Caribbean Tourism faces a tough UK market
By any measure, tourism remains the biggest industry in the Caribbean region. The UK is a key source market for visitors, and many jobs depend on arrivals to the region, remaining strong. But the challenges are many as tough economic conditions, taxation, and incentives for Brits to stay at home are hard to ignore.
Despite the optimistic economic outlook outlined in the Chancellors March 21st budget speech, Trevor Greetham, a fund manager at the UK's biggest ISA manager, Fidelity, said that the UK had little hope of emulating the impressive recovery currently on course in the US unless the Government relented on austerity measures. "America is experiencing a growing housing market, improved car sales, and more job creation. We should be striving to create these conditions here, but austerity is keeping growth weak in the UK," he said. Greetham’s sentiments are consistent with those expressed by other players in the UK’s financial services sector.
It is against this background that Chancellor of the Exchequer George Osborne delivered a further blow to those who depend on the travel and tourism sector. The dreaded Air Passenger Duty (APD) tax rates on travel will increase by double inflation from 1 April 2012. It was also announced that APD rates would increase from 1 April 2013 with the Chancellor expecting to collect £2.7bn in 2011-12, rising to £3.9bn by 2016-17. So at a time when consumers are feeling the pinch in their wallets, taxes will drive up the cost of travel.
As if that was not enough, a £5m advertising campaign was launched in March. A series of TV adverts and a discount scheme hopes to encourage people to take a staycation this year of the Diamond Jubilee and Summer Olympics. VisitEngland is leading it with the support of the tourist boards of Scotland, Wales, and Northern Ireland. Jeremy Hunt, secretary of state for culture, media, sport and the Olympics, explained that 'This is the first time we've had a national domestic tourism marketing campaign.” He went on to say that 'It is completely measurable – we will know how many nights are booked as a result of this campaign.” Hunt concludes by saying that '…as an industry and as a Government, we will know whether this type of campaign works and what the return on investment is.”
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Caribbean countries and the Caribbean Tourism Organisation (CTO) have long been lobbying London to revise the APD with Grenada’s Tourism Minister Peter David, describing the measure as not only negative but discriminatory. Flights from the UK to the Caribbean, discriminatory, are taxed at the same level as the UK's flights to the United States. In fact, one can argue that there is an inherent bias towards destinations located west, of East coast US destinations, over the Caribbean islands. This is because travelers incur a higher APD charge for direct flights to the Caribbean, even though these U.S. destinations are further away.
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In February, the Jamaican Tourism Board (JTB) reported an 8% decline in Jamaican arrivals in May 2011 to January 2012 period, compared to the previous year. Tourism Minister Dr. Wykeham McNeill attributed part of the decline to the APD and has stepped up it's marketing in the UK. Specifically, the JTB will begin advertising on UK television “for the first time in many years.” A very high profile Virgin broadband advertising campaign featuring Usain Bolt is already boosting Jamaica’s profile in the UK. His presence at the London 2012 Olympics will hopefully boost the profile of Jamaica as well.
Trinidad and Tobago will set up a Trinidad and Tobago Village to highlight all aspects of Trinidad and Tobago culture during the Olympic period. There will be fashion, music, food, theatre, film, art, workshops, and business exposure. From July 22 to August 25, the Tricycle Theatre in Kilburn, London, will be a mini T&T. I look forward to visiting this Village and hope that it ties well into a comprehensive destination promotion strategy. I wonder whether the plans announced in the March 2011 press release (TDC website) for Jamaica and Trinidad and Tobago to work together to promote the Caribbean region during the 2012 London Olympics are still on the agenda? To hear that our region is working together is the most beautiful melody.
My name is Derren Joseph, and I love my country, and I love my region. Despite our current challenges, I continue to have the audacity of hope that we will all enjoy a brighter tomorrow.
Read more on derrenjoseph.blogspot.com.
Note: The blog that used to be here is now at https://www.mooresrowland.tax/.