Protectionist policies and expensive airfares and taxes are threatening to undermine the tourism industry of the Caribbean.
The president of the Caribbean Hotel and Tourism Association has challenged the industry to work together for the benefit of all.
Josef Forstmayr spoke to the Journal in the aftermath of the Caribbean Hotel and Tourism Investment Conference, held in Montego Bay, Jamaica.
One of the conclusions he said that professionals had come to was that a crucial element of improving matters for everybody was looking seriously at airlift.
“Bottom line is you cannot swim to our islands; you can take the occasional cruise ship but airlift is the most critical element, and specifically to make sure that we can afford it. Because in many instances the airlines have become very mercurial to get their pound of flesh here by asking governments to contribute to their revenue guarantee or seats or whatever. That is a dangerous cycle to get caught in.
“Also, protectionist policies do not help either. [At the conference] we talked about how to avoid that. Jamaica is a good case in point; by removing statutory protection for Air Jamaica it made airspace a lot more desirable for new entrants,” said Forstmayr.
In a perfect world, the Caribbean would have one airspace and one approval process.
“If I am able to land in the Cayman Islands, for example, why do I have to again apply for all this bureaucratic nonsense in Jamaica? And if you can land in Jamaica why do you have to go through the same thing in Barbados? Sometimes airlines have to go through five or six different approval processes before they can even start on a route.
“These are all issues that we all seem to know of but nobody seems to bite the bullet. But, we must. These are things we can all agree on easily. We must have a common airspace policy; we must have common approval policy; we must have common air controller policy where you do not pay different fees every time you enter someone else’s airspace.
The fact remains that we will always be 35, 37 small countries that will need to work together and if we don’t start where it really makes a lot of sense and someone else has already shown us the way then the whole issue of a united region of the Caribbean becomes ridiculous,” said Forstmayr.
High quality group
The Caribbean Hotel and Tourism Investment Conference took place from Tuesday, 10 May to Thursday, 12 May and featured a number of seminars and presentations, which were attended by high-level individuals from the public and private sectors across the region.
“We were very heartened by the support that we got from the industry,” observed Forstmayr.
“We had a very high quality group of people; close to 200 registrations and the people who did come expressed great confidence and positive vibes in terms of meeting good contacts. It may be [a smaller conference] but it is of good quality. There was a very buoyant and positive mood, albeit as always cautious as to what will happen in the future with the world economy, with commodities – where the next big push is coming from for the region.”
It was felt that emerging markets would lead the recovery for the future. South and Latin America were mentioned in this context as was Asia, particularly in the area of investment flow.
“It is a little too early for the Chinese to descend upon the Caribbean as a sun, sand and sea destination but certainly in terms of Chinese investment into the region, it is definitely going to grow further. An important point was that there was nothing mysterious about it or nothing to be afraid of – it is a simple economic necessity for China to divert abroad some of its huge foreign exchange earnings and holdings that it has.
“The Caribbean offers a great opportunity for a safe and secure investment that will do well for the Chinese in the future,” he noted.
Economics and gaming
Another discussion that piqued the interest was about the future of the Caribbean product, including all-inclusive properties. This brought up a question of how the industry would develop – further into the all-inclusive model and how the luxury end would perform.
“I think the all-inclusive model will continue to be a very attractive option for the larger islands because they do have the wherewithal, the infrastructure and the land in order to facilitate that. Needless to say you also need good airlift to move the amount of people needed for that model.
“It doesn’t exclude the luxury end, which will ride on the coattails of a successful all-inclusive model because the same reasons also apply to the luxury end. You need good access, airlift, infrastructure in order to ensure you can build that model successfully.” Another session presented a report by Oxford Economics, which the Caribbean Hotel and Tourism Association commissioned, together with the World Travel and Tourism Council in May 2010.
According to that report the travel and tourism economy in 2009 accounted for 12.8 per cent of the region’s GDP, 11.3 per cent of employment – 1.9 million jobs – 21.7 per cent of investment in the region and 15.6 per cent of exports.
“It very clearly stated that the world economy, especially in our main markets, is getting into a mode of investment and growth and therefore by nature of our location it should definitely increase into bigger and better business.
“There was a cautious note throughout all of this where the profitability of the industry is concerned, in average daily rates and revenue per available room. They are still anywhere between 10 and 20 per cent below 2008 levels although they are moving up.”
There was also a seminar on the sticky issue of gambling and casinos, explained the president of the association.
“The whole issue of the introduction of casino gaming is divisive and wrought with fear. In the absence of strong legislation, experience, et cetera, I find that [the Jamaican government, for example] is somewhat more hesitant to introduce it albeit we have the law now. There will be a limited amount of gaming licenses, attached to a minimum investment of 2,000 rooms in a hotel.
“We had a very helpful seminar with [Ismael Vega, chief financial officer, Ambassador Casino and chairman of the board, Puerto Rico Hotel and Tourism Association] who brought the Puerto Rican model and was very clear and interesting for all of us who are not that familiar with the gaming industry,” said Forstmayr.
Forstmayr said that his perennial rallying cry is ‘tourism is key’ and that there are ways in which the area must begin to work together for the benefit of all.
“My own focus as always has been… that we use these figures to let us have a strong base to have advocacy with our governments and people within our countries to show how important tourism is for everything from investment and local labour markets and local facilities to GDP in general.
The second part of this is that linkages are important to the industry, stimulating everything from agricultural products to crafts, linens, towels.
“Regional integration is incredibly important. Everyone is happy to talk about it but nobody is willing to take a deep breath and say that certain things have to happen.”