The Caribbean Tourism Organization in its report on the current economic outlook for the United States says that the GDP is expected to taper off to a slower growth rate of around 2.2% in the second half of 1996. This quarter is expected to finish at over a 3% increase in real GDP. Some warning signs are on the horizon. The Conference Board’s index of consumer confidence fell to 101.2 in May after the six-year high recorded in April. The decline lay entirely in the index of expectations for the economy over the next six months and that may be reflected in a new Dimension Research poll which says that 38% of U.S. households do not plan a vacation away from home this year. That figure is up from 34% in 1995. Fewer consumers expect their incomes to rise this year and there is more concern about job prospects. Nevertheless, confidence remains at a fairly high level and we believe that summer travel prospects are good among our main target audience segments.
CTO also looks into prospects for Canadian travel to the region and says that it appears that the flow of visitors will continue to improve with low inflation, a growing trade surplus to further shrink the deficit and signs that the Canadian dollar is making a comeback in spite of a Central Bank push to reduce short term interest rates which are currently below the U.S. for only the fifth time in the last 20 years. The political situation also appears to have stabilized with the spectre of a Quebec secession deferred for at least several years.
Moreover, the organization says that South America, primarily Argentina and Brazil, will continue to grow as a source market. After decades of economic decline and rampant inflation, Argentina seems on the verge of resuming economic growth. Consumer prices rose only 1.6% in 1995, the lowest level in 51 years and the tough policies of the Menem government towards fiscal reform and economic restructuring appear to be taking hold. Economic growth this year will be driven by low interest rates, low inflation and the return of foreign capital investment. Brazil, Argentina’s major partner in Mercosur – the huge common market of 200 million people with a collective GDP of $900 billion – is temporarily on the opposite course. Its real interest rates have soared and inflation although reduced is still too high at 18.2% through April. First quarter GDP fell 2.1% from a year ago and President Cardozo’s own push for fiscal reform has hit some major roadblocks in Congress. Nevertheless, the situation should improve and we continue to advance the case that these countries, together with Chile, represent the next major market for the Caribbean.
In the same report, the Caribbean Tourism Organization says that the United Kingdom shows that by the end of April, total long haul traffic was up by a whopping 29%. The Caribbean, in spite of a continuing impact from last season’s hurricanes, was up 23%. In the region, the biggest winner was Barbados, up 74% to a 4.6% share of the overall market. The Dominican Republic was up by 47% at a 3.3% share, and Jamaica up by 8% at a 2.5 share. The biggest loser was Antigua, down by 21%. However, it is felt that its recovery will be rapid. Although only 1% of total long haul business, Mexico was up by 318%, with a majority of the increase due to Cancun charter traffic.
Competitively, Florida bounced back with an increase of 19% and Western USA was up by 52% with Las Vegas the big draw. The other trendy destination this winter was Goa, on the west coast of India, up by 45% and it is becoming major competition for the Caribbean’s beaches. Looking ahead to summer, long haul bookings from the UK for the period May through October are up by 16% from a year ago.
Caribbean bookings are up 10% and Florida by 18%. Dominican Republic bookings for the summer are up by 46% and it appears that it could wind up with 8% of the total long haul summer business. Barbados bookings are up by 15% and Jamaica 3%. Mexico continues with a large percentage growth with advance bookings ahead by 235% which would represent a 3% market share. Also noteworthy is a big increase in cruise activity.
Although we have no breakout for the Caribbean and business was brisk to the Mediterranean and Aegean, the total cruise business was up by 117% for the winter and there is a 50% increase in bookings for the summer ahead.