Wednesday, January 26, 2005

A NOTE: last week, the Let's Talk radio programme broke the news in Montserrat that Winair, the carrier chosen to have the temporary monopoly on the new airstrip has been in serious financial woes, indeed had gone bankrupt and was being reorganised. Monday afternoon, we learned thast this Wed., the Let's Talk slot will be pre-empted by a Government broadcast on the status of the airport project. We encourage our listeners and readers to participate. In the meanwhile, here is the text for a speech to the Montserrat Tour and Taxi Association.

The Montserrat Tour & Taxi Association:
The "logistics" of tourism

GEM 05:01:17a

Madam President, Members, etc.:

INTRO: I have been asked to briefly discuss the "logistics" of tourism in Montserrat, with a special view to potential opportunities facing tour and taxi operators. This of course comes in the context of (1) the opportunities presented by the ongoing volcano eruption, as the only live volcano in the premier cruise tourism destination, the Caribbean, and (2) the proposed Little Bay port and town development project. Thus, our discussion tonight naturally needs to engage: (a) the raw potential for a substantial cruise ship tourism market, (b) the required infrastructure developments to facilitate the market, (c) the promotion and affordability concerns, and (d) resulting opportunities and challenges for tour and taxi operators. So, now, let us proceed.

A] BACKGROUND: Tourism and travel, together, are the biggest export industry – and the fastest growing economic sector -- in the world. For instance, according to the World Tourism Organisation, in 2000, 698 million people visited a foreign country, spending US$ 478 billions, or US$ 685 per tourist, "making tourism the world's number one export earner, ahead of automotive products, chemicals, petroleum and food," while employing some 7% of the global workforce.

Here in the Caribbean, the World Travel and Tourism Council reports that "[I]n 1998,direct and indirect GDP [Gross Domestic Product, roughly speaking: how much was earned by all the people in a country in a given year] from travel and tourism was over US$28 billion, accounting for about 25 percent of the region’s total GDP . . . and is expected to reach over US$48 billion by 2005 (WTTC and WEFA 1999)." Consequently, "travel and tourism provided over 2.9 million jobs in 1998 (more than 25 percent of total employment); this number is expected to grow to over 3.3 million (27 percent of total) by 2005." For instance, in 1997, 18.8 million tourists visited us (mostly from North America and Europe), and spent US$ 861/visit, or ~ US$ 16 billions. (These trends continued into the early 2000’s, with a temporary dip due to the 9/11 attacks and the associated global recession. But now, growth is back on track and by 2006/7 the number of tourists visiting the region could climb to over 25 millions. 4.5% is a reasonable estimate for growth of the industry over the decade.)

In short, the region is roughly four times as dependent on tourism and travel than the "average" for the world, and creates about ¼ of its annual income from this industry. We are now a tourism region, not an agriculture region. No wonder, then, that the Caribbean Tourism organisation reports that "Most of the countries [in the region] with relatively high per
capita GDP have a high percentage (more than 30 percent) of GDP derived from [tourism]."
Cruise ship tourism is an increasingly important part of the region’s tourism product, so let us now turn to it.

B] CRUISE SHIP TOURISM: It can be argued that cruise ships are a significant competition to our region’s hotels, and significantly contribute to environmental challenges. But, this sector is increasingly important to our region: So, by 1998, "71 cruise ships (which can carry over 93,000 passengers) from 24 lines plied the Caribbean, some year-round and some seasonally," and of nearly 9 million cruise ship tourists worldwide in 1999, over 3.8 millions cruised in the Caribbean, which is close to North America and therefore fits in well with the short vacation cruise model favoured by this emerging mass market.

A measure of our market potential is the fact that, even with 6.5 – 7 million passengers per year in 1999 – 2000, "only 11% of North Americans have ever set sail and cruising [had attracted] only 2% of the entire leisure travel industry." In short, there is "an extraordinary growth potential for this industry."

Other Caribbean countries have been quick to take advantage of this opportunity. For instance, a recent report observes: "[w]hen banana farming fell off in the late 1990s, the government of St. Lucia began creating incentives to push its tourism and banking sectors. Today agriculture represents only 7.9 percent of the gross domestic product, while services account for 72.5 percent and industry 19.6 percent . . . . Close to 380 cruise ships make port calls each year and account for 60 percent of tourist arrivals [and though] cruise passengers tend to spend small amounts of time [< 1 day] and money [~US $ 50] during visits, statistics reveal that they are likely to return for a longer vacation."

This reflects a trend where up to the 1970’s, a 20,000 ton, 800 passenger boat was a big one; then in the early 1980’s this moved to 70,000 ton, 2,0000 passenger vessels, until now, the latest class of 138,000 ton ships launched by Royal Caribbean Lines exceeds 1,000 feet in length, and has space for 3,000+ passengers and nearly 2,000 crew.

These factors, coupled to Montserrat’s unique situation of having a live volcanic eruption "in progress," suggest:

C] A SIGNIFICANT MARKET OPPORTUNITY: While the volcano crisis has brought us much dislocation, it has also opened the door for a significant nature-in-action tourism opportunity. Obviously, with a 600 metre, "temporary" air strip, that opportunity has to focus on cruise shipping; so, we need to focus on the development proposals for Little Bay.
These proposals have raised several possibilities: a marina – we are roughly half way between the Virgin Islands and the Grenadines – as well as a Cricket complex, a Cultural Complex [currently under construction], a housing development, some handy shopping arcades, and a Container Port and a Cruise-ship-ready pier, with a facility for tour buses and taxis. It is projected that up to 100,000 visitors per year could be accommodated: ambitious but not impossible, given the numbers already achieved by St Lucia and the underlying market potential and trends.

What would such numbers mean?

100,000 visitors per year is 2,000 per week, what one large vessel or several smaller ones would carry. Thus, we might be looking at 2 – 3 cruise ships per week, and maybe up to 600 – 800 passengers [and it may be a good idea here to embed the price of a volcano island tour into the cruise package!]. That would reasonably require 20 to 30 or even 40 tour buses, depending on capacity. 30 such buses would in turn require 30 round trips on our main road (all at nearly the same time), and our visitors centres and points of interest would also need to be able to accommodate that many busloads of tourists at once. This also holds for HM Immigration and Customs.

These amount to a tall order, so now, let us consider:

D] OPPORTUNITIES, CHALLENGES & CONCERNS: Clearly, 100,000 cruise ship visitors per year constitutes a feasible but challenging target. But, to begin to access it, we will need to have a Cruise Ship pier capable of accommodating the ships that would carry the tourists. (I am informed that such a pier, too, could facilitate roll-on, roll-off container cargo – especially if there are designated cargo and cruise days; but, we should note that in many islands, such as Antigua, the two types of facilities are kept separate.)

Similarly, we would have to invest in developing and promoting the Volcano Park and other activity and interest sites that would be capable of absorbing the associated numbers – and at prices that are competitive, given the point that cruise ship visitors probably will not spend more than US$ 50 - 100 out of pocket in any one port. Further, the resulting market should have reasonably expected returns on the investment that will have to be attractive relative to their degree of risk.

But, given the trends in the world and region, we have to think seriously about them: for the foreseeable future, tourism is the Caribbean’s number one industry, and we need to be a credible player in it. And, Little Bay is plainly the key alternative to beat if we are to our be able to enter that market. So, let us conclude with some pointed questions:

If not now, then when will we begin to develop a credible tourism sector?

If it is not to be based in Little Bay, then where – and, why?

If not us, then who?

So, now, let’s talk . . .


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