FEATURE-War anxiety leaves Caribbean tourism on edge

www.forbes.com Reuters, 01.30.03, 11:54 AM ET By Jane Sutton

MIAMI (Reuters) - War anxiety, rising fuel costs and a fragile U.S. economy have tempered the outlook for a Caribbean tourism industry wobbling toward recovery during the crucial winter vacation season, industry officials said. Fear that the United States could soon be at war in the Middle East -- travel marketing expert Peter Yesawich calls it "Iraq-nophobia" -- is keeping some would-be travelers home and prompting others to wait until the last minute to book trips. The balmy Caribbean islands, whose $34 billion-a-year visitor industry depends heavily on air travel from the eastern United States and Europe, took a thrashing after the Sept. 11, 2001, attacks. The World Tourism and Travel Council estimates the region lost more than 364,000 jobs as a result -- a significant chunk in a region where travel and tourism accounts for more than 14 percent of GDP and employs 2.1 million workers, or about one in seven. In some islands, like the Bahamas, tourism generates more than half the jobs and economic activity. Industry officials expect final numbers for 2002 to show visitor arrivals down by 5 to 10 percent from 2001 regionwide. But by the end of the year, vacationers had begun to trickle back to the beaches and casinos, albeit with heavily discounted air fares and hotel rates that cut into industry profits. "We began to see a recovery that began to look really quite promising by the end of 2002," Jean Holder, secretary general of the Caribbean Tourism Organization, said from the group's headquarters in Barbados. Cuba and the Dominican Republic saw resurgences. Puerto Rico's hotel occupancy rate rose to 73 percent for the year, up from 70 percent in 2001 but still a couple of points below pre-Sept. 11 levels, Holder said. Air Jamaica's passenger count rose by 5 percent last year and its tour operation, Air Jamaica Vacations, has seen an 11 percent boost in bookings so far in 2003, said Allen Chastenet, the airline's vice president of marketing and sales, who also chairs the Caribbean Hotel Association's marketing committee. The gains augured well for the winter high season, when travelers normally flock to the Caribbean to escape the cold. "Any real money that is going to be made in the industry, we certainly expect to make that in the winter," Holder said. But overall bookings lag, with many reservations still coming in less than a month before travel. "While we would normally have seen everything very much in place for February, February is probably the strongest month in the Caribbean, to date that is not the case," Holder said. "We are not despondent but ... we are certainly going into 2003 with a continued state of uncertainty." "Overhanging the whole thing is the uncertainty caused by the threat of war." Energy costs have hit two-year highs amid twitchiness over a potential war in Iraq and a political strike that has choked supplies from Venezuela. Weak economies in the United States and Germany, a traditionally strong market, have pushed revenues down. Airlines have cut fares by 20 percent and more, and hotels are discounting room rates by as much as 35 percent though mostly not at the top luxury resorts. "There's a lot of deal-making going on," said Yesawich, president of Yesawich, Pepperdine, Brown and Russell, an Orlando marketing services company specializing in the travel industry. "The forecast from a consumer point of view is, if you put the time and effort into trying to find a great deal, you'll probably be rewarded." Generally, destinations faring best are the bigger ones in the northern part of the region, which have the best air access -- Puerto Rico, the Bahamas and the Dominican Republic. La Romana and Punta Cana in eastern Dominican Republic have thrived by courting European charter business. "Punta Cana is sold out until March. That's 17,000 rooms on the east coast," Yesawich said. Curacao and the British Virgin Islands, which aggressively recruit European travelers, also saw increases in overnight stays at their hotels in 2002. "The strongman in Europe has been the United Kingdom, which has continued to produce (visitors)," Holder said. Some islands have benefited as cruise lines divert ships from the Mediterranean to the Caribbean to draw U.S. passengers who feel safer closer to home and can drive to U.S. ports of departure. But while cruise passengers account for about one-tenth of the Caribbean's tourism revenue, they spend less than other visitors because they sleep and dine aboard ship. "What we need to do is to make sure that more of the people who come here first on cruises come back and stay in our countries," Holder said. In the meantime, the Caribbean visitor industry is ratcheting up promotional efforts. Hotels, airlines and credit card companies have joined forces with island governments and tourist boards under the auspices of the Caribbean Hotel Association Charitable Trust to launch a $16 million regional marketing plan. TV commercials with the tag line "Life needs the Caribbean," began airing in U.S. markets in August, juxtaposing hectic urban scenes against tranquil shots of palm-fringed islands. The ads returned to the U.S. airwaves in January as the snow piled up in much of the nation. The trust also runs a one-stop booking service through the Web site www.gocaribbean.com. Tourism boards on individual islands have also boosted advertising, some highlighting the islands as a place of calm in a troubled world, others targeting special-interest travelers, festivals or unique attractions. Jamaica is hosting "Bob Marley Week" on Feb. 2-8, paying homage to the late reggae icon with a series of concerts tied with Black History Month celebrations. The tiny British island of Montserrat, which saw its airport destroyed and half its population flee after the Soufriere Hills volcano roared to life in 1995, is promoting tours of the volcano, which still sends spectacular showers of ash and super-heated rocks tumbling into surrounding valleys. Trinidad is inviting revelers to join the Caribbean's biggest Carnival celebration, March 2-4. Steel drum bands and calypso dancers jam Port of Spain to compete in the rummy annual gala. "You're going to see a very aggressive marketing campaign from the trade" Chastenet said. "I think that the consumer is still going to benefit from good value."