Seminar: Tourism Industry Reform, Strategies for Enhanced Economic Impact
Date & Time: Thursday, May 25 at 10:00 a.m. – 12:00 p.m.
In many Caribbean countries, tourism is the largest sector and lead foreign exchange earner. Recent evidence suggests, however, that the economic growth returns to increases in visitor arrivals has been diminishing. The emergence of all-inclusive hotels and the rapid growth of cruiseship tourism have reduced economic linkages to domestic sectors within host economies, thereby weakening potential multiplier effects and lowering value-added. Cruiseships, in particular, provide most amenities that tourists demand, causing tourist revenues to remain offshore. Because of this, expansion in cruiseship tourism adds little value and contributes very marginally to growth.
Policy interventions, such as subsidies to airlines and duty free concessions to hoteliers, are designed to increase tourism investment and visitor arrivals. Yet, notwithstanding growth in arrivals, increased tourism expenditure and expanded tourism infrastructure, the Caribbean’s global market share continues to decline. Finally, the uncertainty in major tourist markets such as the United Kingdom (UK) due to BREXIT, as well as the thawing of United States (US)-Cuban relations and the re-emergence of Cuba as a major tourism competitor, all potentially pose significant challenges and opportunities for the Caribbean tourism industry.
Summary of key vulnerabilities-(i) Increasingly low value-added potential due to significant changes in the tourism model – all-inclusive hotels and cruiseship tourism; (ii) costly public policy interventions with significantly negative fiscal impact and low returns to investment; (iii) significant market economic uncertainty going forward in major markets such as US and UK; and (iv) increasing levels of existing and potential competition which can reduce the absolute and relative size of the tourism industry.
Resilience-building strategies– This study asks the critical question: “How can the Caribbean reform the tourism industry, making it transformational, job-creating, and growth- inducing?” The study seeks to identify policy measures designed to enhance resilience and increase the growth and development impact of tourism. This would include, among other things, developing an effective response to the all-inclusive model and the increasing dominance of the cruiseship industry.