de facto exempt. Nor is the Argentine measure’s term of validity clear - in Chile, again, it’s valid for the lifetime of the passport, up to ten years.

Meanwhile, an apparently impulsive government decision threatens to undermine one of the Argentine economy’s most dynamic sectors. It's fair enough to open fire on a threatening enemy, but it's foolish to shoot your ally, and even more foolish to shoot yourself in the foot.

Mismarketing Argentina - the Disaster of Discriminatory Pricing

Six years ago, in 2002, I was preparing the first edition of Moon Handbooks Buenos Aires in the midst of Argentina's dramatic economic and political meltdown. In the course of doing so, I paid a visit to a downtown hotel that had had the misfortune to reopen, at this worst possible time, as part of an international chain (not the Sheraton, pictured here). Given its location, barely a block from the chaos of the Plaza de Mayo, and the fact that tourism and business travel had come to a virtual halt, the hotel in question was nearly empty.

My story was that I was looking for a place to house my elderly parents, who were coming to visit, and that my small apartment did not have sufficient room for them, but my real purpose was to inspect the hotel anonymously. Normally I would expect the bellman to show me a room or two, and the hotel's common areas, but in this case I was asked to wait a few minutes as the concierge made a phone call. Imagine my surprise when the hotel manager emerged from her office to give me an exhaustive tour of the spectacularly recycled building, a neighborhood classic. Business was so slow that they had to put out every effort to attract even a single guest.

When I asked the price, the manager told me it was normally US$100 - in fairness, not an unreasonable price for a hotel of this standard in almost any country in the world - but, she added, "because you're living here, I can offer it for the 'local price'" of 100 pesos - closer to US$30. Today, following Argentina's recovery and persistent high inflation, rates at that same hotel start at US$150 plus taxes, and most rooms go for more.

This, however, was the first experience I had with "differential prices" which, over the last several years have become a plague and an excuse to rip off foreign tourists even as Argentine prices return to their pre-crisis levels, when the dollar and peso were one to one (at present, the dollar is slowly regaining strength against the Argentine currency). In March, the federal government finally acknowledged the problem by passing a Defensa del Consumidor (Defense of the Consumer) law that prohibits differential rates in hotels and other services, but the problem has not gone away. According to the Buenos Aires daily Clarín, in hotels, restaurants and taxis, services often continue to cost more to the client who's obviously foreign. In some extreme cases, advertised peso prices are claimed to be dollars or even euros - three or four times the true cost (Argentines also use the "$" symbol to denote pesos in everyday transactions).

One Recoleta artisan quoted by Clarín summed up the problem: "I charge whatever I want, because I'm the one who fixes the value of my labor." Caught giving a discount to an Argentine customer, though, he retorted that "The foreigner has more money than I do." In some cases, it's a little more subtle - when I went to dinner with my Argentine cousin and her husband in the Patagonian resort of El Calafate, for instance, a top restaurant gave us a 20 percent discount because they were locals (even though they're doing very well as freelance guides in Calafate's flourishing tourist economy).

The danger of all this, of course, is that foreigners will start to view Argentines as shameless opportunists who will do anything for a peso, dollar, or euro, and decide never to return - and to tell their friends not to bother going. For an individual or a business, overcharging a foreigner has short-term advantages; for the country as a whole, it could be disastrous. In general, prices are still reasonable, but Argentina doesn't need anything that would further erode its competitive advantage in the travel and tourism sector.