Update Country Report Curaçao 26 Feb 2021

Despite hopes for a tourism recovery in 2021, the Caribbean tourism industry is struggling to cope with new travel restrictions imposed by source countries for Caribbean tourism, including the US, Canada and some countries in Europe, early in the year. These new restrictions will weigh massively on the sector's recovery. The revival of tourism will ultimately depend on the mass rollout of coronavirus (Covid-19) vaccines in these source countries, which we do not foresee before the end of this year, and the resulting loosening of travel restrictions. Our economic forecasts assume that a slow recovery in tourism arrivals will not allow for a sharp rebound in growth in the Caribbean, and therefore we only expect partial recoveries in 2021.

The Caribbean's top tourism source countries are making it more difficult to travel. In mid-January the US introduced a new requirement for returning US residents mandating that travellers present a negative Covid-19 test taken within the previous 72 hours. This means that the tourist destinations hosting US tourists will need to invest in test facilities. In a more severe move, in late January Canada banned all flights to the Caribbean until April 30th as part of the country's aim to slow Covid-19 transmission and bring down domestic case numbers. This is concerning for the Caribbean, as many Canadians visit the Caribbean for winter sun during the first quarter, with Canada's March Break holiday usually providing a major boost to tourism.

Undermining hopes of an early recovery

Together, the US and Canadian restrictions are set to result in significantly fewer tourists visiting the Caribbean in the short term. The Jamaican tourism minister, Edmund Bartlett, has warned that the Canadian travel ban will cost Jamaica US$350m (2.3% of GDP) in lost revenue, based on the 175,000-200,000 Canadians who usually visit Jamaica over the winter season.

In December 2020 8,532 Canadians visited Jamaica, which was still a 82% year-on-year decline, but a 61% month-on-month increase from November, which is when Jamaica begins to move out of the hurricane season into the peak winter season. Similarly, arrivals from the US totalled 74,896 in December 2020-a 65.3% decline year on year. In 2020 as a whole the US comprised 72.4% of Jamaica's tourism market, with Canada comprising 15%.

Investing in testing facilities

Canada's travel ban will therefore be a blow to the nascent tourism recovery. The US restrictions mean that Jamaica is investing swiftly in Covid-19 test facilities in order to continue attracting US tourists and compensate for the Canadian ban. Jamaica's tourism industry has set up new test centres and mobile testing units in "resilient corridors" around main tourism areas, which aim to provide US tourists with reassurance that they can provide a negative test result on their return to the US. The cost of this testing programme is unknown, but the government clearly views it as a necessary investment to support the tourism recovery.

Other destinations across the Caribbean will also suffer from the new North American restrictions, such as the Dominican Republic, the region's largest market. In January 59,156 Americans visited the country-down from 96,957 in December 2020. The December arrivals figure was the highest since February 2020 and, as with Jamaica, sparked domestic hopes of a tourism recovery.

Similarly, 9,522 Canadians visited the Dominican Republic in December, which fell to 5,206 in January as the travel ban was implemented. The Dominican Republic is also providing increased testing facilities around tourism centres, which has led to some popular criticism about the availability of tests on demand for tourists, as opposed to domestic residents.

Disproportionate impact on smaller markets

Jamaica and the Dominican Republic are two of the region's largest tourism markets and have the financial capability to provide increased testing facilities, viewing this as an investment. However, many smaller markets across the Caribbean will struggle to do the same, given the sharp economic downturn caused by a year of minimal tourism revenue.

For example, in Curaçao, where tourist arrivals from Europe (mainly the Netherlands, its main source market for tourism) had already dropped in December following the reimposition of travel restrictions in the Netherlands, traveller arrivals experienced the same pattern of decline in January as in the Dominican Republic. This is due to the fact that falling arrivals from Europe were exacerbated by falling arrivals from North America. Given that the island has limited financial capability to put in place the necessary testing facilities for US tourists, we expect it deter US tourists from visiting the island.

Outlook remains grim

The new travel restrictions in source countries for Caribbean tourism mean that hopes of a swift tourism recovery across the region will be pushed back until later in the year, when vaccines have been rolled out across the main source markets and restrictions are likely to be loosened. This will continue to undermine economic prospects in the region, especially for the smaller islands. As such, we only forecast partial recoveries in most countries of the Caribbean in 2021, while some islands such as Puerto Rico will continue to slide deeper into recession.