Update Country Report Curaçao 21 Sep 2020

Strict measures to contain the spread of the novel coronavirus (Covid-19) pandemic have dealt a strong blow to the tourism-dependent economies of the Caribbean. Tourism, which we estimate directly and indirectly accounted for more than 12% of the region's GDP in 2019, was largely wiped out in the second quarter. Since then, many countries have reopened their borders to international travellers to avoid further strain on their economies. However, reopening for tourism has so far been challenging. Cases of Covid-19 have surged in some countries, while tourist arrivals have remained depressed in most cases. The only bright spot in the near term is the traditional high tourist season due to start soon (November-February); it should enable the region to attract more tourists than in previous months.

Beginning in June, the smaller Caribbean islands led the way in reopening their tourism markets. Antigua and Barbuda, Curaçao, Jamaica, and the US Virgin Islands all reopened their borders to international travellers, after their lockdowns had enabled them to contain the spread of the virus relatively well. Following these reopenings, Aruba, the Bahamas, Barbados, Grenada, Haiti, St Vincent and the Grenadines, Sint Maarten and the Dominican Republic reopened in July. Anguilla reopened its borders in August, while Cuba reopened in early September. As with the June reopenings, the countries put in place stringent health and safety protocols, with most countries requiring proof of a negative Covid-19 test before visitors could enter the country.

Managing tourism's recovery will remain an uphill battle

The success of the exit strategies from border closures has been mixed so far. While some islands such as Antigua and Curaçao have experienced limited transmission of the virus, others have experienced a surge in cases. For example, the Bahamas had only 104 confirmed cases at the time of its reopening in early July. By September 15th, this number had risen sharply to 3,008 cases, with 68 deaths. This led the country to briefly impose a ban on US tourists, especially from states considered to be Covid-19 hotspots, before later reversing this decision, given that the US is one of the Bahamas' main source markets. The country now plans to move to Phase 3 of its tourism reopening in October-following what has so far been a bumpy, phased reopening-which includes the resumption of operations of most hotels and resorts .

The US Virgin Islands similarly experienced a spike in cases following their reopening, leading them to close their borders again in mid-August. The territory is scheduled to reopen again on September 19th-with new Covid-19 test requirements, designated quarantine facilities and a screening protocol upon entry to the country.

Main markets take differing approaches

Measures to ensure the safe reopening of tourism have differed between islands, but broadly they have focused on pre-arrival testing, social distancing, and enhanced health and sanitary protocols. That said, the management of the reopening has varied across countries. For instance, the Caribbean's two largest tourist markets, Cuba and the Dominican Republic, have taken markedly different approaches. The Dominican Republic reopened relatively early (in July) because of the negative economic impact of the closure of one of its largest economic sectors, with tourism generating approximately 9% of GDP in 2019. The economic necessity to generate revenue is therefore likely to have influenced the decision to reopen for tourism while case numbers were still high.

Some tourism has returned to the Dominican Republic, with 135,163 visitors arriving in July, albeit 77% below the arrivals registered in July 2019. More concerning, tourist arrivals in August fell by 7.5% month on month, indicating that tourists remain wary about travel, and perhaps are deterred by ongoing high case loads.

Cuba, by contrast, has opted for a late reopening, after spending several months trying to get the virus under control. While there remain some clusters, especially around Havana (the capital), in early September the first plane of tourists arrived in the country. The Cuban government is seeking to control the reopening, by specifying that tourists must only go to designated resort areas and not travel around the country. This strategy is intended to minimise tourist contact with the broader population, but means that many tourist businesses in non-resort areas will continue to suffer. Moreover, tourist arrivals in Cuba are likely to remain weak, partly because of the stringent rules on where tourists can visit, and also because Cuba continues to feel the negative impact of increased US restrictions on tourist travel to Cuba.

Unfavourable prospects in the short to medium term

The mixed tourism reopening indicates that the smaller islands are initially at lower risk of Covid-19 transmission because of lower visitor numbers; the larger markets and especially those closely linked to the US are at a higher risk. However, the limited healthcare capacity of some smaller islands means that they may be unwilling to take the risk of reopening completely even at this stage. Both the Cayman Islands and St Kitts and Nevis are set to reopen in October, but only in a 'soft' phase; for example, the Cayman Islands is capping visitors at 800 at any one time, and will not reopen for cruise visitors until 2021.

In the immediate term, the Caribbean will have to cope with the challenges of low tourist arrivals and high risks of imported Covid-19 cases. As with the US and British Virgin Islands (which has yet to announce a reopening date for tourism, but currently welcomes returning nationals), a surge in cases might lead to renewed lockdowns, weighing on the region's most fragile economies. However, assuming that some people will be willing to travel during the high tourism season in November-February, tourist arrivals should slightly rebound in the near term. That said, countries of the region should not expect to see a stronger revival of tourism before end-2021, as consumer reluctance to travel will remain high until a vaccine or treatment for the coronavirus becomes widely available.