Inn Roads.

A wave of mid-level managers paves the way for Central America's hotel expansion.

THERE'S AN ERUPTION GOING ON IN Central America But it has nothing to do with the region's volcanoes.

The blast takes the form of a hotel upsurge. A shiny new Plaza Real Inter-Continental hotel sits near the airport outside Managua, Nicaragua. Marriott International is adding 11 hotels to six Latin American countries, including Panama, by the end of 2001; the hotel chain debuted in El Salvador last year, a few months after unveiling a property in Costa Rica. And Holiday Inn has opened new hotels in El Salvador and Honduras.

Four-star hotel brands, such as Choice and Hampton Inn, are also descending upon the region for the first time, offering fewer amenities and gentler rates than the luxury inns. Their entrance reflects a shift in the type of business travelers now frequenting Central America.

"High-level executives have been through the region, staying at the five-star hotels," explains Hans Scholte, director of sales and marketing at the Plaza Real Inter-Continental Managua in Nicaragua. "Now companies are sending their technicians and mid-level executives. Some of them have longer stays. They are not going to be checking in at five-star hotels."

The influx of foreign executives assigned to privatization projects is upping demand for hotel rooms. At the same time, multinationals, skittish in the past because of the region's civil wars and political unrest, are opening their wallets to pump money into tourism projects. Reconstruction after deadly Hurricane Mitch is improving roadways, airports and ports, setting the infrastructure groundwork for a tourism push, and airline connections are getting better.

The boost comes in tandem with an economic upswing in the region. "When you compare Central America with the rest of Latin America, the majority of Latin American countries haven't grown over the past couple of years, but the majority of Central American countries have," says Carlos Acevedo, a macroeconomic analyst for the Salvadoran Foundation for Economic and Social Development (Fusades).

Isolated from international markets, Central America sailed through the Asian and Russian economic crises unscathed. Prosperity in the United States, the region's most important trading partner, has also spilled over into the region. At the same time, laws governing foreign investment have been streamlined.

Construction close-up. Take Honduras, for example. Until recently, its capital city of Tegucigalpa boasted only one luxury hotel: the nearly 30-year-old Honduras Maya. Now hotel guests on the second floor of the new Camino Real Inter-Continental Tegucigalpa can watch the progress of a Crowne Plaza hotel under construction. Last year, the Princess Hotel, a Premiere Hotels & Resorts property, also debuted in Tegucigalpa, joining another new property, the Copantl Suites. Work is now underway to develop a convention center.

"Tegucigalpa needed hotels. They've been a long time in coming," says Tourism Minister R[acute{o}]mulo Garc[acute{i}]a, who predicts tourism could evolve into the country's No. 2 industry after textiles.

The new hotels tail the slow recovery from Hurricane Mitch, which pounded the region in late 1998, killing thousands and racking up nearly US$4 billion in damage. Honduras, the hardest hit, has rebounded: This year, the country's gross domestic product is expected to grow 3% to 4%.

Complementing business travel, Honduras also hopes to lure vacationers to the Mayan ruins of Copan, the diving areas off Roatan and the beaches of the Bay Islands.

In Nicaragua, tourism--the nation's second-largest revenue generator-- offers a promising economic alternative to export crops such as coffee and sugar cane. Lake Nicaragua is a jumping off point for water sports and home to freshwater sharks. The country, once better known to U.S. travelers as home to the war with Contra rebels, boasts lovely colonial cities like Grenada and Leon.

Tourism growth is already being recorded in El Salvador. Last year, 665,000 travelers arrived, adding $225 million to the country's revenues. That compares with 541,863 tourists in 1998 and just 282,835 in 1996, four years after a peace accord ended the civil war and the same year a government tourism office opened.

"I would like to see it reach 700,000 or 750,000," says Salvadoran Vice President Carlos Quintanilla Schmidt, who oversees new foreign investment, including hotel development. "But we want each of them to stay longer. The average now is fewer than four nights per visitor."

'Pompeii of the Americas.' A 100-room Comfort hotel is currently going up near the San Salvador airport, marking the country's first affiliated with Choice Hotels International. A Holiday Inn recently opened near the U.S. Embassy in San Salvador. Edgardo Su[acute{a}]ez, president of Corsatur, the government tourism corporation, says the new hotels will anchor the development of tourism attractions, including cruise port projects. "We want to create jobs in places with potential for tourism," he says.

The archaeological site Joya de Ceren highlights El Salvador's tourism attractions. Nicknamed the "Pompeii of the Americas" because it contains the intact remains of a community buried by lava around A.D. 590, the excavation is listed on Unesco's World Heritage Sites. The country is also promoting a "Peace Route" in areas controlled by anti-government rebels before peace accords were signed. Ex-guerrillas-turned-tour-guides take travelers to the tunnels the former outlaws used to elude government forces.

Although tourism is getting attention from the government, Vice President Quintanilla Schmidt acknowledges that El Salvador will have a tough time competing with Costa Rica, which has a better developed tourism industry and offers vacationers more alluring prices. "To rent a yacht in Costa Rica costs $400, for example," he says. "Here, it's $1,000."

But Costa Ricia's tourism sector took a blow in March when two 19-year-old women from the United States were murdered. Tourism brings $900 million in revenues annually to Costa Rica. Last year, 5 million travelers--not counting cruise ship passengers--visited the eco-oriented country.

In Panama, tourism grew 5% last year and officials want to make it the No. 4 revenue producer. The departure of the U.S. Army Southern Command has opened the door for tourism development: Spanish hotel chain Melia is turning Fort Sherman into a lakeside resort, the Panama Canal Rain Forest Canopy Tower sits on a site once used for canal defense and a military golf course is being resurrected as a civilian country club. New cruise port projects are also on the drawing board.

The hotel and tourism push is complemented by increased airline competition in the region in recent years. Regional heavyweight Grupo TACA, which links Central America to Canada, the United States, Mexico, the Caribbean and South America, has boosted flight frequency (including more early morning flights for business travelers), expanded routes and improved connections. (It recently added Lima, Peru, as a hub to join San Salvador and San Jose.) It's also working on an alliance with Air France that would feed European travelers into its network.

Copa Airlines, based in Panama, in 1998 entered a strategic alliance with Continental Airlines to improve service in the region. And, since 1997, Delta Air Lines has been increasing its Central American flight frequencies.