CHTA President Urges To Strengthen Tourism

He made these remarks during a keynote address to the graduating class of the School of Hotel Management and Tourism at the San Pedro de Macorís-based Eastern Central University (UCE) in the Dominican Republic.

Caribbean Hotel & Tourism Association President, Enrique De Marchena Kaluche
De Marchena Kaluche, a key figure within the Dominican tourism and real estate industries in addition to his role at CHTA president, offered insight into current tourism industry developments and an overview on what is being done by various governmental bodies and private-sector organizations within the Caribbean region to combat the negative effects of the global economic crisis.

“There is no doubt that, as far as numbers of tourists and the spending power of American visitors are concerned, the American market is the main source of tourism for the Caribbean,” said De Marchena Kaluche during his third appearance at the university.

“Dominican Republic, Cuba and the Mexican Caribbean, to a great extent – and Jamaica, to a lesser extent – are exceptions to this. However, the rest of the Caribbean depends heavily on the American market,” De Marchena Kaluche noted.

“The reduced spending power of the American family and the uncertainty weighing on the minds of everyone has led to a reduction in potential arrivals to the region,” said De Marchena Kaluche, suggesting that the Caribbean “strengthen international advertising and programs to attract investments by latching onto innovative and creative ideas” to counter the effects of the tourism reductions seen across most of the region.

Citing tourism increases in Cuba and Jamaica as the rare exception, De Marchena Kaluche explained that the “reality for the rest of the Caribbean is more like the Bahamas rather than Cuba. In other words, islands such as St Lucia, St Kitts, Bermuda, Barbados, Grenada and others, suffered a 10% or more decrease in the influx of tourists.”

The following is an excerpt from De Marchena Kaluche’s remarks, detailing the steps various Caribbean nations have taken to help reduce the impact of the decline in tourism and programs some have initiated to stimulate bookings and increase their competitiveness within the global industry:

“The Antiguan government was one of the first Caribbean countries to react to the economic crisis. Last October they got an emergency economic plan off the ground. This plan set out certain benefits or concessions for hotels, such as a 15% reduction on electricity bills and duty free purchase of diesel, as well as other minor measures.

“The Bahamas took the following measures to counteract the economic crisis: exemption from import tax on a limited number of products for hotels, such as glassware, dishware, silver, marine parts; elimination of Customs/Immigration surcharges to air lines; support infrastructure in the ports to attract cruise lines; road construction; US$ 400 million invested in new airport terminals and facilities; hosting Miss Universe 2009 at a cost of US$ 6 million shared between the public and private sector; a help program for workers granting unemployment insurance; funds assigned to aid workers let go from hotels; and a program to enhance tourist attractions.”

In regards to the Bahamas, De Marchena Kaluche noted that “500 workers let go from the hotel sector [have been] contracted by the government to improve the appearance of the entire island.”

“In Barbados, the government made an extra US$10 million available for tourism marketing, half of which was spent in the last quarter of 2008 and the rest is currently being invested,” said De Marchena Kaluche.

“The [Barbados] government also set up what it calls ‘The Tourist Industry Aid Fund.’ This fund was created for all businesses involved in tourism – not just hotels, but restaurants, tourist attractions, activities, vehicle rental and other small tourist businesses. The fund was set up with an initial input of US$ 7.5 million, which was distributed in the first quarter of this year.

“The second phase will see the investment of a further US$5 million to be handed over at the end of August 2009…however, for this second distribution the employment factor will be in play. Companies that have let go a high percentage of their employees will not be eligible for aid unless they can prove certain conditions or circumstances.

“The government has also financed other marketing initiatives with the airlines and JetBlue will be introduced in October, offering daily flights [to Barbados] from New York,” he added.

In Bermuda, De Marchena Kaluche noted “special concessions to hotels in relation to tax on salaries. Likewise, negotiations were allowed with the trade union regarding the freezing of annual salary increases, customs incentives were broadened as a relief initiative for hotels and [Bermuda’s] advertising budget was increased to US$ 2 million.

“The Federal Government of Mexico began an ambitious campaign called ‘Viva Mexico’ which focuses on increasing tourism. The Island of Cozumel was included in this campaign, and a new brand of advertising for Cozumel is also to be launched.

“Likewise the [Cozumel] hotel industry has contributed US$1 million towards promoting Cozumel in the American, Canadian and Mexican markets,” noted De Marchena Kaluche.

“Finally, due to the lack of tourists in the main tourist resorts, the State and Federal governments [of Mexico] have set up a special program to help employees by granting two months of financial aid,” he added.

“An agreement was drawn up between the Grenadian government and the Hotel and Tourism Association of Grenada [to] protect existing jobs in the tourism industry – particularly in the hotels and guest houses – keep the hotels and guest houses functioning throughout the economic crisis and protect the direct air services negotiated by the Air Transport Commission.

“A Social Protocol is also being negotiated,” said De Marchena Kaluche, advising that “provisions will be added to the Social Protocol guaranteeing help for the tourism industry.

“In Guadalupe, an extra US$3 million has been injected for the marketing and advertising of the island as a tourist destination,” he noted.

“In Puerto Rico, the government has…invested US$12 million in an advertising campaign for the island which began at the end of 2008. An extra US$5 million was added in March-April 2009 to reinforce the campaign [and] special concessions for travel agents working with the ‘Dining out in Puerto Rico’ program have been made,” said De Marchena Kaluche, further noting that the island is “currently studying various options to offer social and employment aid.

“In St. Lucia, US$5 million [was] invested by the government in an overseas advertising campaign, [while] St. Martin has reduced room tax from 5% to 4%,” said De Marchena Kaluche, pointing out that St. Kitts and Nevis now offers “exemptions on wines and food for small hotels with under 100 rooms [with the] same deal for restaurants.”

He also touted “tax amnesty for arrears” in St Kitts and Nevis with “no penalties.”

De Marchena Kaluche applauded St Vincent and the Grenadines for allowing “electricity consumption for hotels at the same price as domestic users, reduced income tax from 30% to 20% for hotels applicable to 2009 income [and] 20% income tax for yacht operators.

“The US Virgin Islands [launched an] emergency marketing plan with US$1.4 million capital, US$185,000 of which was contributed by the private sector.”

Speaking of his native Dominican Republic, De Marchena Kaluche advised of strategies announced by Secretary for Tourism, Francisco Javier García, including plans to “double the investment in advertising, promotion and public relations, [open] new offices in Europe, the US and Latin America, work with emerging markets and promote a regional communications program in the Caribbean.”

He also spoke of greater efforts to facilitate investments, including “the elimination of bureaucratic hindrances to speed up the processing of new projects,” specifically noting the creation of “a new unit for processing new projects combining elements from the Dept. for Tourism and the Dept. for the Environment.”

De Marchena Kaluche discussed new methods the Dominican Republic is introducing in regards to working with tour operators, including “signing two-year contracts [for increased] stability and offering a bonus for increasing passenger numbers.”

He further advised of investments for infrastructure improvements, such as the improvement of roads in major tourist hubs by July 3, 2009 and efforts to “fight poverty in Punta Cana [with] a program to build housing utilizing private companies in exchange for lands with great tourism potential.” He also spoke of heightening local awareness with “a communications program to increase local self esteem and appreciation for tourism.”

Coordination with the Private Sector was a major theme in his remarks on the Dominican Republic.

“From our point of view these are important measures that have been announced. However, rather than being a plan to counteract the crisis, most of these measures are steps and policies that should have been put into practice three or four years ago and, in truth, constitute a long overdue overhaul,” said De Marchena Kaluche, still speaking about the Dominican Republic.

“For example, the fact that the previous tourism authorities created a type of project dam obstructing the influx of millions of dollars in local and foreign investments into the system for months and causing incalculable damage to the development of the country and tourist industry, and that these same projects are now facing grave financing difficulties because of the global banking problems and resulting credit restrictions, is inexcusable.

“It is also wise to call attention to the growing tendency for state bodies to create administration taxes or increase taxes charged to hotels exorbitantly, said De Marchena Kaluche.

“It seems that now state bodies [within the Dominican Republic] in need of further resources, far from tightening the belt which is common practice these days, have come to the conclusion that the tourist industry, now crippled from three consecutive years of difficulties, is their gold mine,” he added, warning of the damage this will cause to the sector.

Looking back at the overall picture in the Caribbean region, he said “the comparative analysis is revealing in so far as each Caribbean island has taken steps tailored to meet their individual needs. However, it should be noted that they all have common elements: reduction in taxes, job protection, social aid, increased advertising budgets and even the issue of electricity, which has an enormous impact on costs for the majority of the [Caribbean] islands, negatively influencing the competitiveness of our tourism product.”

During his remarks, he also brought up the issue of interconnectivity within the Caribbean, emphasizing the necessity for freedom of movement between nations.

“Globalization and the subsequent reduction of the limiting effects of borders and cultural differences is an irreversible international economic and social process,” said De Marchena Kaluche.

He noted that the “Caribbean is diverse, but at the same time, it is an intensely interconnected market,” but criticized the absence of flight connections within the Caribbean as well as “restrictive immigrations policies, the latter likely to be the topic of debate at the next CARICOM Heads of State Meeting.”

De Marchena Kaluche received a standing ovation for his remarks at Eastern Central University and expressed honor for having been welcomed back for a third time by UCE President, Dr Jose Hazim Frappier.

Source: Caribbean Net News