Trying to conduct a debate through the media on an issue of technical complexity is not wise. The recent brief public spat between the Caribbean Hotel and Tourism Association (CHTA) and Guyana’s President, Bharrat Jagdeo, on whether the problems faced by tourism were caused by the taxes imposed by regional governments or by the industry’s charging policies and cost structures, was striking for the absence of fact.
This is largely because academia, government and the industry have still not embarked on the detailed research necessary to measure the full economic impact of the region’s most important, if sometimes unsteady, industry. As a consequence no one can say with any certainty what the effect of prices and taxes is on travel, how great the level of elasticity in demand might be, or for instance, how the regional industry’s offering compares with other competitors in source markets.
As a consequence, it remains very difficult for anyone to have the hard evidence necessary to enable government at either a national or regional level to take an informed approach to decision making on tourism.
In this, it is worth noting that the Caribbean is not alone. Recent experience, in relation to Air Passenger Duty and the application of the European Union’s Emissions Trading Scheme to aviation, suggests that developed countries too have not yet developed the modelling that can determine the point at which the levels of taxation and pricing associated with the industry become counter-productive.
The reality is that tourism is a hugely important but complex industry. Its success depends on so many factors that it is hard to pinpoint whether it is taxation, hotel costs or other factors that separately or jointly challenge competitiveness. This is because the industry requires an unusually wide range of services, companies and government actions to deliver and support a visitor’s requirements, whether they come from the region or beyond.
At its least complex, a single visit can include transactions that involve tour operators, travel agents, taxi drivers, airlines or cruise ships, airports, hotels, food suppliers and dozens more forms of financial exchange that are not always apparent. As a regulated industry, tourism also engages directly and indirectly the actions of thousands of public sector officials involved in providing services from immigration to tax and security.
It is an industry that has enabled and can continue to enable rapid economic growth in public revenues and private sector income, has myriad linkages back into the domestic economy, employs very large numbers indirectly such as doctors or accountants, and increasingly touches on other matters from foreign relations to security, the environment and social policy.
What recent exchanges on tourism point to, is an urgent need for a regular structured dialogue between governments, the industry and others involved. For this to have any chance of success multiple changes are required.
There ought to be a well endowed and substantial school of tourism at the University of the West Indies with the research capacity to be able to develop studies and comment publicly and independently on developments in the industry. Tourism satellite accounting needs to be developed in every Caribbean nation, as well as on a region-wide basis, in order to indicate in an accessible form the broad nature of tourism’s role and its overall contribution to each Caribbean economy. Within the Caricom or Cariforum secretariats there needs to be a solid understanding of the economic dynamics of tourism and how regional decision making relates to the industry.
The media need to understand the industry better, and how government and the private sector relate to each other, if it is ever to stimulate an informed debate.
There is a need to find an independent way to develop a much wider range of tourism statistics so that they cannot be regarded as self-serving. This is not an easy task, but a more detailed, frequent and thoughtful analysis will lead to trust and a better understanding at a high political level about the complexity of the industry or the reasons for government’s concerns. There should be a clear Caribbean mechanism that ensures that Tourism ministers decisions and concerns reach Caricom heads of government for consideration in a timely manner.
The private sector needs to have a clear structure for regular dialogue with government.
There needs to be a sense that the industry and government are partners in development and have fixed points in which they are able to engage in high level dialogue. It is a list that could go on.
The recent exchange between the CHTA’s President and Guyana’s President obscured more significant structural trends that both must already know will require governments and hoteliers to adapt if either the tax that governments take from the sector or the industry’s profitability is ever to be the same again.
Tourism statistics show that visitor arrivals are still not back above the peak before the global financial crisis struck. A comparison of the Caribbean Tourism Organisation’s (CTO) stop over arrivals figures for 2008-2010 reveals an average decline of 6.5 per cent and significantly worse figures for those nations heavily dependent on the UK and European market. Although some Caribbean destinations report a recovery in the North American market, most of the significant recent regional growth that is occurring is from starter markets in Latin America and Russia. The CTO also notes that the number of intra-Caribbean visitors has fallen to 566,000 in 2010 from 1.5 million several years ago.
CHTA’s President was correct when he said that there is insufficient awareness and understanding of the industry’s economic contribution and how it permeates the depth and breadth of the general economy and overall fabric of Caribbean society. However, what he did not establish is how this is to be overcome and an understanding achieved between government and the industry.
What is missing is any agreement on how a joint policy going forwards might establish a consensus on the industry’s future role in regional development; a far from easy matter when some nations, most notably Guyana and Trinidad, do not have a significant industry. In the absence of any movement on structured dialogue, perhaps the time has come for an independent eminent persons group to be convened by both government and the industry to enable both to come to terms with the extent that tourism now holds the region’s economic future in its hands.
Previous columns can be found at www.caribbean-council.org
