Economies will suffer if Caribbean ignores tourism

Wednesday, July 7, 2004

CASTRIES, ST Lucia: At the Counterpart International Caribbean Media Exchange in St. Lucia, Richard Miller, Executive Vice President for the World Travel and Tourism Council (WTTC) presented a report requiring full attention by the Caribbean industry key players, if the region is to succeed.

The WTTC is an organization headquartered out of London and composed of over 100 CEOs and chairmen from the travel industry (including hotels, airlines, cruises, travel agencies and tour operators).

WTTC’s projections on the economic impact and growth of Travel and Tourism (T&T) in 23 Caribbean economies and a series of policy recommendations to maximize the impact on individual and regional economies comprised the study Miller completed to prepare the region for 2005 until 2014, at least.

Miller said it is the most sophisticated, most comprehensive analysis of travel and Caribbean economies put together. Sponsored by the Caribbean Hotel Association, American Express, Sandals and Air Jamaica, his research was in the works for 14 years, costing US$5 million; but took shape only in the last three months and delivered June 14 to the Caribbean Hotel Association General Assembly in San Juan.

Reflecting national accounting economics designed for use by finance, budget or accounting ministers, the report has become an international standard approved and agreed by the UN a couple of years ago as a result of years of negotiation on methodology and framework undertaken by the WTTC in Madrid.

As a standard, it can be compared on one-to-one basis with agriculture, electronics, or manufacturing required by the UN for implementation. It shows two sides: the demand and the supply in the industries which allow those in the bureaucracy and investment circles to understand the nature and flow of goods and services for both business decisions and policy recommendations to apply in order to maximize the tourism impact on economies from national to regional levels.

As part of the national accounting structure, personal consumption investigates the spending of residence in the Caribbean within and without the region. Miller reveals total personal consumption in Travel and Tourism (T&T) reaching 6.5 percent for 2004, valued at US$8 billion and 6 percent real growth for the year. In the US and the EU, consumption is in the range of 10-12 percent giving indication on the economic scale where the Caribbean is at.

Largest consumption numbers were reported for Puerto Rico, followed by Cuba, the Bahamas and Dominican Republic in that order of expenditure by residents. Business travel or spends within the region and outside by companies, government agencies and corporate Caribbean agencies amounted to US$3.1 billion at 6.9 percent growth – a rate twice the normal for business travel elsewhere.

Government expenditures, to support the industry and travelers in terms of air traffic control, tourism marketing and promotions, customs and immigrations facilities may have faced a lot of lead and lag time issues for 2004.

However, at US$1.9 billion and 8.2 percent of total spend, the largest spenders of government funds developing the industry were the Cayman Islands, Antigua, the British Virgin Islands, St. Lucia, Puerto Rico and Haiti.

Capital investment, spending by T&T companies on new resort facilities, aircrafts, cruise ships, new business infrastructure, tourism infrastructures in airport facilities to utilities, totals 21.7 percent of overall investment in the region; which means every dollar spend in the Caribbean is spent in T&T development.

St. Kitts and Nevis, St. Vincent and the Grenadines, Trinidad & Tobago, St. Lucia have economies growing faster than their peers. One factor most vital to tourism ministers is the Caribbean visitor exports or inbound visitors which reached US$19 billion representing 16.1 percent of total exports and 16.8 percent real growth – an indication that 2004 is an excellent year for the Caribbean.

Other exports, like manufactured consumer and capital goods within the region shipped outside the region, relates its importance to strengthening the economy. It amounts to US$2.7 billion at 2.3 percent growth in total exports in the region. Puerto Rico, Dominican Republic and Cuba earn an average of 6.5 percent for the region.

The Caribbean T&T demand, nearly regained by leading countries Puerto Rico, Cuba, Bahamas, Jamaica representing 65 percent of T&T in the region. Direct contribution to T&T economy specifically to the GDP is US$8.7 billion showing a 4.5 percent increase on total GDP, and an indirect contribution of US$28.4 billion with 14.9 percent real growth. Here’s one important factor requiring undivided attention. Otherwise economies will collapse such as the BVI’s, whose economy relies 95% upon T&T, followed by Anguila and Barbados.

Number of jobs directly created by the industry is 814,550 while 2,416,500 were created indirectly and directly with Barbados, Antigua and Barbuda topping the list.

Miller said the importance of T&T in the Caribbean is indisputable. However, there is no awareness, unfortunately. The impact of the industry is generally not understood by public officials, the communities at large, even the industry itself. The WTTC proposes a committee guided by public-private partnership (not CTO, CHA, tourism directors or ministers but all involved) be created to guarantee success for better understanding of T&T by labor ministers, finance ministers and tax officials.

Tourism planning must be done at both national and regional levels as prerequisite for generating investor confidence. Economic and marketing-related research and forecasting are generally inadequate in terms of quality and quantity.

Problem is, Miller explained, the larger economies are doing well by themselves while the smaller ones are left to their own devices. Regional marketing & promotion, and funding in the Caribbean are in dire need of popular and official support. Miller said that experience has shown demand for any destination grows sharply if marketing and promotion are well-funded and effective.

The WTTC recommends a marketing initiative be presented as an addendum in the Strategic Plan with consideration for possible later implementation. Miller suggests reaching a broader consensus before moving forward into regional marketing. The WTTC also calls upon the T&T stakeholders to seek help and assistance and follow celebrated examples of education and HIV/AIDS management strategies.

Likewise it asked the major players in the industry to focus on protecting the natural environment, pay attention to safety, security and health, community development and poverty alleviation, effective linkages between T&T and the economy, providing a conducive investment atmosphere, intelligent taxation principles outlined by the WTTC on new taxes and adjustments, viable air transportation system, development of a regional cruise line strategy, sound timeshare regulations and skilled, professional workforce to sustain a labor-intensive industry such as T&T.

Requesting the Caribbean Communities to put the T&T agenda in their Granada meeting this week, Miller said CARICOM has not given them approval or the time to present the ground-breaking study of the economics and policy issue. “The awareness is low, they don’t have the will for the industry to present its case and thus, missing a large opportunity of the economics of the job creation and the workings of the industry.”

Unfortunately, there is a disconnect that exists between preaching economic development and the largest contributor to the regional economy. It would be better if they adjust their policy agenda to focus on the opportunities.

“The private and public sector focus groups we dealt with were directly related to the industry.” Miller revealed that unfortunately in his research, in only a few cases the tourism ministry people got involved, none from the economy or taxation ministry joined in the process. He closed, “It is hard to engage the people even though much of their economy and business deal with T&T on a daily basis.”

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