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."

athena.tbwt.com IPS Article Dated 1/30/2003

GEORGETOWN, Guyana - Caribbean Community (CARICOM) leaders meeting in Trinidad next month will devote much of their time discussing how political turmoil in oil-producing Venezuela and a possible Gulf War II would affect this economically fragile region, still reeling from the Sep. 11, 2001 terrorist attacks on the United States.

The two-day biennial meeting that starts on Feb. 14 will be preceded by a day-long special encounter between heads of government and civil society that would examine whether or not political federation could work in the 15-nation Community of 15 million people.

But CARICOM officials say leaders will focus on the serious social and economic consequences of a U.S.-led war against oil-rich Iraq, which they say would affect almost every sector in the Caribbean, tourism in particular.

Since the opposition-led effort to oust controversial President Hugo Chavez in Venezuela started nearly two months ago, several CARICOM nations that depended on petroleum from that country - delivered under the concessional Caracas Energy Accord - have been forced to turn to alternative markets to keep their economies afloat.

Guyana now buys much more expensive gas and diesel and Bunker C fuel from Trinidad, while Jamaica has turned to Mexico and Ecuador because supplies from Venezuela have virtually dried up under the weight of crippling strikes.

Barbados and St Vincent have also indicated that they are watching the situation closely.

Higher fuel prices have resulted in near riots among private bus and taxi operators in Jamaica and triggered several brief strikes by owners in Guyana - where many commuters refused to pay the average 25 percent increase in bus fares - and a strike in Haiti.

Officials say that while alternative arrangements are working, a war in Iraq accompanied by sabotage of that country's oilfields would hike prices astronomically.

''We are still reeling from the effects of 9/11 and we know for sure that our high-energy sectors like the aviation industry would be seriously affected. We can see airfares and jet fuel (prices) going up and that would be tough on airlines and our tourism industry,'' said Maurice Odle, economic adviser at the Guyana-based CARICOM Secretariat.

Odle is scheduled to present a paper to finance ministers in the next 10 days that would paint a picture of the impact on the region if the Venezuela crisis persists and the United States attacks Iraq.

Sabotage of Iraqi oilfields would put severe pressure on the airlines and cruise ships that are expected to bring the bulk of the 18 million people scheduled to visit more than 30 Caribbean destinations this year.

That total is down significantly following the 9/11 attacks and more signs of the decline in tourism, which employs one in four Caribbean nationals, have emerged recently.

The finance-starved Trinidad and Tobago airline BWIA announced this week it is firing 617 of its 2,400 workers, many of them maintenance engineers, to help it reduce monthly losses of one million U.S. dollars.

The airline, the second largest in the English-speaking Caribbean after Air Jamaica, has been carrying heavy losses for several years, but they have grown in the last two years.

''We had no choice. We had to save the airline,'' said BWIA Chief Executive Officer Conrad Aleong.

Meanwhile, Air Jamaica, which brings about 70 percent of the nearly two million tourists who visit Jamaica each year, is carrying accumulated losses of 70 million dollars at a time when jet fuel prices are rising significantly. Executives say setting higher prices to cover climbing fuel costs would discourage North American and European tourists from flying.

The story is similar at LIAT, the island-hopping, Antigua-based commuter airline that serves the smaller islands in the east Caribbean and is a valuable feeder for the larger carriers. Several CARICOM governments came together late last year to bail out LIAT to the tune of about 12 million dollars.

Edwin Carrington, CARICOM's three-term secretary general, says that some member states are now hard pressed to pay their annual budget contributions to the Secretariat.

''One member state said that one of the factors limiting their capacity to contribute any increased resources to our budget is the rising price of oil, and so my Secretariat is feeling the squeeze of oil price increases,'' he said.

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