The Business of Tourism - Arrivals up but Caribbean marketshare still falling
Although the year-end visitor arrival figures have yet to become available, it looks like 2014 will be seen as the year in which Caribbean tourism turned around, arrival numbers increased, and for hoteliers and the industry more generally, occupancy, yield and profitability strengthened.
Although there were clearly variations by destination, the view from the Caribbean Tourism Organisation (CTO) at mid-year was that annual growth would be in the region of three per cent for stay over and cruise tourism and that the demand for Caribbean vacations will remain buoyant.
"The atmosphere of despair has lifted," Beverly Nicholson-Doty, the outgoing CTO chair declared at the regional body's annual state of the industry conference last September.
That said it is also apparent that while a degree of life has returned to the tourism sector, the region as a whole has continued to lose global market share.
An International Monetary Fund study produced in late 2014 indicated that the pace of growth in the Caribbean tourism economy in recent years had been weaker than in other regions, and its share of global tourism has continued to decline, falling on average to around 2 per cent from a figure of 2.5 per cent recorded in 2000.
That said, some destinations were exceptions. For example Belize, the Dominican Republic, Aruba and Jamaica, experienced significant and sustained growth, improving their product offering, airlift, and marketing, enabling them to diversify their feeder markets. This was in contrast to nations that remained largely reliant on arrivals from the US (the Bahamas) or for instance, the UK (Barbados and Antigua).
The good news in 2014 was that after years of lobbying by Caribbean tourism ministers and the industry, Britain's Chancellor of the Exchequer (finance minister) decided to revert, as the Caribbean had proposed, to a two band long-haul/short-haul system for its Air Passenger Duty ( APD). The effect was to at least make the Caribbean competitive with US destinations that were previously in a lower tax category, though the tax remained high and damaging. Later in the year, Britain also announced that it would gradually remove APD for children, thereby significantly reducing the costs for families vacationing in the region.
At the other end of the spectrum in December, the US president, Barack Obama, announced that the US would further ease travel restrictions on the twelve categories of US visitors licensed to travel to Cuba. Although the new regulations governing this and possible ship calls have yet to be published, the implications are potentially far-reaching. President Obama wants more people-to-people contact, and the likely next steps, when full diplomatic relations are restored, may be an agreement to restart scheduled air services and possibly cruise ship calls.
Low oil prices
Another development of potentially great significance to the industry is the collapse in global oil prices. While it will take some time to see crude oil prices at US$55 per barrel or less feed through - a year ago, it was over US$100 - airlines will come under increasing pressure to remove their now unwarranted fuel surcharges, and hoteliers should see lower utility and other input prices.
Last year was the year that the much hoped for growth in Russian tourism to the region collapsed as that nation's annexation of the Crimea led to sanctions and foreign exchange and payment problems; arrivals from South America continued to grow; and there were reports of growth in the inter-regional tourism market. It was also the year in which Jamaica led the way in understanding the importance of foreign language training for visitor-facing staff; the use of ganja began to be liberalised, starting a debate about the implications for tourism and visitors.
Finally, it was the year when forward-looking parts of the industry in Jamaica and elsewhere realised that future growth and profits will go to those best able to adapt their offering to the interests of better-off millennials, baby boomers and users of social media.