Growing our No. 1 industry
Our tourism statistics highlights for 2013:
(1) Tourism contributed 10.9 per cent to our GDP from direct services in 2013;
(2) Direct and indirect tourism services contributed 36.2 per cent to our GDP for 2013;
(3) Approximately 12 per cent of total employment is related to direct tourism services and about 40 per cent of total employment when indirect tourism services are added;
(4) Visitor arrivals average approximately 530,000 per annum.
The World Economic Forum (WEF) in a recently released White Paper entitled Unlocking Economic Growth And Development Through Travel Facilitation highlighted the following:
(1) Tourism represents nine per cent of global GDP and one of every 11 jobs;
(2) The global middle class will more than double by 2030;
(3) The rate of international tourism growth between 2010 and 2030 will be highest in emerging economies (Asia, Africa, Latin America, Middle East);
(4) Passenger air transport traffic is forecast to increase by 31 per cent by 2017;
(5) Visa facilitation and a smart travel approach can stimulate the much needed growth in this sector and the wider economy
The chairman of our Barbados Tourism Authority recently suggested that our focus should now shift from arrivals statistics to the amount of money being spent by visitors when they come here.
How does all of this influence our industry as a viable plank of our future economic growth and sustainability? I use this space this week to explore my own observations and thoughts as to how we might achieve this.
Contribution to GDP.
Without comparison to statistics pre-2013, the GDP contribution from the sector for last year paints an interesting picture.
Total contribution to GDP of 36.2 per cent from all tourism services suggests that the role of the indirect tourism activity segment (25.3 per cent) may be even more important than initially conceptualized. It is also worthy of note that a significantly higher level of employment was provided by the indirect tourism segment (28 per cent) compared to the 12 per cent from direct services.
Can we increase the total GDP contribution from tourism? I believe we can:
(1) through existing and future efforts in exploiting sports tourism, entertainment/cultural tourism, corporate incentive and meetings tourism, environmental and adventure and (2) through forging greater linkages with our other sectors like international and other business, agriculture and manufacturing which could further boost some of the targeted segments highlighted above.
The greater linkage to international and other business seeks to convert business trips into future leisure trips for family and friends, while links to agriculture, agro-processing and manufacturing seek to increase local production of goods and services for direct use in the industry. With such an approach the GDP grows across sectors though driven by tourism product, and we should commend the Barbados Hotel & Tourism Association for their efforts in this area.
To further enhance our efforts we must ensure that there are events, activities and attractions available monthly (both in and out of season) for locals and visitors alike. In this regard, I refer to cultural events, culinary events, sporting events, entertainment events, and so on. Together these two approaches also cater to our local market for which our tourism product and services must always remain fully accessible and affordable, as this will enhance the earnings of the sector and generation of GDP – the sector cannot survive without local spend.
The growth of the tourism industry will require further investment to realize its full potential, and while 2013 will not prove our most successful year to date, the statistics in my opinion suggest a good start point for immediate focus. A 25.3 per cent contribution to GDP from indirect services is significant and the creation of more of these support services should be encouraged through entrepreneurship, especially where the majority of their business could possibly be generated from another of our major sectors in the economy.
For example, the provision of safety supplies would be an indirect service for the tourism industry. However, the majority of such a company’s income may be from the construction sector. Our product is a mature product from many perspectives (average age of visitor, age of plant, ranking of product) and its growth at this time is critically linked to additional and/or upgraded hotel plant and restaurants, but also in expansion of support services of an indirect nature.
Target markets and niches.
Barbados has historically placed a heavy focus on the luxury end of the tourist market and as a result this has led to the proliferation of four- and five-star hotels, villas, condos and restaurants primarily along the West Coast, with similar developments along the South Coast in recent years, and I have often questioned the sustainability of such a focus. This focus has led to infrastructural and other local development. But has this been at the exclusion of further integration of the middle class and lower income bracket categories of traveler?
I subscribe to a strategy that says we can’t be all things to all people, but I hold firm to the belief that we need an adequate mix of all wealth categories to ensure sustainability of all properties, restaurants and attractions and by extension our industry. Middle class families have generally continued to take their vacations despite increased economic hardship, even where wealthier travellers have taken a step back, and are also more likely to use some form of short-term debt to make their travel plans a reality.
The WEF statistic that the global middle class will double in the next decade and a half suggests to me that this is where greatest tourist-related travel will originate, for after all, it is the middle class that continues to carry (in more ways than one) the economies of developed and developing nations.
Additionally, the WEF paper with statistics from the World Tourism Organization further suggests that for the 20-year period (and we are already four years in) from 2010, the emerging economies/regions will provide the highest rate of tourism growth. The BRIC countries (Brazil, Russia, India and China) represent these emerging economies and Barbados already has airlift from Brazil, and by extension South and Latin America, and this can augur well for our product and industry in the future, based on the WEF research and statistics.
Merits of the WEF travel facilitation concept. The WEF concept for travel facilitation revolves around Smart Travel that addresses:
1. VISA facilitation: seeks to address the additional burden, costs and inconvenience for travellers. Last week it was noted that the Barbados Passport was one of the most respected internationally, not requiring its citizens to acquire visas for most travel, and in return our product is supported by a regime that does not have heavy visa restrictions on visitor entry.
2. The airport experience: post-2001 we can all vouch for the gross inconvenience of travel in today’s world as we are required to face airport security, immigration, customs and other obstacles that often don’t add any value to airport authorities or the travellers themselves. The WEF calls for a comprehensive approach to managing travel security and border control, rather than the redundant approach that fails to enhance security.
Travellers do not want unnecessary measures to be enforced, especially where there seems to be a lack of consistency, and we do have some room for improvement in this regard. However, it is not a significant deficiency.
Barbados is therefore on the correct path to the Smart Travel concept with the exception of some aspects of the required technological implementation.
The real statistics, sustainability, improvements. Our industry averages about 530,000 visitor arrivals annually, and while this is concentrated heavily in the traditional tourist season, the following analysis sheds better light on the sustainability of the industry:
(1) Average annual arrivals –– 530,000.
(2) Average monthly arrivals –– 44,000.
(3) Average daily visitors –– 1,400.
(4) Assuming 50 properties –– 28 guests per night, per property.
This rough analysis clearly highlights the sustainability challenge for the industry and supports the notion of greater focus on visitor spend and the development of attractions and services to encourage that spend. Such a focus supported by the continued marketing in existing and emerging markets will yield more and more benefit.
Additionally, we need to pay closer attention to the following:
(1) Quality of service –– the best way to differentiate our product.
(2) Cleanliness and attractiveness of buildings and general environment –– historical buildings, properties, city and other streets all need to be kept beautiful.
(3) Revitalization of cities –– bringing back life to our capital City of Bridgetown, Speightstown, Oistins and Holetown, through entertainment, cultural attractions along main streets, boardwalks and other locations
(4) Development of cultural product –– seeking new ways to redefine and showcase our culture through arts, cuisine, and so on in open spaces to attract both visitors and locals.
(David Simpson is Immediate past president of ICAB and a director of the Barbados Entrepreneurship Foundation (BEF), and serves as co-champion of its finance pillar.)