At the Cayuga Collection, we believe that true luxury is not just about beautiful locations and exceptional service—it’s about creating a positive and lasting impact.
We are incredibly proud to announce a recent finding from our financial statements: our Costa Rican hotels have achieved a remarkably low expense leakage of just 8%.
This is a powerful testament to our commitment to sustainable tourism and a major win for the local communities we partner with.
What Is "Tourism Leakage"?
For those new to the concept, tourism leakage is the portion of a traveler’s money that leaves the local economy and is instead directed to foreign-owned companies. This is a critical issue in developing nations, where the vast potential of tourism to create jobs and prosperity can be significantly undermined by a high rate of leakage.
Leakage typically occurs in two main ways:
- Import Leakage: When a destination must import goods like food, beverages, and supplies to cater to tourists, that money leaves the country.
- Export Leakage: When profits from foreign-owned businesses—such as international hotel chains, airlines, or tour operators—are sent back to their home countries, the local economy loses out.
A Deeper Dive: How Our 8% Stacks Up Globally
To put our achievement into perspective, it’s essential to look at the global context. For decades, the tourism industry in many developing nations has been dominated by business models that lead to massive leakage. Estimates for tourism leakage often fall between 40% and 80% in many parts of the world. For instance:
- In regions like the Caribbean, where all-inclusive, foreign-owned resorts are common, leakage rates can be as high as 80%.
- In countries like Thailand, a significant portion of tourism revenue—as much as 70%—is estimated to leave the country.
- Even in larger economies, such as India, leakage is still a considerable issue, with estimates around 40%.
The primary drivers behind these high numbers are well-understood. Foreign-owned tour operators sell all-inclusive packages that use foreign airlines, foreign hotel chains, and imported food and beverages. The profits are repatriated, and the local economy benefits only marginally, primarily through low-wage jobs.
Our 8% leakage rate is not only well below these industry standards, but it also means that a massive 92% of the money we spend stays in Costa Rica. Even more impressively, we found that half of our leakage is related to marketing expenses—an unavoidable cost of attracting guests from around the globe. This means our operational leakage is even lower, a direct result of our conscious decisions.
How We Achieve Such a Low Leakage Rate
Our success is not an accident; it’s the result of a philosophy we have practiced for over two decades. We operate under a “buy local, hire local” philosophy that stands in stark contrast to the models that fuel high leakage rates elsewhere.
- Our Hotels vs. Foreign-Owned Chains: Unlike large international hotel chains that repatriate profits, we are locally based and have built our business to ensure our success directly contributes to the well-being of our host communities. The money you spend with us recirculates in Costa Rica, helping to build a more robust local economy.
- Our Suppliers vs. Global Supply Chains: Many large resorts, from the Maldives to Mexico, rely on complex global supply chains for everything from specialty cheeses to hotel linens. This drives import leakage. We, however, actively seek out local partners. Our food is sourced from local farmers, our furniture is crafted by local artisans, and even our spa products are made in Costa Rica. This choice ensures that a significant portion of your money directly supports local producers.
- Our Team vs. Expatriate Management: A common practice in many foreign-owned tourism businesses is to import expatriate management. We do the opposite. Our managers and staff are from the communities where our hotels are located, and we invest in their training and professional development. This not only empowers individuals but also ensures that the income from tourism stays within the community.
While the numbers are still being tallied, we are confident that our properties in Nicaragua, Guatemala, and Panama are achieving similar, if not better, results, as our core business philosophy remains consistent across all our locations.
The Cayuga Difference
Our 8% leakage rate is more than just a number; it’s proof that a responsible and successful business model is possible.
It’s a powerful validation of our belief that when we invest in the local economy, we create a more authentic, vibrant, and sustainable experience for our guests and a more prosperous future for our communities.
This is the Cayuga difference—traveling with us means you're making a choice that truly benefits the destinations you love.
