Tourism must look to core competencies because diversification is a myth.
Countries like Cayman would do better to concentrate on core competencies and make the most of competitive advantage, according to a top tourism expert.
Vincent Vanderpool-Wallace is minister of tourism and aviation for Bahamas and is widely respected for his straight-talking and entertaining style. His speech at Cayman Business Outlook 2011 highlighted some of the perennial issues facing small islands in what he called ‘the most competitive business in the world’.
One thing that the radical change in the tourism industry due to the economic downturn had done was to cleanse the sector. As hurricanes cause damage, the aftermath also presents opportunities to rebuild and the recession had done the same for the tourism industry, he told delegates.
It is time, he said, to get away from Ego-Tourism, which is more concerned with head counts than with economic growth. In the Bahamas, during 2010, visitor numbers had grown by 15 per cent but visitor spend was down to 2008 levels. He also noted that 80 per cent of all European tourists were headed to low-cost or all-inclusive countries.
“We’ve got to be very careful that when we talk about tourism we talk about the real positives and not the positives that people like to talk about to make themselves look good. It bothers me when people say things like they love Europeans or tourists from far away but they don’t love Texan [tourists, for example]. The Texans are contributing more to the economy than the tourists. We feel better about ourselves if the tourists come from far away, which is a very strange thing… we have to start talking about these things in economic terms and not about feeling good about where these people come from.”
Vanderpool-Wallace said that there is a definition of tourism that the Bahamas has developed, which states that, on a very good day, tourism grew the population by 10 per cent.
“The daily spending of that 10 per cent is significantly higher than the daily spending of any 10 per cent of our population and that’s all it is. We do all kinds of sophisticated things but at the end of the day, tourism is an economic development tool. Indeed, in the case of Bahamas, that 10 per cent contributed 24 per cent of taxes.”
Increased tourist spend meant lower taxes for the rest of the population; it is an extraordinarily clean business that contributes enormously to the economy.
“I have to remind people that unlike Gucci, BMW, I only have one shop. One store and that store is located someplace; I can’t take it and have it represented all over the place… it’s a very important part of what we’re talking about. People love to talk not about price but about value. Define value: they tell me it’s about what you get for what you pay. Well, price is just there… it’s incredible. You get hoteliers talking about average room rates, but there’s something they may forget. Because I only have one shop, part of that value equation is how much does it cost to get to me. We like to dismiss it as if it makes no difference but it’s a very important part of the equation.”
He added that the farther you travel, the longer you stay and that limits spend. The likelihood of large numbers of visitors from Brazil, Russia, India and China is low because of the flight length and cost. Prices of flights closer to home are also an issue, he said, citing an example that it costs more for a 45 minute trip from Miami to the Bahamas than it did from Miami to Las Vegas. It is therefore critical to business that low-cost, high-quality and high-frequency airlift is implemented in Caribbean destinations.
The Internet is also vital as it enables destinations to deliver video, audio, photos and bookings 24/7 but there is a need to bring older tourism experts together with the younger generation of tech-minded whiz kids to take full advantage.
Economic diversification may make destinations feel better but most diversified economies are now in a mess so it is vital to concentrate on core competencies and maximising comparative advantage. Diversification should only take place within the field of expertise, he said.
Other forms of tourism such as medical and sports tourism are brilliant ideas; the latter because it has been proven that when teams are drawn to a destination, friends and family are prone to go along at their own expense. In the case of Cayman, as the country has outstanding swimmers it makes sense to create swimming events. Another idea the Caribbean, and Cayman, could pursue was the concept of an international school of hospitality management and training. There is no reason that the Caribbean can not become the headquarters of tourism and export its knowledge worldwide, mused the tourism expert.
Finally, he noted that Caribbean nations could look to South America as well as North. Panama, in particular, is a hub to Latin America and therefore market opportunities exist there that must be pursued.