Is the tourism recovery sustainable?
The view of Europe
After two lean years, Caribbean tourism is recovering. As travel restrictions are removed, there is widespread optimism about the summer and winter season ahead.
Industry reports suggest that 2022 has started well. The World Travel and Tourism Council, a body backed by major international travel agencies, says the region’s recovery is outpacing the rest of the world and expects Jamaica, the Dominican Republic and Aruba are among the twenty best performing destinations in the world. .
However, a deeper dive and conversations with industry professionals suggest that the picture is mixed, that the structure of the Caribbean market is changing and that new thinking may be needed to ensure sustainability.
The view is that the current positive picture may prove difficult to replicate next year when post-pandemic traveler exuberance wears off, and current levels of excess disposable income and pent-up demand are tempered by a now almost certain recession in the region’s main visitor markets.
Although arrivals figures produced by Aruba-based Tourism Analytics indicate that the overall average recovery rate of long-stay visitors to the Caribbean in calendar year 2021 was equivalent to 54.4% of the number of arrivals recorded in 2019, its measurements and analysis indicate significant national variations.
Last year, three Caribbean destinations saw extraordinary levels of visitor recovery. This was either because as US destinations they were largely exempt from US public health protocols – Puerto Rico and USVI recorded 103% and 129% recovery rates of arrivals respectively in 2019 – or, in the case of the Dominican Republic, its 77.5% recovery arguably reflected pandemic-related entry requirements that were not particularly difficult.
The Turks and Caicos Islands, the Dutch-speaking Caribbean, Jamaica, Antigua, the Bahamas and Saint Lucia also all showed an above-average return to pre-COVID arrivals. However, elsewhere the rebound in 2021 has been slow, with for example Barbados seeing only a 20% recovery from 2019, Cuba by 8.3% and Cayman by just 3%. These trends continued in the first quarter of 2022.
What these wide variations indicate are country-specific factors. These range from the complexity and longevity of entry protocols, infection rates and travel advice in key source markets, to Caribbean concerns over domestic vaccination and infection rates. Equally significantly, recovery rates also reflected a precipitous drop in travel from the United States to Europe and Canada, with the big winners being the Caribbean markets focused on the United States and Mexico.
Most Caribbean destinations are now hoping to end 2022 in a much better place.
Jamaican Tourism Minister Edmund Bartlett said he expects to see 3.2 million arrivals this year (4.3 million: 2019) and a full recovery in 2024; Cuba, despite the loss of its important Russian and Ukrainian market and its closure to American tourism, hopes to receive around 2.5 million visitors (2019: 4.3 million); while Barbados’ Minister for Tourism and International Transport, Lisa Cummins, predicted a “healthy” 2022.
This is of course good news, but should come with a warning.
The global impact of the war in Ukraine is leading to an almost certain recession in the region’s main visitor markets, as well as high levels of imported inflation, significant price increases in industry and a consequent shift in demand visitors. This will be particularly damaging to countries and businesses that have just begun to repay the significant levels of debt accumulated during the pandemic.
In its current configuration, the tourism sector imports almost everything, from food to cutlery and linen. Not only will global food shortages and soaring energy prices increase all hotel operating costs, but they will also put pressure on wages, making the Caribbean, an already expensive destination denominated in US dollars, less in able to compete with other hot water destinations hoping to replace Russian and Chinese customers lost by some of the region’s European and North American visitors.
In addition, airfares are expected to continue to rise. The global supply of oil and its derivatives has tightened due to the sanctions. According to the International Air Transport Association, the cost of jet fuel is now nearly 149% higher than a year ago and will remain high through 2023, when carriers expect crew and equipment shortages continue.
What this suggests is that as the recession and rising prices rage, the Caribbean market could become fragmented, with high-end properties continuing to benefit from growing demand from affluent leisure travellers, while that many less prosperous US, European and Canadian citizens are turning to lower cost destinations such as the Dominican Republic and Cuba or heading to the Maldives and Thailand.
More fundamentally, as room rates and airfares rise, a significant number of visitors are expected to turn to cruises, all-inclusive packages, Airbnb accommodation types, and villa rentals.
In Puerto Rico, demand for short-term rental accommodation is already booming, elsewhere in the region industry professionals suggest that customers are acquiring large homes and villas in preference to world-brand properties, and according to Rick Sasso, President and CEO of MSC Cruises, the cruise industry, particularly in the Caribbean, stands to benefit from the growing disparity between prices for onshore accommodation and cruise prices.
Jim Hepple, managing director of Tourism Analytics, fears that the main tourism conversation currently underway in the Caribbean will be dominated by the recovery in arrivals in 2019. He says that instead of creating a long-lasting sustainable industry Ultimately, the conversation right now is about returning to 2019 and not about what kind of tourism the region wants to move forward or whether the tourist has changed and will want different things in the future.
“If the pandemic has taught the Caribbean anything, it’s how vulnerable the region can be to external shocks. Governments and the private sector must sit down together to plan a sustainable future for the sector that exploits the strengths of the region and minimizes the impact of these exogenous variables,” he observes.
Although the IDB, OECD and others have produced reports on the overhaul of the post-pandemic Caribbean tourism economy, few in the sector, let alone among its external partners, have shown much interest in change or recognize the need to reform the largely undiversified model of the Caribbean. , which remains little different from decades ago in terms of source markets, supply, import leakage and capital structure.
Change, however, could be on the way. Minister Bartlett argues that the time has come for Jamaica to “repatriate its sovereignty” in tourism. He wants to identify how the industry could better stimulate sustainable economic growth through product diversification, induce growth in productive capacity and place greater emphasis on quality, human development, job security and the contribution of the multitude of tourism SMEs.
His counterparts in Barbados and Saint Lucia agree.
David Jessop is a consultant to the Caribbean Council and can be contacted at
Previous columns can be found at https://www.caribbean-council.org/research-analysis/