 |
By Sir Ronald Saunders |
Part of this success has been due to marketing and promotional efforts by some outstanding hoteliers, and by a few governments who have dedicated resources to the task. But, part of it has also been due to calamities in other parts of the world, and the fact that tourism has been riding on a weak US greenback.
The drop in the exchange rate between the US dollar and other major currencies resulted in an effective devaluation of the US currency. Because most Caribbean currencies are pegged to the US dollar, they too have experienced an effective devaluation in relation to other major currencies, particularly those in Europe.
Consequently, British and other European tourists found the Caribbean to be a more affordable holiday destination this winter.
Simultaneously, because the US dollar has remained constant against the Caribbean currencies that are pegged to it, U.S. tourists suffered no difference in prices.
A further boon to Caribbean tourism is that the industry tends to purchase most of its imported requirements from the U.S. Therefore, the fixed rate of exchange between the US dollar and Caribbean currencies kept the costs of provisioning the industry constant.
The weak US dollar also helped European airlines, such as British Airways and Virgin Atlantic, to expand their services to the Caribbean bringing even more tourists than usual despite the fact the oil prices increased reaching US$55 per barrel in January.
Oil is priced in US dollars but largely paid for in euro-denominated revenues by European airlines. Consequently, the drop in the value of the US dollar against European currencies allowed European airlines to offset 10% to 15% of their fuel costs even though oil prices have risen.
LURING SUN SEEKERS
On the point of benefiting from the calamities of other regions, after 9/11, many tourists who would have gone to the U.S. turned to the Caribbean; after the U.S. interventions in Afghanistan and Iraq, visitors to the Middle East sought the peace of our region. Similarly, after Christmas last year, Caribbean tourism gained from the Asian Tsunami, which forced sun seekers away from Thailand, Sri Lanka and other countries that were victim to this unexpected calamity. They looked elsewhere and found that in the context of an effectively devalued dollar, Caribbean prices were not prohibitive.
Now, the region's tourism looks set to continue to enjoy this ride as long as the American dollar does not dramatically strengthen.
There are no signs yet that this will happen. A huge budget deficit in the U.S. coupled with a large trade deficit show no sign of improvement.
Warren Buffett, the highly influential financier and well-known currency trader, predicted last week that the dollar is poised for a new bout of deterioration and said that he will continue to bet against the US currency.
Already the Caribbean Tourism Organisation (CTO) is predicting a 5% increase in 2005 over the record 21.8 million stayover tourists and 20 million cruise ship passengers who visited the larger Caribbean area in 2004.
However, with the exception of very few countries, these benefits do not flow from a diversified and well-developed product that is being effectively promoted and marketed in the global tourism marketplace.
The Caribbean Hotels Association (CHA) has been very active over the last year in trying to raise awareness in the councils of the EU about the vital importance of travel and tourism to the region's economies. Both the CHA and the CTO have managed to secure funding for tourism from the European Union (EU) under the trade and investment arrangements between the EU and the African, Caribbean and Pacific (ACP) group.
So far, the funding is small but a start has been made after years of focussed attention only on commodities such as bananas and sugar. The Caribbean has, at last, put tourism on the agenda for discussion with the EU in a meaningful way. Hopefully, all CARICOM countries, but particularly those like Dominica and Guyana that lag behind in tourism, will urge that tourism funding be included in their national programmes of assistance from the EU.
Countless studies have underscored the major contribution that tourism and travel are making to national economies. However, apart from those directly involved in tourism, its valuable impact on national economies continues to be either not fully understood or ignored.
At the national level, tourism planning should not remain the concern only of hoteliers, restaurateurs, airline representatives and Ministry of Tourism officials. Other key players in tourism planning should include the Ministry of Finance, the Ministry of Health, the Ministry of Public Works, the Public Utilities agencies, the Ministry of Agriculture, the Police and representatives of the workers organizations.
DIGNITY OF SERVICE
Essentially, a conducive environment has to be created for investment in tourism which should include levels of taxation that are not crippling; sensible incentives for investment in the industry on a graduated scale; pitching costs of public utilities for such a vital industry at levels which are cost-based plus a reasonable rate of return; agreement on wage rates that are fair and competitive, and a work force that is trained to understand the dignity of 'service' for which they are being paid.
In addition, planning should include the contribution of the government to providing essential infrastructure such as safety and security, good roads, adequate and comfortable airports, and health facilities that are acceptable to an increasingly aging and sophisticated travelling public. But the government must also protect the natural environment through independent and non-political regulatory bodies empowered with the authority to penalise abuse. Without this, the Caribbean environment which is what differentiates the region from other parts of the world, will be eroded to the detriment of tourism, national economies and the welfare of people.
At the regional level, there are three areas that immediately require joint attention.
The first is economic and marketing-related research and forecasting. The region has long suffered from inadequate market intelligence.
The second is inadequate regional marketing, promotion and funding.
The governments and the private sector organisations have to join together to correct these two major deficiencies. No product, however good, can be sold without market research and forecasting, and marketing and promotion. All this requires money, and the governments and the private sector organisations at the national and regional levels must agree on: the machinery to carry out this task; the budget for such machinery; and reliable and sustainable sources from which they both finance its work.
The third area that needs regional attention is the evolving framework for treating travel and tourism at the World Trade Organization (WTO). The region urgently requires an experienced team to represent it at every meeting of the WTO where rules are being shaped. If the region is not there fighting for its own concerns, it will inherit rules made by others, like them or not.
The region's tourism can ride on a weak greenback and other incidents of a good fortune for a time, but the global industry is now so sophisticated and competition so strong that the old ways will not do.
It is time that every Caribbean country, and the region as a whole, stops paying lip service to tourism, and commits to investing all the required resources into its development and marketing.
The writer is a former Caribbean diplomat, now corporate executive, who publishes widely on small states in the global community. Responses to: ronaldsanders29@hotmail.com.