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Tourism thrives despite hurricanes, financial meltdown
CubaNews / November 2008

By Larry Luxner

Fewer tourists are booking cruises to Jamaica. In the Bahamas, sales at duty-free shops along Nassau’s picturesque Bay Street are flat.

And in the Turks & Caicos Islands, a group of disgrunted Chinese construction workers recently took their Israeli bosses hostage, after a Ritz-Carlton resort they were building fell through following the collapse of its chief backer, Lehman Brothers.

Throughout the Caribbean, nothing is making bigger headlines than the worsening global financial crisis. In fact — with the exception of Cuba, which doesn’t depend on American tourism — the repercussions of this crisis on the Caribbean could be deeper and longer-lasting than those caused by the Sept. 11 terrorist attacks seven years ago.

“In 2001, it was an issue of security. In this instance, you’re talking about people’s livelihoods,” said Wayne Cummings, director of business administration for Sandals Resorts International and president of the Jamaica Hotel & Tourist Association.

“Eight months ago, I started hearing about problems with subprime mortgages, and that’s when I knew the very foundations of the American economy were shaky,” he said.

“Even so, I don’t believe this crisis is a singular event. It’s going to have international catastrophic consequences,” said Cummings. He added that “9/11 was a challenge of great proportions, but with this one, nobody seems to be able to tell what the endgame is.”

In addition to the worsening U.S. economy, tourism-related businesses also face rising energy costs, rising competition and dramatically reduced air service to the Caribbean — all of which could result in lower hotel occupancy levels for the region’s hotels.

“Given the region’s dependence on airlift, the most daunting issues facing the Caribbean hotel industry are the rising cost of airfares and the announced cutbacks in air service,” said Scott Smith, senior vice-president of PKF Consulting.

“Due mostly to the rising cost of fuel, four of the five leading air carriers to the Caribbean have announced cutbacks in service. Puerto Rico and the Dominican Republic could see as many as 26% fewer flights in December 2008 compared to December 2007.”

Yet so far, Cuba seems immune to the problem — nor has its tourism industry been much affected by the two back-to-back hurricanes that ravaged the island this summer. Reuters reports there have been no cancellations of tours booked for the December-March peak season, and that an expected increase in Canadian visitors should help offset any reduction in Europeans put off by rising airfares and other economic problems.

“There will be some decline in tourism from Europe as airfares are up 30%, but we expect another big jump from Canada to make up at least part of the difference, along with new markets like Russia,” the representative of a European hotel chain told Reuters on condition his name not be used.

Immediately after hurricanes Gustav and Ike hit the island, some tours to hard-hit areas were canceled, but not for the months ahead, he said. The hurricane season ends Nov. 30.

“The hotels are completely taken by tour operators starting in late December, and to date there have been no cancellations of flights or rooms.” The bigger uncertainty now, he told Reuters, was the financial crisis roiling markets around the world.

“We will have to see what happens with the global economy over the next months, but so far we see a good season despite it all.”

The number of tourists from Canada, already the top tourism country for Cuba, could rise as much as 20-30% because of the weak U.S. dollar and increased marketing, the sources said.

Cuba’s currency is pegged to the dollar, which makes the country an inexpensive destination for Canadians seeking warm tropical beaches during their country’s long winter. Reuters reported that while Gustav and Ike inflicted $5 billion in damage on the island, key tourist areas like Havana and the Varadero beach resort were largely spared.

Spanish firm Sol Meliá, which has 24 hotels in Cuba, said it was back up to full speed after the hurricanes. “Sol Meliá's hotels and resorts are open and operating normally after complete recovery from minor damage,” said Gabriel García, the company’s marketing director in Cuba.

Hotel occupancy through the end of August reached 58.9%, and tourism revenues rose by 20%, according to Cuba’s Ministry of Tourism.

Varadero, located 150 kms east of Havana, has welcomed 700,000 tourists so far this year, and may reach one million by year’s end.

“We’ve maintained a progressive increase since the second half of 2007, and specifically this year we’ve seen very good results, even though we know the sector can be more efficient,” said Armando Acosta, a Tourism Ministry official in Matanzas province.

During the first eight months of 2008, Cuba received 1,693,054 visitors, 13.5% more than the year-ago period. Tourism revenues were up 20% and are expected to total some $2 billion this year. With 17,300 rooms, Varadero is the most important tourism attraction in Cuba, followed by Havana.

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