By NEIL HARTNELL
Tribune Business Editor
The Bahamas has been branded “the notable exception” to the Caribbean’s tourism growth over the past two decades by an IMF paper, which found this nation is not among those most vulnerable to Cuba’s US opening-up.
The study, entitled ‘Revisiting the Potential Impact to the rest of the Caribbean from opening US-Cuba tourism’, described tourist arrivals to the Bahamas as “mostly flat since the mid-1990s”.
Its authors wrote: “It is important to note that over the last two decades the tourism sector has grown throughout the Caribbean - from 12 million arrivals in 1995 to 26 million in 2014.
“The notable exception is the Bahamas, where tourist arrivals have remained mostly flat since the mid–1990s..... Over this period Cuba’s tourist arrivals grew at an average annual rate of 7.6 per cent, Cancun’s grew at 7.5 per cent, and the Dominican Republic’s grew at 5.7 per cent, with the region as a whole growing at 4 per cent per year.”
The study produced sa chart showing that expansion in Bahamian tourist arrivals, cruise and stopover combined, has been much flatter than larger Caribbean rivals, although the growth rate appears to have picked up since 2010.
Cruise arrivals dominate the Bahamian tourist market, and the relative lack of growth identified by the IMF paper has likely been caused by the lack of new hotel room inventory since the mid-1990s.
That period saw significant resort expansions via the Atlantis Phase I and II projects, and refurbishments and upgrades at the likes of Sandals Royal Bahamian and SuperClubs Breezes.
However, since then the Bahamas’ total room inventory has remained relatively flat, with properties falling out of the market - such as the Royal Oasis in 2004 - as quickly as new ones are added.
The newly-opened Baha Mar project, with its net new 2,331 rooms, and Grand Hyatt, Rosewood and SLS brands, is being counted on to help fix this and drive the first significant increase in stopover tourism since the mid-1990s.
Once fully operational, Baha Mar’s extra rooms are projected to attract an extra 315,000 air arrivals per annum, generating a 19 per cent boost to stopover tourist figures.
That is forecast to become a reality in 2018, with the SLS and Rosewood properties projected to open by December 1, 2017, and April 30, 2018, respectively.
However, other sources of concern for the Bahamas are its declining share of the Canadian tourism market, which the IMF paper described as the fastest growing for the Caribbean as a whole.
The study’s charts show the Bahamas’ share of the Canadian market has fallen from 10 per cent in 1995 to just 4 per cent in 2014, as a proportion of the Caribbean total.
The IMF paper said Cancun, Cuba and the Dominican Republic were now the top Caribbean destinations for Canadians, with the first two having increased their share over those two decades to 24 per cent and 30 per cent, respectively.
“The Canadian market is of particular interest because it has been the fastest growing tourism source in the Caribbean, with an average annual growth rate of 8.6 percent,” the paper said.
“This has resulted in Canada’s share of tourists more than doubling, and has reduced somewhat the region’s dependence on the US tourism market.”
Growth in Canadian visitors to the Bahamas was flatter than to any other Caribbean destination over the 1995-2014 period, although the rate had started to pick up again slightly since 2010.
When it came to the impact of Cuba’s opening up to US visitors, the IMF paper acknowledged the Bahamas’ potential vulnerability, given that more than 75 per cent of its base came from that nation.
However, it gave credit for the Bahamas’ efforts to reduce its reliance on the US market by targeting increased visitors from Canada and other nations.
While the IMF paper predicted a fall-off in US arrivals as a result of Cuba’s full opening to the US travel market, it also forecast that this would be offset slightly by a rise in Canadian and UK visitors.
As a result, it found that while the Bahamas will be negatively impacted it will not be the worst off, reserving this honour for Anguilla, Belize, Saint Maarten, and the US Virgin Islands.
“There are some policy recommendations that will help Caribbean tourism destinations confront the increased competition from Cuba in the US market. Despite their generality, they are worthwhile in their own right,” the IMF study said.
“Our analysis shows that dependence on the US market is large, and while this dependence is understandable in terms of the proximity and size of the US market, a diversification strategy that targets other advanced economies and large emerging markets in Latin America would be beneficial.
“Improving the competitiveness of the tourism sector will be crucial, and improving quality and reducing costs will help countries compete with a low-cost provider as Cuba.
“Finally, thinking of regional strategies to facilitate intra-regional travel would help bring the possibility of multi–destination vacations. This would help the rest of the Caribbean to benefit from the new tourists that will start visiting the region when the US opens up free travel to Cuba.”
Still, the IMF study left little doubt as to the huge debt of gratitude that the Bahamas owes to the late Fidel Castro for his 1950 revolution, which closed Cuba to US visitors and diverted them to this nation and other Caribbean destinations.
“In the case of the Bahamas, despite a long history of tourism promotion that started with the Tourism Encouragement Act of 1851, it was the US embargo on Cuba that provided ‘the main stimulus to the tourism industry’ with much of the US tourists switching to the Bahamas,” the IMF paper said.
“Tourist arrivals to the Bahamas went from 142,689 in 1954 to over a million in 1968.”