Following a meeting of the Caribbean Hotel Association (CHA) Board of Directors, CHA has taken steps to increase its advocacy efforts in the United States. The most noteworthy of these recent efforts is CHA’s participation in a United States International Trade Commission (USITC) hearing on the Caribbean Region: Review of Economic Growth and Development, which was commissioned by U.S. Congressman Charles Rangel and sanctioned by the House Committee on Ways and Means. CHA President Peter Odle and Director General and CEO Alec Sanguinetti presented pertinent information crucial to the enhancement of U.S. policies regarding economic growth, trade and tourism in the Caribbean.
CHA’s presence was requested in a letter sent to Sanguinetti by the USITC Director of Operators, requiring the hospitality organization’s expertise to enhance the investigative process so that the hearing could delve more deeply into trends and issues facing the Caribbean region’s economic growth and stability.
“Our report to the USITC has laid the foundation for the creation of new economic policies that take into account the current status of Caribbean tourism and its contribution to our local economies, as well as the significance of the U.S. market in each country,” said CHA President Peter Odle.
The comprehensive report features information on all factors pertaining to Caribbean tourism and economic development including passport regulation, employment in the region and global climate change, as well as suggestions for potential targets for U.S. aid, such as human resource development programs and hospitality service training initiatives.
The report details findings of the 2007 World Travel and Tourism Council (WTTC) Travel and Tourism Economic Research study on the Caribbean, which ranked the region first (out of 13) in the world for relative contribution of travel and tourism to the regional economy. On a global scale, the Caribbean was also ranked first for capital investment and government expenditure on tourism.
Travel & Tourism in the Caribbean throughout 2007 is expected to post US$56.1 billion of economic activity, growing to US$107.3 billion by 2017. The industry is expected to contribute 5.1% to Gross Domestic Product (GDP) in 2007 (US$12.5 billion), rising in nominal terms to US$24.7 billion (5.5% of total) by 2017. The Travel & Tourism Economy contribution (percent of total) should rise from 16.5% (US$40.3 billion) to 17.3% (US$77.2 billion) in this same period.
For the Caribbean, Travel & Tourism activity is expected to grow by 3.3% per annum in real terms between 2008 and 2017, according to these findings.
The report emphasized that Travel & Tourism is human resource intensive, creating quality jobs across the full employment spectrum. Caribbean Travel & Tourism Economy’s employment is estimated at 2,447,000 jobs in 2007, 14.8% of total employment, or 1 in every 6.7 jobs. By 2017, this should total 3,074,000 jobs, 16.0% of total employment or 1 in every 6.3 jobs. The 806,000 Travel & Tourism Industry jobs account for 4.9% of total employment in 2007 and are forecast to total 1,042,000 jobs or 5.4% of the total by 2017.
Travel & Tourism is a major exporter, with inbound visitors injecting foreign exchange directly into the economy. In the Caribbean, exports make up a very important share of Travel & Tourism’s contribution to GDP. Of total Caribbean exports, Travel & Tourism is expected to generate 21.2% (US$30.9 billion) in 2007, increasing to US$60 billion (22% of total), in 2017.
Travel & Tourism is also a catalyst for construction and manufacturing. Caribbean Travel & Tourism Capital Investment is estimated at US$9.4 billion or 19.9% of total investment in year 2007. By 2017, this should reach US$17.5 billion or 19.7% of total.
Travel & Tourism is both a generator and receiver of government funds. Government Travel & Tourism operating expenditures in the Caribbean in 2007 are expected to total US$2.8 billion or 9.4% of total government spending. In 2017, this spending is forecast to total US$5.4 billion, or 10% of total government spending.
The above statistics clearly demonstrate that Caribbean tourism is a prime example of an industry that has to-date managed to compete successfully on a global scale despite country-level constraints created by geographical size and distance from major markets, and often being limited in human, financial, and in many cases, physical resources. Despite these obstacles, tourism is acknowledged as a major contributor to employment, foreign investment, and economic development, and has helped to raise the standard of living for the people of the majority of Caribbean countries.
The latest available statistics for Caribbean tourism arrivals in 2007 indicate that arrivals from the United States amounted to nearly seven million people (6,991,473) accounting for 44.8% of total arrivals of just over fifteen and a half million people (15,589,682). This percentage increases to 47% based on arrival numbers for CARICOM countries only. These numbers immediately demonstrate the immense significance of the U.S. market to Caribbean tourism.
To provide a greater idea of the dollar value significance of the U.S. market’s contribution to Caribbean economies through tourism, CHA made reference to a 2005 World Travel and Tourism Council’s (WTTC) study on the Economic Impact of U.S. Passport Changes to Caribbean Travel & Tourism which found that the total value of Caribbean tourism exports to U.S. visitors to be US$20.7 billion.
The following initiatives, programmes, and projects were suggested as target areas for assistance with a view to enabling the Caribbean tourism industry to further contribute to regional growth and development:
1. Initiatives to lower the cost of tourism related inputs sourced extra regionally;
2. Human resource development programmes and hospitality service training initiatives;
3. Employee job attachments and training and apprenticeship arrangements, including Mutual Recognition Agreements for tourism related qualifications and credentials;
4. Technical and financial assistance for regional and local level projects such as:
a. Capacity building for adaptation to and mitigating the effects of climate change;
b. Capacity building for environmental management within the tourism sector;
c. Internet marketing strategies for micro, small- and medium-sized tourism enterprises, including accommodation, tour and entertainment entities;
5. Regular dialogue, information sharing and consultation between US and Caribbean delegations to exchange best practice information and consult on issues of concern pertaining to tourism between the U.S. and Caribbean
Various research initiatives commissioned by the CHA has in order to gather firm and accurate information on the status of the Caribbean tourism industry were found to be particular interest to the Commission, including:
1. The Caribbean: The Impact of Travel and Tourism on Jobs and the Economy – Prepared for the CHA by the World Travel and Tourism Council with the support of American Express, Air Jamaica, American Airlines and Sandals in 2004.
2. Taxation and Operating Costs for the Caribbean Hotel Sector – Prepared for the CHA by PA Consulting Group with the support of the European Union in 2006.
3. The Caribbean Accommodation Sector as a Consumer of Locally Produced Goods and Services and Contributor to Government Revenues – prepared in 2006 by Tourism Global Inc. for the CHA under a technical support grant by the ProInvest Management Unit (PRIMS) – CDE (Centre for the Development of Enterprise), a joint agency of the European Union and ACP States.
The findings of the latter demonstrate the extensive linkages between the tourism sector and other sectors (services and non-services) of host economies in the region and the resulting far-reaching economic benefits of the tourism industry. The study defines and quantifies what Caribbean accommodation establishments spend yearly supporting the economic well being of workers, local entrepreneurs, professionals, service providers, other economic sectors, as well as government’s revenues that finance the running of the country. In conducting this research, CHA sought to reveal the possible opportunities for further accelerating social and economic development. Some of the results that stand out include:
• 84% of services required by the hotel sector are being purchased locally.
• The hotel sector contributes to investment in the local economy first through the initial investment in plant and equipment: 63% of hotels surveyed invested $1 to $10 million initially in their property. Secondly, the continuing refurbishment, upgrade and expansion of facilities is characteristic of the industry with 96.2% of respondents indicated they spent between $1 and $10 million in this area in 2005.
• Overall the hotel sector creates employment at the rate of 2.3 employees per room, spending $61.1 per room per day in payroll and related costs in 2005.
• The hotel sector in addition to its direct and indirect expenditures in the local economy actually provides direct entrepreneurial opportunities in at least 14 areas identified in the survey e.g. taxi concessions, water sports, spas and beauty salon, gift and craft shops and restaurants.
• Hotels in the sample purchased 93% of their utilities in the local economy.
• 74% of vegetable used by the hotel sector are produced locally, 67% of dairy products are sourced locally, and 63% of meats are sourced locally.
• 20% of fish is purchased locally; fresh fruit, 16%; and eggs, 10% sourced locally.
• Overall the hotel sector is sourcing just under one-half (47%) of its requirements for light manufacturing locally.
• Hotels paid an overall 18.83% of their annual turnover in taxes of one kind or another during 2005. This works out at $15.1 per room per day.
The hearing, which was also attended by Ambassadors and Ministers from Antigua & Barbuda, The Bahamas, Barbados, Belize, Jamaica, St. Kitts & Nevis and St. Vincent & The Grenadines, has been regarded as a huge success resulting in much enthusiasm on the part of the CHA membership and Board of Directors.
This follows the recent unprecedented conclusion of an Economic Partnership Agreement (EPA) between CARIFORUM and the European Union, an alliance that will ensure continued support of tourism interests in the Caribbean.
The CHA was deeply involved in the negotiation and evolution of the EPA between the European Union (EU) and CARIFORUM with particular regard to the liberalization of tourism related services. CHA provided input and defended its positions on various aspects of the tourism business including the following items which were ultimately reflected in the final agreement:
a. Competitive safeguards and a prevention of anticompetitive practices
b. Mutual recognition of tourism professionals
c. Sustainable tourism development
d. Technical assistance
The fact that the EPA covers tourism services is itself a noteworthy accomplishment. Although the industry is now the largest contributor to Caribbean economic development, tourism has either been ignored or referred to only in passing in all previous regional trade agreements. Throughout the EPA, however, there are references to the industry, a chapter on tourism and much detail elsewhere in the accompanying schedules.
The Caribbean Hotel Association aims to optimize the full potential of the Caribbean hotel and tourism industry by serving member needs and building partnerships. CHA was founded in 1962; it is the voice of the Caribbean hospitality industry for the development of the region in the highly competitive and sophisticated environment of international tourism. Today, tourism is widely recognized as a pivotal industry in the economy of the region – and CHA functions as the common denominator for this industry in a region of diverse nationalities, languages and styles, identifying mutual problems and marshalling the resources of the active and allied members to devise solutions. CHA represents all facets of the hospitality industry with more than 800 member hotels and 750 allied members.
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