Travel Weekly – January 5 2020
With the health of Mexico’s hospitality sector continuing to deteriorate in the latter part of 2019, the long-term outlook for the country’s tourism appears grim.
Year to date through November, hotel data company STR reported that revenue per available room (RevPAR) across Mexico was down 6.6%, to $69.11. Concurrently, average daily rate (ADR) slipped 3.8%, to $112.17, while occupancy fell 2.9%, to 61.6%.
Supply also outpaced demand, with the former up by nearly 3.2% year to date through November and the latter virtually flat at 0.1% growth.
“There is certainly a threat of oversupply in Mexico,” said Jennifer Dohrmann-Alpert, vice president for advisory services at global design firm HKS, which has an office in Mexico City. “We’ve seen tons of developments entering the pipeline, especially in places like Riviera Nayarit and Cabo, and many of these projects are opening between 2020 and 2025. If there’s an economic slowdown, I think we could see definite impact from oversupply in the next three to five years.”
A supply-and-demand imbalance, however, is far from Mexico’s only challenge, added Dohrmann-Alpert. Exacerbating matters is a recent uptick in cartel-related violence, which has sparked safety concerns, as well as the Mexican government’s decision in early 2019 to shutter the Mexico Tourism Board, diverting millions in tourism promotion dollars toward a proposed train to connect key destinations along the Mayan corridor.
According to Dohrmann-Alpert, the latter move has likely had an outsize impact on Mexico’s Yucatan region, home to tourism-dependent hot spots like Cancun, the Riviera Maya and Cozumel, which have long been dominated by the all-inclusive model.
“Mexico has banked much of its tourism expansion in the broader Yucatan on all-inclusive properties,” said Dohrmann-Alpert. “But millennials, in particular, may not be as keen on all-inclusive resorts, and so that segment may be starting to trend downward a little bit as the travel market [shifts to preferring] more of an experiential travel product.”
Indeed, STR data indicates that the Yucatan Peninsula has borne the brunt of Mexico’s recent troubles. RevPAR in the market declined 12.9%, to $111.94, year to date through November, while ADR plummeted 10.6%, to $163.28. Occupancy in the Yucatan Peninsula year to date was down 2.5%.
Also weighing heavily on the region was last summer’s unusually severe sargassum seaweed outbreak, which at times rendered beaches across the Riviera Maya and Cancun coastlines virtually uninhabitable.
In late October, Francisco Zinser, executive vice president of Mexican hospitality group Grupo Hotelero Santa Fe, blamed sargassum for some of the company’s third-quarter woes, while also calling 2019 “a tough year for the Mexican tourism sector in general.”
Grupo Hotelero Santa Fe saw RevPAR slip 10.9% for the nine months through September, as the company’s ADR fell 7.8% over the same period. Occupancy across the group’s portfolio, which includes 25 properties in Mexico, decreased 2.2 percentage points, to 60.9%.
With the hospitality segment clearly losing steam, Dohrmann-Alpert believes hotel developers may be hesitant to bet big on Mexico moving forward.
She cited as one example Apple Leisure Group’s recent decision to put up to $600 million in Mexico hotel investments on hold. Apple Leisure executive chairman Alex Zozaya said at a press conference in December that the company’s AMResorts arm would defer construction of four or five properties, blaming the tourism board’s closure for a downturn in visitor numbers and pointing to growing pressure on hotel profitability and room supply growth outpacing demand.
“Some institutional investors are off-loading projects,” said Dohrmann-Alpert. “[And] savvy developers like AMResorts have started to scale back on their ambitious expansion plans for the region as they assess the future demand for luxury all-inclusive resorts.”
In the Mexican Caribbean, resorts may also be facing increased competition from a wave of what Dohrmann-Alpert calls “newer and more amenitized [cruise] ships.”
“There has been a significant push toward cruise tourism in the last five years,” she added. “With 5 million-plus visitors coming to the Mexican Caribbean this year via cruise ship, this could have a negative long-term impact on RevPAR as hotels have to drive prices down to attract visitors back.”
Tom Brussow, president of the nonprofit organization YesToMexico and owner of Wisconsin-based travel agency Sunsational Beach Vacations, is seeing solid demand for Mexico travel among his clientele despite cooling RevPAR trends.
“In 2019, there were a lot of challenges, whether it was the sargassum or all the sensationalized headlines, but overall, I think that the industry came together really very well,” said Brussow.
“The resorts, tour operators, [regional] tourism boards and agents are all doing a great job of educating consumers,” he said. “In doing that, I’m starting to see that my clients’ concerns about travel to Mexico have decreased compared to what we were dealing with a year ago.”
Most notably, Brussow said he’s seen his Mexico destination wedding business spike significantly, which he believes is a “good barometer” for overall tourism strength.
“Weddings always involve a lot of people with very different perceptions and concerns as it relates to travel,” explained Brussow. “A couple has to make decisions based on ensuring that everybody within their party is comfortable with the decision that they make. So, when we see the weddings come back to Mexico, that’s definitely a good sign.”
The Conference Board Consumer Confidence Index® decreased marginally in December, following a slight increase in November. The Index now stands at 126.5 (1985=100), down from 126.8 (an upward revision) in November. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 166.6 to 170.0. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased from 100.3 last month to 97.4 this month.
“Consumer confidence declined marginally in December, following a slight improvement in November,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was December 13.
Consumers’ appraisal of current-day conditions improved in December. Those claiming business conditions are “good” was virtually unchanged at 38.7 percent, while those claiming business conditions are “bad” decreased from 13.6 percent to 11.1 percent. Consumers’ assessment of the job market was mixed. Those saying jobs are “plentiful” increased from 44.0 percent to 47.0 percent, however, those claiming jobs are “hard to get” also increased, from 12.4 percent to 13.1 percent.
Consumers were moderately less upbeat about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months increased slightly from 18.6 percent to 18.9 percent, while those expecting business conditions will worsen declined from 11.4 percent to 9.3 percent.
Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead decreased from 16.5 percent to 15.3 percent, while those anticipating fewer jobs increased from 13.4 percent to 14.9 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.9 percent to 21.1 percent, while the proportion expecting a decrease rose from 6.2 percent to 7.7 percent.
Source: December 2019 Consumer Confidence Survey®
According to the Hawai‘i Hotel Performance Report published by the Hawai‘i Tourism Authority (HTA), statewide RevPAR increased by 8.1% to $204.80, with ADR up by 4.4% to 259.78 and occupancy of 78.8 percent up 2.7 percentage points from 76.1% in November 2018.
HTA’s Tourism Research Division issued the report’s findings utilizing data compiled by STR, Inc., which conducts the largest and most comprehensive survey of hotel properties in the Hawaiian Islands.
In November 2019, Hawai‘i hotel room revenues statewide grew by 7.6 percent to $330.3 million, which is $23.2 million higher than last year. Room demand rose to 1.3 million room nights, up 3.1 percent compared to a year ago. Room supply was similar year-over-year (1.6 million room nights, -0.5%). Several hotel properties across the state were closed for renovation or had rooms out of service for renovation during November.
Through the first eleven month of 2019 the hotels achieved an average room occupancy of 80.9%, up 0.2 percentage points from 2018. ADR in 2019 averaged $276.06 up 1.8% compared with the first 11 months of 2018 with revpar at $223.28, up 2.1% compared with 2018.
All classes of Hawai‘i hotel properties statewide reported RevPAR gains in November. Luxury Class properties reported RevPAR growth to $371 (+3.9%), with increases in ADR at $509 (+3.9%) and flat occupancy. Midscale & Economy Class hotels reported RevPAR of $135 (+11.1%), with increases in both occupancy (81.6%, +5.2 percentage points) and ADR ($166, +4.0%)
Among Hawai‘i’s four island counties, Maui County hotels led the state in RevPAR at $265 (+7.7%), with ADR of $354 (+5.8%) and occupancy of 74.9 percent (+1.3 percentage points) in November. Properties in Wailea, where there are a number of luxury resorts, earned RevPAR of $444 (+3.0%), with increases in ADR ($536, +7.5%) offsetting lower occupancy (82.8%, -3.6 percentage points).
O‘ahu hotels reported RevPAR growth to $188 (+9.1%) in November, with increases in ADR to $229 (+5.4%) and occupancy of 82.0 percent (+2.8 percentage points). Waikīkī properties earned RevPAR of $188 (+11.4%), with increases in both ADR ($227, +6.5%) and occupancy (83.1%, +3.7 percentage points).
Hotels on the island of Hawai‘i saw significant increases in RevPAR to $185 (+13.5%), ADR at $245 (+3.8%) and occupancy of 75.7 percent (+6.5 percentage points) in November compared to the same time a year ago. Properties on the Kohala Coast earned RevPAR of $271 (+16.3%), ADR at $349 (+2.5%), and occupancy of 77.8 percent (+9.3 percentage points). In May 2018, Kīlauea volcano started erupting in lower Puna, which contributed to a downturn in visitors to the island of Hawai‘i in the following months.
Kaua‘i hotels reported lower RevPAR of $180 (-1.7%), ADR at $250 (-1.9%) and occupancy of 72.2 percent (+0.2 percentage points) in November.
Properties report rooms as officially out of service to STR if they are unavailable for rent for 30 days or more. However, it should be noted that rooms out of service for renovation for less than 30 days are still included in the Supply numbers presented in Figures 2 and 4 and may be considered overstated.
Tables of hotel performance statistics, including data presented in the report are available for viewing online at:
About the Hawai‘i Hotel Performance Report
The Hawai‘i Hotel Performance Report is produced using hotel survey data compiled by STR, Inc., the largest survey of its kind in Hawai‘i. The survey generally excludes properties with under 20 lodging units, such as small bed and breakfasts, youth hostels, single-family vacation rentals, cottages, individually rented vacation condominiums and sold timeshare units no longer available for hotel use. The data has been weighted both geographically and by class of property to compensate for any over and/or under representation of hotel survey participants by location and type.
For November 2019, the survey included 168 properties representing 48,185 rooms, or 89.6 percent of all lodging properties with 20 rooms or more in the Hawaiian Islands, including full service, limited service, and condominium hotels.
Abu Dhabi: Data analytics will be a key driver for Abu Dhabi’s tourism industry in the years to come as the emirate looks to compete globally as a top tourist destination, said Saif Saeed Ghobash, undersecretary of the Department of Culture and Tourism — Abu Dhabi (DCT Abu Dhabi).
Ghobash was speaking at the first-ever Tourism and Data Analytics Forum held in Abu Dhabi on Sunday, as the event brought together several leading industry players from the tourism and hospitality sector to discuss the latest trends within the sector and how important data information will be as the industry looks to expand.
This year has already been a successful one for the DCT Abu Dhabi, which last month announced a 2.9 per cent overall increase in hotel guests staying in Abu Dhabi compared to 2018, with the emirate hosting several major events this year including the Asia Cup, Special Olympics, UFC 242 and the Formula 1 Grand Prix.
“We at the DCT — Abu Dhabi believe that the subject of data analytics is a fundamental pillar of our modus operandi. Data is the fuel that drives the various operating models as a key ingredient to achieving our aspirations,” said Ghobash.
“We strong believe that a tourism destination not adopting data and analytics as part of its work in this day and age is akin to a city running without electricity or fuel,” he added.
“With the world crossing the 1 billion threshold of visitors and the $1 trillion market spend, competition is global and it’s real,” he said, pointing to the highly competitive nature of the tourism industry.
Ghobash said that it was no longer an option to provide visitors with a personalised plan tailored to their tastes, but rather a must for cities looking to stay ahead of the competition.
“Mass personalisation is no longer a theme of innovation when it has become a customer expectation.
“Let’s imagine for a moment you land at Abu Dhabi International Airport; your Uber or Careem is waiting for you [and] you open your assistant … and check out your plan for the day … and every bit of your plan matches your budget, taste and lifestyle,” he added.
“This isn’t science fiction, today it’s all about personalised journeys and data perfected by retailers,” he said.
Ziad Mohammad, business intelligence director at the DCT Abu Dhabi, spoke on how the organisation was already using its data analysis to help support the local industry, highlighting how one such programme was implemented for the UFC 242 which took place in September.
“We gathered the data from Ticketmaster, all our digital marketing and PR campaigns and we created buyer personas. We predicted who is coming to Abu Dhabi to [watch] the UFC [and] at what income level and which country and demographics [they’re from.].
“We created four buyer personas — high income buyer, low income and family buyer personas. We went back and tested [this] as a pilot to the nightlife operators, we told them 60 per cent of their audience will be from these two countries and this income level,” he added.
“They changed their artists for the UFC event to accommodate the upcoming audience, this allowed them to significantly increase their bookings ... and offering,” he said, explaining how the data was able help.
Speaking on some of Abu Dhabi’s tourism trends gleaned from their data studies, Mohammad said visitor spending was varied during summer and winter months, creating two different pictures for the emirate.
“We realised the profile and the spending power and the demographics of the people arriving in the summer in Abu Dhabi is completely different than the profile arriving in winter.
“So with this … we create a statement highlighting the story of Abu Dhabi through two narratives … [and] so every single forecast will differ depending on which solution you use [summer or winter],” he added.
The UNWTO reports solid growth in international arrivals in the first nine months of 2019, though uneven across regions.
International tourist arrivals (overnight visitors) grew 4% in January-September 2019 compared to the same period last year, with mixed performance among world regions.
The UNWTO’s Tourism Barometer for November 2019 estimates that destinations worldwide received around 1.1 billion international tourist arrivals in the first nine months of 2019, about 43 million more than in the same nine months of 2018. This represents a continuation of the 6% growth recorded in 2018 though at a more moderate pace and in line with the annual average of 4% for the last ten years (2008 -2018).
The Middle East (+9.3%) led growth, followed by Asia and the Pacific (5.4%) and Africa (4.6%). Europe (+3.4%) and the Americas (+2.4%) enjoyed more moderate increases.
The Caribbean posted a 7.6% growth rate in the first nine months of 2019. While growth was up 15.0% in the first quarter and was up 8.2% in the second quarter growth fell by 1.3% in the third quarter of 2019 compared to third quarter 2018 as a result of issues in the Dominican Republic and the impact of Hurricane Dorian in The Bahamas.
According to IATA international air passenger traffic measured in revenue passenger kilometers (RPK) saw a similar pattern to international arrivals with a 4.3% increase through September 2019.
However, the global economic slowdown, trade tensions and rising geopolitical challenges, social unrest, prolonged uncertainty about Brexit and lower business confidence have weighed on growth in international tourism.
The collapse of major travel group Thomas Cook, and some small European airlines has disrupted some tourism flows, though other travel service providers have moved in to absorb the current demand and offset, at least partly, the decline in capacity.
The failure of Thomas Cook on September 26 2019 left 600,000 travelers stranded around the world including 150,000 Britons. According to data provided by Mabrian Technologies 38 countries were affected , particularly in Europe and the Americas and more than 8.6 million flight seats would be cancelled from September 2019 until the end of August 2020 according to the inbound flight seats scheduled by Thomas Cook. By countries the UK, Spain, Turkey, Greece, the USA and Tunisia would be the most affected by the failure of the world’s oldest travel firm.
As per the main source markets, the United States led growth in international tourism expenditure in absolute terms, supported by a strong dollar. France reported the strongest increase among the top ten markets, reflecting for the second consecutive year a surging demand while China, the world’s top source market saw outbound trips increased by 14% in the first half of 2019, though expenditure fell 4% compared to the same period last year.
For more information go to https://webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2019-12/UNWTO_Barom19_04_November_excerpt_0.pdf
The United States Government’s Department of Commerce, International Trade Administration’s National Travel and Tourism Office (NTTO) recently released the figures for U.S. citizens outbound travel from the USA to International Regions for the month of September 2019 as well as the first nine months of 2019.
While overall travel by US citizens to international regions was up 5.5% in September travel by US citizens to the Caribbean fell by 6.8% from 451,939 in September 2018 to 421,173 in September of this year, a decline of 30,766 visitors.
This was largely due to a 33.0% drop in travel by residents of the USA to the Dominican Republic in September, which fell by 35,752 in September 2019 compared to September of the previous year as well as a 21.5% drop in stopovers to The Bahamas. With 80% of visitors to The Bahamas coming from the USA this would also have had a negative impact on the overall numbers.
The NTTO does not include travel by US citizens to either Puerto Rico or the USVI in their total for the Caribbean as both are deemed to be domestic destinations for the purposes of their study.
Year to Date September 2019
The numbers for air traffic both to and from all international regions (on US and foreign flagged carriers) are reported to the NTTO by means of the “U.S. International Air Travel Statistics Report”.
As can be seen: -
The NTTO defines the Caribbean as including the following countries: -
Included in Caribbean for APIS:
US Citizens Travel to the Caribbean by Month 2019
While the Caribbean saw good growth comparing the first six months of 2019 with the same six months of 2018, growth slowed significantly in the third quarter with the onset of the sharp decline in US travel to the Dominican Republic which was down from the US by 24.6% in July, down 24.4% in August and down 33.0% in September.
The travel and hospitality conglomerate Apple Leisure Group announced on Friday that it has put investments worth between US $500 and $600 million on hold due to a range of factors, including a lack of tourism promotion by the federal government and lower visitor numbers from the United States.
CEO Alejandro Zozaya told a press conference that four or five projects have been “put on pause,” explaining that the company has the land and necessary permits to build new hotels but for now construction won’t go ahead.
He said the government’s decision to disband the Tourism Promotion Council (CPTM) and the consequent lack of marketing of Mexico abroad resulted in lower profits for the hotel industry this year.
“Hotels weren’t as profitable in 2019 as in 2018 and 2017,” Zozaya said.
“. . . The closure of the CPTM has hit us, it’s one of the factors that has hurt Mexico. Tourism from the United States has decreased,” Zozaya said.
He said that another factor in Apple’s decision was that the supply of hotel rooms is growing faster than demand.
“When demand doesn’t grow at the same pace as supply, [room] rates go down, but operational costs haven’t fallen,” Zozaya said.
The strength of the US dollar and higher electricity rates have in fact caused them to rise, he said.
The CEO charged that tourism hasn’t been a priority for federal governments for many years even though the industry contributes to 8% of GDP. However, Zozaya added that the private sector needs to do a better job of informing the government about the importance of tourism to the economy.
To that end, representatives of the sector have met with officials from the Tourism and Foreign Affairs secretariats as well as the president’s chief of staff, Alfonso Romo.
“We’re looking for a joint effort to promote tourism in Mexico and we see some strong potential in the collection of taxes that we’re [currently] missing out on . . . We see opportunities in cruise ships and taxes should be placed on digital platforms such as Airbnb,” Zozaya said.
Although Apple is putting some of its projects on hold, the CEO said the company will still open six new hotels in Mexico by the end of next year.
The conglomerate currently has 33 hotels in 15 Mexican destinations, most of which are AM resorts in Cancún, the Riviera Maya and Cozumel. It is also a large provider of charter flights, transporting one million international passengers a year to Mexico.
Some tourism investors have big plans for Mexico, although the 100 billion pesos (US $5.1 billion) that has been earmarked for tourism infrastructure spending in the government’s National Infrastructure Plan is not scheduled to be spent until 2021-2022.
By Paul O’Donnell ● The Dallas Morning News
Nov 26, 2019 Updated Nov 27, 2019
Thousands of U.S. travelers will pack their beach clothes and head to Cancun’s sun-soaked coastal resorts for Thanksgiving and Christmas getaways.
The popular Mexican vacation spot tops the international destinations where Americans plan to spend the holidays, according to Airlines Reporting Corp., which tracks sales of airline tickets. It ranks as the No. 1 destination for both Thanksgiving week and the Christmas-New Year’s period.
And that’s a welcome ending to what’s been a challenging year for the region known as the Mexican Caribbean, where 80% of its economy is reliant on tourism and more than 10,000 new hotel rooms are under construction or planned in the next few years.
It’s had to contend with a triple play of troubles in 2019: Smelly seaweed invaded its typically pristine beaches during the summer months, the Mexican government redirected a $300 million fund previously dedicated to promoting the country’s top sites, and cartel-fueled violence spilled into areas near resort towns to further stoke travelers’ ever-present crime concerns.
In an interview with The Dallas Morning News, the executive director of promotion for the tourism board of Quintana Roo said her organization will spend about $35 million to ensure a steady flow of tourists next year. Lizzie Cole’s job is to tout Cancun and the state’s other popular destinations such as Cozumel, Riviera Maya, Playa Del Carmen and Tulum.
She was in Dallas last week to meet with American Airlines travel planners and agents about a dozen coastal cities she’s in charge of promoting. Some of the region’s key hotel operators came as well.
Before that, Cole put on road shows in Charlotte and Philadelphia. Her message: 19 million people visited the Mexican Caribbean in 2019, including over 5 million who arrived on cruise ships, and she wants them to come back.
“We have a visitor return rate of 52%,” she said. “Most have been here two or three times before. They come back because they found what they were looking for, they feel comfortable and the service they have been receiving is what they expected or even better.”
Major U.S. airlines are crucial to the cause, she said, ticking off a list of new flights being launched or bigger planes replacing smaller ones on existing routes. American Airlines will add a five-day-a-week Cozumel route from Miami. Southwest Airlines is adding new Cancun routes from Dallas, Austin, Nashville, Milwaukee and San Antonio, and a Cozumel flight from Houston.
Despite seaweed woes that Cole acknowledged sent some domestic travelers to the country’s Pacific Coast resorts, the region expects to finish this year with a 1% increase in visitors over last year.
Six out of 10 visitors to Mexico end up in Quintana Roo, a region that hosts about 30,000 destination weddings each year. Besides the U.S., Cole said visitors come from Canada, the UK, Columbia, Spain, France and other parts around the globe.
The U.S. market, which typically accounts for about 4 million visitors, was a little soft this year, she said. She cited the grounding of Boeing’s 737 Max aircraft as one factor because it forced carriers like American, Southwest and United to operate with reduced capacity, including the cutting of some secondary connections.
Quintana Roo government officials, hotel operators and researchers are hatching an aggressive plan to keep seaweed from taking over its beaches next year, if there’s another algae bloom like the one this year that filled white sand beaches with what Cole described as “mountains of sargassum.”
Cole described the problem as global, stretching from South America to Texas’ Gulf Coast and as far away as Europe. By late summer, Mexico had spent $17 million to remove over half a million tons of sargassum from its Caribbean beaches.
Government officials mobilized by creating a temporary workforce to attack the complicated problem. Seawood piled up so high on some beaches that turtles were unable to climb it to lay their eggs during the summer nesting season. That also meant the seaweed couldn’t be picked up by trucks because of potential damage to nests.
“It’s beyond just having an ugly beach,” she said.
For next year, the state government ordered two barges that will float offshore to harvest seaweed before it arrives on beaches. The barges cost about $750,000 each.
“We don’t know if we’re going to have this same situation next year, but if we are, we are better prepared to counter that,” she said. “By the end of September, our beaches were clean.”
Luxury tour operator Journey Mexico posts regular updates on the state of sargassum. In a Nov. 15 post, it showed seaweed-free images taken at Riviera Maya and Isla Holbox beaches.
The Yucatan train
Quintana Roo took a $12 million to $13 million hit to its annual promotion budget after the election of President Andres Manuel Lopez Obrador.
One of the signature proposals of his campaign was to shift the nation’s tourism budget to building a “Mayan train” to link tourist hot spots and spur development along the Yucatan Peninsula. The original plan for a 948-mile route was scaled back in June in a cost-saving move.
Cole said the train could greatly benefit her region but noted that “there are a lot of indigenous communities against it because it’s going to impact their areas.” Preliminary studies are being done on the train’s sustainability, and she said there is no firm time frame for when it will be built or completed.
“It’s a big, big project,” she said.
Developers aren’t waiting for the train’s arrival. Earlier this year, for example, Palladium Hotel Group invested $280 million and opened a new 1,139-room all-inclusive resort in Costa Mujeres. Cole said there’s talk of a new Waldorf Astoria joining the lineup.
Cole said hotel occupancy rates in Quintana Roo typically run in the 80% range. STR said those rates fell below 70% during the three-month period from April to June when the sargassum invasion received extensive attention.
Hotel construction throughout the Caribbean region was up nearly 17% in October, according to hotel data firm STR. Mexico led with 16,303 rooms under construction.
A safe destination?
Violence linked to cartel turf wars receives massive media attention when it occurs near Mexico’s tourist areas. Some airlines cut back on routes in late 2018 as a result of killings and reports of tourists blacking out after consuming small amounts of alcohol. In April, gunmen burst into a bar about 4 miles from Cancun’s hotel zone and opened fire, killing five and wounding five others.
Cole said her tourism board works continuously to address those fears. She noted that the U.S. State Department has no travel restrictions in place for the Mexican Caribbean.
“We want to make sure we provide transparent information ... so people can see what’s really happening,” she said. “This is a relatively new initiative for our state, and one that many tourist destinations around the world are having to deal with as well.”
In 2019, Quintana Roo’s murder rate is down 15% and Cancun homicides dropped 25%, Cole said.
“Unfortunately, this is the reality of the world at large. There’s no place immune to danger,” she said. “However, the numbers speak for themselves. When you see the continued increase in tourist arrivals, it is clear that our destinations are absolutely safe.”
By late summer, Mexico had spent $17 million to remove over half a million tons of sargassum from its Caribbean beaches. Government officials mobilized by creating a temporary workforce to attack the complicated problem. Seawood piled up so high on some beaches that turtles were unable to climb it to lay their eggs during the summer nesting season. That also meant the seaweed couldn’t be picked up by trucks because of potential damage to nests.
In the Caribbean, tourism employs 2.4 million people and contributes more than $62 billion (15.5%) to GDP (2018) making it the most tourism-reliant region in the world. But the pursuit of tourism-driven economic growth overlooks a significant environmental burden. The global sector is responsible for 8% of all global greenhouse gas emissions— 4.5 billion tons of CO2 per year— and for small islands such as Dominica and St. Lucia, where total emissions are a mere drop in the ocean compared to that of large nations, tourism’s contribution to domestic carbon emissions can run as high as 97% and 70% respectively. (Gossling, 2013)
With the high average footprint of tourism-related activities, such as diving classes and jet ski rides, each of which produce about 24 kg of CO2 per tourist, or golf courses which use as much water as 60,000 rural residents and 1,500 kg of chemical fertilisers, pesticides and herbicides each year, scientists and economists have suggested that there is a higher cost to the environment from developing tourism over other sectors.
According to a 2018 study reported in the journal, Nature Climate Change, one dollar of travel-related consumption produces a carbon footprint of 1 kg CO2e, which is 25% higher than the global average emissions produced per dollar spent across all sectors. If this formula was applied to the Caribbean it would mean that in 2018, regional tourism contributed 62 billion kg CO2e to global emissions.
A significant proportion of tourism’s carbon footprint is associated with international transport. Aviation and the cruise industry contribute 3-5% of the world's total carbon dioxide emissions, with long haul flights producing 16% of all tourism-related CO2 emissions. Case in point: A round trip flight from New York to Barbados produces 505 kg of CO2 per passenger while a round trip from London Gatwick to Kingston Jamaica produces 985.8 kg of CO2 per passenger— the equivalent of burning 1077 pounds of coal. Comparatively, the average cruise ship passenger was responsible for 820 kg CO2e in emissions in 2017. (Global Sustainable Tourism Dashboard)
Hotels are major contributors to global carbon emissions. According to the Hotel Global Decarbonisation Report, the hotel sector has been tasked with reducing absolute carbon emissions by 90% by 2050 in order to keep global warming below the 2-degree threshold agreed upon in the Paris Climate Agreement.
Given their round-the-clock energy consumption, hotels have a higher carbon footprint than other building categories. Laundry facilities, waste disposal and the production of hotel consumables are major carbon emitters.
According to the International Tourism Partnership and Greenview’s Hotel Footprint Tool, the mean carbon footprint per Caribbean hotel room (total greenhouse gas emissions of a hotel divided by the total number of rooms, without factoring in occupancy or floor area) is equivalent to the amount of emissions of 3.4 passenger vehicles per year. A Caribbean hotel room has more than twice the mean carbon footprint of a hotel room in London or Hawaii, almost four times that of Toronto and has a larger footprint than the average room in Thailand or Mexico.
In the Caribbean, hotels tend to source most of their food from imports causing the carbon footprint associated with hotel food to be typically high. According to the World Wildlife Fund, 13 nights in a five-star all-inclusive hotel resort can produce food-related carbon emissions of 205 kg per person and 13 nights in a four-star hotel can produce 91 kg of emissions per person.
Tourists are also directly responsible for a great deal of environmental damage inflicted on their host countries. From natural habitat loss, reduction in biodiversity, over-exploited land and water resources, pollution (land and marine) and coral reef damage, tourism places a great deal of stress on the natural resources on which it depends.
Countries are seeking to curb the environmental impact of tourism by making hotels more green and climate resilient, by integrating eco-tourism into their tourism product and by implementing policies to protect marine and terrestrial resources. But despite these investments, the negative impacts of climate change will be increasingly unavoidable over time.
Climate change will increase the severity of extreme weather events such as droughts, storms and hurricanes, which are likely to negatively impact tourism revenues.
A growing amount of travel will be driven by environmentally conscious decision-making. Travellers will be dissuaded by “flight shame” given the role of aviation in total carbon emissions.
In the years to come, sea level rise will impact coastal tourism infrastructure and development. According to the United Nations, a sea-level rise of one metre would cause more than 29% of major resort properties in the CARICOM region to be partially or fully inundated by water, while 49% would be damaged or destroyed by a combination of sea-level rise and storm surge.
If temperatures rise according to worst-case scenario predictions, scientists predict “the Caribbean alone could generate an extra $22 billion and $46 billion in storm and infrastructure damages and tourism losses by 2050 and 2100.” (Reyer, 2015)
These expenses will be compounded by the social cost of emissions from the carbon intensive tourism sector. According to estimates from the Environmental Defence Fund, the social cost or dollar value of damages from emitting one ton of carbon dioxide into the atmosphere is just over $50 per ton. This means that in 2010, the social cost of emissions related damages from Barbados’ tourism sector was $45,250,000. This is more than twice the amount of European tourist expenditures within that market during the first quarter of that year.
While the region as a whole contributes less than 2% to global greenhouse gas emissions, regional emissions on a per capita level are significantly higher than the global average (USAID), with tourism mostly to blame— this should not be neglected simply because aggregate numbers cannot compare to those of large nations.
The relationship of tourism to the environment is complex. Given the sizeable carbon footprint of the industry, the region has been attempting to reduce emissions and environmental impacts while improving the climate resilience of tourism infrastructure, particularly within coastal communities.
Some governments have begun to pre-emptively remove a few tourism eggs from their economic basket and are diversifying across emerging sectors such as blockchain, medical marijuana and renewable energy.
David Jessop, Caribbean Council.
Although the statistics vary, reliable Caribbean and international entities suggest that the region’s sector is now delivering on average directly and indirectly about 40.6% of the Caribbean’s GDP, earned the region in 2018 US$62bn, and employs at least one in 11 of the region’s citizens.
Despite this, little thought has been given to how to future proof the industry as disruptive technologies take their toll, the region’s largely sun, sea and sand high-volume offering becomes subject to multiple global pressures likely to affect traveller sentiment, and international competition increases.
Detailed country by country analysis indicates that away from the Dominican Republic, Trinidad, Suriname and Guyana, the contribution tourism makes to almost every other Caribbean economy has become critical to economic stability. For example, the World Travel and Tourism Council (WTTC) estimates that in 2017 for Antigua, travel and tourism provided 51.8% of the island’s GDP, employed directly and indirectly 46.1% of its workforce, and was the island’s major source of investment. Similar above average figures exist for Aruba, Barbados, and The Bahamas, the OECS states and most overseas territories.
Although projections suggest that tourism’s contribution to global GDP is likely to grow on average by 3.6% per annum over the next decade, similar levels of future Caribbean growth and the region’s long-term pre-eminence as a warm water destination may be much less certain. This is because macro developments affecting travel and tourism globally may damage those industries that fail to understand how changing thinking about travel and the environment may alter a destination’s prospects.
Industry analysts say that the megatrends that determine what visitors want, expect, and where they will go, are changing. Demographics, new ways of thinking about vacations among a globally expanding middle class, and the ability of large numbers of citizens of China, India, Latin America, and Russia to travel widely will, they believe, mean that tomorrow’s tourism is likely to be very different.
Up to now, apart from a few far-sighted Caribbean industry professionals, ministers and former ministers of tourism, government’s approach has been to rely on increasing arrivals numbers, encouraging the hotel and cruise sector to provide future perspective, and then allowing them to drive and largely finance commercial responses to changing visitor requirements.
This may no longer be enough.
Changes taking place on a worldwide basis suggest that Caribbean governments and the industry need to elevate their thinking about positioning and take a more strategic approach.
The Paris based OECD, which brings together thirty-six of the world’s like-minded wealthy nations, has for several years been focussing on long-term trends affecting tourism, and the reforms needed to ensure sustainability has resulted in the production of a detailed assessment of the structural changes it believes will shape the future of tourism globally.
What the OECD concludes is that tourism policy makers need to develop a better understanding of trends and develop a strategic approach which sees their regulatory frameworks and industry governance updated. They also propose the adoption of dynamic policy responses to disruptive developments such as growing consumer concern about levels of aviation and maritime carbon emissions, or the use of artificial intelligence, data gathering, and new monetary instruments that it believes are most likely to take hold.
Its experts suggest that tourism by better understanding the future can also help make a transition to a green economy, become more socially inclusive, and see nations better able to encourage investments that are resource efficient and environmentally responsible.
Its studies indicate that global demographic change will see the nature of visitor demand change and industries around the world adapt. They recommend that members states begin to prepare for tech-oriented newer generations with different aspirations, an increase in ageing travellers who will have special needs, and determine how to respond to visitors from nations with different cultural norms and expectations who will come to represent the bulk of international travellers.
The OECD believes that unregulated tourism growth will increasingly impact on host communities and the natural environment. This it says will require governments to deliver policies that ensure a low-impact low-carbon future for the industry and a require a political response to ‘overtourism’. It argues that technology will radically reshape the industry causing it and governments to have to think carefully about how a destination trades off cost savings and efficiencies against the value of customer experience.
It observes too that as newer generations exert growing influence over international norms, modes of transport, security, free movement across borders, and the environmental impact of travel, such issues will become the subject of intense international debate and behavioural change.
All of which, the OECD suggests, requires a ‘whole of government’ response if tourism is to continue to play a central role in economic development.
What is surprising for ‘the most tourism dependent region in the world’ is that the Caribbean has no well thought through long-term approach of this kind. Nor does it have any discussion of the longer-term issues of the kind that the OECD will consider in mid-December in Vienna when its members will consider tourism as a catalyst for regional development.
The OECD has come close to being a dirty word in the Caribbean in relation to its desire to more closely regulate offshore financial jurisdictions. However, what is saying to its own members about tourism offers a more positive and alternative way to view the institution and is worthy of close study.
Tourism has demonstrated its ability to drive Caribbean growth in ways that spread its benefits far beyond the industry. Despite this, it is still not universally seen as an essential component in future growth, let alone requiring adaptation if it is to meet the needs of a changing global environment.
Those who lead the industry should consider in a regional context all that the OECD is saying about the future of the industry that now dominates and sustains the regional economy. What is lacking in the region is any tourism related vehicle able to analyse future change and prepare the region for the visitor world of tomorrow.
David Jessop is a consultant to the Caribbean Council and can be contacted at firstname.lastname@example.org
Previous columns can be found at https://www.caribbean-council.org/research-analysis/
November 22nd, 2019
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.