Economic Crisis Battering Bahamas Tourism

Prime Minister Hubert Ingraham says the most serious impact that the global financial and economic crisis has had on small Caribbean economies, like The Bahamas, has been the downturn in the tourism industry.

Mr. Ingraham was speaking at an Inter-American Development Bank (IDB) Regional Forum in Port-au-Prince, Haiti on Friday.  

"Those countries that rely heavily on the North American market as a source for their visitors, like The Bahamas, were impacted earlier," he said.

"But as the global economic downturn enveloped Western European and Asian markets, all Caribbean tourism economies, like those of Barbados and the Organisation of Eastern Caribbean States, have suffered widespread retrenchment."

The forum focused on the economic transformation and ways to strengthen Caribbean economies during challenging times.

Despite serious discounting and other incentives offered in the travel and hotel sector, hotel occupancy levels remain well below levels achieved last year by all of the Caribbean tourism economies, the prime minister said.

"The impact of reduced visitor numbers is being felt in all tourism-related businesses, including food and beverage, beach sports, handicraft and souvenir sales, ground transportation, land and sea excursions and tours, luxury shopping and entertainment," he said.

"And suppliers to the sector are similarly severely negatively impacted."

The impact of the international economic crisis on the Caribbean and The Bahamas has resulted in the slowdown in new construction, particularly hotels and resorts, vacation homes, other business and commercial buildings, Mr. Ingraham said.  

"As in more developed economies, construction serves as a bell-weather for the state of the economies of small Caribbean economies.

"The slowdown in construction in our region has signaled reduced foreign direct investment inflows with implications for foreign reserves," Mr. Ingraham said. "Inevitably, the slowdown in important economic sectors is contributing to an increase in unemployment."

In The Bahamas, the decline in tourism arrivals has led to lay-offs in the hotel sector of the order of 2,200 and that amounts to more than one per cent of the country's labour force, he said.

These numbers do not convey the full story, he added. The tourism sector provides employment for thousands of independent entrepreneurs who make a good, if not lucrative income, such as taxi drivers, tour operators, souvenir and craft artisans and musicians.

"The vast majority of these small business operators have seen their incomes reduced, some drastically," Mr. Ingraham said.

"Such shedding of high wage earning labour is likely to have a downward multiplier effect on other sectors as a result of the fall in aggregate demand."

The Bahamian economy is expected to contract by 3.9 per cent in 2009, he confirmed.

Source: The Bahama Journal