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Island Nations Fret About Drop-Off


April 6, 2003
Copyright © 2003
THE MIAMI HERALD. All rights reserved. 

GEORGE TOWN, Grand Cayman - CNN's nonstop war reporting blasted across the bar, but there were few viewers.

In fact, there were three. Two employees and a customer. ''If things don't pick up I don't know what I'm going to do,'' one server said.

It wouldn't have been so disheartening, he said, except that it happened to be 4 in the afternoon, and this was an airport restaurant. This is where people usually grab a bite and make a last toast to paradise before they head back to the mainland.

Not today. ''It's been this way'' since the war started, he said.

And the Caribbean is fearful that it might be this way awhile longer.

The fact is, tourism is off in the islands. It began to fall when the Internet bubble burst. It collapsed right after Sept. 11. And the nascent recovery is being choked off by the war in Iraq.

There are bright spots -- cruise ships continue to bring lots of day trippers to many ports. But economically, they're far less lucrative than the coveted overnight guests, who pay for meals, hotel rooms and recreational activities, creating local jobs.

The bottom line: The traditional winter tourist season is ending with a whimper. And summer is looking soft, too. Advanced bookings for the coming months have fallen as hostilities increased in the Middle East.

''I think, through April, our hotels in Nassau, Paradise Island and Grand Bahama are going to be all right,'' said Vernice Walkine, deputy director general of tourism for the Bahamas. ``The bookings are softer than last year, but not terrible.''

She adds, however: ``Forward bookings beyond April are very, very soft.''

Tourism as an industry has had a number of challenges since Sept. 11, of course. While South Florida has fared relatively well, other destinations like San Francisco, Orlando and New York have seen clear drop-offs.

But the issue is particularly crucial in the Caribbean, because in most cases tourism is the leading industry, and in some instances it's almost the only one. Caricom, the secretariat whose membership includes most Caribbean island jurisdictions, said the number of overnight visitors was 4.41 million last year, down by more than half a million from the 5.07 million in the peak year of 2000.

Furthermore, the decline is occurring when many destinations have been investing millions of dollars in new tourism infrastructure. Puerto Rico is undertaking a mammoth expansion of its convention center, for instance. A huge Ritz-Carlton project, valued at over $350 million, is underway in the Caymans.

Meanwhile, not everyone is seeing problems. For instance, Divers Direct, a Fort Lauderdale company that plans trips for scuba enthusiasts, said it has seen a rise in bookings. Its target market tends to be what it calls ''tropical adventurers,'' who are males between the ages of 35 and 50 and have household income of about $100,000.

''I think there's a pent-up demand right now,'' says Chuck Whiteman, vice president of marketing for the company. 'People are saying, `I just have to get away.' ''

But the broader picture is far less rosy.

In 2002, Cancun saw an 11 percent dip in overnight visitors, while the Cayman Islands had a 9 percent drop. Cayman traffic in the first two months of this year was flat vs. last year.

The Bahamas fell by 2 percent in 2002, although Puerto Rico showed a 4 percent gain.

For some destinations, cruise-ship arrivals can help fill the gap. They were up by nearly a third in the Caymans, for instance, and by 20 percent in Aruba.

That's not as lucrative as overnight visitors, said Eric Crutchley, president of Cayman National Corp., the island's top financial house.

In the Caymans, for instance, the average overnight visitor spent $1,200 in 2000 during their trip, excluding air fare. The average cruise passenger dropped a mere $109.

Furthermore, Caribbean jurisdictions often rely heavily on tourist taxes for government revenue, but cruise passengers tend to favor duty-free shops when they stop.

The Caymans is responding by developing promotional programs to lure cruise passengers back for longer stays. The goal, according to Nicole Le Valette, general manager of the tourism association here, is that ``1 to 2 percent of the estimated 2.1 million cruise visitors in 2003 will be converted to stay-over guests.''

In another effort, the Caymans has an H2Go! program, which among other things offers a $99 companion fare on Cayman Airways. Participating hotels and condos offer a fifth night free to guests.

Other destinations are finding marketing ever more crucial as well.

''Branding is very important,'' said Gordon ''Butch'' Stewart, CEO of the Sandals Resorts International organization, which has 11 properties in Jamaica. ``We all want to put the war behind us. It's not good for business.''

Stewart said there are really two issues at hand. One is the decline in travelers. ''We're not really getting any cancellations,'' he said. ``But fresh bookings are way off, by 40 percent or so.''

Secondly, travelers who do make the journey are spending less. Last year their expenditures fell by about 5 percent or so, which on a base of 1.2 million overnight visitors and 865,000 cruise passengers begins to add up.

Meanwhile, Air Jamaica, which Stewart also heads, continues to lose money. ''Every time we almost get there, something happens,'' he says.

Last week the company laid off over 80 employees in South Florida and said it will also be cutting service from the island to U.S. cities after Easter.

Walkine, the Bahamian tourism official, said her country is also planning a new marketing effort. The ads will focus not so much on beaches and water as on reassuring Americans weary of war and fearful of terrorism.

Therefore, the message will tout the proximity of the Bahamas, its English-speaking status and the fact that the U.S. dollar converts at par to its Bahamian counterpart.

''Under normal conditions we take these things for granted,'' she says. ``Now, they're obvious benefits.''

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