The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

An end to the US trade embargo on Cuba will certainly challenge to this nation’s tourism industry, a leading economist has warned, noting that the latter’s stopover arrivals were second in the Caribbean to the Dominican Republic despite having virtually zero American airlift.

Addressing the Royal Fidelity Bahamas Economic Outlook on Tuesday, Marla Dukharan, Royal Bank of Canada’s senior Caribbean economist, said the countries most likely to be affected by the normalisation of ties between the US and Cuba were those nearest to the latter, were heavily dependent on US tourists, and those with a similar product offering at a  higher price.

With the Bahamas heavily dependent on tourist arrivals from the US, Ms Dukharan said improving relations between US and Cuba could present a challenge to this nation.

“We in the Caribbean display the highest economic dependence on tourism, and that’s on a global scale,” Ms Dukharan said. “According to the United Nations World Tourism Organsiation, the Caribbean has a 2.1 per cent market share of the global tourism industry and received 21.2 million tourists in 2013.

“The Caribbean has had the lowest growth in arrivals globally. Arrivals have grown at an average annual pace of 1.5 per cent between 2005-2013, which is the lowest rate of growth in the entire world. The rate of growth for arrivals for 2013 was 2 per cent higher only than the Middle East.

“Cuba’s stop over  arrivals are second only to the Dominican Republic, and they have almost zero airlift from the United States. Cuba received 3.2 million stopover  arrivals in 2014, an increase of 5.3 per cent year-on-year. Cuba also has one of the lowest  levels of economic dependence on tourism in the region.”

 Ms Dukharan said the Bahamas has the second highest dependence on tourism in this region after Aruba. She added that following the 2008 financial crisis, The Bahamas lost 3 per cent of its market share according to the International Monetary Fund (IMF).

Last December, US president Barack Obama  announced major changes to US policy towards Cuba, moving to normalise relations with the island after more than 50 years.

Under the new measures, the US plans to reopen its embassy in Havana and significantly ease restrictions on travel and commerce within the next several weeks and months.

The announcement regarding the re-establishment of diplomatic ties between Cuba and the US is said to have followed more than a year of secret talks between the US and Cuba, including meetings in Canada and at the Vatican, and personal involvement from Pope Francis.