Tourism industry under threat

www.barbadosadvocate.com Web Posted - Thu Mar 13 2003

CARIBBEAN tourism is bracing for international conflict and its associated hardship, as the Bush administration presses for war with Iraq.

Considering this region’s dependence on the outside world for tourists, oil and other trade, and the lingering hangover from the economic fallout of the attacks of 9/11, most commentators believe that Caribbean economies will suffer significantly if the looming war becomes a reality.

“The context is already a bad one,” Anthony Gonzalves, director of the Institute of International Relations at the University of the West Indies, recently commented. “If you impose a war on the current situation, you’ll see how much worse it can get.”

Caribbean governments are attempting to cushion the anticipated fallout by seeking price guarantees on oil and developing plans to boost travel promotion, but their ability to cushion the impact may be limited.

“No one believes this war would be good for business,” said Jean Holder, secretary-general of the Caribbean Tourism Organisation. “We pray that it doesn’t break out.”

This region is, however, accustomed to buffeting by outside forces. Tourism has yet to recover fully from the terrorist attacks in the United States, whilst he flow of oil from Venezuela remains uncertain.

The European Community is phasing out preferential prices for bananas and sugar. The offshore banking and insurance industry remain under pressure from international organisations.

Tourism, however, has the most to lose, as a US attack on Iraq would strike directly at the Caribbean’s largest industry. As many as 20 million visitors – more than half of them from the United States – pump billions of dollars into the region annually. That trade, which employs as much as three-quarters of the workforce on some islands, is still recovering from a ten per cent drop in arrivals since September 11, 2001.

“If there’s a war, people don’t go on holidays,” Edward Carrington, secretary-general of the Caribbean Community, said last month.

During the 1991 Persian Gulf War, tourist visits to some islands fell by as much as 30 per cent. Simon Suarez, president of the Caribbean Hotel Association, said a similar experience now would be “a terrific blow.”

“There are quite clear signs of recovery, but that could come to a sudden stop if this war actually goes and if it lasts a long time,” said Suarez, an executive with Coral Hotels and Resorts in the Dominican Republic.

“The long-term effect will be that there will be a gap in the growth pattern.”

Holder said the impact might not be as negative as feared. In 1991, some American vacationers who would otherwise have gone overseas to Europe, visited the Caribbean instead. After the war, the region recovered more quickly than other parts of the world.

Still, Holder said, any additional decline would further burden the struggling airline industry. United and US Airways already have declared bankruptcy, and analysts have speculated American Airlines – the leading carrier to the Caribbean – could follow suit.

Reliance on fuel imports makes the Caribbean vulnerable to oil price hikes. The recent reduction in flow from Venezuela during the general strike against the government of President Hugo Chavez, sparked walkouts by transportation workers in Guyana and Haiti, and raised consumer prices on several islands.

Oil-producing Trinidad and Tobago already told its neighbours it would not be able to hold prices to a “pre-Iraq war” level, should hostilities commence.

The nation imports half the petroleum it refines, and so is also vulnerable to world price fluctuations.

“Our willingness to empathise is not supported by the realities of our own situation,” Prime Minister Patrick Manning said.

War plans are affecting the US territories in another way. In Puerto Rico and the US Virgin Islands, thousands of Army reservists and National Guardsmen are answering the call to service; in the case of Puerto Rico, those numbers are the largest in island history. While troops train with weapons and gas masks, the government has opened several family- support centres.

At the governmental level, the region’s leaders – with the exception of Cuba’s Fidel Castro – have sounded a more measured ambivalence.

In a communiqué last month, the heads of the Caribbean Community bloc of 15 nations called on the United States to exercise restraint while urging Iraq to co-operate fully with weapons inspectors.

“These islands are economically dependent on the United States,” said Ralph Premdas, a professor of public policy at the University of the West Indies. “I don’t think you’re going to find any place except for Cuba officially coming out against the war.”

Instead, leaders are preparing contingency plans. In Puerto Rico, for example, the government has pre-purchased ten million barrels of petroleum at a fixed price, and invested in hedges – insurance to protect against fluctuations in fuel prices – for 2.7 million barrels more. The US commonwealth has set aside $3.5 million for additional tourist promotion.

The Caribbean Hotel Association has advised members on public relations messages – promoting, for example, perceptions of the region as safe and affordable – while urging them to establish more flexible cancellation policies for travellers stranded by events.