Costa Rica Tourism Faces Tough Competition Amid Currency Fluctuations and Rising Costs, Here’s What You Need to Know

Published on December 6, 2025

The educational period is over for this field for Costa Rica due to the impact of the country’s peak tourist season. His currency’s exchange rate has surged. The Costa Rican central bank reported ¢488 for the dollar on December 6, 2025, marking a continual fall due to a high exchange rate. The dollar has dropped significantly. The peak tourist season for Costa Rica is impacted by the domino effect this falls the distance. The fall of the dollar has impacted all of the Costa Rican tourism operators. The dollar has fallen to the weakest exchange rate since 2005.

Declining Dollar: A Growing Concern for Tourism Operators

Over the past few days, the U.S. dollar has dropped by ¢5.61, signaling a continuation of the trend that has been unfolding since mid-2022. At that time, the dollar was trading at ¢640, and since then, the Costa Rican colon has appreciated by nearly 27 percent against the dollar. While this strengthens the local currency, it has made Costa Rica significantly more expensive for foreign tourists, particularly those coming from the United States and Europe.

For tourists, the stronger colon means they now get fewer colones for their dollars, effectively increasing the cost of their stay in Costa Rica. This change comes at a particularly problematic time, as the high season begins—typically the period when the tourism sector generates significant revenue to support the rest of the year. The reduction in the dollar’s value has made Costa Rica a less attractive option for foreign travelers, who are increasingly turning to neighboring countries like Mexico, the Dominican Republic, Colombia, and Panama for more affordable vacation options.

Impact on Small and Medium Enterprises in the Tourism Sector

One of the most significant impacts of the falling exchange rate is on the country’s micro, small, and medium-sized enterprises (MSMEs), which make up 85 percent of Costa Rica’s tourism businesses. These small businesses are vital to the local economy, particularly in rural areas, where tourism supports jobs and provides essential income for local communities.

Shirley Calvo, executive director of the National Chamber of Tourism (CANATUR), explained that tourism companies are facing higher operational costs during the peak season. Expenses for staff salaries, utilities, maintenance, and supplies are all paid in colones, but much of the revenue generated by these businesses comes in U.S. dollars. The discrepancy between the two currencies has created a financial gap, making it harder for these businesses to maintain their margins and stay profitable.

“This financial gap threatens the stability of many tourism businesses,” Calvo warned. The growing challenges for MSMEs in the tourism sector are compounded by the fact that many of these companies support jobs in small communities, from the beaches of Guanacaste to the cloud forests of Monteverde. As these businesses struggle to remain competitive, there are concerns that the financial pressures could lead to job losses and a reduction in employment opportunities, particularly in rural areas where alternatives are scarce.

Costa Rica’s Competitiveness Erodes in the Regional Market

As the exchange rate makes Costa Rica a more expensive destination, tourists are increasingly choosing to visit rival destinations that offer better value for money. CANATUR highlighted that Costa Rica is now more expensive than competing destinations such as Mexico, Panama, the Dominican Republic, and Colombia, all of which offer similar experiences at a more affordable price point. This shift has led to fewer bookings, particularly from North American and European markets, which are vital sources of tourism revenue for Costa Rica.

Data from the tourism industry highlights a decline in tourist arrivals, with a 2.1 percent drop in air arrivals from January to August 2025 compared to the previous year. In February 2025 alone, the decrease was more pronounced, reaching a 7 percent drop. These figures reflect the growing concern that Costa Rica’s position as a competitive tourism destination is weakening, especially as more budget-conscious travelers opt for more affordable alternatives in the region.

Rising Costs and Strains on the Hotel Industry

In addition to the challenges posed by the falling exchange rate, Costa Rica’s hotel industry is also grappling with rising operational costs. Flora Ayub, executive director of the Costa Rican Chamber of Hotels, emphasized the compounded impact of these costs. Increases in utility prices, the rising cost of maintenance, and delays in essential infrastructure projects have added further strain to the industry. Moreover, concerns about public safety, which have led to security alerts from countries like the United States and Canada, have also deterred visitors from traveling to Costa Rica, compounding the economic hit to the tourism sector.

Ayub stressed that the timing of the exchange rate drop is critical for Costa Rica’s tourism industry, particularly in the high season when hotels are expected to generate the bulk of their income for the year. “The current exchange rate has reduced our margins at a time when we need them the most,” she said. The combination of rising costs, fewer tourist arrivals, and increased competition from neighboring countries has created a perfect storm for the hotel industry, with businesses now forced to tighten their budgets and explore new ways to attract cost-conscious travelers.

Tourism’s Critical Role in Costa Rica’s Economy

Despite the challenges posed by the current exchange rate, tourism remains a cornerstone of Costa Rica’s economy, employing thousands of people and fueling growth in many sectors. The tourism industry experienced a strong rebound in 2024, with an increase in tourist arrivals. However, the ongoing pressures of the falling exchange rate and rising operational costs have led to concerns about the long-term viability of many small and medium tourism businesses.

In 2024, 75 percent of businesses in the tourism sector reported lower earnings due to the currency pressures. As Costa Rica’s high season ramps up, industry leaders are increasingly concerned that the trend could continue, leading to further financial instability and job losses in a sector that is critical for the country’s economic health.

Calls for Government Intervention to Support the Tourism Sector

The situation has sparked calls from industry groups for the government and the Central Bank of Costa Rica to take action to mitigate the impact of the low exchange rate on tourism. Exporters are also feeling the strain, with the rate falling nearly 20 percent below the decade’s average of ¢598. Victor Pérez, from the Chamber of Exporters, called for the Central Bank to consider lowering its policy rate at the next meeting to ease the burden on businesses.

As Costa Rica’s tourism industry braces for the peak season, industry leaders continue pressing authorities to implement measures that will support the sector’s stability and competitiveness. Without relief, the ongoing exchange rate volatility could threaten the long-term health of Costa Rica’s tourism sector and the many communities that rely on it for economic survival.

Adapting to the New Economic Reality

Costa Rica’s tourism sector has had to adjust to the economic reality of fluctuating exchange rates. Ramp-cutting initiatives designed to attract new tourists while remaining competitive have already begun. Due to the impact the sector’s tourism has on the overall economy of the country the government must also take actions to the sector’s economic problems. Without the economic activities of the tourism sector the country definitively will lose the strong economic position it has. Living the strong economic position will also relocate the country from the position of the top world tourist destination.