Caribbean Tourism Depends on Cooperation

No matter who you ask, Caribbean tourism executives seem to share three primary concerns. First, they want to know when business will improve. Secondly, they worry airlift won’t be adequate to serve the tourism-dependent region. And finally, they’re puzzled over what effect a thaw in U.S.-Cuba relations would have on their business.

Yet, that’s not the most important problem the Caribbean tourism industry faces, at least in the mind of former American Airlines Chairman Bob Crandall. In a keynote speech to last week’s Caribbean Hotel & Tourism Investment Conference, the airline icon of the 1980s and ‘90s blasted the gathered public and private tourism executives for not working more closely together to promote the region.

“The Caribbean tourism industry needs to strengthen its value proposition if it hopes to compete in the future,” Crandall told the crowd of 330 attendees at the Puerto Rico Convention Center in San Juan. He outlined a number of things not done well in the region and presented a multi-pronged plan to bolster business.

Most critical in Crandall’s view is the need for a regional marketing effort. In the early 1990s, with seed money from American Airlines, the island nations launched a campaign to lure more visitors to the region. That effort fizzled within two years, except for a short-lived reprise in 2002 during the post-9/11 tourism slump.

“You’ve got to work together to persuade the world the Caribbean is the optimum tourism choice,” he said. “You face intense competition from around the globe and challenges with airline capacity. It’s time again to mount a major campaign.”

The feisty Crandall also took issue with Caribbean taxing schemes he says favor the cruise industry. “It’s time to stop taxing your most important export: tourism. We need a regional agreement on taxation that shifts some of the burden to cruise passengers instead of landside customers. Those visitors who arrive by air stay longer and spend more.”

Several sessions and numerous speakers dealt with the Cuba question, specifically what effect a completely open Cuba would have on tourism in the other islands in the region. According to Timothy Ashby, a lawyer who consults with American companies on Cuban issues, there is a “65- to 70-percent chance” the U.S. House of Representatives will pass a bill this summer that will open travel to Cuba by all Americans. He believes the Senate will consider, and probably pass, similar legislation by the end of the year.

He and other speakers believe if (or more likely when) that happens, as many as three million U.S. tourists will go to Cuba within the first five years and the island will become the number-one destination in the Caribbean.

Emily Morris, a Caribbean analyst with London-based Economic Intelligence Unit, says Cuba is currently the third-most-visited destination in the Caribbean (after the Dominican Republic and the Caribbean coast of Mexico) but could vault into the top spot by 2014 if the embargo is lifted. According to her calculations, the Dominican Republic’s tourism business would suffer the most should Cuba open to all visitors.

Ashby says infrastructure issues in Cuba may dampen the number of U.S. tourists who can visit the island in the early years following the lifting of the embargo. He believes Cuba will use its visa policies to restrict the number of visitors until cruise-ship facilities, ferry terminals and an additional 20,000 hotel rooms can be constructed. The island now has about 50,000 hotel rooms, 65 percent of which are of four- to five-star quality.

“While the bill in Congress would only allow Americans to visit Cuba, someday U.S. businesses will be able to operate in the country,” said Ashby. “A lot of companies, including tourism concerns, consider Cuba to be the last major emerging market. In fact, some of my clients are holding off on other investments in the Caribbean waiting for opportunities to open up in Cuba.”


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