BARBADOS AND OTHER leading destinations in the Caribbean need to consider updated policies, including modifying the price of their offerings, if they want to want to achieve the tourism revival they are longing for.
That’s the advice coming from a new International Monetary Fund working paper authored by a group of economists led by its mission chief for Barbados, Nicole Laframboise.
In their new study titled Revisiting Tourism Flows To The Caribbean: What Is Driving Arrivals?, Laframboise, Nkunde Mwase, Joonkyu Park, and Yingke Zhou, concluded that “the behaviour of tourism flows and expenditure changed after the onset of the global financial crisis in 2008”, and that “both price and income elasticities of tourism have declined since the start of the Great Recession”.
Their paper also found that “tourism arrivals and expenditure are sensitive to both price and income factors in source markets”, and “the nominal cost of an average one week beach holiday in the Caribbean is higher than in other beach destinations around the world”.
“The findings have different implications for each country grouping. At the higher end, countries should ensure that the tourism plant (hotels, facilities, restaurants) and service remain of a quality commensurate with the high-end brand.
“This highlights the importance of having supporting infrastructure, social development, and institutions that provide the public services and security expected by high-end tourists,” the economists said.
“In this regard, governments should reduce administrative impediments to doing business and avoid sustained exchange rate overvaluation that could erode profitability – in order to encourage private sector operators to invest adequately. Governments should also make sure that public investment in infrastructure and institutions supports the delivery of a high end tourism environment.”
Laframboise and company also found that since 2008 “tourism arrivals and expenditure are less sensitive to price or income indicators, which suggests a structural change in the behaviour of tourism demand from traditional markets”.
“In this respect, the Caribbean may not see sustained strong growth in the tourism sector again, or at least not until we see pre-crisis growth rates and full employment again in North America and Europe,” they said. (SC)
