When Covid reared its ugly head on cruise ships, management was asleep at the wheel. What could have been corralled and addressed in its early stages was allowed to grow and assault the entire planet. To this day, cruise line and tourism executives, government bureaucrats, and elected officials refuse to take responsibility for their negligence, never offering an apology for their disregard of facts and science and their “head in the sand” approach to the management of their organizations and the well-being of passengers and crew.
Tourism Dependent
The most tourism-dependent nations in the world include Aruba, Antigua, Barbuda, the Bahamas, St. Lucia, Dominica, Grenada, Barbados, St. Vincent, and the Grenadines, St. Kitts and Nevis, Jamaica, Belize, the Cayman Islands, and the Dominican Republic (iadb.org). For these island nations tourism is their economic lifeblood and it dissolved overnight.
The devasting collapse is a product of the Caribbean’s absolute failure to diversify its economic activity and a myopic view of its own resources. This is one of the least diversified areas of the world with tourism accounting for 14 percent of GDP in 2019, the most of any region. The LAC countries are among the most crises-prone in the world and natural disasters are more like everyday activities rather than shocks or surprises. What is new, however, is the tragically high and frightening speed and persistence with which the coronavirus has affected the economic foundations of these locales.
Coming out of enforced hibernation, the hospitality, travel, and tourism executives who have survived the worst of the pandemic are now left with the enormous task of weaning the industry away from life support and nursing it back to health.
Like anyone who has been sick – there is a need to take steps (frequently baby steps), in order to move from sickness to wellness. If the patients are lucky, friends, family, and good advice from online Google pundits will provide pathways to recovery. Patients may stumble and back-slide a few times, but with grit and determination, they will recover and be ready for combat.
Gut Punched
According to the Inter-American Development Bank (IDB) the Covid-19 pandemic led to the worst economic decline in Latin American and the Caribbean in two hundred years. Beyond the economic hardship is the destructive impact of the pandemic on the region’s society and health systems. Although the region represents just 8 percent of the global population it has reported 28 percent of all deaths (atlanticcouncil.org).
Even before the pandemic, the region’s overall economic performance was the worst in the world measuring only 0.1 percent growth in the gross domestic product (GDP) during 2019. Between 2013 and 2019, the Latin America and Caribbean GDP growth averaged 0.8 percent and the region has never been able to develop a sustainable economy.
The countries are largely divided in terms of access to public and private goods, ranging from economic and educational opportunities to healthcare and a clean/safe environment made worse by high levels of labor informality, low private investment (16 percent GDP), compared to other regions, and this impacts on productivity, innovation and formal job creation (cepal.org, 2020).
From the closing of airports and the restrictions on travel for consumers, the Caribbean tourist arrivals fell by 67 percent in 2020 according to UN data, the IMF determined that annual hotel stays fell by 70 percent, and cruise ship travel completely stopped.
Despite vaccination programs and the gradual reduction in travel restrictions, the Caribbean recovery is very slow forcing the International Monetary Fund (IMF) to lower its 2021 projected growth rate from 4.0 to 2.4 percent regionwide. There have been at least 38,789,000 reported infections and 1,310,000 reported deaths caused by the novel coronavirus in Latin America and the Caribbean (graphics.reuters.com). Of every 100 infections last reported around the world, approximately 26 were reported from countries in Latin American and the Caribbean. The region is currently reporting a million new infections about every 8 days and has reported more than 38,789,999 since the pandemic began.
The reduction of tourists forced the industry to reduce employment – which, in a region where tourism accounts for 2.8 million jobs (about 15 percent of total employment), this is a serious economic hit. In all, the Caribbean lost more than 2 million jobs due to the pandemic (International Labor Organization), many in the tourism sector.
As LAC countries face new waves of the coronavirus amid a slow vaccination campaign, recovery will be difficult. Major properties have closed: In the Dominican Republic the 400 room Excellence Punta Cana resort; in Jamaica, the Half Moon Hotel Jamaica (400); in St. Kitts the 50-room Ocean Terrace Inn.
Tourism is unlikely to rebound until the region gets the virus under control. Currently, the Pan American Health Organization finds the hemisphere is “in the midst of a worsening outbreak,” and the virus continues to island-hop in the Caribbean where daily case numbers rise and indebted Caribbean governments have few resources to keep their economies afloat.
Long-Term
Loss of employment in the tourism sector impacts almost entirely on youth, women and less-educated workers and therefore increases poverty and inequality. The lack of diversity and sustainability also heralds business closures and bankruptcies among hotels, resorts, and other sectors associated with tourism services (i.e., restaurants, retail, tour operators, taxi drivers). With the reduction in air-lift and the continued conflict with go/no decisions in the cruise line sector, industry partners dependent on cruise line passengers have no recourse if the ships are permanently canceled or rerouted to other destinations.
Money Pit
The Caribbean region exists largely on debt. Although the international monetary community has opened its collective wallet to meet the need for public spending in the region, the support has been a double-edged sword; the near-term pressures have been alleviated but many countries now face a challenge as growing fiscal deficits and borrowing becomes harder and the crises persist.
According to the IMF, assuming no new external financing and realistic tourism scenarios, the regions financing gap will hover at approximately US$4 billion, or 4.8 percent of 2020 regional GDP with (anticipated) natural disasters likely to be part of 2021 (and beyond), the financial short-fall could be even greater.
Vaccine Donations
Many of the LAC countries are dependent on vaccines from other nations or a discounted global program and COVAX, an alliance run by the Coalition for Epidemic Preparedness innovations, Gavi, and the World Health Organization works with UNICEF who provides vaccination services on the ground. The COVAX program was to be headed by India-based Serum Institute, the world’s largest drugmaker; however, now that India is plagued by its own outbreaks the company suspended exports in March. The initiative promised to eventually provide poorer countries with enough vaccines to cover incremental portions of their populations; however, it faces a $23 billion funding gap and delayed shipments (Economist Intelligence Unit).
The US government is scheduled to donate 580 million vaccine doses to support global Covid-19 vaccination efforts. As of June 21, the first 80 million doses had been allocated with approximately 20 million directed to LAC locales with plans to donate additional doses to approximately seven LAC nations.
In addition, USAID partners are assisting livelihoods, distributing hygiene commodities and emergency food assistance, providing technical assistance and essential equipment to health care centers, supporting national governments to develop vaccination strategies, and training frontline medical personnel.
UnEqual Effect
US Virgin Islands
Not every part of the Caribbean has been hit by Covid. The borders to the US Virgin Islands never closed even when Americans were barred from most of the world. Offering vaccines to everyone and anyone – even before they could get a shot at home, visitors flocked to the American territory’s beaches and restaurants as tests and vaccinations have been required; however, quarantines are not mandated. The result? Hotel occupancy is almost three times that of the region and seven times higher than the Bahamas (STR).
According to the US Virgin Island Department of Tourism, hotels are running at over 90 percent occupancy. As of February 2021, hotel tax revenues reach $1.85 million (a decline of only 28 percent from February 2020).
In the US Virgin Islands, the charter business has expanded and is likely to add $88 +/- million to the local economy – almost double the approximately $45 million in 2019 (Marketplace Excellence). This destination was the first American community to vaccinate everyone 16 and older and, as of mid-May, 31,645 residents and tourists had been fully vaxxed.
Airlines connecting to the USVI include Frontier, American, and Jet Blue. As of April 2021, travelers had access to approximately 27 flights a day into St. Thomas and six into St. Croix departing from Boston, New York, Dallas, Chicago, Atlanta and Florida.
The Virgin Island Economic Development Authority has developed, Vision 2040 plan and tourism is not the major economic engine going forward. The future emphasis will be on agriculture, healthcare, and renewable energy.
Turks and Caicos Islands
The Turks and Caicos recorded that 59 percent of its adults (20,000 people) were fully vaccinated and 62 percent partially vaccinated (May 28, 2021; tcweeklynews.com)
With a $600,000 loan from Ken Patterson, the CEO of Seven Stars Resort & Spa, the Turks and Caicos were able to acquire 60,000 test kits, immediately certifying 18 new testing sites (most at resorts), trained hotel staff to conduct tests, and passed a series of law to ensure health standards. The result? According to Deborah Aharon, CEO, Provo Air Center, traffic is busier than ever with private jet flights increasing more than 50 percent above rates in place before the pandemic with mid-May traffic increasing 73 percent from 2019.
Tourism currently is at 70 percent capacity and Seven Stars was completely booked in May and almost completely booked for June with little availability until September.
As of June 16, 2021, The US State department assessed this destination at Level 2 indicating a low level of Covid-19 in the country
Aruba
Aruba has been busy putting jabs into arms and as of mid-May, approximately 57,500 of the population were at least partially inoculated. To keep a flow of tourists coming to this small island nation, Jet Blue became a tourism partner offering approximately 40 flights each week from the US to Aruba using CommonPass, the world’s first digital vaccine passport. With the pass, travelers can take a virtual supervised at-home PCR test within three days of departure, upload results, and cut through immigration lines.
Tourism is slowly returning to Aruba and the average hotel room occupancy in May 2021 was 56.3 percentage points higher than the 52.7 percent reached in April 2021. The forecast is optimistic going forward with average room occupancy expected to reach 71 percent in July, and 61 percent in August (Aruba Hotel and Tourism Association).
St. Barth
France locked down its territories and this included the 11-mile-long St. Barth (autonomous but not independent). The island received Pfizer vaccines from France in April and pushed through a massive rollout. More than two-thirds of the island’s adult residents are at least partially vaccinated and the hospital had no Covid-19 patients. No Covid-19 deaths have been recorded in 2021 as of April 9, 2021.
St. Barth’s is open to travelers from certain countries and before reservations are made, country status should be updated. The US Centers for Disease Control has assessed this destination as Level 1, the lowest risk level for Covid-19.
All visitors over the age of 10 years of age are required to present a negative Covid-19 Antigen test taken within 48 hours of their arrival or a negative Covid-19 PCR test taken within 72 hours of their arrival. Masks are encouraged when social distancing is not possible and are required on busy streets and entering food indoor establishments (i.e., shops, grocery stores, banks). People without masks will be assessed a $100 fine for non-compliance and a $5000 fine for violating quarantine plus a $2000 fine for intentionally damaging a quarantine tracking device and all travelers must have travel insurance.
Visitors have unrestricted access to public space and beaches. Grocery stores and restaurants are open and in-villa Private Chef services can be reserved.
The British Virgin Islands
Yachts at Paraquita Bay in Tortola, British Virgin Islands. Photo: Morrelli & Melvin Design and Engineering
The British Virgin Islands tourism picture is not as rosy as other island nations as the UK closed the territory to international tourists and strict Covid safety protocols have discouraged visitors to even consider the destination.
The BVI vaccinated 4,201 people (14 percent of the population) by mid-May. Ferries reopened in April with daily service between BVI and USVI. International vessels are still barred and there is no timeline for reopening. Visitors must get tested three times (before travel, after arrival, and following a four-day quarantine). Travelers with proof of completed vaccinations can exit quarantine following a negative test taken upon arrival. Anyone accused of breaking social distancing rules can be fined up to $10,000.
As of July 19, 2021, fully vaccinated travelers must have a rapid antigen test at the port of entry ($50 fee) with results available in approximately 35 minutes. All travelers must show a PCR test or rapid antigen test within five days of arrival and vaccinated travelers must show proof of vaccination. For travelers partially vaccinated or unvaccinated there is a seven-day quarantine required. Visitors must also have proof of medical insurance that includes coverage for Covid-19 and they must register on the online portal within five days of the scheduled travel date to obtain a Traveller Authorization Certificate ($35 for vaccinated visitors; $105 for others). Fully vaccinated travelers with one or more unvaccinated children between 5 – 17, will be tested upon arrival and receive a second test on the 4th day.
The curfew extends from 7 PM – 5 AM through July 23 (and maybe extended). All restaurants (including dining options located in hotels and restaurants) are restricted to takeout only. All businesses are limited to 65 people at a time and subject to social distancing. All ferries are limited to 65 passengers at any one time. Salons, gyms, bars, clubs and entertainment venues are closed through July 23 and may be extended.
Before the pandemic the BVI GDP ranked third in the world for dependency on tourism (almost 2 in every 3 jobs were related to tourism-WTTC); however, the island nation is resourceful and has turned to its financial services sector to help alleviate the economic strain.
Reality Check
For an industry worth more than US$25 billion, the absence of planning is astonishing. Very few countries are publicly stating their marketing goals and objectives for 2022 and beyond although post-pandemic research suggests changing tourist needs and wants that focus on health, safety, and a sustainable environment. In addition, tourists are interested in small and personalized tours and experiences that go beyond traditional sun, sea, and sand.
Although parts of the Caribbean tourism sector are slowly adding visitor arrivals, the actual value of the tourism economy is declining and has been since 2007 with annual visitor spending disappearing by US$5 billion. Sadly, governments ignore this distressing reality… that income is falling and profitability has yet to reach pre-2007 levels. According to the Caribbean Council, this suggests that the region is becoming less competitive in comparison to other destinations and current levels of tourism employment and tax revenue may not be sustainable (caribbean-council.org).
Will government, private, and public sector leaders take advantage of the opportunity to review and create enhanced economies, using the pandemic as “lessons learned?” Will the now evident vulnerabilities be acknowledged in order to eliminate (or at least mitigate) future shocks?
Some research suggests that a possible pathway to the future lies in the development of agritourism, encouraging increased affiliation within tourism sector partners (i.e., hotels, tourism, agriculture, food/beverage/restaurants) with agribusinesses. Increasing island agriculture can also provide additional jobs and a positive revenue stream throughout a mix of education and income levels while providing food security.
Until the leaders in the public and private sectors share their mission statements and provide views of their marketing plans for next year and the next decade, we are left to prayer beads, crystal balls, and the wisdom of Bob Dylan:
“Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.”
― Bob Dylan , Chronicles: Volume One
