Machu Picchu and the surge in Peru's tourism

Peru is more popular than ever. In 2007, the country welcomed more than 1.8 million foreign visitors, a number the government expects to increase by 11 percent this year. The tourism industry represents more than $2 billion for the country, according to the Asociación Peruana de Agencias de Viaje y Turismo (APAVIT).

The big draw is, by far, the so-called “lost” city of the Incas, Machu Picchu. The ruins are - by far - the most visited local in South America and it’s the engine that drives Peru’s tourism industry. More than 750,000 people visited Machu Picchu last year boosting the country's economy by more than $40 million.

With the historic site being named one of the “new” seven wonders of the world last year, Peru expects the interest to increase substantially this year. Unsurprisingly, costs have increased as well. Two years ago it cost $20 for a full-day pass to Machu Picchu and $10 for each day after that. A foreign tourist is now charged 120 soles - about $45 - for a single day admission to the ruins (Peruvians pay half that). And calls to hike the price above $100 are increasingly common.

In addition, prices for lodging in Cusco and Aguas Calientes have surged as well, a trend expected to continue due to the increased demand and the decreased buying power of the dollar. Hotels, particularly on the high end, say accommodation costs could increase by as much as 20 percent this year.

Currently, basic two-day tours to Machu Picchu from Cusco cost between $424 and $1,278 although those prices could change significantly as the tourist season gets going.

One way Peru is handling the rising cost is by promoting itself as a destination for more affluent travelers. Five-star hotels that boast such luxuries as massages, yoga and aromatherapy have become commonplace in Cusco and other popular cities.

::Update 11/04:: According to tourism officials, permits to hike the Inca Trail are now booked through the end of August. Restrictions put in place in 2004 limit the number of hikers on the famed hiking route to Machu Picchu to just 200 each day.