In a week’s time Caribbean Market Place, the Caribbean Hotels and Tourism Association’s (CHTA) premier annual business event will take place in Nassau. This very large gathering brings together the industry in the region with those internationally who buy and sell the region’s tourism product: the tour operators, airlines, cruise companies and the sector’s allied industries.
The occasion, which is attended by the region’s tourism ministers and includes meetings of the Caribbean Tourism Organisation (CTO), additionally offers the industry in the Caribbean the opportunity to take stock of the challenges that it faces. Both the location in Nassau and the economic background against which this year’s event takes place, emphasise the changing nature of the industry, its centrality to the Caribbean’s future economic fortunes, and the effect that the global economic downturn is having on traditional markets.
Caribbean tourism is now a long way from its origins. From an industry originally run by gifted amateurs and mavericks it is now a hugely important professional activity at the centre of the Caribbean economy which, irrespective of the aversion that some international financial institutions and non-governmental organisations have for it, now plays a vital role in Caribbean economic development.
In the Bahamas the government from the Prime Minister down, the media, the unions and the private sector all understand this and accept tourism’s centrality to the islands’ economic survival. As a consequence tourism has for a long time now been a matter about which every member of the Bahamas Cabinet and opposition has a positive view.
Until relatively recently this could not be said about much of the rest of the region despite the fact that tourism, its allied services and its ever increasing demand-shadow now lie at, or close to, the centre of the modern Caribbean economy in all but a very few nations. Thankfully more nations have in the last few years come to realise that tourism, unlike any other form of investment, can turn economies around rapidly and in real time; provides a non-national source of income to support social commitments at hopefully realistic levels of taxation; and has a wider cash impact that can benefit everyone from the farmer producing eggs to the accountant or junior physician.
In an approach that should be common among financial institutions across the region, the Barbados Central Bank Economic Review in December provides a detailed focus on the tourism industry. This identifies trends in visitor spending and highlights the impact of the global recession on spending by visitors from the United Kingdom, the island’s largest source market. The Review also contains a useful study estimating the average length of stay of visitors over a seven-year period, an approach central to determining how much the tourism sector contributed to GDP and by extension its long-term role in the economy.
A further interesting example of a nation that has fully recognised the dynamic role tourism has in underwriting growth is Cuba. There, very senior members of its government unconnected with the industry, speak positively about the central economic contribution they intend the industry making as it moves upmarket, and government encourages investors to locate facilities in newly created development zones. The key, as Barbados, Cuba, Jamaica, Aruba and others in the region have found, is that the Caribbean has to make tourism sustainable, professionally run and monitored if nations are to be able to compete globally. This is an important step forward from the sometimes grudging support given by some governments across the region to an industry that parts of the public sector and academia still seem unwilling to accept.
Having said this it is clear that 2012 will not be an easy year for the industry. Despite the continuing view that a regional perspective is required on marketing the Caribbean tourism product, the likelihood is that 2012 will see greater competition between Caribbean destinations. This is because the ever-increasing need to cut public expenditure means that self-interest will continue to reign.
The fall-off in visitor arrivals from Europe to destinations like Barbados and St Lucia is likely to continue. This will mean that significantly more will have to be spent on UK marketing and on competing in markets like Canada and the US against all other regional destinations. This will include Caribbean nations like Cuba, which is forecasting 8.2 per cent growth in 2012 and the Dominican Republic which like its Hispanic counterpart is trying to move upscale rapidly.
Caribbean destinations dependent on Europe and the lower end of the US market will have to move their offering upscale as lower-end travellers from Europe abandon the region for a few years and select nearer warm-water destinations or like lower- end US visitors, choose to vacation nationally, or shift to cruises or all-inclusives where they feel better able to control their spending.
Developing campaigns in new source markets will be a new focus. The rapidly growing disposable income of citizens in Brazil, Russia, China, Argentina and other non traditional markets will offer alternatives and new sources of income develop, especially as airlift making use of gateways such as Panama and Mexico City come on stream.
Airlift will remain critical, and governments will find themselves locked into providing significant and more complex levels of support to retain traditional full-service carriers who depend on a specific mix of fares across the plane. Increasing levels of taxation on air travel for environmental or other reasons may further reduce air services from Europe.
Locally owned smaller hotels will continue to discount, sadly to their longer term detriment.
This will continue to eat into their profits and their ability to upgrade properties, in contrast to the bigger brands and chains that have emerged in the region and are better equipped to discount and market globally. Space does not permit more, but it is clear that the competition from global destinations will become fiercer as governments everywhere recognise the power of tourism to rapidly turn economies around.
Since the start of the twenty-first century the industry in the region has undergone structural change, the implications of which have not fully been acknowledged. This is not because the region is any less attractive as a destination, but because not enough attention has been paid to the need to adapt tourism’s offering and approach to ensure that the industry in the Caribbean remains competitive and sustainable.
The tourism sector needs to be nurtured: without it the Caribbean economy cannot grow.
Previous columns can be found at www.caribbean-council.org