Sustaining Tourism Will Stimulate Growth

By David Jessop

News Americas, LONDON, England, Tues. Nov. 15, 2011: Every year, tourism trade fairs take place in locations from Berlin to Hong Kong. These are international events where those involved in what is now a US$1,850.0bn global industry, meet to strike deals, promote their image and consider industry trends.

These occasions act as a bellwether for the sector and by extension the fortunes of those nations and regions that depend on tourism to maintain economic stability and growth.

World Travel Market (WTM), which took place in London last week, was no exception. This huge event attended, the organisers suggest, by 47,000 industry professionals, provided an indication of the opportunities and challenges that the industry generally and the Caribbean more specifically now faces.

At its most simplistic the selling floor at WTM indicated how aggressive competition in the travel market has become. There, enormous and modern display spaces had been created by nations like Brazil, India, Peru, Russia, Ecuador, Egypt and China; to say nothing of individual cities or sometimes remote regions around the world. By the simple measure of size, appearance, and numbers participating, Government and the private sector from these nations were demonstrating their willingness to place ever more emphasis on marketing their tourism product.

Speaking to some of these exhibitors, it was apparent that the reason for this was tourism’s unique ability to create rapid growth and financial transfers at a time of global economic.

What was also apparent at WTM was how the fundamentals for achieving success in tourism were changing and that any nation or region that did not understand this and adapt was likely to lose any competitive advantage they may have.

Alarmingly for the Caribbean, a number of industry seminars indicated that sustained GDP growth was off the agenda in the region’s main feeder markets in North America and Europe. The nature of visitor decision making was changing. New factors were at play. The middle classes on which the region had depended for past growth were financially squeezed and they were becoming ever more cautious. This meant that hotel and tax yields would fall as visitors sought ways to limit expenditure by taking cruises, staying at all-inclusives and spending less in the wider economy.

The luxury travel market was also in flux with such travellers being more interested in the experience, time and peace and less in material acquisition, exuberance and personal image.

In short, the manner in which people were buying and taking vacations was changing and this had profound implications for the Caribbean tourism offering.

Talking to participants from the Caribbean and other industry professionals there, what became apparent was that if the Caribbean tourism economy was to grow it also needed to address other challenges, some of which were systemic.

In no particular order, reference was made to the fact that the pricing policies of the externally-owned hotel chains and cruise ships with large numbers of rooms or cabins were driving down the profitability of domestically owned smaller hotels; viral marketing, search engines and new media were changing the marketing paradigm in ways that was turning every destination and property into a competitor; taxes, whether domestically or externally imposed on visitors were increasing at a rate that may place the Caribbean, especially for middle-income long-haul travellers, back into the category of aspirational; Cuba’s changing economic model may well bring it fully back into the Caribbean market as a competitor; airlines and cruise companies were exerting an ever increasing stranglehold over the industry and individual nation’s tourism development; levels, of service and cuisine are far from acceptable at many properties, in relation to price; the largely unspoken issue of crime against tourists has yet to be addressed; and the fastest growth in disposable income and travel in the next decade is likely to be from markets like Brazil that the region is only slowly reaching out to.

How the Caribbean tourism industry intends to address these and the other more prosaic challenges raises troubling questions.

While no one doubts that tourism will continue to play a critical role in the Caribbean economy, much less certain is whether previous levels of growth and success will still be seen a decade or more into the future.

The industry in the Caribbean is now thirteenth globally in absolute size; first in its relative contribution to national economies; and tenth internationally in its contribution to long term national growth. Moreover, it is the biggest employer after the public sector, the largest single contributor to Gross Domestic Product, and was worth in 2010 some US$39.4 billion.

Logically, this should lead to rapid recognition that tourism is one of the few areas of comparative advantage the Caribbean still has and that everything within government’s and the private sector’s power should be done to defend it and foster its growth, while ensuring the equitable spread of the wealth it creates and the fullest possible integration into the national and the regional economy.

One hopeful factor in developing a response to the challenges is the setting aside of many of the previous differences between the public and private sectors and then recognition of the need for joint responses on issues of significance from aviation taxation to the problems of airlift.

If Caribbean tourism is to continue to be able to compete globally, what is now required is more than a short term fix. There needs to be a clear analysis of the challenges the industry faces accompanied by a public and private sector road map and, after debate, a commitment to a timetable for implementing whatever is agreed.

In 2012 the Caribbean Hotels and Tourism Association will celebrate its fiftieth anniversary in Jamaica. The event offers an extraordinary opportunity not just to commemorate the organisation’s role, recognise the first hotels, and the broader contribution the industry has made to the region, but also to launch a high level initiative to re-position the industry in Caribbean thinking as a newer generation of leaders emerge in both the public and private sector.

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org.