Despite the ravages of the global recession and falling yields, Sandals boss Gordon ‘Butch’ Stewart is of the view that Caribbean tourism is holding up well, particularly in Jamaica.
He attributes this to the region putting in place marketing initiatives and working closely with the respective governments to ensure that the tourism industry is suitably insulated from the fallout.
“The state of Caribbean tourism right now is a mixed bag. I think overall Jamaica has done better than all the islands because we were able to put significant airlift in place and aggressively undertake promotional campaigns,” Stewart said in an interview with Caribbean Business Report earlier this week. “Generally we have been able to position ourselves in such a way as to insulate the industry – not perfectly, but just about better than everybody else.”
In June this year, Jamaica’s tourism minister Edmund Bartlett, in his contribution to the sectoral debate in Parliament, said: “In the first four months of this year, though most of the Caribbean is continuing to have difficulties, of the countries submitting reports to date, Jamaica is one of only three to have recorded growth.”
The Caribbean is one of the most tourism-dependent regions in the world. According to statistics from the Jamaica Tourist Board (JTB), last year the contribution of travel and tourism to gross domestic product in the Caribbean was estimated to be US$39.9 billion. This represented 14.8 per cent of the Caribbean’s total GDP. The contribution of the travel and tourism industry to employment is estimated to be 2,148,000 jobs, which represents 12.9 per cent of total employment in the Caribbean. Looking across the region, real GDP growth for the travel and tourism economy is estimated to be 2.1 per cent in 2008 and 3.3 per cent per annum over the coming 10 years.
For three decades Stewart has been a champion of Caribbean tourism, investing heavily in his Sandals brand across the region. Only last month he purchased the Four Seasons in Great Exuma, the Bahamas, which will now be called Sandals Emerald Bay. He is one of the biggest employers in the English-speaking Caribbean, providing approximately 10,000 jobs.
The Atlanta-based PKF Hospitality Research said most Jamaica hotels saw bottom-line profits decline by 16 per cent in 2008. According to this research body, the global economic recession was the primary driver of the double-digit profit decline.
Commenting on this revelation, Stewart said: “We have had to discount heavily as the yields have been drastically reduced and this is the case not just with the Caribbean but hotels the world over. You can now get hotels at rates that a couple of years ago would have been inconceivable.
“The layoffs in some islands have been horrific. The Bahamas, St Lucia and Antigua have taken their blows. I think Jamaica has survived the layoffs better than most of the other Caribbean countries. The reason that is so is that there has been very good co-ordination between both the private and public sectors in tourism.
“The Jamaican Government, by moving swiftly in securing airlift – although it was deemed controversial at the time – went a long way in boosting Jamaica’s tourism product. It proves that the critics were wrong. Had we not had the Chicago and Texas flights we would certainly have felt more pain than we have. What is abundantly clear is that we have a fairly strong tourism industry. The fear is with the low yields, the ability to make ends meet and to continually update the products. This is a big concern for all the Caribbean islands. But this is not just applicable to the region. If you look across the United States, Europe and the Far East, rates are down and so are occupancies.
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“Economies that have to do well in order for our tourism product to prosper are mostly having a lot of difficulties with the global recession.”
Stewart is of the view that the region has done better out of the UK than was expected, despite the fact that the British economy is foundering. He sees France and Germany as showing good signs of recovery while Spain and Portugal seem to be in a tailspin. Both the United States and Canada have taken initiatives to combat the recession, and Stewart believes the world economies are starting to turn a corner and that the prospects for global growth look brighter.
“But never forget that many of our customers are out of work and many potential customers are afraid of spending money on a vacation at this time. So the pickings for what it’s worth are a lot less.
“I believe this winter our occupancies will be better than last winter, largely due to the added airlift,” he said. “Last year, there was the fear that we would see a severe downturn and a disaster was predicted, but we all did better than expected. But saying that, here we are in the fall, and island by island we are seeing falling occupancies and rates, so there is still some work to be done.”
The Sandals boss attributes the resilience and performance of the Jamaican tourism product to the management of the economy by the present Government. He feels the government has been very smart with its approach to tourism and has made a concerted effort by communicating and partnering with the tourism sector, taking advice and being extremely proactive.
“More importantly, they have people who have great knowledge of the industry. The government has placed great stock in tourism and has made a concerted effort in coming to its aid during these turbulent times.
“This Government has done a great job of managing the economy, considering what it is up against,” he said. “Bauxite revenues are down, so too are remittances and tourism, and we are in the midst of a global recession not seen since the 1930s”. He further added that the Government is caught between a rock and a hard place with its budget proving difficult to balance.
“The fact that we have been able to weather the storm, and better so than most of the other Caribbean countries, is a testament to the management of the economy by the Golding Government as none of this happens by chance. The new government went through a period of finding its footing and I believe it has now done so and is now going in the right direction and for sure we are starting to see the full benefits in all sectors of the economy.”
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