Honduras - Tourism Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2249-HO STAFF APPRAISAL REPORT HONDURAS TOURISM DEVELOPMENT PROJECT February 26, 1979 Tourism Projects Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  HONDURAS TOURISM DEVELOPMENT PROJECT CURRENCY EQUIVALENTS Currency Unit = Lempira (L) US$1.00 = L 2.00 L 1.00 - US$0.50 L 1,000,000 US$500,000 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 kilogram (kg) = 2.2 pounds (lb) 1 hectare (ha) = 2.47 acres ACRONYMS AND EQUIVALENTS CABEI - Central American Bank for Economic Integration CONADI - National Investment Corporation FONDEI - National Industrial Development Fund IHT - National Tourism Institute ILO - International Labour Office INA - Institute for National Agrarian Reform INFOP - National Institute for Vocational Training SECOPT - Ministry of Communications, Public Works and Transport SECTUR - Ministry of Culture and Tourism SAHSA - Honduran Air Services, Inc. SITCA - Secretariat for Central American Tourist Integration TAN - National Air Transport UNDP - United Nations Development Programme FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY HONDURAS STAFF APPRAISAL REPORT TOURISM DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. I. THE TOURISM SECTOR ...................................... 1 A. Tourism Potential ................................... 1 B. Present State of the Sector ......................... 1 C. Contribution of Tourism to the Economy .............. 3 D. Tourism Development Strategy ........................ 3 II. PROJECT CONCEPT AND COMPOSITION . . 3 A. Project Objectives and Content ...................... 3 B. Line of Credit ...................................... 4 C. Other Components .................................... 7 III. BORROWING/EXECUTING AGENCIES . . 10 A. The Central Bank .................................... 10 B. Ministry of Culture and Tourism (SECTUR) ........... 11 C. Ministry of Communications, Public Works and Transport (SECOPT) ................................ 12 D. National Institute for Vocational Training (INFOP).. 12 IV. PROJECT COST AND FINANCING .. 12 A. Cost Estimates ...................................... 12 B. Financing Plan ...................................... 15 C. Lending Terms ....................................... 16 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. V. IMPLEMENTATION, PROCUREMENT AND DISBURSEMENT .......... 16 A. Implementation .................@.................. 16 B. Procurement ..........00..............0000.00.00.0000000... is C. Disbursement ................. O. .. .... .. .........OO. 19 VI. PROSPECTIVE TRAFFIC.................................. 20 A. Occupancy Rates and Tariffs ........ 0...... 20 B. Traffic Growth ..... . . ........o.o 21 C. Air Services 00........ 0... 0................ 21 VII. HOTEL PROFITABILITY ................... 22 VIII. ECONOMIC JUSTIFICATION.................. . ....... 30 A. Economic Analysis ...................... 30 B. Economic and Social Impact ....... 36 IX. SUMMARY OF AGREEMENTS REACHED ON LOAN CONDITIONS,ooooo 38 ANNEXES I. Statistical Tables and Organizational Charts .......... 40 II. FONDEI Operating Regulations for Tourism Loans ...oo... 57 III. Principal Assumptions used in Financial and Economic Analyses.... 59 IV. Related Documents and Data Available in Project File.. 65 MAP IBRD 13747 The appraisal mission consisted of Messrs. H. David Davis, Gianni Brizzi and Michael Sarris who visited Honduras in May/June 1978. Both in the field and at headquarters, the mission received assistance from Messrs. Luis Vera (physical planning), Herbert Boehm (financial analysis), Miguel Ruiz- Herrera (legal affairs) and H. Rex Shama (airports). A further visit was made by Messrs. Davis and Sarris in September 1978 for discussions with newly appointed Government officials.  I. THE TOURISM SECTOR A. Tourism Potential 1.01 Honduras has considerable potential for the development of inter- national tour