Countries covered: Cuba, Martinique, Virgin Islands, Bermuda, Caribbean
2008 Arrivals Slow
With most major Caribbean countries having reported 2008 results, the picture is generally gloomy.While some countries have experienced high growth, in general growth has been minimal or negative. Ofthe 16 that have yet reported full-year figures, only six reported growth, and only one of these growth ofover 4.0%. The highest growth was registered in Cuba, which posted an unexpectedly strong figure of9.1% growth, despite an unusually heavy hurricane season. In addition, Jamaica performed surprisinglystrongly, with growth of 3.9%, despite ongoing concerns about rising levels of crime.
Of those countries reporting declines in growth, Bermuda and Martinique suffered the greatest, with acontraction of 4.6%, followed by Grenada with 4.1%. The remaining eight posted growth levels of anaverage -2.0%. This represents a recovery from the first nine months of the year, when several countrieswere posting 8-10% declines in growth. With the final quarter being traditionally strong, given theCaribbean’s attractiveness as a Christmas holiday destination, this was to be expected, and does notrepresent a reversal of the overall downwards trend. Given the ongoing economic slowdown, touristarrivals will remain sluggish in 2009. Given the dependence of the Caribbean economies on tourism, thiswill have a significant effect on economic growth and job creation in the region.
Focus On Cuba
New proposals in the US legislature to lift the ban on Americans travelling to Cuba could have a majorimpact on the island’s tourist industry. Cuba could then expect a major influx of visitors, as a rush ofcurious visitors take advantage of the island’s relative proximity. Such a situation would create a majorboost to tourism, notwithstanding the infrastructure investment required to accommodate such an increasein tourists. However, with US-Cuba antagonism heavily entrenched, Cuba is not making anyassumptions, with the government stating that no more infrastructure investment will be made than isalready planned.
Cruise Sector Suffers
The Caribbean cruise sector has traditionally been one of the strongest sectors in the industry. However,after experiencing high growth in 2007 - partly owing to the new routes created for the Cricket WorldCup - the sector struggled in 2008. Despite a positive first half of the year, the second half was badlyaffected by the hurricane seasons, which forced several companies either to cancel cruises altogether or tomiss out certain countries. Most countries therefore experienced declines in cruise arrivals, with a fewnotable exceptions. In particular, Aruba experienced growth of 15.4% year-on-year (y-o-y), whileMartinique’s arrivals grew by 21.5% and Dominica’s by 9.4%. However, major contractions were morecommon, with arrivals in St Vincent and the Grenadines dropping by a dramatic 36.2% and those inBermuda and Antigua and Barbuda falling by 19.1% and 13.7%, respectively. In part this may be theresult of a statistical rebound from strong sector performance in 2007, but it also reflects the generaldownwards trend of the tourism industry. As such, we expect performance to be similarly depressed in2009, with investors being particularly cautious around the August-November hurricane season.
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