Why tourism is so important to the Dominican economy

A recent study, “Dominican Tourism: A Decade of Contributions 2009-2019,” released last week shows how important tourism is to the Dominican economy, the potential of Dominican tourism and the country’s leadership in the region.

The Dominican Association of Hotels and Tourism (Asonahores) and the Banco Popular sponsored the research carried out by the economic intelligence firm, Analytica. The study reveals there is a multiplier effect of five for every hotel employee. The study provided insights into how hotel jobs impact transportation, entertainment, food production and other value-added chains throughout the country.

The study found that tourism creates 10% of all the jobs in the country, over 500,000. The study highlights the direct foreign investment (FDI) in tourism was around US$5.2 billion for the period. This was 20% of the total FDI for the 10-year period and 30% for the last five years of the study period.

The study found that eight out of every 10 dollars earned from tourism industry remain in the country and 60% of all profits have been reinvested.

This massive inflow of resources into the Dominican economy is explained by the fact that visitor arrivals during the decade exceeded 65 million, including 7.5 million in 2019, with a total expenditure of US$63 billion. This represents an increase of 68% in the period.

Meanwhile, cruise activity alone increased by 121%, while air arrivals were double those seen for the rest of the Caribbean.

The visitor flows drove an increase of 16,372 rooms over the last decade, which reached 82,221 in 2019. At the same time, hotel occupancy increased by more than 11 points, rising from 66% in 2009 to 77.5% in 2018, the year before the DR was affected by a media crisis.

The growth of the Dominican Republic’s gross domestic product (GDP) generated by tourist demand presented an average growth of 8.01%. Private activities linked directly or indirectly to tourism represent 13% of Gross Domestic Product (GDP). This figure rises to nearly 16% if public activity and domestic tourism are taken into account.

The research indicates that as a result of tourism activity, 573,000 jobs were generated in the country, directly and indirectly, which corresponds to 12.3% of all private sector jobs in the country.

In terms of taxes, tourism contributed more than RD$400 billion in taxes, an average of 1.28% of the GDP each year. The tourism industry is the mainstay of the balance of payments, contributing to the accumulation of international reserves.

The report was presented to the general public during an event with the participation Tourism Minister David Collado; the executive president of the Banco Popular, Christopher Paniagua; the president of Asonahores, Rafael Blanco Tejera; the president of the National Business Council, Pedro Brache; and the executive vice president of Asonahores, Andres Marranzini Grullón.

The study is a follow up of a first study carried out in 2017.

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19 July 2021