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Stabroek News

Commentary - Tourism limits to growth
published: Sunday | May 13, 2007

David Jessop, Contributor

Last week, I attended along with some 450 others, the Caribbean Hotels and Tourism Investment Conference in Curaçao, an event organised jointly by the Caribbean Hotel Association and the Caribbean Tourism Organisation.

The emphasis was on industry trends: the creation of public-private partnerships in countries where governments own hotels; the fast-growing market for condominium, and; private residences and issues of concern such as destination marketing.

The mood was upbeat despite weakening tourism arrival data. Tourism globally was growing by more than four per cent a year.

Some nations in the region were exceeding this. There was a sense among investors, hoteliers and service providers from the region, North America and Europe that there was a unique window of opportunity for the industry to advance.

The Caribbean was 'hot'

The unparalled expansion of the sector, the profitability of certain types of properties in Barbados, Turks and Caicos and Anguilla, and the scale of Spanish investments in Jamaica all indicated possibilities elsewhere.

Variously, participants noted that new money was flowing into the tourism sector and that banks and financial institutions were prepared to look more favourably than hitherto at financing.

Moreover, many of the multi-lateral lending institutions had begun to recognise the economic significance of the industry to the region and see opportunities for investment and infrastructure support.

In private, however, some of the more thoughtful regional leaders of the industry pointed to undercurrents of concern.

The tourism sector might be modestly happy now, but they had begun to wonder about issues such as limits to growth, the growing global competition from other destinations, the need for greater social responsibility and the emergence of new challenges like climate change.

This interested me, not least because the tourism sector is still not regarded as being far-sighted.

Irrespective of the significant contribution the industry makes to economic growth, employment and taxes it has tended to be seen as an industry apart, lacking in social commitment, rarely figuring in any debate about regional development and, incorrectly, dominated by large corporations and external interests.

Look over the horizon

But here were those from the region representing the industry that has become the largest contributor to the region's gross domestic product, thinking deeply about the industry and the region's future in ways that, for the most part, have yet to be matched by governments and academics.

I encouraged those I spoke with whom to look over the horizon and suggest the issues that were of greatest concern.

The emphasis varied, but there was a common stream of thought that ran through each conversation.

There was a widespread belief that the industry in some parts of the region was moving towards a human resources crisis.

There were not enough well trained hotel workers in the region. Destinations such as Tobago and The Cayman Islands were importing labour from the Far East and elsewhere. This implied a limit to growth.

The industry needed to improve its skills. Its workforce needed experience in North America and Europe, but it also had to offer enough to guarantee their return.

The weakness of the U.S. dollar was enabling the present boom in the industry but was of uncertain duration. It was encouraging North Americans to holiday closer to home. It had also made the region a more attractive holiday destination for Europeans because of the appreciation of the euro and sterling against the dollar.

Was this, I was asked rhetorically, a sustainable basis for tourism's growth?

Newer destinations

The point was made that newer destinations were emerging globally in the Gulf and Far East with service levels, cuisine and an environment that exceeded much of the Caribbean's offering.

This was often at lower cost and higher rates of profitability. The region suffered tosome extent from an early start and many smaller locally owned properties required refurbishment, training and a new approach.

The industry in the region could not be complacent. It needed to constantly update its facilities for which it needed new forms of financing.

Climate change presented a challenge that had scarcely been recognised. The effect of a more intense hurricane season, sea-level change, and reef and beach erosion physically threatened the industry. Visitors in Europe and North America were being encouraged to holiday at home and to lessen their carbon footprint.

Profitability was likley to come under pressure as climate change-related operating costs rise in relation to airlift, insurance, utilities and making a property 'green' to meet changing consumer demand. Governments and the industry needed to develop a coordinated approach.

Another constant theme was the cost of air fares and the recent decrease in interregional air services.

There was a sense among those I spoke to from both the public and private sectors that a socially responsible open-skies policy was what was needed in order to reduce fares and increase and improve services to and within the region.

The potential of low-cost carriers from Europe entering the Caribbean was seen as both an opportunity and threat.

Almost to a man and woman, levels of taxation imposed on the industry were regarded as a matter of concern and coupled with comments about the insensitivity of many governments to the industry and its wider economic role.

There was the suggestion that governments needed to note more carefully how significant the numbers employed in the sector had become in the electorate.

This was not special pleading, but a desire to have all ministers and government more generally take a holistic approach to the economic sustainability of the industry in the face of challenges it faces.

Another cause for comment was the apparent absence of social responsibility of some of the newer external investors in the region who wereneither respectors of the environment, local labour nor participants in the regional debate on industry issues. Related concerns focused on the dangers of overdevelopment and environmental degradation, limits in some smaller nations to tourism growth once all available beachfront has been exploited and how, in such circumstance, the culture and experience of being in the Caribbean can be maintained.

It was all of course, a snapshot; but one that suggests the need for the industry and government to prepare to meet at the highest levels to determine before rather than after problems arise, a strategic long-term approach to the challenges facing the region's most valuable industry.

David Jessop is director of the Caribbean Council. Email:

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