Tourism Outlook

Economic News

22 Jul 2010
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The tourism industry in Barbados is confident it is protected against the threat of falling visitor numbers in the Caribbean, although the forecast is mixed for one of the country's largest revenue earners.



In 2007, tourism accounted for $172m of the country's $1.15bn Gross Domestic Product (GDP) - almost 15% of the total, according to figures from the country's central bank. By comparison, Barbados' manufacturing sector accounted for just $64m of GDP, while agriculture contributed $50m in 2007. Nevertheless, relative to many in the region, Barbados' economy is significantly more diversified, with tourism in the Bahamas, for example, accounting for approximately 60% of GDP.



According to figures released by the Caribbean Tourism Organisation (CTO) in late November, Barbados has recently fared better than many of its neighbours. Though the 290,434 long stay arrivals registered by Barbados in the first six months of the year did represent a 1.8% fall compared to the January to June period in 2007, the decline was far less dramatic compared to a number of other peak Caribbean destinations.



Even more comforting were the figures for cruise passenger stopovers - tourists who visited Barbados for a day or less as part of their liner-borne holiday. In the first six months of 2008, 376,670 cruise passengers stepped ashore, a 15.4% increase on the 326,347 who landed in the first half of last year.



Despite these solid figures, there is little room for complacency. One concern is the key US market, with the CTO report showing a 2.1% drop in arrivals from the US in the first half of the year. While this is nothing like the 12.2% fall seen by Bermuda and just half that recorded by the Bahamas, this decline could intensify as the full effects of the global financial crisis take hold in the US, especially during the forthcoming winter holiday season.



With US tourists making up nearly 25% of total arrivals in Barbados last year, a decline in visitors from the states - as is predicted - could have a major impact on the sector. As US tourists also comprise the majority of cruise passengers, even this growing segment could sail into stormy waters.



The European market is even more crucial for Barbados, supplying 251,832 of last year's 574,576 long stay visitors to the island, or more than 40% of the total. The arrival numbers for the first half of the year were positive, with 131,000 visitors showing a 3% increase compared to the same period last year. Indeed, this rise in European tourists easily offset the fall in visitors from the US. However, with most of Europe's economies now formally in recession, the flow of holiday-makers from the continent could drop.



In recent years, Barbados has worked to increase its slice of the lucrative cruise tourism segment. Improvements to the Bridgetown Port - including dredging to deepen the port's basin to allow the new generation of large liners to berth, and extending the number of piers where cruise ships can dock - have contributed to the rise in seaborne arrivals.



Additionally, the recent completion of a $120m upgrade to Grantley Adams International Airport, including a new arrivals building and a boost in the facility's aircraft handling capacity, should also serve to support the tourism industry.



However, though the airport has received an upgrade, services are about to be downgraded. In early November, British Midland Airways (BMI) announced it would suspend flights to Barbados in the new year as part of the carrier's programme of scaling back operations, which also saw it drop routes from Manchester to Las Vegas and Chicago.



The loss of BMI, which carried 17,000 passengers a year to the island, will be a major blow to the tourism industry, according to Wayne Capaldi, president of the Barbados Hotel and Tourism Association.



"This will have a tremendous effect on our tourism product," he told the local media on November 8. "This is a real shame, and is quite an unexpected surprise."



Though BMI's plans to pull out of the Barbados market have been somewhat offset by Canadian budget carrier WestJet adding the country to its schedule, with the airline intending to offer 13,000 seats annually, the severing of a link to Barbados's prime European market will surely be felt.



Unlike in the Bahamas, the Barbados tourism industry has yet to experience widespread job losses. But as the government is mindful of the effects of a slowdown in the industry, Minister of Tourism Richard Sealy has announced increased promotional spending in key markets such as the UK, where an additional $2m has been allocated for advertising.



It appears the impact of the global economic slowdown on Barbados has so far been limited, but the government is taking cautionary steps to cushion any blow that may be felt in the future.

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