Caribbean tourism on edge

www.cnn.com Friday, January 31, 2003 Posted: 9:55 AM EST (1455 GMT)

MIAMI, Florida (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 September 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 an area 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 the final numbers for 2002 will show that visitor arrivals dropped by 5 percent to 10 percent from 2001 regionwide. But by the end of the year, holiday makers 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-September 11 levels, Holder said.

Air Jamaica saw its passenger count rise by 5 percent last year and its package tour operation 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.

Winter season

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 nervousness 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."

Challenging year

For the industry however, "2003 is going to be a challenging year," he said. "If we get through this situation in the Mideast quickly and successfully, all the pointers are that recovery is going to be very quick."

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.

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.

Security concerns posed special obstacles for other islands trying to lure back visitors.

Trinidad and Tobago was stung when the British government warned in December that the southern Caribbean nation was at increased risk of terrorist attack, prompting one cruise company to cancel visits.

Jamaica is struggling to rein in gang warfare that has sent its murder rate soaring. Though the violence has been largely limited to inner city neighborhoods far from the beaches where tourists flock, it has tarnished Jamaica's image.

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.

"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."