The full impact of the global financial crisis and the recession that it has spawned are now being felt in the world travel industry, as reflected in the sharp decline in air travel, especially in North America and Europe, the largest economic blocs and two biggest regions in the world air-transport system.

The impact is even more severe in the tourism-dependent economies of the Caribbean and has led in some cases to balance of payment problems that have pushed them into the 'arms' of the International Monetary Fund (IMF).

Most recently, the IMF has warned that Barbados is undergoing a severe economic recession, as the global financial crisis has "depressed tourism, brought Foreign Direct Investment to a sudden stop, and weakened public finances". Other Caribbean countries, such as Antigua and Barbuda, the Bahamas, Cayman Islands and Grenada, have been hit just as hard with their stopover tourist arrivals falling by double-digit levels. Indeed, the Caribbean has been one of the most badly affected regions of the world tourist industry.

According to the latest statistics from the Airports Council International, global passenger movements went down by just under six per cent for the January-July period, with the European region declining by 8.4 per cent and North America by 8.1 per cent. What was most significant, though, was that for our region (Latin America and the Caribbean) international passenger movements fell by 10.9 per cent, the steepest decline for any region.

With the Caribbean's heavy dependence on the United States (US) as a source market for visitors, we must be concerned that the world's leading eco-nomy, while having been pulled 'back from the brink', seems set for a shaky recovery.Moreover, US gross domestic product growth, another leading indicator of consumer spending, is also, according to IMF projections, likely to be anaemic. For 2010, the Fund is projecting that the US economy will grow by 1.5 per cent, not enough to recoup the 2.7 per cent decline which it is forecasting for 2009. Thus, incomes will remain depressed, and combined with the uncertainty in the labour market, this will serve to further weaken the demand for travel.

Weak performance

The Euro zone, which is also a critical source market for the Caribbean tourist industry, is performing even more weakly as, according to the IMF, the economy of the region could shrink by 4.2 per cent this year. It is projecting that the 16-nation group will see growth of only 0.3 per cent in 2010. This means that consumer spending by Europeans will likely not increase significantly, and hence, international passenger movements from Europe could remain depressed. Countries like Antigua and Barbuda, Barbados, Cuba, Dominican Republic, St Lucia, and to a lesser extent Jamaica, are therefore likely to feel the squeeze.

In the midst of the sharp downturn in the Caribbean tourist industry, Canadian stop-over visitor arrivals to several destinations have expanded robustly. In the cases of Cuba and Jamaica, the growth of Canadian tourists has been at a pace that has compensated for the declines in visitors from other regions, although not making up for the loss of revenue. As a matter of fact, the latest data from the Caribbean Tourism Organisation indicate that Canadian visitor arrivals to Cuba increased by 14.3 per cent for the first seven months of this year.

Jamaica did even better with growth of 27.7 per cent for the same period. Barbados, Grenada and St Lucia also enjoyed strong growth of 11.9 per cent, 13.4 per cent and 16 per cent, respectively. No doubt, the continuing expansion in visitor traffic from Canada is indicative of the less severe downturn in that country's economy. But there are other major factors that account for the impressive performance by Jamaica in this market.

New hotel investment

What are some of these factors? In the early 2000s, Jamaica moved strategically to attract new hotel investments, especially by European operators, with strong presence in Canada. Their powerful marketing muscle and integrated systems facilitated expanded airlift to match the increase in hotel rooms. By 2003, the Sangster International Airport was also privatised to a group including Vancouver Airport Services, which added to the outreach for new air connections from Western and Central Canadian population centres.

Concurrently, the Jamaica Tourist Board's Canadian operations were restructured and expanded to full regional status to better support industry players in that market. First, Pat Samuels, and now Sandra Scott, both dynamic performers who have filled the newly created post of regional director, have turned in very positive results.

Strategic moves

By 2004, the strategic moves were beginning to bear fruit as visitor arrivals from Canada went up by 10.9 per cent, compared with negative growth of 2.2 per cent in 2003. Subsequently, we have experienced growth of 10.6 per cent, 31.4 per cent, 24.1 per cent and 23.9 per cent in 2005, 2006, 2007 and 2008, respectively.

The success achieved in Canada over the last five years, and which is continuing this year, clearly signals the strategies which need to be deployed as we seek to expand and diversify Jamaica's tourism markets and to cope with the turbulence in the global travel industry.

Dennis E. Morrison is an economist. Feedback may be sent to columns@gleanerjm.com