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Tourism Industry Reform Strategies for Enhanced Economic Impact

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Presentation on the study commissioned by the CDB looking at 'Tourism Industry Reform: Strategies for Enhanced Economic Impact ' delivered by Dr. Amos Peters, Economist, CDB on May 25, 2017 at the 47th Annual Meeting of the Board of Governors in the Turks and Caicos Islands.

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Tourism Industry Reform Strategies for Enhanced Economic Impact

  1. 1. Tourism Industry Reform: Strategies for Enhanced Impact Amos C Peters Gustarvus Lightbourne Sports Complex Providenciales Turks and Caicos Islands May 25, 2017
  2. 2. Rationale Tourism has traditionally been the dominant sector of the Caribbean economy and a driver of economic growth and development In 2015, CDB BMCs recorded 22.7 million visitors - 64% cruise visitors and 36% long-stay visitors The tourism sector has evolved considerably over the past two decades; digitisation of booking services, the rise of all inclusive resorts and cruise ships impact consumer behavior Global events such as BREXIT, US- Cuba relations etc., can affect tourism growth This has implications for the extent to which the tourism sector can support economic growth and development.
  3. 3. Tourism arrivals Country share of tourist arrivals, 2015 Bahamas 31% Cayman Islands 12% Jamaica 11% St Kitts/Nevis 7% Belize 6% Turks & Caicos Is. 6% St Lucia 5% Haiti 5% Other BMCs 17% Cruise arrivals Jamaica 26% Bahamas 18% Barbados 7% Haiti 6% Trinidad & Tobago 5% British Virgin Is. 5% Turks & Caicos Is. 5% Cayman Islands 5% Other BMCs 23% Long-stay arrivals Total arrivals 14.5 million Total arrivals 8.2 million
  4. 4. Goals of the study To understand and quantify the relationship between the tourism industry and economic growth and to assess how this relationship may be evolving To provide useful evidence to inform policy responses to the changing tourism business environment
  5. 5. Key findings A 10% increase in tourism expenditure per capita gives rise to an increase in GDP per capita of between 0.58% and 0.89% within the same year, and a 2.6% increase in GDP over the long-term In dollar terms, every $100 in tourist expenditure yields $35-54 in GDP within the year and $155-160 over the long-term No evidence of a change in the relationship between tourist expenditure and GDP growth, despite the changes in the tourism industry Impact of tourism on GDP growth varies significantly by arrival type. Long-stay tourist arrivals have substantive impact whereas cruise arrival impacts are much smaller
  6. 6. Stylised facts Over the period 1989 - 2014 Number of long-stay tourist arrivals in BMCs has grown slowly • 2.5% in CDB BMCs • 3.7% in the wider Caribbean • 4.5% globally BMCs share of global long-stay arrivals fell from 1.1% to 0.7% Cruise arrivals in the BMCs have grown substantially, tripling from 4.4 million to 14.5 million. Almost twice as many cruise arrivals to the BMCs as long-stay arrivals Average expenditure per tourist arrival fell from $870 in 1999 to $608 in 2014
  7. 7. Stylised facts 0.0 100.0 200.0 300.0 400.0 500.0 600.0 1990 1995 2000 2005 2010 2015 BMCs All Caribbean Central America South America Mexico Arrivals index (1990=100) Growth in international tourist arrivals, 1990-2015 Source: Caribbean Tourism Organization (CTO), World Tourism Organization (UNWTO), and the World Bank.
  8. 8. Stylised facts Arrivals to the BMCs by type of tourist, 1990-2015 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 1989 1994 1999 2004 2009 2014 Arrivals (in thousands) Cruise passengers Long-stay tourists Source: Caribbean Tourism Organization (CTO).
  9. 9. Visitor arrivals and expenditure in the BMCs $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 0 5,000 10,000 15,000 20,000 25,000 1989 1994 1999 2004 2009 2014 Visitor arrivals Visitor expenditure Visitor arrivals (thousands) Visitor expenditure (USD millions) $870 $608 $500 $600 $700 $800 $900 1989 1994 1999 2004 2009 2014 Per visitor expenditure (USD) Source: Caribbean Tourism Organization (CTO).
  10. 10. Stylised facts -4% -3% -2% -1% 0% 1% 2% 3% Grenada Trinidad & Tobago Belize Suriname Anguilla Guyana Jamaica St Vincent & Gren. St Lucia Montserrat Bahamas British Virgin Is. Antigua & Barbuda Haiti Barbados Turks & Caicos Is. Cayman Islands Dominica St Kitts/Nevis Annual growth rate of expenditure per visitor Source: Caribbean Tourism Organization (CTO).
  11. 11. Stylised facts Growth in international tourist arrivals, 1990-2015 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Annual growth rate Source: Caribbean Tourism Organization (CTO); World Tourism Organization (UNWTO).
  12. 12. SWOT analysis Strengths • Unique value proposition and diversity of the tourism offering • Proximity to major markets Weaknesses • Seasonality of tourism industry • Weak linkages to the local economies • Transportation links • Human resources and training Opportunities • Increased regional collaboration • Growth of the shared economy • Cruise conversion • Medical and education tourism • Yachting industry Threats • Climate change • Environmental damage • Health risks • US-Cuba relations • BREXIT CURRENTEMERGING SUPPORTING LIMITING
  13. 13. Industry focus: Yachting • Yachting sector / Pleasure boat industry - Activities required to sustain charger boating and cruising in the Caribbean • Yacht establishments: services such as marinas, boatyards, repair and part shops • Tourism establishments: services that complement the yachting experience and overlap with general tourist needs - restaurants, night clubs, and grocery stores. Demand Factors • Natural drivers (warm weather, calm waters, northern hemisphere winter) • Infrastructure drivers (marinas) • Recreational drivers (sporting, cultural events, restaurants and nightlife Skippered/Cre wed Bareboat Super yachts Cruisers Chartered yachts Private yachts Maintenance Repairs Storage RecreationalIndustrial Yachting Industry
  14. 14. Industry focus: Yachting Strategies for enhancing economic impact • Safety and security for yachters • Development of consistent data collection methodology and practice • Linking yachting to other tourism products • Human development and inclusion of locals in the sector • Public policy, regulation, and incentives • Review of BMCs with potential for development Yachting tourist 1. Tourist Yachting spendingGeneral tourism Yachting Fees 2. Expenditure Restaurants Hotels & accommodation Shopping Entertainment & recreation Transportation Water & utilities Provisioning Fuel Repairs & Maintenance Boatyard fees Government fees Marina fees Medical services Telecommunications Drivers of economic impact associated with the yachting industry
  15. 15. Policy imperatives Leveraging tourism as a tool for economic development • Use tourism product as an instrument to grow other sectors. Eg. link concessions granted to hotels to measurable contributions to BMC development such as training of staff, local investment. Organising the tourism industry • Treat industry as a cohesive and formal part of the economy. E.g increase coverage and standardization of tourism data collection across the industry Developing economic linkages and inclusion • Create links to the local economy. Make it easier for businesses to source locally, develop programs to help entrepreneurs access capital. Convert cruise arrivals into future long-stay visitors. Exploring further opportunities for regional collaboration • E.g. regional network of facilities for training in hospitality, improve transportation links, standardisation of immigration and customs procedures across the region Preparing for the tourism industry of the future • Needs and expectations of tourists are changing. Visitors are using less cash for daily transactions; used to accessing services on their mobile phones. BMCs must adapt tourism products to meet demands.
  16. 16. Summary It’s not just about arrivals. It’s all about optimising the impact of arrivals, creating value for OUR people, value chains, economic linkages, training, local investment, and local enterprise. It is about us - Caribbean people!
  17. 17. Thank you!
  18. 18. Appendix Tourism offering BMCs reporting strengths in tourism offering Ecotourism • Belize • Trinidad and Tobago • Guyana • Suriname • Montserrat • St. Lucia • St. Vincent and the Grenadines Heritage & culture • Trinidad and Tobago • Belize • Dominica • Jamaica • Suriname Culinary • Turks and Caicos • Anguilla • Cayman Islands • Suriname Events & sports • Trinidad and Tobago • Belize • Dominica • St. Kitts and Nevis • Bahamas • Guyana • Anguilla • Barbados Education • Grenada • Dominica • St. Kitts and Nevis • Guyana Yachting • Trinidad and Tobago • Dominica • Bahamas • Grenada • St. Lucia • St. Vincent and the Grenadines • British Virgin Islands
  19. 19. Appendix 41.7% 79.8% 41.2% 14.3% 33.9% 60.9% 10.0% 14.3% 28.4% 23.7% 24.0% 36.6% 8.1% 26.0% 0.5% 12.8% 2.6% 2.0% 90.6% 50.9% 41.2% 13.0% 53.1% 25.6% 23.7% 15.3% 14.7% 13.8% 12.7% 28.8% 22.6% 19.8% 1.8% 16.1% 6.7% 1.5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Turks & Caicos Is. British Virgin Is. Anguilla Montserrat St Lucia Antigua & Barbuda Dominica Grenada St Kitts/Nevis Cayman Islands St Vincent & Gren. Bahamas Belize Barbados Suriname Jamaica Haiti Trinidad & Tobago 2014 1989 Very large (1M+) Large (200K-1M) Medium (50K-200K) Small (Below 50K) Population Source: Analysis of data from the Caribbean Tourism Organization (CTO). Visitor expenditure as a proportion of GDP
  20. 20. Appendix US 59% Canada 11% UK 9% Europe (excl. UK) 6% Caribbean 9% South America 2% Other 4% Long-stay tourist arrivals by source market, 2015 Source: Caribbean Tourism Organization (CTO).

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