Caribbean Tourism Report Q3 2008

Q108 Performance Patchy Although only 13 Caribbean countries have yet reported figures for Q108, these indicate that performance was mixed in the first quarter. Four countries reported declines in tourist arrivals, with the others displaying a range of growth rate. Overall, the range was from a decline of 5.7% y-o-y in Montserrat to an impressive growth of 43.9% y-o-y in Curacao. Those countries that experienced declines were Belize, with 0.9%, Bermuda with 4.9%, and Martinique with 2.3%. Those that experienced tourist arrival growth were Antigua and Barbuda (16.8%), the Cayman Islands (9.0%), Cuba (15.7%), the Dominican Republic (5.6%), Jamaica (13.3%), Puerto Rico (0.9%), St Lucia (17.1%) and the US Virgin Islands (9.1%).

It is noticeable that most of those countries experiencing high growth rates were those reporting figures for January to March, rather than just for January to February. This indicates that the region received a significant arrivals boost over the Easter holiday period, which fell in March this year. We expect other countries to report similar increases in March tourist arrivals. However, we remain cautious about prospects for the region in 2008, owing to slow economic growth in the US and surging fuel prices pushing up flight expenses. As such, we expect moderate growth in 2008, forecasting arrivals to total 25.1 million.

Focus On the Dominican Republic The Dominican Republic is one of the most popular tourist destinations in the Caribbean. It is popular both as a cruise destination and for longer visits, and provides a variety of holiday packages designed to appeal to tourists from North America and Europe. Along with the rest of the Caribbean, the Dominican Republic is set to experience below average tourist industry growth in 2008, as slowing global growth weighs on tourism potential. However, we believe that the Dominican Republic is well-positioned to ride out this temporary slowdown, given its well-established tourist industry and a good balance between high-end tourists and local and backpacker visitors.

Cruise Sector Performs Strongly Final 2007 figures released by the Caribbean Tourist Organisation (CTO) indicated that the cruise industry performed well in 2007. Some countries experienced sharp increases in cruise passenger arrivals, such as Antigua and Barbuda (42.7%), the British Virgin Islands (29.6%), St Lucia (69.7%) and St Vincent and the Grenadines (50.9%). In part this was due to the launch of new cruises, particularly by Royal Caribbean, but also reflected cruise bookings related to the Cricket World Cup, for which some companies laid on special cruises, revolving around the host nations. We expect cruise performance to remain strong in 2008, to some extent compensating for a decline in flight arrivals. This is since tourists from nearby North and Central America may choose cruise tours rather than paying for expensive flights to holidays in other parts of the world.