The below is the first part of a two-part commentary. The second part will be published next week.
No one should be in doubt. The Caribbean tourism recovery is facing several threats that could set it back significantly, including a toxic economic mix consisting of a war in Europe, surging inflation, slowing Chinese growth, a probable global recession, and a decision to cut production to increase oil prices by OPEC-plus, the cartel which now includes Russia.
Put more directly, some already relatively high-cost tourism destinations in the Caribbean may experience a significant decline next year as household budgets are stretched, particularly in Europe, and as personal post-pandemic savings evaporate and higher airfares and input costs for hotels make the Caribbean less affordable to middle- and lower-end long-haul travellers.
The implication in the short term is that many visitors may choose to vacation closer to home. This will likely make the United States and Canadian markets of greater significance; bring a surge in the numbers cruising to avoid higher onshore costs; require new emphasis on encouraging airlift for visitors from Central and South America; and offer competitive advantage to lower input-cost destinations such as Cuba and the Dominican Republic.
Preeminent industry
Despite this, Caribbean tourism is unlikely to lose its long-term economic preeminence. As the pandemic proved, an absent industry spells economic disaster for most Caribbean nations.
According to regional research, hospitality is now linked to almost every aspect of the Caribbean economy. It is a huge employer of labour both directly and indirectly (43 percent); it is the single largest generator of foreign exchange in 16 Caribbean nations; it is responsible for 53 percent of export earnings; and it is the sector receiving the most foreign direct investment. By global standards, the region has a higher percentage of gross domestic product (33 percent) derived from tourism. The industry also indirectly supports many national governments’ ability to fund education, health care and social services through corporate-related and other taxes imposed on visitors.
Pandemic
The pandemic was a watershed for the sector. It has caused many Caribbean tourism ministers to recognise the importance of consolidating past success and the need to restructure the tourism value chain on a regional and sub-regional basis to ensure that in the long term the industry’s economic benefits are sustainable and resistant to misfortune, and are spread more widely across the whole region.
Discussing such issues recently, Jamaica Tourism Minister Edmund Bartlett pointed to the exchanges that took place last month within the framework of the Ministerial Council of the Caribbean Tourism Organisation.
Describing the CTO meeting as the best he had attended, he said that the focus was on the need to take a longer-term, non-traditional, and much broader view of what the Caribbean has to offer and to whom; the importance of creating new international alliances; and the need for a whole-of-government and whole-of-region approach, bringing with it an industry sometimes at odds with public policy.
“Recovery cannot come without growth, and to grow we need to diversify, both within our tourism product and the markets we expand into,” he said.
To be continued next week. Mr. Jessop, a consultant to the London-based Caribbean Council, can be reached at david.jessop@caribbean-council.org.