Raise the sails

There are hopeful signs that the tourism sector in the Caribbean is back from the brink. This comes a decade after the sector was hit hard by numerous problems and market volatility which flattened performance and in some cases, went into shock with very negative consequences for guest houses and hotels. Two leading tourism officials believe the Caribbean has made the crucial turning point and from all indications, cruise and air arrivals are set to increase in the coming years. Long-serving Secretary General of the Barbados-based Caribbean Tourism Organisation (CTO), Jean Holder said this week at the International Tourism Exchange in Berlin, “The Caribbean is back and in a big way, but not before having faced and overcome some rather challenging times.”

President of the Puerto Rico-based Caribbean Hotels Association (CHA), Simon Suarez said recently that the challenges and opportunities facing Caribbean tourism were those of an industry in expansion. “For long now we have been towing the line and cutting sail, but fortunately, for the Caribbean as a whole we can see wind in our sails and can go on a growth mode,” said Suarez. In an environment of a weak Euro and a strong US dollar, faltering world economies, serious loss of airlift from Europe, especially to the Eastern Caribbean, and a distinct shift of interest away from the Caribbean by tour operators, the Caribbean began experiencing serious loss of business in the first half of 2001 before the disastrous terrorist  events that were to take place later that year in the United States. Between September and December 2001, Caribbean tourist arrivals plummeted some 15.4 percent, as opposed to the rest of the world which witnessed decreases of 11 percent compared to 2000. The succeeding period of January to June 2002 was a period of major difficulty with continuing decreases and it was not until the autumn of 2002 that the Caribbean recovery began in earnest.

The region now welcomes around 20 million stay-over visitors annually and about 16 million cruise visitors, spending some US $20 billion annually and helping to keep over a million people employed in the tourism sector. In 2003, the tourism sector in the Caribbean increased by 7 percent over 2002 figures and surpassing for the first time arrivals to the region in 2000. Several independent surveys show the Caribbean to be the current destination of first choice. “Almost each one of our destinations had a good performance in 2003, although the Spanish speaking Caribbean countries continue to dominate, now accounting for some 60 percent of Caribbean business,” said Holder. The Canadian market gained an increase of some 20 percent, the US market seven percent and the European market 11 percent. Cruise tourism continues to perform aggressively, recording some 10 percent. Growth in Caribbean tourism for 2004 is also projected in the range of 4-5 percent.

Holder outlined a number of factors which he said contributed to the resurgence in the tourism sector. Among them economic recovery in the Caribbean, the lowest interest rates in the USA in 45 years; the Bush tax cuts; the weak US dollar; a strengthening Canadian economy and a Canadian dollar that rose above 78 US cent; improving European economies and an apparently ever strengthening Euro. Factors also included a recovering economy in Germany with GDP forecasts for 2004 now in a positive range between 1.7 percent and 1.9 percent; security and health concerns that weakened the Caribbean’s competitors in the market place, the region’s geographical proximity to the US market where it still sources some 50 percent of tourism business; the region’s record for safe and tranquil societies amid the turmoil of a troubled world; an abundance of airlift and “just plain good luck.”

The London-based World Travel and Tourism Council (WTTC) in its 2004 outlook is forecasting robust growth in global travel and tourism. The WTTC reported that the Travel and Tourism recovery from 9/11, the war in Iraq, SARS and the down-turned economy is now well underway and the overall outlook for 2004 and beyond is for robust growth. “The industry is poised for a robust recovery in 2004. The stage has been set for Travel and Tourism Demand to forge ahead to normal levels of growth following three years of economic uncertainty and reluctance by consumers to travel,” said WTTC President, Jean-Claude Baumgarten.

“I am cautiously optimistic that we have weathered the perfect storm of terrorism, war and health concerns that created a disproportionate toll of concern and impact on our consumers, the industry and our economy.” Speaking about the state of the industry, Baumgarten said a number of lessons have been learnt over the past three years about travel and tourism’s sensitivity to external events. “Perhaps one of the biggest lessons is that the economic impact of the industry goes well beyond the traditional notion of airlines, hotels, car rental agencies and tour operators, but reaches well into the fabric of our economies.

“When the front line of Travel and Tourism is hit by a fall in Travel and Tourism demand, our entire economy suffers. And although the industry can and does do a great deal to help alleviate the concerns of our customers and get them moving again, government officials must step in and become partners with the industry to strengthen its position and resolve.” CHA’s Suarez said the Caribbean’s attention has to continue focusing on challenges and opportunities of growth. Identifying the high cost of operation as one of the limits to growth in the industry, the Dominican Republic hotelier said in many Caribbean destinations operational costs are pricing the industry out of the market.

“While each destination has particular characteristics that govern this situation, at CHA we believe that it is incumbent upon the private sector and the governments together, to find ways of reducing the operating costs of the tourism sector,” he said. In Puerto Rico, like in most of the traditional Caribbean destinations, over-protective labour laws check the industry’s competitiveness. Fringe benefits that can go as high as 50 percent of direct labour costs will not allow the sector to take full advantage of the expansion opportunities of the moment, said Suarez.

He said such laws are a clear deterrent on new investment and an impediment for the country to enter the lucrative value markets. “The benefits of expanded demand for the Caribbean product that we are seeing will not be sustainable if we do not improve the return on investment of our operations. “Creating a climate that provides an acceptable return is critical to the future of Caribbean tourism, and taxation is an integral element of profitability, “said the CHA official. In assessing challenges and opportunities, Suarez said it must be remembered that in all Caribbean destinations tourism is the driving force of economic and social development. “That the sun is shining stronger now, giving us a new opportunity to work together, governments, private entities, to present ourselves to the world as the Caribbean: an all inclusive package of opportunities.”