Examining the impact to Caribbean tourism
By Denaye Hinds and Eduardo Lafforgue
While the world grapples with understanding how Brexit will take shape and to what level the region may be affected, as tourism destination developers and product specialists, here’s our take on potential impacts on Caribbean tourism.
It is difficult to predict how the exit will play out and if Article 50 of the Lisbon treaty, allowing two (2) years of negotiations, will change the current course of the withdrawal, however what is evident is the immediate impact the vote has caused worldwide.
Tourism Arrivals & Products
Since the vote the British Pound has dropped to a 31-year low making it worth 12% less. This may have some interesting implications, it may limit the purchasing power of the U.K. middle class, dampening their spending habits on discretionary spending, including vacations.
Should this occur, a result we may see mid-market products suffer, some with weakened purchasing power of British tourists, particularly hotels, resorts, and restaurants with visitors opting for similar but lower priced options. This is not a prediction, but a precautionary note to take stock of for some who may be considering a diversification of their tourism products.
There is also some concern that with some Caribbean destinations recently seeing double-digit increases in U.K. tourists a weaken Pound may result in much slower growth. Additionally, destination entry and departure taxes further limit middle-class purchasing power and mid-market products.
There is an upside however, big ticket purchases will not be limited and luxury destinations traditionally favored from U.K. citizens including BVI, Barbados, Antigua, and St. Kitts will likely not see a severe downfall, as middle-upper to high-income tourists will not be dramatically impacted. As such, those who did not traditionally realize feeder markets from the UK or Europe will also fair seemingly well with perhaps an increase from their US feeder markets. With the above, there are still unknowns when you factor in the direct impact on Caribbean tourism.
Tourism Investment & Interests
With the market volatility caused by the Brexit vote, economic advisors have been predicting a serious economic slowdown in the U.K. therefore, investors are looking for safer investments. This may create an opportunity for Caribbean investment as some British hotel investors may turn their eyes to the Caribbean where the tourism economy is more dependent on the U.S. Dollar than the Pound or Euro.
Although no one can predict how the Brexit implications will play out it is certain that it will keep the market volatile, which creates opportunities for the Caribbean. At first blush, opportunities for investment in Caribbean tourism overall may outweigh smaller and more immediate impacts due to reduced purchasing power of U.K. tourists.
As the Brexit vote unfolds focus is again brought to the need for the Caribbean to increase economic resiliency in tourism by focusing their efforts on long-term, sustainable planning and investment positions.
Denaye Hinds is Director of Sustainability for OBM International. Eduardo Lafforgue is CEO, Territoire & Tourisme International.