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Caribbean must prepare, invest to exploit tourism

Published:Tuesday | September 1, 2015 | 12:12 PMMcPherse Thompson
Cyclists ride past US yacht Still Water, moored at Hemingway Marina in Havana, Cuba, Thursday, August 6, 2015. The United States has eliminated restrictions on nautical tourism, opening up opportunities for boating in Cuba.

An economist has recommended that Caribbean tourism destinations move to expand their customer base before any opening between Cuba and the United States, to offset some of the losses that could come with the new dispensation.

Economist Rafael Romeu said timing is important because capturing tourists dislocated by the influx of Americans into Cuba could offset some losses and secure a share of the growing tourism pie.

Romeu also recommends other steps, such as specialising in and delivering customised services to clients, based on non-economic features like culture and language, increasing airline competition, and guarding against increasing costs, particularly tourist visa requirements aimed at United States visitors.

His recommendations are outlined in an article by Nicole Laframboise, a deputy division chief in the International Monetary Fund's (IMF) Western Hemisphere Department, in the fund's September 2015 magazine, Finance and Development.

Laframboise said the opening of Cuba to US travellers could bring a major upheaval in Caribbean tourism, but if countries prepare and invest, the gains from trade need not necessarily come at their neighbours' expense.

"However, time may be of the essence," she said. "The charm of a mid-century Cuba won't last long once this unique market expands and modernises to accommodate the arrival of American tourists."

Laframboise suggested that lifting restrictions would raise the purchasing power of US consumers in the short term.


no need to despair


Referring to Romeu's 2008 assessment of the possible impact on the Caribbean of liberalisation of US travel to Cuba, she said the economist found that it would increase the total number of tourists visiting the Caribbean by between four and 10 per cent.

"So policymakers in other Caribbean islands need not despair," Laframboise said. "Growth in US tourism to Cuba will not necessarily mean an equivalent reduction in visitors to other points in the Caribbean. ... Moreover, there are a large number of potential new Caribbean tourists from places like Canada."

That does not mean that change would come without dislocation, said the IMF's deputy division chief.

It probably would involve redistribution - the so-called substitution effect. An influx of US tourists with relatively higher purchasing power would quickly fill Cuba's hotels, outbidding and displacing traditional tourists. At least some of the sun-seekers displaced from Cuba would likely go to other islands in the Caribbean, including those abandoned by the US tourists. "Which of those islands wins or loses is harder to parse," she said.

The importance of Jamaica's earnings from tourism is not specifically spelt out in the memorandum of economic and financial policies the Government submits to the fund as of the four-year economic support programme.

However, its significance can be gleaned from a requirement that, to ensure adequate monitoring of economic variables and reforms, the Jamaican authorities will provide information on tourism indicators within four weeks after month end.

Tourism indicators may vary, and have not been outlined in the memorandum, but usually include, for example, visitor arrivals, visitor expenditures, daily room rate, room stock, hotel-occupancy rates, and visitor length of stay.

Tourism has consistently been the largest earner of foreign exchange in the Jamaican economy. Its contribution to the combined value of all the goods and services produced in the country each year is significant.

Along with remittances, tourism is tied for the top foreign-exchange earner and, in 2012, contributed close to US$4 billion dollars to the Jamaican economy.

That revenue came from more than three million visitors worldwide, with travellers from the United States, Europe and Canada leading the way.

The tourism sector directly employs about 80,000 persons and, viewed as an export industry, accounts for some 40 per cent of Jamaica's total export of goods and services, according to the Ministry of Tourism and Entertainment.