Carnival 2026 Generated $81.9 Million in Tourism Revenue — Government Cuts VAT to 8% for Tourism

Ecuador's biggest party of the year was also its most profitable.

The Numbers

The February 14–17 Carnival holiday generated impressive tourism figures across Ecuador:

| Metric | 2026 | Change vs. 2025 | |--------|------|------------------| | Tourism revenue | $81.9 million | +11.8% | | Domestic trips | 1.284 million | +6% | | Hotel occupancy | 49.6% | +5 percentage points | | Average stay | 2.3 nights | Stable |

The data comes from Ecuador's Ministerio de Turismo (Ministry of Tourism) and the national tourism observatory.

Where People Went

The top Carnival destinations by visitor volume:

1. Bolívar province — Home to Ecuador's most famous Carnival celebration in Guaranda, featuring traditional water fights, parades, and the Carnival chicherón (chicha de jora drinking)
2. Tungurahua — Ambato's Flower and Fruit Festival, the country's largest Carnival cultural event
3. Santa Elena — Beach getaways to Salinas, Montañita, and Ayangue
4. Galápagos — International tourists timing visits with the holiday
5. Pastaza — Amazon ecotourism centered on Puyo and Tena

Notably, traditional beach destinations saw strong demand despite rough sea warnings from INOCAR (the Naval Oceanographic Institute) earlier in the week.

The VAT Cut

The government applied Executive Decree No. 304, temporarily reducing the IVA (VAT) from the standard 15% to 8% for tourism-related services during the Carnival period. This applied to:

• Hotel and hostel accommodations
• Restaurant meals (in registered tourism establishments)
• Tour operator services
• Adventure tourism and guided excursions

The temporary tax cut was designed to incentivize domestic travel and boost spending. Tourism industry groups had been lobbying for the measure since late 2025.

Economic Context

The $81.9 million Carnival figure is significant in context:

• Ecuador's tourism sector was devastated by COVID-19 (2020–2022) and then the 2024 internal armed conflict declaration and blackouts
• The sector has been rebuilding steadily, with 2025 showing the strongest recovery year
• The government has set a target of $4 billion in annual tourism revenue by 2028
• The temporary VAT reduction signals the Noboa administration sees tourism as a strategic economic priority

What This Means for Expats

• Tourism recovery is good for expat communities. Restaurants, hotels, tour companies, and service businesses that cater to both tourists and expats benefit from increased visitor spending
• The 8% VAT for tourism may become permanent. If the Carnival trial generates positive revenue data, expect lobbying for a permanent reduced tourism VAT — which would lower costs for expats dining out and booking domestic travel
• Carnival crowds are the new normal. If you live in a popular destination (Cuenca, Baños, the coast), plan around the four-day holiday weekend. Roads, restaurants, and hotels fill up quickly
• Domestic tourism is growing faster than international. Ecuadorians are traveling more within their own country, which supports the broader service economy that expats depend on
• The $81.9 million circulates locally. Unlike extractive industries, tourism revenue goes directly to hotels, restaurants, transport companies, and artisans — the economic base of expat-friendly communities

Sources: Prensa Latina, Travel and Tour World, Ministerio de Turismo