Caribbean is cautious over recovery signs

MF says revenue could fall by 15 per cent this year

Current assessments of the state of the crisis-hit Caribbean tourism industry are sending mixed signals of continued contraction in the short term, on the one hand, along with indications that in the medium to longer term the industry may now have put the worst of its woes behind it.

While a recent assessment of the state of the regional tourism industry by the International Monetary Fund (IMF) predicts that revenues could fall by an average of 15 per cent this year, newly-appointed Secretary General of the Caribbean Tourism Organization (CTO) Hugh Riley has said that the Organization believes that the bottom of the recession that has devastated the industry over the past twelve months may be in sight.

Last week, PKF Hospitality Research, an Atlanta-based group reported that Caribbean hotels had suffered an average decline in profits of 16 per cent last year and predicted “further profit deterioration” this year, the result, principally, of a fall in visitor arrivals from Europe in North America. According to the PKF report not even the steep discounts and special offers including incentives, hotel discounts and free airport transfers that have been made available by various Caribbean tourism destinations have been sufficient to offset a 4 per cent decline in visitor arrivals to those territories most dependent on tourism.

Riley, however, appears to be pinning his hopes for a medium term turnaround in the performance of the industry on an August survey of airlines and tour operators which revealed an increase in enquiries about Caribbean travel through he concedes that those enquiries must still materialize into bookings. He cautioned that while regional tour operators “have reason to be optimistic”, the immediate concern lay in “getting through the next few weeks before winter.”

Even increased demand for travel from European and North American locations to the Caribbean, however, is unlikely to be enough to secure a short or even medium-term revival of the Caribbean tourism sector. In the wake of the decline in visitor arrivals which has persisted for 2009 thousands of jobs were lost, tourism facilities sold off and planned projects shelved. The PKF report predicts that kickstarting around 50 planned hotel development projects in the region is likely to be stymied by the difficulties that developers are likely to face in sourcing financing. According to the report the challenge of restoring the industry to a state of fitness could be particularly challenging for countries like The Bahamas, a destination of choice for extra regional visitors where the downturn forced the closure of a number of hotels including the popular Four Seasons Hotel.

Recently, however, that resort may have benefited from a stroke of good fortune with the announcement by the Jamaica-based Sandals that it would acquire the 500-acre high-end property and re-open it in January next year.

While various regional tourism officials including Sandals Chief Executive Officer Adam Stewart and Antigua and Barbuda Tourism Minister John Maginley have been upbeat about the recovery prospects for Caribbean tourism, the challenges head for the industry go beyond attracting tourists, restoring jobs and pressing ahead with new projects. Even now both Caribbean territories and British airlines and travel agencies are predicting that increased levels of taxes on flights to the region could precipitate a sharp downturn in visitor arrivals, a cruel irony amidst the glimmer of hope for the revival of the industry that is beginning to emerge from behind the protracted dark cloud of downturn. In a recent report, the industry-specialist newspaper Aviation Daily said that the CTO is all too aware of the likely consequences of such a development “having lost an estimated US$100m since 2007 following the implementation of a new US policy” which requires that US citizens visiting the Caribbean have a passport.

Accordingly, and even as regional tourism officials monitor hopeful signs for a recovery of the sector, Caribbean political figures led by Jamaica’s Prime Minister Bruce Golding have mounted an aggressive lobby in the United Kingdom aimed at keeping the level of taxes on flights to the Caribbean down. Regional Tourism Ministers have also been reportedly active in the United States seeking an expansion of pre-clearance facilities in order to enable speedier immigration clearance for visitors to the region from the United States.
Meanwhile, regional tourism officials are pointing to what they believe are early signs that despite the relative gloom some airlines have been enhancing the visibility of the regional tourism sector in the international marketplace by announcing new flights to the Caribbean. One of the most recent of these is the low–cost carrier Airtran which recently filed applications with the United States Department of Transportation to offer flights to The Bahamas and Aruba from cities in the US.

Here in Guyana, Tourism Minister Manniram Prashad has continually ‘talked up’ the sector despite indications of decline as reflected in the closure of some interior resorts, reduced occupancy rates at hotels and indications by some hotel owners that they were ready to sell their properties. Earlier this week President of the Georgetown Chamber of Commerce and Industry (GCCI) Chandradat Chintamani told Stabroek Business that while the upbeat predictions regarding the future of the tourism sector was “good news’ for Guyana, he believed that the local industry itself needed to be more “creative and inventive” in the marketing of the industry. “What the industry needs to do is to sit and think of special incentives that it can offer to visitors to Guyana, including, for example, complimentary trips to places like Kaieteur. Such initiatives can help to create lasting positive images in the minds of visitors that amount to another kind of international marketing of the sector,” he said.