BASSETERRE, St. Kitts – THE scale of the current global economic problems has blown a hole in the region’s tourism industry and while there are faint signs of recovery, 2010 does hold some uncertainty for the industry.
This is according to the December 2009 instalment of the Caribbean Economic Performance Report issued by the Caribbean Centre for Money and Finance (CCMF). Although the tourism industry tends to be more resilient than other sectors of the economy during slowdowns, the report indicated that the ongoing economic crisis had “a significant negative impact” on tourism globally.
Entering 2009, the industry was backed by a strong performance in the first half of 2008, showing a six percent increase in global tourist arrivals. By the second half of 2008, total international tourist arrivals declined by one percent. According to the report, the industry suffered from a continued decline, although statistics show that the Caribbean performed better than the expected global average decline.
“The decline in demand intensified in 2009 as worldwide tourist arrivals are estimated to have contracted by 6% in the first six months of the year in the wake of a deep recession in source markets and the influenza H1N1 outbreak,” the CCMF report states. “As in previous downturns, tourism receipts suffered more than arrivals as tourists traded down to cheaper destinations, stayed closer to home and/or stayed for shorter periods.”
Data from the report also suggests that the tourism sector may have suffered the worst of the crisis already, as the region now records smaller declines in tourist arrivals and worldwide airline capacity is showing “positive growth of 1.4%”.
However, the main threats to the prospect for the industry are slow growth, sluggish employment growth in developed economies and the outbreak of a more virulent strain of the influenza H1N1 virus.
“For the Caribbean, weaker global growth will continue to create a drag on tourism demand but expected lower fuel prices, a weak US dollar and closer proximity to North America may shore up demand. If the downside risks materialise, however, it could do serious damage to the industry in the region. The forecast for tourism demand in the Caribbean is therefore subject to much uncertainty.”
The Caribbean has seen an increase in cruise tourism, which has grown to be a critical component in the industry. However, the CCMF report noted that actual expenditure from cruise passengers is much lower.
Better coordination among Caribbean countries, a more carefully crafted policy and better infrastructure could “increase the economic footprint” of cruise tourism, according to the report.
