With the effects of spiraling fuel costs spreading like an oil slick over the region, Caribbean tourism leaders are moving quickly to try to contain the damage and mitigate any future fallout.
In interviews, several government tourism officials in the Caribbean said they feared that high energy prices would trim airlift, the region’s lifeline, and prompt potential visitors to curtail their vacations.
“Time is running out for the region as we continue to miss out on opportunities to take control of this industry, and we continue to forfeit market share,” said Allen Chastanet, chairman of the Caribbean Tourism Organization (CTO) and the minister of tourism and civil aviation for St. Lucia.
Frustrated with those squandered opportunities, Chastanet already has drawn a line in the sand, saying candidly that he will resign his tourism minister’s post if he does not get the support needed to fund the CTO’s $30 million regional branding campaign to sell the region as one destination.
Chastanet pointed out that “in an industry which earned millions of dollars of foreign exchange, it should not be that difficult to raise $30 million.”
The funding is all the more necessary because of American’s announcement last week that it would reduce domestic and regional capacity by up to 12% in the fourth quarter due to rising fuel costs. Chastanet said the cutback could have a serious impact on visitor arrivals to the region, where American is the dominant carrier.
Chastanet pointed out that “a number of U.S. carriers serving the Caribbean have old planes which are less fuel-efficient, incur higher fuel costs and lower yields.”
He added: “This situation is expected to deteriorate over the next six to nine months as the ongoing economic downturn, plus the traditional low spending in an election year, would equal a falloff in holiday bookings to the Caribbean from the U.S.”
Regional tourism and civil aviation ministers will meet in an emergency session May 29 in Antigua to formulate a comprehensive plan to deal with the effects of the continued spike in oil prices on the region’s tourism industry. The meeting will mark round one in three strategy sessions designed to help plug the anticipated drain of tourism revenue, airlift and visitors in the upcoming summer, fall and peak winter seasons.
Round two will take place at the first Caribbean Tourism Summit in Washington, June 21 to 25, attended by government leaders, ministers and private and public sector representatives, including a large contingent from the Caribbean diaspora.
The setting for round three is the convention of the heads of government of the Caribbean Community (CARICOM) in Antigua from July 2 to 4.
Proposals and strategies already hammered out and agreed upon in the first two meetings could then be ratified by CARICOM and put into action, Chastanet said.
The May 29 meeting will focus on a study commissioned by CTO two weeks ago from ASM, a U.K.-based consulting group, on the state of the industry in the region.
“It will be a hard-hitting reality check that will offer us options as to how to attack the fuel problem and increase demand for air travel to the region, which will result in higher yields for the airlines serving the Caribbean,” Chastanet said.
The impact of the fuel crisis is being felt across the region, affecting both travelers and destinations, according to Ricky Skerritt, St. Kitts’ minister of tourism, sports and culture.
“The current economic scenario forces travelers to be more careful in their quest for vacation experiences,” he said. “As a destination, we have to fight for market share where there is growth.”
In Curacao, a crisis-management team already is in place to monitor developments on fuel and food prices, according to Eugene Ruggenaath, commissioner of tourism. He termed the May 29 meeting as “crucial.”
“This is a Caribbean-wide problem. We have to act as one body,” he said.
While recognizing the scenario of rising fuel costs, Felix Jimenez, tourism minister for the Dominican Republic, said he remained optimistic as long as the visitor numbers continued to climb as they did in the first quarter, when they rose by 8%.
The May 29 emergency meeting is expected to result in at least four different formulas or proposals to deal with the fuel cost crisis, Chastanet said. The plan is that the ministers will take these proposals back to their government leaders for approval or rejection and then arrive at the summit in Washington, where the proposals will be ratified by the full body of Caribbean leaders from 32 countries.
“We can get this ratification process done in one day in Washington during the summit because the government leaders will already have seen and approved one or more of the proposals,” Chastanet said.
“Of course, the last option is to sit back and do nothing and see what happens. That’s not an option. We have been proactive in setting this up,” he said.
Chastanet was critical of governments for levying departure taxes and raising landing fees for airlines when they should be aiding the survival of the carriers in question.
“In this region, without aviation we are dead,” he said. “Many of the taxes in these ticket prices are going to different Caribbean governments. Airlines cannot raise their fares without losing market share, but if the governments in question can reduce operating costs for the airlines by reducing some of the government-mandated taxes, that will help us to maintain airlift,” he said.
Several Caribbean destinations had fairly robust first quarters with some dramatic stayover visitor increases over the same period in 2007. Antigua & Barbuda was up 16%, the Cayman Islands 9%; Curacao 43%; Jamaica 14%; St. Lucia 17%; and the U.S. Virgin Islands 13%.
But Chastanet predicted that “the numbers will drop this summer and from then on.”
“This is what we are dealing with and why we have to act now,” he said. “All the economic evidence is there.”