Clouds over Puerto Rico

Only a couple of years ago, Puerto Ricans could afford a sunny air of self-satisfaction. Businesses lured by tax benefits and tourists attracted year round by the cool sea and warm weather caused the island's economy to flower brightly. Now Puerto Rico is clouded by recession. Once-thriving garment and shoe industries are suffering from foreign competition, agricultural employment has plunged (soaring costs and shrinking markets soured the sugar industry), and the jobless rate has risen to 13%. Migration to the U.S. mainland, which declined during the boom years, is swelling again. The most obvious sign of Puerto Rico's economic malaise--and one of the prime causes of it--is the island's slumping tourist trade.

In 1968, more than 1,000,000 visitors went to Puerto Rico, spent about $230 million and created employment for more than 10,000 workers. Since then, if only because of inflation, income from tourism should have jumped. But it has declined steadily to $223 million last year. So far this year, it is running an estimated 7% below 1970. Prospects are even bleaker for the summer season, normally a busy period for Puerto Rican tourism. The once crowded, palm-fringed beaches near San Juan hotels are now lightly used and cluttered with litter; some are badly polluted. Warning signs along the Condado Lagoon tell swimmers to stay away.

Bellhopping Mad. The casinos are also quiet. To attract customers, El San Juan, El Conquistador and other hotels offer gambling junkets from the mainland, some including free fares or rooms. That practice was formerly frowned on by Puerto Rican government officials fearful of drawing too many professional gamblers and underworld figures.

Several hotels have closed or soon will do so. El Miramar and Le Petit Miramar shut down last summer. In March, the 52-year-old Condado Beach, San Juan's oldest luxury hotel, was closed with startling suddenness; guests arriving for breakfast were told by desk clerks to clear out immediately. Carrying their own luggage--the bellhops had been dismissed--the tourists tramped out.

Hilton International plans to stop operating the San Jeronimo Hilton, which will close unless its new owners, a local business group, find other hotel people to run it. The Dorado Hilton is scheduled to shut in June, when Hilton International ends operations there. The Dorado Hilton's owners, International Investment Co., got a promise of a $500,000 loan from the Puerto Rican government to help refurbish the hotel; they hope to reopen it in December. In addition, the government plans to buy San Juan's exclusive but ailing Racquet Club Hotel for $4,500,000 and turn part of it into a hotel school. El Convento Hotel is $4,000,000 in debt and faces a grim future.

Bombing Business. Some hotel owners are finally recognizing that room rates have been excessively high (as much as $60 per day for a single room, without meals). Governor Luis Ferre's brother Jose, who last year bought the troubled Darlington Hotel and renamed it the Borinquen, has cut rates by a third and appealed for middle-class and convention customers. Other hotels, including La Concha and Flamboyan, have posted their off-season rates sooner--and dropped them down further--than last year. They are offering double rooms for $21 to $26 a day, about $20 less than the usual high-season rate. Their decision to give the tourists some bargains comes none too soon. "Right now the lobbies look like undertakers' parlors between funerals," says Roberto Bouret, director of the hotel association.

As in many other parts of the Caribbean, tourism in Puerto Rico has been crimped by the U.S. recession and competition from cheap group-rate air fares to Europe. Another factor is the increasing violence in the fight between proponents and opponents of Puerto Rican independence from the U.S. When urban guerrillas bombed seven stores in San Juan one night last month, 1,400 conventioneering pharmacists were persuaded to remain only after police and politicians gave them assurances of protection.

Most of the blame for the tourism decline belongs to the hotelmen, who during the boom days boosted prices exorbitantly and genially ignored visitors' outraged complaints. Hotel employees did little to help, treating tourists indifferently and often with undisguised ill humor. The hotel workers had little to grumble about; their hourly wages and benefits soared an estimated 143% between 1959 and 1970. During the same period, consumer prices rose by 40%.

Puerto Rican businessmen now look to the island's government to pluck them from the economic slough. Officers of the hotel association want a wage-price freeze in the tourist industry. Others in the tourist business demand that more public money be spent on promotion and advertising, even at the expense of public education. Casino owners are pressing the government to allow slot machines and games like baccarat, which are presently banned. The real answer, of course, lies in a return to the pre-boom formula of courteous treatment and reasonable prices.

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