Costa Rica Tourism Braces for Weak Dollar and Low Season Threat
Tourism & Currency
Key Facts
—Exchange rate. The colón has strengthened from ₡700 to around ₡500 per US dollar since mid-2022, a near two-decade low for the dollar.
—Arrival decline. International arrivals fell for seven consecutive months from late 2024 into early 2025, with air arrivals down 2–4% year-on-year.
—Job losses. Industry estimates point to roughly 22,000 tourism jobs lost in about a year, linked to the strong colón and softer demand.
—Competitiveness. Business groups say Costa Rica is now “prohibitively expensive” compared to Mexico, the Dominican Republic, Colombia, and Panama.
—Year-end outlook. Chambers warn of a possible 15–20% reduction in arrivals by year-end 2025 if conditions do not improve.
Costa Rica tourism cautious about the year-end outlook as a persistently strong colón and a draining low season erode margins and push price-sensitive travellers toward cheaper regional rivals.
The Exchange Rate Squeeze
The Costa Rican colón has appreciated sharply, moving from roughly ₡700 per US dollar in mid-2022 to around ₡500 today. That is the dollar’s lowest value against the colón in nearly two decades.
Tourism businesses earn mostly in dollars but pay payroll, utilities, and local suppliers in colones. Each dollar of revenue now buys far fewer colones, squeezing margins even when nominal dollar prices stay flat.
For international visitors, the strong colón makes Costa Rica visibly more expensive. A given holiday budget in dollars covers less lodging, food, and tours than it did two years ago.
Why Costa Rica Tourism Cautious About the Year-End
Costa Rica’s low season runs roughly from May to November, with September and October traditionally the weakest months. Many businesses report they did not earn enough during the last high season to comfortably survive the low months.
International arrivals declined for seven consecutive months from late 2024 into early 2025. Air arrivals fell between 2% and 4% year-on-year in early 2025, with some months down significantly more.
The December-to-March high season normally pays the bills for the rest of the year. If operators enter that period with depleted reserves, they have less capacity to invest in marketing, maintenance, and staffing.
Losing Ground to Regional Competitors
Tourism chambers including CANATUR and Turismo por Costa Rica say the exchange rate is “suffocating tourism” and “killing competitiveness.” They warn Costa Rica is now seen as prohibitively expensive for many middle-class travellers.
The country is losing ground to Mexico, the Dominican Republic, Colombia, Panama, and even Guatemala. These destinations offer similar sun-and-nature products at a lower cost for dollar-carrying visitors.
Even small percentage drops in arrivals translate into tens of thousands fewer visitors and tens of millions of dollars in lost spending. Industry estimates point to roughly 22,000 tourism jobs lost in about a year.
Operational Strain and Investment Freeze
Companies are postponing investments, freezing hiring, and in some cases reducing operations or considering closure. Chambers warn that if the upcoming high season does not deliver a strong rebound, more small and medium enterprises may not survive.
There is also a growing reputation risk. Business leaders say Costa Rica is building a negative image as an expensive destination where money does not go far in hotels, restaurants, and tours.
Concern is mounting that service quality will deteriorate if companies keep cutting costs. That would make high prices even harder to justify to visitors who have cheaper alternatives.
Beyond the Exchange Rate: Security, Connectivity, and Global Headwinds
The exchange-rate problem is central, but tourism leaders emphasise it is not the only threat. Rising crime in key areas and travel advisories have been explicitly linked to falling arrivals.
Airline seat reductions of 10% to 41% on some routes limit access, especially for US travellers who form the majority of visitors. New taxes on tourism services and health alerts add further cost and perceived risk.
Global economic turbulence, including US tariffs and broader uncertainty, is encouraging more cautious travel spending. That hits a relatively expensive destination like Costa Rica hardest.
What Investors and Expats Should Watch
For investors with exposure to Costa Rican hospitality assets, the margin squeeze is real and likely to persist. Operators earning in dollars but paying in colones face a structural cost disadvantage until the exchange rate stabilises.
Expats and property owners who rely on tourism-linked income should monitor occupancy rates and forward bookings closely. A weak December-to-March high season would signal deeper trouble for the broader tourism economy.
The sector is lobbying for measures to prevent further colón appreciation. Any policy shift from the central bank or government on exchange-rate management would be a material signal for the market.
Frequently Asked Questions
Why is the strong colón hurting Costa Rica’s tourism sector?
Tourism businesses earn revenue mostly in US dollars but pay local costs such as salaries, utilities, and supplies in colones. As the colón strengthens, each dollar buys fewer colones, squeezing profit margins.
At the same time, Costa Rica becomes more expensive for foreign visitors, pushing price-sensitive travellers toward cheaper regional destinations.
How much have international arrivals fallen in Costa Rica?
International arrivals declined for seven consecutive months from late 2024 into early 2025. Air arrivals fell between 2% and 4% year-on-year in early 2025, with some months recording steeper drops.
Business groups estimate a possible 15–20% reduction in total arrivals by year-end 2025 if current conditions persist.
Which countries are benefiting as Costa Rica loses competitiveness?
Tourism chambers and travel media identify Mexico, the Dominican Republic, Colombia, Panama, and Guatemala as the main beneficiaries. These destinations offer similar sun-and-nature products at a lower cost for travellers carrying US dollars, making them increasingly attractive alternatives to Costa Rica.
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