by Brian Major
Last updated: 9:00 AM ET, Tue January 6, 2015
Photo: Belize is one of several Caribbean destinations that posted strong tourism growth in 2014. (Photo by Brian Major).
Despite mounting pressure from other countries, the Caribbean once again spent 2014 ranked among the world's most popular leisure travel regions. However, a new International Monetary Fund (IMF) report suggests higher costs and slowing arrivals growth will challenge Caribbean nations throughout 2015.
The IMF report, "Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals," finds Caribbean tourism experienced "solid" expansion during the 2000s, driven by "steady growth in key advanced economies and strong inflows of foreign direct investment."
The study charts data from Anguilla, Antigua & Barbuda, the Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Jamaica, St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines. Countries including Guyana, Haiti, Suriname and Trinidad & Tobago were deemed to have "non tourism-based economies" and were not featured in the IMF study.
Not surprisingly, the study found the Caribbean to be "highly dependent" on tourism. Leisure travel "now accounts for a large share of gross domestic product" in the 16 countries tracked in the study, ranging from eight to 40 percent.
The Caribbean's strong tourism growth continued in 2014 according to key regional groups. Arrivals in the first six months of 2014 increased 4.3 percent compared with the same period last year, said Caribbean Tourism Organization (CTO) Secretary General Hugh Riley.
In fact, some Caribbean destinations posted surging visitor growth in 2014. Belize, the Cayman Islands, Haiti, Grenada and the Turks & Caicos all posted arrivals growth of 10 percent or more last year according to CTO data. Aruba and the Dominican Republic both posted growth of more than nine percent in 2014, while Jamaica reached the two million visitor mark for the first time in its history while Aruba hosted one million visitors for the first time.
Still, IMF officials say the Caribbean continues to face daunting challenges. "In recent years, the [Caribbean's] rate of growth in tourist arrivals has stalled, and the region's share of the global market has been shrinking," the report finds.
"Moreover, many Caribbean countries are facing significant macroeconomic imbalances as growth has slowed and public finances have deteriorated," the report says. The Caribbean's share of the global tourism market totaled about two percent in 2013 compared with 2.5 percent in 2000, says IMF.
The study also claims travelers to the region pay a premium compared with other warm-weather destinations. "The cost of an average one-week beach holiday in the Caribbean is higher than in other beach destinations around the world," the report notes.
Other challenges facing Caribbean destinations include inconsistent visa regulations and policies, high taxation and investment barriers and even inadequate branding, say other observers. Caribbean destinations have "tremendous potential" because of North America's proximity to the region but have yet to fully capitalize on that advantage, said Alex Zozaya, chief executive officer of Apple Leisure Group, a leading Caribbean vacation retailer and resort operator.
"We have a market of 300 million in North America that has created only 12 million Caribbean tourists a year," Zozaya said recently. "I don't see why we can't attract 30 million tourists a year. The biggest competition for Caribbean tourism is the percentage of North Americans who have never traveled outside of the U.S."
He pointed to Caribbean nations' high energy costs, which translate into higher costs for suppliers and by extension, travelers. "On some islands we pay more for energy costs than we do for [employee] payroll," Zozaya said.
Meanwhile, the IMF report also identified the Caribbean's at times inconsistent air transportation network as an impediment to wider regional tourism growth.
"Overall the number of flights to the Caribbean region dropped steadily," the report notes. "Airline companies are reluctant to reinstate or embark on new connections without guarantees that seats will be filled."
The report concludes, "Since the demand for tourism in the Caribbean is sensitive to shocks in key source countries, governments may wish to place more emphasis on policies that help diversify source markets, and especially to countries with higher growth rates, such as large emerging markets in Latin America."
Zozaya also urged Caribbean destinations to "be pragmatic and commercially driven," setting aside politically based decision-making. "There is so much bureaucracy in the Caribbean," he said. "If [destinations] could ignore consequences in the political arena, they could move much faster."
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