Buoyed by increases in airlift, declining fuel costs and continued economic recovery in key source markets, the number of tourists visiting the Caribbean in 2014 hit record highs. Although the outlook for the sector is strong in the short term, challenges abound in the medium term, especially for the region's small islands.
According to statistics released by the Caribbean Tourism Organisation (CTO), visitors made 26.3m trips to the region in 2014, a 5% increase over the previous year, a period during which a 2-3% increase was forecast. The cruise-ship sector also saw strong growth, with 24m passengers-an 8% rise over 2013-visiting the region in 2014. Visitors are also staying longer and spending more: tourist expenditure topped US$29.5bn in 2014, a 5% increase on the previous year.
Tourism sector is an outlier
The continued demand for Caribbean holidays is propping up GDP growth at a time when the islands' secondary sectors-such as manufacturing, mining, financial services and oil refining-are either sluggish or in decline. However, although tourism growth is broad-based and poised to continue in 2015, the medium-term outlook for the smaller islands is less certain, given the likelihood that Cuba's anticipated opening to US tourists could siphon away visitors.
More than half of the 2014 arrivals came from the US, where a sustained increase in GDP and falling unemployment enabled more residents to go on holiday. Harsh winter weather on the East Coast and additional Caribbean airlift from two US carriers, Southwest Airlines and JetBlue Airways, also helped. Many of the US visitors flocked to four mass-market destinations: Jamaica, Bahamas, the Dominican Republic and Puerto Rico. However, Dutch Caribbean destinations that have ramped up marketing and improved their airport facilities also saw sizeable growth. Other traditional markets for the region also contributed to the record year. In 2013 Canadian arrivals were flat, but growth has returned, with over 3.2m tourists arriving in 2014. Europe, a market that has been weak for years, sent more than 5m visitors to the Caribbean for the first time since 2008. The cruise sector also saw major gains in 2014 as major players including Carnival Cruise Lines (US/UK) and Royal Caribbean Cruise Lines (US-based) built new ships and invested in Caribbean ports. Gains could slow in 2015 as ships are re-positioned out of the region.
Rising investment, but uneven growth
Overnight-arrival growth is spurring private-sector investment in resorts and encouraging governments to improve airports. In the Bahamas, for example, the US$3.5bn, 2,200-room Baha Mar mega-resort and casino complex-a project largely financed by Chinese investors-is expected to open in March. Investment across the region could rise if the CTO's prediction of 5% arrival growth in 2015 proves accurate, which is likely if economic recoveries continue and fuel prices stay low.
Despite the optimism, growth in the region has not been evenly distributed. Arrivals to the French overseas regions of Guadaloupe and Martinique were flat in 2014. High ticket costs and the unreliability of a troubled regional airline, LIAT, have hampered intra-regional tourism within the Eastern Caribbean, a sub-region that could benefit the most from growth. Many of the nations in the sub-region are small, dependent on arrivals from one or two countries, heavily indebted and suffer from high youth unemployment.
Challenges abound for the region's tourism industry. Although in the past the CTO has trumpeted the emergence of new markets such as China and Brazil, slowing growth has diminished those possibilities. Many of the islands' governments are also warily eyeing the opening-up of Cuba, although it could take years to build the necessary tourism infrastructure there.