Will the 2009 nightmare push regional tourist destinations towards diversification?
Even as the Caribbean’s tourism industry seeks to point to what it believes are early signs of a silver lining behind the dark clouds that settled over the sector for much of 2009, the body blow which the decline in tourist arrivals has dealt to the region raises once again the long-debated issue of the need for Caribbean tourist havens to treat with the issue of economic diversification of their economies with a greater sense of urgency.
The outcomes of reduced 2009 spending on travel by North American and Euro-pean holidaymakers caught up in a global economic crisis that swept away jobs, savings and, in thousands of cases, homes, demonstrates the frailties of a sector which, in some countries of the region, accounts, directly or indirectly, for well over 50 per cent of GDP and all but a small percentage of overall employment.
Last week’s report by the Caribbean Development Bank on its 2009 activities paints a disturbing picture of a significant decline in Gross Domestic Product (GDP) in several of the more tourism-dependent countries of the region, singling out Antigua and Barbuda and the Cayman Islands where GDP declined by more than 5 per cent last year. According to the report real output among the Bank’s remaining Borrowing Mem-ber Countries (BMC’s) contracted by between 1 and 4 per cent.
And the CDB report makes no secret of the fact that the ravages of the 2009 global economic and financial crisis were accentuated in the Caribbean by the region’s heavy dependence on tourism. “Sharply declining tourist arrivals” were, the CDB report says, along with reduced foreign direct investment, “the main transmission channels of the crisis to regional economies.”
Across the region the decline of the weak metropolitan source market coupled with reduced airlift resulted in double digit declines in visitor arrivals and while increases in cruise passenger arrivals increased significantly – by as much as 15 per cent in some destinations, according to the CDB report – tourist preference for the cruise ship rather than the stay-over option meant that visitor spending, particularly on hotel accommodation declined significantly.
Setting aside the thousands of businesses closed and jobs lost in the transportation, food, souvenir, entertainment and other service sectors as a result of the severe drop in visitor arrivals last year, the CDB report points to the reduction in foreign direct inflows for tourism-related projects which had, just two years earlier triggered a building boom during the lead-up to and hosting of Cricket World Cup 2007.
These past few weeks the Caribbean Tourism Organi-zation (CTO) has been seeking to sound an upbeat note on the immediate-term future of the industry with CTO Chairman, Antigua’s Minister of Civil Aviation and Tourism, John Maginley pointing to some “positive signs” including ‘investments our airline and cruise partners are making in the industry.” Maginley, however, is measured in his assessment of even the short-term outlook for Caribbean tourism pointing to the need for the region’s tourism sector to enhance the level of competitiveness through creativity. Maginley is no doubt aware that even where signs of an global economic turnaround might offer positive portends for Caribbean tourist destinations, it must still contemplate some of the cheaper, even if less well known ‘sun, sand and sea’ options in North Africa and the Mediterranean. Uppermost in the minds of the region’s tourism proprietors too must be the additional tax on airline travel to the region imposed by the authorities in the United Kingdom. The regional tourism sector must also take account of the recently released World Bank Report – Global Economic Prospects (GEP) 2010 which specifically identifies the Caribbean as one of the regions that is likely to be affected by an anticipated slowdown in the global economic recovery as the impact of fiscal stimuli wane. Indeed, the report specifically points out that the remittances and tourism sectors should anticipate only modest recovery in 2010.
Still, the CTO is looking to its May 2010 forum on Sustainable Tourism as a starting point for the refashioning of the sector to take advantage of signs of improvement in the global economy. As the CDB report points out, however, the Caribbean tourism sector, whatever internal initiatives it takes, must still face some imponderables that will impact on the rate of its recovery. The report notes that “the outlook for regional economies in 2010 is largely predicated on the timing, pace and magnitude of the incipient global recovery” an assertion which the tourism sector can hardly afford to ignore given its implications for the choices which potential tourists will have to make. While the report looks to the staging of international sporting events in the region, including the International Cricket Council’s 20/20 Cricket World Cup as a possible boost for regional tourism it points too to the region’s reduced price competitiveness resulting from the new UK Air Passenger Duty.
The Caribbean, it appears, has settled for the comfort that accrues from the fact that tourist destinations in the region have sustained several of the region’s economies over the years; additionally, the current emphasis on gearing the sector to take advantage of a recovering global economy assumes that recovery will bring with it a ‘more-of-the-same’ posture from the traditional metropolitan travel markets. Certainly, it is reasonable to assume that the vast majority of traditional middle-income tourists who, to varying degrees, have been victims of the global economic and financial crisis, will require a recovery period during which they will pursue more prudent spending regimens.
While the CDB report indicates that growth is expected to return to “some of the regional economies that contracted in 2009 its asserts that recovery of regional economies is not likely to “take hold” before 2011. Caribbean economies, Caribbean jobs and Caribbean welfare which, in so many cases, are heavily dependent on tourism cannot afford to await the uncertainties associated with the pace of the global economic recovery.
At a minimum one expects that the lessons learnt from the 2009 experience of the regional tourism agenda ought to place on the agendas of those countries that have suffered most the issue of economic diversification. Up until now discussions at the level of Caribbean Community Heads regarding the strengthening of the region’s agricultural sector in order to both enhance food security and position the Caribbean to take advantage of a likely global food shortage has borne little fruit. There is, in the circumstances, a role for the CDB in drawing the region’s attention to the importance of learning lessons from the experience of the tourism sector in 2009. Plans to rebuild and restructure the sector ought to proceed side by side by an active contemplation of changes in the global economy that will impact on its competitiveness while rendering it more vulnerable to the vagaries of market preferences. It is as much a psychological as a physical shift which the tourist economies of the Caribbean will be required to make and those changes will require both the expert interventions which the CDB is both equipped and positioned to make as well as domestic social and political changes which the people and leaders and the region will have to make. If no one is suggesting that sustainable tourism should not be pursued in the context of global environmental concerns the real question is whether or not tourism, given the vagaries made manifest in the 2009 crisis and the imponderables that will doubtless emerge side by side with the global recovery, is sufficient to create sustained growth and development among those Caribbean economies that depend so heavily on the product.