Caribbean Draws More Development, Less Tourism

At a recent conference on Curaçao, hotel and real estate executives raved about the record amount of development under way across the Caribbean, long a top vacation spot for Americans, the Wall Street Journal reports. But underlying their excitement was a more immediate worry: Tourism, which is rising world-wide, is declining in the Caribbean, with overnight stays in the region down 2.3 percent last year to 18.45 million, according to data from the Caribbean Tourism Organization. The decline has been even steeper in some of the places whose beaches and other charms have traditionally drawn the region's biggest share of tourists from the U.S. During the first quarter of this year, American visits were down 12 percent in Jamaica, 9 percent in the U.S. Virgin Islands and as much as 8 percent in the Bahamas, the CTO says. Whether the decline is a blip or a longer-term trend will go a long way in determining the economic health of the region. Tourism is critical to the Caribbean, making up 16 percent of its overall economic activity, according to the World Travel & Tourism Council. On smaller islands such as St. Lucia, tourism can account for as much as 50 percent of the economy. The Bush administration's announcement Friday that it will temporarily ease passport requirements for Americans traveling to the Caribbean, Mexico and Canada is expected to give Caribbean tourism a temporary lift. Stricter rules, which took effect in January--right as the high season was under way--caused huge backlogs of passport applications, prompting many Americans to change their travel plans and vacation closer to home. But the longer-term outlook for tourism also presents challenges. Apart from the passport backlog, travel to the Caribbean is being hurt by weaker economic growth in the U.S. and falling home prices, which are making Americans skittish about spending on discretionary items such as travel. For a region that's heavily dependent on the U.S., even a small pullback by American consumers can have big consequences. The falloff in travel to the Caribbean also reflects growing competition from other regions around the world, including Asia and Central America, which are building beachfront resorts at a furious pace, posing a long-term competitive threat. (DB)