Browsing Posts tagged Argentina tourism

Argentina travel

When I put out the first edition of The World’s Cheapest Destinations at the end of 2002, Argentina was one of the best travel values in the world and it stayed that way for quite a while. Reeling for a huge banking collapse and currency crisis, the local peso went from parity to the dollar to a rate of three to the dollar when the dust settled, without any change in prices.

After a while though, even though the exchange rate kept widening, inflation galloped even faster. As tourism picked up and hotels were able to fill their rooms, rates for those went up as well. With an inefficient and pricey airline system, combined with very long distances for buses, eventually Argentina drifted out of budget travel territory and I had to drop it from the book when doing updates.

This is a country that can’t get out of its own way though and you can almost bet money that every 10 years they’re going to be in trouble again. That time is now. They have defaulted on debt, robbed the public pensions, strangled international business, and practically outlawed a whole range of imported goods. It keeps getting messier and nothing is working as intended though.

tango dancers

Another Collapse, but When?

The prevailing wisdom from people who live there is that one of two things will happen before the next election at the end of 2015.

1) The government and economy will collapse, the opposition will come in and make rescue moves, and in a few years they’ll get all the credit for the turnaround. The current government won’t regain power.

2) The current government will somehow keep limping along and will stay in power long enough to hand the whole mess off to the opposition, then the old guard can blame the whole mess on the opposition since it will take a while to turn things around. Then eventually the pendulum will swing and they’ll be back in power.

Either way, few are predicting good news on the horizon anytime soon. There are so many red flags right now that it’s hard to see anything positive to point to.

There’s one big red flag though that’s really a gold one for travelers: a dual exchange rate for those with dollars.

Official Rate vs. Blue Rate

Nobody wants to call the real exchange rate a “black market” rate, so they’re calling it a “blue rate” to make it sound prettier. The official rate is a little more than 8 to the dollar. The real rate you’ll get on the street is more than 15. This rate is so open that it’s printed in the newspaper and you can look it up online each day.

What this means for you the traveler is this: cash is king. Forget the ATM, forget using your credit card. For both of those you’re going to get the lousy official rate. You can almost double your spending power by bringing cash.

Blue rate Buenos Aires

Your Argentina-bound carry-on bag

Yes, I know this goes against everything you’ve learned about safety, theft prevention, debit card back-ups, and the like. But really, you are better off acting like a mobster and coming in with rolls of $50 and $100 bills (clean and recent of course) than you are trying to use plastic. Then you simply exchange these dollars for pesos and use those pesos to pay for your now-much-cheaper hotel rooms, restaurant meals, and bus tickets. Use those pesos to shop for now-cheap leather goods and to buy good wine for cheap.

If you do this, you’ll be copying what the wealthy Argentines are doing now. The country has slapped a 35% international travel tax on anyone leaving the country to try to stem the outward flow of money, but it’s not keeping the rich from traveling. That’s because they can easily justify it as a business expense: they’ve stowed their money in Montevideo, Panama, or Miami. So it’s a banking trip. It’s also the only way they can shop for items not made in Argentina: the import restrictions have gotten so tough that most of the best-known international brands have pulled out of Argentina. The ones who stayed are having to buy buildings to have something to do with their profits since they can’t get them out of the country.

In short, its a big mess. But when there’s upheaval, that’s often the best time to visit. You have a hard currency in a land where that hard currency is extra valuable.

Just be advised there’s one big expense you can’t get around: the hefty reciprocity fee to enter the country. Chile dropped it recently, but not Argentina (or Brazil). You need to apply in advance and pay $160 per person if you’re American, $92 if you’re Canadian, and $100 if you’re Australian. Stay a while to make up for this tax on tourists.

After threatening and then backing off multiple times, the Argentine government has officially kicked itself in the balls by imposing a huge surcharge on visitors wanting to come spend their vacation funds in Argentina. They won’t call it a visa, but if you arrive at the Buenos Aires Airport, you will not be allowed to enter their country without coughing up a significant sum. For Americans it’s $131 per person, for Canadians US$70, for Australians US$100, all according to what the Argentines pay for a real visa from those countries.

They say it’s not a visa, so if it’s not a visa, what is it? I like to call it a “screw you surcharge,” while those running hotels and tourism businesses in the country are calling it a “screw us surcharge.” Either way, a lot of people are now bending over and it’s going to hurt.

This is essentially a way for the government to get back at countries with high visa fees by charging them the same amount to come into their country. Besides the fact that much of the U.S. cost is because of security and background checks and the Argentine one is simply going into someone’s pocket, there’s one major flaw in this approach. Argentina depends on tourism and gets lots of visitors from wealthier countries. The U.S. doesn’t even have a national tourism promotion board. If 100% of Argentines stopped coming to the U.S., Canada, and Britain, it would be a good year or two before the people keeping stats even noticed the blip. It certainly wouldn’t have an impact on the overall economy of any of those nations.

So it may put some money in someone’s coffers in the short term before word gets out, but what about after that? A friend of mine got a nasty surprise upon arrival, as I’m sure many have the past few weeks, and it’s the first thing she tells everyone when they ask about how her trip went. She and her husband had $262 less to spend on the ground than they expected after arrival. Long-term that’s a recipe for disaster. Peru, Uruguay, and Ecuador must have popped the Champagne when this news came out.

For now, there’s one good workaround: enter Argentina overland or via a flight to Mendoza instead of through the capital. The problem is, Chile, Bolivia, and Brazil have similar punitive fees in place (a big reason Argentina has, up until now, been more popular), so flying into any of those instead won’t solve the problem unless you were going to one of them anyway already. That leaves Uruguay as the best bet. If you can find a flight into there for the same or less than one to Argentina, take it and ride the ferry over. Or just avoid Argentina altogether until the tourism industry there cries “Uncle!” and the policy gets reversed. That could be a while though, as Argentina is not known for intelligence in government and the Kirchners have made enough boneheaded moves to fill a book.

To see the kind of reaction this announcement has brought, check out the 100+ comments after the story ran on the Argentine Post or the ones here on the Economist.

Look, I’ll be the first to admit we make it an expensive hassle to visit the U.S., but frankly, it’s just not important enough to our economy for the national government to really care. If the foreign tourism numbers dropped to zero tomorrow, only a few states (like California, New York, Hawaii, Florida, and Nevada) would even notice much of a drop in revenue. The rest rely on domestic travelers. So tit-for-tat moves like this don’t accomplish much, which is why others who have tried it (like Jordan) have ended up scrapping the idea when it became clear it was costing more than it was earning.

What do you think? Are you less likely to visit Argentina now that it’s this much more expensive? What about Bolivia, Chile, or Brazil? If you visited all four of these, it would cost you more than $500 before you even factored in actual travel costs on the ground. Ouch.