Jun 2004 Financial News

Jamaica will earn US$3.3 billion from tourism this year, says int'l study

Jun 23, 2004

A new study by the World Travel and Tourism Council (WTTC) has estimated that tourism will this year generate as much as US$3.3 billion in overall economic activity in Jamaica, and projects that the figure will rise to US$6.85 billion, or more than double, over the next decade. These figures, in what was a largely upbeat review of the region's tourism prospects, place Jamaica behind Puerto Rico (US$9 billion), the Dominican Republic (US$5.2 billion) and Cuba (US$4.8 billion) in the league table of Caribbean countries with the largest tourism-driven aggregate demands in their economies.



But more critically, the study suggests that travel and tourism's impact on gross domestic product (GDP) - the value of all goods and services produced in the island - will be 36 percent, three times the approximately 12 percent when the traditional, and narrower, measures are applied.

Usually, analyses of the economic contribution of tourism to the economy capture the defined production side of the industry.

But the WTTC says that it has, over time, developed a model that captures a broader, "economy-wide" impact, including direct and indirect contributions.

Its so-called Tourism Satellite Account (TSA), the WTTC says, will help governments and the industry make "intelligent and informed business decisions."

"Travel and tourism demand is an aggregate measure of travel and economic activity that combines personal travel and tourism, business travel (government and corporate, government activities to support tourism and travel activities, traditional visitor exports, consumer and capital goods) shipped abroad for use by visitors or travel and tourism companies," the WTTC explained in its report.

Beyond the aggregate demand profile, the model allows for the breaking out of the industry's direct contribution to GDP, and a wider influence on the economy by the travel and tourism sector - the travel and tourism economy.

Based on these broad measures, it is projected that travel and tourism will this year generate US$5.5 trillion in economic activity and is forecast to grow to US$9.6 trillion by 2014.

In the Caribbean, total economic activity by the industry will this year reach US$40.3 billion, growing to US$81.9 billion over the next decade.

But more narrowly, the region's travel and tourism industry, as opposed to its wider economic impact, will this year contribute 4.5 percent to the Caribbean GDP (US$8.7 billion), rising to US$18.4 billion or 5.2 percent of the region's GDP by 2014.

The travel and tourism economy's contribution to GDP over the same period will move from 14.8 percent of the region's GDP to 16.5 percent, or from US$28.4 billion to US$58.5 billion.

The region's industry is expected to grow by about four percent a year.

According to the WTTC analysis, this year the travel and tourism sector, adjusted for inflation, will net US$870 million to the Jamaican economy or 11.8 percent of GDP. The broader tourism and travel economy will account for an adjusted $4.65 billion or 36 percent of GDP.

Overall, tourism-driven aggregate demand will be US$3.3 billion.

Between them, the five big regional tourism players - Puerto Rico, the Dominican Republic, the Bahamas, Cuba and Jamaica - account for 64.4 percent of the region's tourism activity.

Said the WTTC: "Over the next 10 years, to 2014, the expected annual growth rates for the different Caribbean islands (in terms of travel and tourism demand) will range from 2.5 percent for the Dominican Republic and 2.7 percent for Aruba, at the low end, to 7.2 percent and 6.2 percent respectively for Guadeloupe and St Kitts and Nevis at the top of the scale. Average growth for the Caribbean region as a whole is expected to total 4.0 percent over this period."

In Jamaica's case, the growth is expected to be around four percent.

But the study notes that while the region has made a good recovery since the declines of 2001, it still needs policies to ensure that it capitalizes on its growth potential.

Among its proposals is the development and implementation of national tourism master plans and cooperation in the region in building an already strong brand image. Domestic social problems also have to be addressed.

Said the report: "The region's brand image is stronger than it has been for some time and. this is due to a number of different factors. The improving economies of key source markets, the Caribbean's image as a safe and secure haven far from the threats of terrorism that plague destinations in North America, Europe and other parts of the world, and most importantly perhaps, the depreciation of the US dollar - all have contributed to raising the Caribbean's profile and stimulating demand.”

"Research suggests that prospects for growth over the foreseeable future are extremely bullish although certain challenges remain to be addressed.

"For the moment the Caribbean is very much back in favors. But there are some concerns about local unrest in some islands and its impact on tourists' safety, and this also needs to be addressed."


Jamaica Observer