UN Tourism and the World Free Zones Organization have mapped 140 tourism special economic zones (SEZs) worldwide for the first time. Asia and the Pacific accounts for 72, followed by Europe with 21, Africa with 19, and the Middle East with 16. The Americas has just 12, the lowest number of any region.
But does having fewer tourism zones mean missing out on investment opportunities? Not necessarily. The real question is whether a special economic zone can offer a destination a competitive advantage that its existing national framework cannot.
This question is at the heart of a growing conversation about how countries can use special economic zones to attract tourism investment while promoting sustainable development and strengthening local economies.
The test is whether the zone offers a real advantage
A tourism special economic zone makes sense when it addresses specific barriers to investment and provides clear advantages over existing national incentives. If the benefits available within the zone are no better than those offered elsewhere in the country, the designation may add administrative complexity without generating additional investment.
Different destinations illustrate why there is no one-size-fits-all approach. The Dominican Republic offers extensive tourism incentives that may reduce the additional value of formal zone designation. Several Middle Eastern countries rely on nationwide investment frameworks and large-scale development projects rather than legally defined zone regimes. Costa Rica, meanwhile, has selectively extended its existing free trade zone regime to tourism instead of creating a separate instrument.
The lesson is clear: creating more zones is not necessarily the answer. The priority should be identifying the barriers investors face and determining whether a special regime can effectively address them.
Five factors that can make or break a tourism special economic zone
1. Commercial viability comes first.
A zone needs a credible investment proposition grounded in market demand, investor interest, and a viable business model. Without these foundations, even an attractive incentive package may fail to generate investment.
2. Incentives must make a measurable difference.
Tax relief and customs exemptions can help, but they are not enough on their own. Their value depends on how they compare with the national framework and whether they are combined with practical advantages such as faster permitting and investor facilitation services.
3. Efficient administration can be a competitive advantage.
Tourism developments often require environmental licenses, construction permits, and visas for workers and visitors. Coordinating these approvals through an effective single-window mechanism can reduce delays and provide investors with greater certainty.
4. Investment commitments must reflect how tourism projects develop.
Large tourism developments are typically implemented in phases, depending on market demand and infrastructure readiness. Rigid capital expenditure or employment targets with short deadlines can discourage investment. Flexible, performance-based commitments are often better suited to the sector’s long development cycles.
5. Natural and cultural assets must be treated as productive assets.
Unlike an industrial park, where machinery is central to production, a tourism destination often depends on its beaches, reefs, forests, mountains, or cultural heritage. Protecting and restoring these assets is therefore essential to maintaining the destination’s long-term competitiveness. Conservation should be integrated into the economic model rather than treated simply as a regulatory obligation.
Colombia offers a compelling example: a heritage hotel in a free trade zone
Cartagena’s Four Seasons San Francisco illustrates how a tourism project can use a special economic regime to support the development of a high-value asset. The project involves approximately US$100 million in investment to restore the San Francisco Cloister and surrounding heritage buildings in Getsemaní, transforming them into 131 rooms and suites, 15 private residences, and eight restaurants and bars.
The project’s special permanent free trade zone regime provides specific fiscal and customs benefits, subject to the applicable requirements and commitments. These include a preferential corporate income tax rate linked to internationalization commitments, exemptions from VAT and customs duties on qualifying goods and inputs, and the deferral of customs duties until goods enter the national customs territory.
The broader lesson is that a special regime can support a project when the investment proposition, the regulatory framework, and the economic rationale align. A single high-value development may justify a zone designation when the numbers support it.
Tourism investment and the global minimum tax: why it does not tell the whole story
The 15% global minimum tax introduces another consideration for international tourism investors, but its implications depend on the structure of each project.
The rules generally apply to multinational enterprise groups with annual consolidated revenues of at least EUR 750 million. Their impact therefore depends on factors such as the ownership structure, the entities involved, the jurisdictions in which they operate, and the applicable tax rules.
The substance-based income exclusion is also relevant because it takes qualifying payroll costs and tangible assets into account when calculating the amount of income excluded from the minimum tax. Tourism projects often involve substantial physical assets and local employment, making these considerations important when assessing their tax position.
For destinations evaluating new projects, the key is to assess the effective tax outcome rather than assume that a special economic zone automatically guarantees a tax advantage. The applicable rules and the project’s individual circumstances must be considered together.
From tourism destinations to investment ecosystems
Tourism special economic zones represent an approach to development in which institutional quality, environmental integration, and local economic linkages matter alongside fiscal incentives.
Their success should not be measured solely by the number of hotels built or the amount of capital invested. It should also be assessed through the wider economic ecosystem they help create, including local employment, agricultural producers supplying hotel kitchens, small businesses entering supply chains, and the protection of the natural and cultural assets that attract visitors in the first place.
The Americas’ 12 identified tourism zones may reflect the region’s existing policy choices, or they may point to opportunities that have yet to be fully assessed. The number alone does not tell us which. What matters is whether destinations understand their competitive position, identify genuine investment barriers, and choose the instruments best suited to address them.
Is a Tourism Free Zone the Right Tool for Your Destination?
Read the full publication: Rethinking Investable Destinations: An Approach to Tourism Special Economic Zones (UN Tourism & WFZO, 2026)
