Dissecting the Numbers – CTO State of the Industry Report 2014
by Winfield Griffith, Director of Research & IT
We have heard from our chairman that the rise in Caribbean tourism continued last year with an increase in arrivals and an even more favourable improvement in visitor spending particularly in the accommodation sub-sector.
I just want to speak a little more about what the general picture means and where we could perhaps optimize our outreach in the present circumstances and present some possible policy implications from the trends we have been observing.
WHAT’S HAPPENING IN OUR SOURCE MARKETS
USA remains bouyant
The USA is still holding steady as our core market accounting for nearly half of the total traffic to the region. However, other key traditional source markets such as Canada, the UK and Continental Europe have been contributing less stay-over arrivals than before.
We see that outbound travel from Canada increased modestly (2%) with indications that most of these tourists went south of the border to the USA. What is not altogether clear is if they remained there or go on to South America which has been doing well out of Canada recently.
There was no significant increase (0.1%) in Canadians travelling to other international destinations. This translated into a marginal 0.7% rise in Canadians coming to the Caribbean last year. Most of them went to Dominican Republic.
What is clear therefore is that we perhaps need to understand the new Canadian travel psyche a little better and market ourselves more or even differently in Canada.
Struggling European market
Those European economies from which much of our tourism business is drawn, showed glimpses of recovery in 2013. Industrial production is moving up again and unemployment, while still relatively high in some places, is starting to decline. These positive signs only recently occurred and have not yet manifested themselves in greater benefits from that market. In fact, arrivals have declined for two consecutive years. However, the outlook is brightened by reports of proposed increased airlift prompted by more than usual forward bookings.
Weak performance out of the UK in 2013
The UK has been an important source market for a number of Caribbean countries especially those of the eastern Caribbean. Its continued sluggish economic growth coupled with significant Air Passenger Duty on travel to this region are seen as good reasons for the continued dampening of arrivals out of this market.
INTRAREGIONAL TRAVEL PICKING UP
Some Caribbean states, particularly in the Eastern Caribbean have also been heavily dependent on intra-regional travel.
Air transport challenges notwithstanding, Intra-regional travel saw further revival last year as the number travelling continues a slow upward climb (2%) to reach it highest recorded level.
The Caribbean has also started to benefit in a significant way from South American arrivals. Countries such as Aruba, Curacao, Dominican Republic, Cuba and Belize have all reported better business from this market.
Direct flights from Brazil to destinations like Jamaica, Barbados and Trinidad and Tobago have boosted arrivals from this market.
OUR FUTURE POTENTIAL
What is our future therefore, given that there are shifts in our source markets…at least that is the immediate picture. As a caution, we will have to keep an eye on our forecast however to determine when the picture will revert.
New and Emerging Source Markets are galloping
When we examine tourism globally, new markets with lots of potential for the Caribbean are clearly emerging from among the BRICS countries (Brazil, Russia, India, China and South Africa). In particular, Brazilians have started to show interest in the Caribbean. Recent IADB studies have revealed some interesting findings about the potential value of this market. Among other things the research emphasized the need for:
(1) Intensified communication to heighten awareness of the Caribbean among Brazilians
(2) strategic marketing
(3) sourcing of greater airlift
(4) Brazilian language training
(5) research of the Brazilian market.
IADB has recognized the enormous potential for engaging this new market and has asked CTO to facilitate the process of communicating information relating to IADB funding and technical assistance to Caribbean countries.
An estimated 97 million Chinese travelled internationally last year, around 17% more when compared with 2012 according to UNWTO statistics. They had spent an estimated US$102 billion by September, 12% more than the year before. Asia and the Pacific region benefitted largely from this source.
The Russians were also very active in 2013 with outbound travelers climbing by 14% with increased spending of nearly 26% by September. Other European countries were the main beneficiaries of this increased traffic and buoyant spending although some Caribbean states are seeing Russian arrivals in increasing numbers. These arrivals are notably concentrated among Cuba, Dominican Republic and recently Jamaica which actually had its first direct flight from Moscow last year by Transaero airline.
One feature of all the new markets is the strong propensity to boost business in regions in close proximity first and foremost. China and India patronized Asia and the Pacific while Russia fed Europe and especially Eastern Europe. It seems only natural to foster the Brazilian/Caribbean link in the same manner. Indeed, now seems to be the right time to pursue the South American market with full vigour.
There is a pressing need to investigate all the new markets and emerging markets in a detailed and serious way that provides all the data necessary to inform a successful launch into these markets.
Cruise Activity steady
Itinerary switching in cruise scheduling is evident across the Caribbean. More often than not, this rescheduling intentionally shifts vessels between the Southern and the Northern ports of the Caribbean with something of a zero sum effect on overall arrivals to the region. Typically this is responsible for cruise arrivals fluctuating widely between destinations over time. Caribbean countries which are more distant from the mainland USA and major home ports suffer most. Consequently in 2013, Grenada recorded a near 22 per cent fall in cruise passenger visits, while Curacao welcomed over 45 per cent more than it did in 2012. Overall, there was improvement, 2.8% rise, with nearly 22 million cruise passenger visits to the region.
Twice as many destinations recorded increased activity last year when compared to 2012. However, destinations farthest from the US struggle to find more cruise business. Still, our numbers suggest that the summer months of 2013 were the best ever for summer cruising in the Caribbean.
Airlines have been Active
Both legacy and low cost airlines have been very watchful vigilant in the Caribbean chopping and changing to maximize load factors. This environment has raised some uncertainty in many of our destinations.
Promising Caribbean Tourism Outlook 2014
There is good reason for heightened optimism when anticipating the performance of tourism in the Caribbean this year. Major challenges still exist making it harder for tourism growth to regain the momentum of the years prior to 2009 when the global meltdown started.
It’s generally expected that global economies will perform better in 2014, with the IMF predicting sluggish 1% growth across Europe and 2.8 per cent in the US. According to the experts the emerging countries are expected to outdo more advanced ones. The demand for travel, therefore, should remain buoyant. As a result, tourist arrivals to the Caribbean are expected to rise between two and three per cent in 2014 riding on expected improvements in the global market place but more importantly there are strong signs that there will be a further injection of spending to give a much needed boost to the regional economy.