disertation (masters)

5/20/2018 Disertation (Masters)

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Sustainable Tourism Development: The Case of Barbados

by

Nathali Rosario Greenidge

2006

A Dissertation presented in part consideration for the degree of MSc in

International Business


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SUMMARY

This study examines the issue of sustainable tourism development in the case

of Barbados. As part of the background analysis, the study begins by defining

what is meant by tourism and discussing its benefits and costs. It then goeson to analyse trends in the tourism industry at both the global and regional

level. In this regard, it shows tourism as the largest and fastest growing

industry in the world and as being the most important sector for many

countries, particularly developing countries. The analysis is then narrowed to

Barbados where the evolution and structure of the industry is discussed in

detail. Barbados is shown to be heavily dependent on tourism and indeed

tourism has become the most significant sector in the economy. It is also

identified as the industry that will contribute the most towards the continued

economic prosperity for the country and also propel the country into further

social development, plus act as a catalyst for the conservation of the physical

environment. Therefore, the importance of tourism to the overall development

of the country can not be overstated. Yet, tourism can have adverse impacts

on the environment and the society if not managed and developed in a

manner that is in harmony with the surroundings and the locals. Issues such

as management of the islands water resources, over-crowding and the impact

on the environment are of paramount importance. Thus, the question arises

as to whether the industry is on a sustainable development path or whether its

future would require a different approach to the development. The study then

reviews the literature on assessing sustainable and applies a number of

indicators to the case of Barbados. In general, the results suggest that tourism

development in Barbados is on a sustainable path. Specifically, the economic

benefits of tourism will continue to accrue to the Barbadian economy well into

the long-term, any negative social effects are at manageable levels and the

authorities are implementing various measures to deal with the adverse

impacts the industry has had on the environment. These measures are aimed

at ensuring that the tourism industry develops in harmony with the

environment.


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ACKNOWLEDGEMENTS

In completing this dissertation, I greatly give thanks to God for giving me health,

wisdom and the strength to overcome all difficulties.

I would like to express my sincere appreciation to my supervisor, Dr Peter Lyth, for

his kind help, unfailing interest, guidance and support during the writing of this

dissertation.

This dissertation, and indeed the entire master program would have not had been

possible without the support and understanding of my husband, Kevin. For this, I

give him a very special thank you and my deepest gratitude.

I also acknowledge the assistance of a number of organisations, including the

Central Bank of Barbados, the Caribbean Tourism Organisation and the Barbados

Ministry of Tourism for providing me with valuable data and information on Barbados

and the Caribbean for my research.

Also, I sincerely thank my mother, Gladys for her extraordinary and unconditional

help during the year.

I am grateful for the assistance provided by the rest of my family, especially Kaye

Greenidge and Dion Greenidge. I am grateful too for the support of friends. So my

sincere thanks to John Williams, Darrin Downs, Roland Craigwell and especially

Tamika Beckles for kindly providing me with some interesting reading material.


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TABLE OF CONTENTS

Summary.......vi

Acknowledgements.......vi

Table of Contents......vi

List of Figures.......vi

List of Tables ....vi

1. The Tourism Industry ....................................................................................................11.1 Defining Tourism...................................................................................................11.2 Benefits of Tourism ...............................................................................................1

1.2.1 Foreign exchange earner................................................................................2

1.2.2 Employment generator...................................................................................21.2.3 Encourages inter-industry linkages................................................................21.2.4 Other benefits.................................................................................................3

1.3 Costs of Tourism....................................................................................................41.3.1 Seasonal Employment....................................................................................51.3.2 Leakages ........................................................................................................51.3.3 Environmental costs:......................................................................................61.3.4 Socio-cultural destruction ..............................................................................6

1.4 Overview of World Tourism..................................................................................71.5 The Regional Picture..............................................................................................81.6 The Caribbean Picture..........................................................................................12

1.6.1 Market performance.....................................................................................131.6.2 Distribution of earnings ...............................................................................141.6.3 Importance of Tourism to the Caribbean.....................................................141.6.4 Some challenges for the region....................................................................16

2. The Tourism Industry in Barbados ..............................................................................172.1 Introduction..........................................................................................................172.2 Structure and Development of the industry .........................................................20

2.2.1 Exploration and Involvement (1956-1964)..................................................212.2.2 Development- accelerating growth (1965-1972).........................................252.2.3 Consolidation decelerating growth (1973-1992) ......................................26

2.2.4 Rejuvenation (1993-2005) ...........................................................................292.3 Barbados Tourism Product Just Beyond your Imagination...........................302.4 Importance of the Industry...................................................................................332.5 Costs and Challenges of Tourism ........................................................................36

2.5.1 Environmental Issues...................................................................................362.5.2 Socio-cultural Issues ....................................................................................37

3. Sustainable Tourism.....................................................................................................403.1 The Concept of Sustainable Tourism Development............................................403.2 Assessing the sustainability of tourism development..........................................45

3.2.1 Possible Indicators To Assess Sustainable Tourism Development .............474. The Potential for Sustainable Tourism Development in Barbados..............................55


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4.1 SWOT analysis of the Barbados tourism Industry ..............................................584.2 Economic Sustainability of Tourism ...................................................................59

4.2.1 Sustaining Tourist Satisfaction ....................................................................604.2.1.1 Indicator 1: Perception of value for money .................................................604.2.1.2 Indicator 2: Percentage of returnees ............................................................61

4.2.1.3 Indicator 3: Willingness to return or recommend a friend...........................624.2.1.4 Indicator 4: Visitor security .........................................................................634.2.1.5 Indicator 5: Product rating ...........................................................................64

4.3 Social Sustainability of Tourism..........................................................................654.3.1 Socio-Cultural Carrying Capacity................................................................654.3.1.1 Indicator 6:Tourism density ratio.................................................................664.3.1.2 Indicator 7: Tourist penetration ratio ...........................................................674.3.2 Tourism related employment.......................................................................684.3.2.1 Indicator 8: Direct and indirect employment from tourism.........................68

4.4 Environmental Sustainability of Tourism............................................................694.4.1 Indicator 9: Solid waste management ..........................................................70

4.4.2 Indicator 10: Sewage treatment and wastewater management ....................714.4.3 Indicator 11: Natural Resources Issues and Land Use.................................724.4.4 Indicator 12: Potable Water and Energy......................................................724.4.5 Indicator 12: Green Globe 21 ......................................................................73

5. Conclusions..................................................................................................................745.1 Summary of Study ...............................................................................................745.2 Major Findings and Policy Implications..............................................................755.3 Limitations and Suggestions for Further Research..............................................78

Appendix 1...........................................................................................................................79

References............................................................................................................................84


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LIST OF FIGURES

Figure 1-1: Regional Shares of Total International Arrivals ..............................................10

Figure 1-2: Regional Shares of International Tourism Receipts ........................................11

Figure 1-3: Growth in Tourist Arrivals since 1970: Caribbean and World........................12

Figure 1-4: Tourists Arrivals to the Caribbean by Main Markets (2004)...........................13

Figure 2-1: A Map of the Caribbean and Barbados............................................................17

Figure 2-2: Map of Barbados..............................................................................................18

Figure 2-3: Tourist Arrivals to Barbados 1956 2005 (in thousands)...............................21

Figure 2-4: Tourist Arrivals to Barbados by Market: 1956-2005 (in thousands)...............24

Figure 2-5: Organisational Chart for the Barbados Tourism Industry................................31

Figure 4-1: Feeling of Safety in Barbados (percent of total respondents)..........................64

Figure 4-2: Barbados Tourism Employment (000s of jobs)..............................................69

LIST OF TABLES

Table 1-1: Worlds Top Ten Destinations for International Tourists..................................9

Table 1-2: Worlds Top Ten Tourism Earners..................................................................10

Table 1-3: Caribbeans Top Ten Destinations for International Tourists Arrivals ...........13

Table 1-4: Caribbeans Top Ten Tourism Earners............................................................14

Table 2-1: Tourist Arrivals to Barbados by Market: Shares and Growth Rate (1956-2005)

..........................................................................................................................23

Table 2-2: Sectoral Contributions to Real GDP in Barbados (1970-2005) in percent......34

Table 2-3: Sectoral Contributions to Foreign Exchange Earnings in Barbados (1970

2005) in percent ...........................................................................................................35

Table 3-1: WTO (1995) Core Indicators of Sustainable Tourism.....................................49

Table 3-2: WTO (2004) Baseline Issues and Baseline Indicators.....................................50

Table 3-3: English Tourism Council National Sustainable Tourism Indicators (2002)....51

Table 3-4: Spanish System of Environmental Tourism Indicators (2003)........................52

Table 3-5: Guidelines for a SWOT Analysis ....................................................................54

Table 4-1: Coverage of Caribbean Tourism Organisations Surveys ..............................58

Table 4-2: SWOT Analysis of Barbados Tourism Industry.............................................59

Table 4-3: Perception of Value for Money (on a scale of 0 to 10)....................................61

Table 4-4: Frequency of Visits to Barbados (percent of total visitors) .............................61

Table 4-5: Frequency of Visits to Barbados by Purpose of Visit (percent of total visitorsin 2005)........................................................................................................................62


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Table 4-6: Willingness to Return to Barbados or Recommend it to a Friend (percent of

total visitors) ................................................................................................................63

Table 4-7: Visitors Rating of Barbados Tourism Product Components (1996-2005) .....65

Table 4-8: Tourism Density Ratio for Barbados (1992-2005)..........................................66

Table 4-9: Tourism Density Ratio for Selected Caribbean Countries (2003 & 2004)......66

Table 4-10: Tourism Penetration Ratio for Barbados (1992-2005) ....................................67

Table 4-11: Tourism Density Ratio for Selected Caribbean Countries (2003 & 2004)......68

Table 4-12: Hotels in Barbados with Green Globe Certification ........................................73

Table 5- 1: Summary of Findings on Sustainable Tourism Development in Barbados.....75

The Flying Fish National Icon of Barbados

Source: http://barbadostravel.squarespace.com/barbados-flying-fish/
http://barbadostravel.squarespace.com/barbados-flying-fish/http://barbadostravel.squarespace.com/barbados-flying-fish/http://barbadostravel.squarespace.com/barbados-flying-fish/http://barbadostravel.squarespace.com/barbados-flying-fish/


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1. The Tourism Industry

1.1 Defin ing TourismThis section discusses the tourism industry from a global and regional perspective. It

begins by examining the growth, distribution and importance of World tourism before

narrowing the discussion to the Caribbean. However, before proceeding in that

direction, it is we need to define what is meant by tourism. In this regard, Weaver

and Lawton (2002) argue that there is no unique definition of tourism in the literature

and offer a definition which attempts to capture the various stakeholders involved

and as such define tourism as the sum of the phenomena and relationships arising

from the interaction among tourists, the tourism industry, host government, host

communities, origin governments, universities, community colleges and non-

governmental organizations, in the process of attracting, transporting, hosting and

managing these tourists and other visitors (2002, pp. 3). However, nothing is lost in

the somewhat simpler definition of the World Tourism Organisation (WTO, 1994, pp.

5), which states that "tourism comprises the activities of persons travelling to and

staying in places outside their usual environment for no more than one consecutive

year for leisure, business, or other purposes not related to the exercise of an activity

remunerated from within the place visited." Indeed, this has become the

internationally accepted and agreed upon definition of tourism (Middleton and

Hawkins, 2002, pp. 51). The key point is that tourism is multidimensional and

encompasses all those activities, services and industries that are directly or indirectly

linked to the tourist. Consequently, the industry has the potential to contribute

positively to the economic and social advancement of countries.

1.2 Benefits of Tourism

Tourism should positively affect economic growth and development for several

reasons (see for example, Bull, 1995; De Kadt, 1980; Weaver and Lawton, 2002).

The most obvious of these being, Gross Domestic Product (GDP), foreign exchange

earnings, tax revenue and the generation of employment. Indeed, it is because of

such benefits that the notion is commonly advanced that the development in tourism-


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dependent economies could be accelerated if more resources are allocated to the

tourism sector (Dwyer and Forsyth, 1993; Dwyer and Forsyth, 2000).

1.2.1 Foreign exchange earner

This is perhaps the most cited benefit of tourism. First, tourism earns the country

foreign exchange which it can use to import not only consumer goods but also

capital and intermediate goods. In addition, the export and import of related goods

and services generate income to the host economy and can stimulate the investment

necessary to finance growth in other economic sectors.

1.2.2 Employment generator

Tourism provides employment opportunities for workers in the economy. To a large

degree, the tourism industry tends to be labour intensive since it is a service

industry. It comprises several segments; the principal ones being transportation,

accommodation, food and beverage and other related activities such as the

production a sales of souvenirs and other confectionaries. Given the diversification of

the industry, each of these sub-sectors offers many job opportunities and career

paths. These range from accountants and life guards to museum guides and

marketing officers; from travel writers and event planners to hostesses and

engineers. For example, various skills are required during the construction phase of

a hotel and immediately upon completion additional skills are required for the

operations phase.

A 1987 study by the Organisation of American States (OAS) suggests that an

investment of US$80,000 in the tourism industry in the Caribbean provides

employment for 41 persons. However, if that same investment is done in the oil

industry it generates only 16 and if it is in the bauxite industry the number is 11.

1.2.3 Encourages inter-industry linkages

Tourism is viewed as possessing the potential for creating positive linkages with

other sectors of the economy, particularly agriculture, manufacturing, and other

service industries. For example, food and most finished goods (furniture and other

construction materials) required by tourism establishments can generate supportingindustries in other sectors. Likewise, many other services, including transport,


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business services, financial services, professional services, construction design and

engineering, environmental services, security services and government services are

also linked directly to the tourism industry (Diaz Benavides, 2001, pp. 7). This

process would lessen the country's dependence on outside factors, stimulate the

local economy and reduce foreign exchange leakage.

Tourism also promotes improvements in the countrys infrastructure, as it

encourages investment in areas that would have a positive impact on the tourists

experience and increase arrivals; areas such as water and sewage systems, roads,

electricity, telephone and public transport networks (including airport constructions

and upgrading). This benefits not only tourism but also other sectors in the economy.

For example, when a new road is built to provide access to a resort or when a beach

front is developed as a tourism project, businesses in the immediate vicinity benefit

and new ones are encouraged to setup, for example: providing entertainment,

transportation and laundry services, establishing catering facilities where local

cuisine is prepared.

Moreover, since tourism can be built on existing infrastructure and be developed with

local products and resources, it facilitates the use of resources that are in line with

the factors endowment of the country. For example, if a country has more beaches

than mountains then tourism can be developed around water sports and other

activities involving beaches as opposed to mountain climbing and hiking.

1.2.4 Other benefits

Another benefit that tourism brings is increased government revenue. Direct revenue

is generated by taxes on income from tourism employment and tourism businesses,

and by direct levies on tourists such as departure taxes. Similarly, indirect revenue is

generated from taxes and duties levied on goods and services supplied to tourists.

Tourism is a product, which has no exact substitute and as such the demand for

tourism rises with income. For example, a country producing sugar as in the case of

Barbados, would find that demand for sugar does not increase as peoples income

rises but in fact it may actually fall as they can now afford healthier though more

expensive alternatives. However, as peoples income grows, the more likely they are


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to go on a holiday, take a recreational break, go to a sporting event or some other

form of travel. Thus, tourism demand increases with world income and once a

country provides a product that can attract visitors, it is likely to benefit from such

increases.

Finally, tourism can serve as a conduit for transferring new technology and

managerial skills into the economy. This is primarily through the heavy involvement

of multinational corporations1 (MNCs) in the industry (United Nations Center for

Transnational Corporations, UNCTC, 1982). According to the UNCTC report (pp. 4),

MNCs have entered the international tourism industry at a very rapid pace since the

late 1960s and their contribution to its development has been tremendous;

particularly in the area of hotels, airlines and tour operations. Moreover, it is through

the MNCs involvement in these areas that the technology transfer occurs. For

example, MNCs make valuable contributions to the development of large scale

hotels through managerial know-how and access to marketing reservation systems.

Dwyer and Forsyth (1994) argue that the foreign investor will have better knowledge

of the home countrys travel market and thus is better placed to market the

destination2more effectively in that market. Similarly, transnational airlines and tour

operators can support the development of national and regional airlines through

various contractual agreements.

1.3 Costs of Tourism

Tourism not only generates economic benefits but also bring a number of direct and

indirect costs to the tourist destinations. In fact, Weaver and Lawton argue that the

economic, social, cultural and environmental effects of irresponsible tourism canoutweigh the positive impacts (Weaver and Lawton, 2002, pp. 254). The most cited

drawbacks of tourism are the seasonality of employment, revenue leakages and its

environmental and socio-cultural impact (Page and Dowling, 2002, pp. 152).

1MNCs are enterprises which operate in more than one national territory.2The World Tourism Organisation (2004, pp. 8) defines a tourism destination as a physical space inwhich a visitor spends at least one overnight.


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1.3.1 Seasonal Employment

Even though the tourist industry is an effective way to generate jobs it has been

argued that the seasonality of such employment creates problems. Particularly,

where there are strong seasonal variations there may be both social and economic

disruptions (Weaver and Lawton, 2002, pp. 258; Wearing and Neil, 2003, pp. 72-73).

This effects both the planning of businesses and individuals, which lowers output

and results in an inefficient allocation of recourses. For example, Pattullo (1996, pp.

52) mentions the case of Aruba where the rate of unemployment was drastically in

1985 as a direct result of tourism, however, many of the jobs were highly seasonal

and as such wages are low and there is no job security or work-related health care.

1.3.2 Leakages

According to Weaver and Lawton, 2002, the major cost of tourism is its high

leakage. Leakage can be defined as the percentage of import expenditures to

export earnings (Pattullo, 1996, pp. 39). In other words, leakages reflect the erosion

of revenue gained from tourism. Often, a considerable portion of tourism receipts

leave the destination country in the form of international airfares, fees to tour

operators of all-inclusive package tours, management fees and other income to

international hotels and other multinational companies operating in the destination

country (often referred to as external leakages see Diaz Benavides, 2001, pp. 7),

and for imports of food, drinks and other commodities for the sector (or internal

leakages - see Diaz Benavides, 2001, pp. 7).

A 1996 report by the United Nations Commission for Sustainable Development

(UNCSD) suggests that the impact of the leakage varied greatly across countries,

depending on the structure of the economy and the tourism industry. Nonetheless,

majority of leakages go from developing countries to developed countries. Estimates

by the World Bank indicate that on average 55 percent of gross tourism earnings to

developing countries actually leak back to developed nations (Frueh 1998, cited in

Boo, 1990). In the case of the Caribbean, estimates range from 25 percent in

Antigua and Barbuda to 56 percent in St. Lucia. Pattullo (1996) suggests that such

leakages may be much higher and put the regional average for the Caribbean at 70

percent, with Bahamas as having the highest leakage for the region (90 percent).

Leakages related to imports are estimated to be the highest form of leakage and


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range from 10-20 percent of gross tourism earnings for most advanced countries, to

40-50 percent for most developing countries (Diaz Benavides, 2001, pp. 9).

1.3.3 Environmental costs:

One of the most severe impacts of the tourism industry is its environmental

consequences. In this regards, Lea (1988) identifies four environmental issues, what

he calls stressor activities, which are changes causing permanent restructuring of

the environment, the generation of waste products, tourist activities, and population

effects (Lea, pp. 55). Permanent environmental restructuring refers to the

modification of the physical landscape due to the construction of different

infrastructure (for example, shopping malls, hotels, golf clubs and piers) especially

on agricultural areas or wild areas. For instance, according to the Island Resources

Foundation (1996), sand has been removed from some parts of Havana (Cuba) for

the construction of buildings. The generation of waste products is related to the

increase of littering by travellers. In this regard, the Island Resources Foundation

(1996, pp. 22) claims that visitors produce more amounts of solid and liquid waste

per capita than local users. For instance, tourists tend to leave litter at picnic areas

and even human excrement is sometime found in some beaches and rivers in the

Caribbean. An example of this is the case of Quiba, one of the west coastal rivers of

Havana, which is extremely contaminated due to the increase pollution from

foreigners. Similarly, cruise ships and air transport are also major contributors to the

rise of residual products and pollution by dropping oil into the sea and by burning

fuel, damaging thus the seawater and air quality. Tourist activities themselves also

negatively impact on the environment. For example, destruction of reefs, pollution of

coastal waters, damage parks and removal of plants and precious corals are some

of the problems tourist destinations face in developing countries. Finally, population

dynamics is related to the seasonal effect of tourism on population densities. For

example, the seasonal flow of tourists can lead to congestion when the capacity of

the destination is exceeded.

1.3.4 Socio-cultural destruction

The impact of tourism on society significantly depends on the size of the population

of the tourist destination relative to the flow of visitors (Lea 1988, pp. 66).

Nevertheless, tourism does influence the locals behaviour, consumption patterns


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and even beliefs. Moreover, it is argued that eventually tourism brings more social

and cultural damages to the society than positive ones (Weaver and Lawton, 2002,

pp. 277). This is possibly due to the demonstration effect, which occurs when the

flow of tourists becomes so large that it causes local residents change their

consumer habits and this may not necessarily be the best outcome for the entire

population of the destination (Lea, 1988, pp 66). The demonstration effects different

social stratus and racial groups. Weaver and Lawton (2002, pp. 282) point out that

young people are more incline towards adopting foreigners consumption patterns

rather than the home custom and culture, and this increases social tension between

the old and the young residents of the community.

The commodification of a destinations culture is another potential negative impact

that tourist destinations may experience because of fast and uncontrolled tourism

growth. Commodification refers to the modification of the local culture in order to

satisfy tourists expectations and needs so as to attract more tourism but losing in

the exchange, national integrity (see for example Weaver and Lawton, 2002, pp.

277). The general thrust of the commodification is that tourism can turn local

cultures into commodities where religious rituals, traditional ethnic rites and festivals

are modified, sanitised and repackage to conform to tourist expectations, diminishing

the original value and meaning of the particular cultural practice. One Antiguan

senator wrote that "folk culture has become a marketable commodity, readily and

monotonously packaged as Yellow Bird, limbo without meaning, except as tourist

entertainment, steelbands which now draw no response from the people for whom

the music is produced, and a national dish which is really Kentucky and Fries. A

culture has been turned on its head" (Pattullo 1996, pp. 182).

1.4 Overview of World Tourism

Tourism contributes significantly to the export earnings, employment and GDP of

many countries and is currently the worlds largest and fastest growing industry

(World Tourism Organisation, (WTO) and the World Travel and Tourism Council

(WTTC)3). Indeed, estimates by WTO suggest that in 2005, approximately 808

million people travelled to foreign countries (45 million more than in 2004), spent

3See for example, WTO (2005; 2006b) and WTTC (2005; 2006).


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almost US$650 billion, generated US$6,201.5 billion in economic activity, accounted

for 12 percent of total world exports, and contributed 3.8 percent to world GDP and

8.3 percent to world employment. No other industry currently boasts these kinds of

statistics. Moreover, the WTO forecasts for up to the year 2010 indicate that the

industry should expand at an annual average rate of approximately 3 percent, in real

terms (World Tourism Organisation, 2006b).

In 2004, international tourism arrivals reached an all-time high of 763 million,

representing an 11 percent (or 73 million persons in absolute terms) increase on

2003. WTO (2005, pp.7) argues that this is an indication of the resilient of the

industry, having recovered from the September 2001 terrorists attacks in the USA,

the 2001 foot and mouth scare in the UK, and the 2003 SARS outbreak in Asia.

Moreover, international tourism receipts accounted for roughly 6 percent of the

worlds exports of goods and services, and almost 30 percent of service exports

WTO (2005, pp.2).

Fifty two percent or 395 million tourists travelled for the purpose of leisure and

recreation, while business trips accounted for approximately 16 percent or 120

million. Another 24 percent, or 120 million tourists, either visited friends and relatives,

went on religious trips or had travelled for health treatments WTO (2005, pp. 10).

1.5 The Regional Picture

International tourist arrivals

Table 1 shows the top ten destinations in the world in terms of tourist arrivals for

2004, along with their previous rankings over the last decade and a half. The table

indicates that these top ten destinations have over the years accounted for roughly

half of international tourist arrivals, from 54.7 percent in 1990 to 47.6 percent in

2004, thus suggesting a heavy geographical concentration of tourism flows.

Moreover, six European countries consistently appear in the top ten, collectively

accounting for 30.5 percent of international tourist arrivals, with France being the

number 1 choice among tourists (visited by 75.1 million tourists in 2004) followed by

Spain (receiving 53.6 million tourists in 2004). From the Americas only the USA and

Mexico are in the top 10, with the USA securing the third largest amount of total

international tourists during 2004. Interestingly, a decade ago the USA was ranked


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second but is now outperformed by Spain. However, the most impressive

performance comes from China, which in 1990 received only 10.5 million

international tourists and was in 12th position, accounted for 41.8 million arrivals in

2004, placing it in 4th position behind the USA. A similar story can be seen in the

case of Hong Kong, which makes the overall position of China even more

impressive.

Table 1-1: Worlds Top Ten Destinations for International Tourists

Arrivals in mil lions World Ranking Market Share (%)

1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004

World 441 538.1 680.6 763.2

France E 52.5 60.1 74.5 75.1 1 1 1 1 11.9 11.2 10.9 9.8Spain E 34.1 39.3 48.5 53.6 3 3 3 2 7.7 7.3 7.1 7.0

United States Am 39.3 43.4 52.7 46.1 2 2 2 3 8.9 8.1 7.7 6.0

China (mainland) AP 10.5 23.4 31.2 41.8 12 6 5 4 2.4 4.3 4.6 5.5

Italy E 26.7 31.1 41.2 37.1 4 4 4 5 6.1 5.8 6.1 4.9

United Kingdom E 18 24 24.9 27.8 7 5 6 6 4.1 4.5 3.7 3.6

Hong Kong AP 6.6 10.2 13.1 21.8 19 15 14 7 1.5 1.9 1.9 2.9

Mexico Am 17.2 20.2 20 20.6 8 8 9 8 3.9 3.8 2.9 2.7

Germany E 17.1 14.8 18.9 20.1 9 13 10 9 3.9 2.8 2.8 2.6

Austria E 19.1 17.2 17.8 19.4 6 10 12 10 4.3 3.2 2.6 2.5

Source: Various World Tourism Organisation Tourism Market Trends reports from 1991 to

2006. Edenotes European region,Amstands for the Americas andAPrefers to the Asia andPacific region.

Figure 1-1 gives a regional perspective on international tourist arrivals (supporting

data is given in Table A1 of Appendix 1). Reflecting the fact that at least six of its

member countries are top tourist destinations, the European region has dominated

the market for international tourist arrivals. However, its share has been gradually

slipping; from a high of 74.1 percent of total international arrivals in1965 to its current

position of 54.6 percent (see Figure 1-1). The rate for the Americas exhibits a similarpattern, falling from 25.5 percent in 1970 to 16.5 percent in 2004. At the same time,

Asia and Pacific region has constantly trended upwards over the period, with its

share of total international tourist arrivals rising from 0.8 percent in 1950

(representing just 0.2 million visitors) to 20 percent in 2004 (or 152 million arrivals),

making it the second largest visited region behind Europe.


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Figure 1-1: Regional Shares of Total International Arrivals

Europe

Americas

Asia & Pacific

AfricaMiddle East

0

10

20

30

40

50

60

70

80

90

100

1

950

1

965

1

975

1

981

1

983

1

985

1

987

1

989

1

991

1

993

1

995

1

997

1

999

2

001

2

003

%

Data source: (World Tourism Organisation, 2006a, Annex 3).

Tourism receipts

Table 2 shows the rankings according to tourism receipts and tells a similar story of

geographical concentration where the top ten receivers of tourism earnings

accounted for 51.6 percent of the Worlds total. Moreover, eight of the top tourism

earners are also in the top ten destinations. In fact, the top three positions, thoughreversed, are the same countries in both Tables.

Table 1-2: Worlds Top Ten Tourism Earners

Receipts (US$ billions) World Ranking Market Share (%)

1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004

World 273.2 411.3 479.2 622.7

United States Am 43 61.1 82.4 74.5 1 1 1 1 15.7 14.9 17.2 12.0

Spain E 18.6 25.3 31.5 45.2 4 4 2 2 6.8 6.2 6.6 7.3

France E 20.2 27.5 30.8 40.8 2 2 3 3 7.4 6.7 6.4 6.6

Italy E 20.1 27.5 27.5 35.7 3 3 4 4 7.4 6.7 5.7 5.7Germany E 11.5 12.8 18.5 27.7 7 7 6 5 4.2 3.1 3.9 4.4

United Kingdom E 14.9 19.1 19.5 27.3 5 5 5 6 5.5 4.6 4.1 4.4

China (mainland) AP 2.2 8.7 16.2 25.7 25 10 7 7 0.8 2.1 3.4 4.1

Turkey E 3.2 5 7.6 15.9 21 21 14 8 1.2 1.2 1.6 2.6

Austria E 13.4 14.6 9.9 15.4 6 6 9 9 4.9 3.5 2.1 2.5

Australia O 4.1 7.9 8.6 13.0 14 14 11 10 1.5 1.9 1.8 2.1

Source: World Tourism Organisation Tourism Market Trends. from 1991 to 2006. EdenotesEuropean region,Amstands for the Americas,APrefers to the Asia and Pacific region, and Oindicates Oceania region.

The USA is the number one tourism earner in the world and has always held thisposition, or at least as far back as consistent data allows us to confirm. France has


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also held the second position for quite sometime but since 2000 it was outperformed

by Spain, which was previously in fourth position. However, as with arrivals, there is

also evidence of market diversification with countries like China, Turkey and

Australia emerging as top tourism earners for the first time. This diversification has

not yet extended itself to the Latin America and Caribbean region (LAC), where the

Dominican Republic was the highest tourism earner for 2004 with US$3.2 billion,

which is roughly one-quarter that of Australia.

The above pattern of concentration in international tourism earnings is also reflected

in the aggregate at the regional level. Figure 1-2 (the supporting data is in Table A2,

Appendix) shows that the majority of annual earnings accrue to the European region.

However the ratio, which averaged 63 percent in the 1980s, has been gradually

sliding. Nevertheless, it is still above 50 percent. The second largest recipient of

international tourism receipts is the Americas and only so because it includes the

USA. In fact, the USA earnings accounts on average for between 60 and 70 percent

of the Americas total. The impressive performance of the AP region can also be

seen from the figure and is consistent with significant rise in arrivals to that region,

discussed above.

Figure 1-2: Regional Shares of International Tourism Receipts

Europe

Americas

Asia & Pacific

Africa Middle East

0

10

20

30

40

50

60

70

80

90

100

1950

1965

1975

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

%

Data source: World Tourism Organisation (2006a, Annex 10).


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1.6 The Caribbean Picture

In 2004, the Caribbean region4 received 2.4 percent of 2004s international tourist

arrivals, which may appear at first glance to be a small percentage but represents

18.2 million tourists visiting the region, just over half the regions population5. In

addition the region received 20.2 million cruise ship passengers. The industry also

generated US$19.2 billion in tourism receipts. Thus, for many of these countries the

tourism industry has become the most important economic activity, particularly as a

foreign exchange earner. In recent times its importance has grown even further as

other traditional areas of production have come under threat from trade liberalisation:

for example, sugar in Barbados; bananas in the Organisation of Eastern Caribbean

States; and, bauxite in Jamaica.

An interesting feature of Caribbean tourism is that since 1986, arrivals have

increased at a much faster rate than that of world arrivals. Indeed, tourist arrivals to

the region have expanded at an annual average by 5.5 percent over the period 1986

to 2004, while world arrivals grew at a rate of 4.72 percent per annum (see Figure 1-

3). Even more interesting is the regions share in World tourist arrivals, which jumped

from 2.5 percent in 1985 to 3.0 percent in 1987. It then oscillated around this ratio,

only falling significantly in 2001 following the September 11 terrorists event.

Figure 1-3: Growth in Tourist Arrivals since 1970: Caribbean and World

0

20

4060

80

100

120

140

160

180

200

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

%

Caribbean

World

Data sources: WTO (2006) and directly from the Caribbean Tourism Organisation (CTO)

4 The Caribbean region comprises Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados,Bonaire, Cayman Islands, Cuba, Curacao, Dominica, Dominican Republic, Grenada, Guadeloupe,Haiti, Jamaica, Martinique, Montserrat, Puerto Rico, Saba, St. Eustatius, St. Kitts and Nevis, St.

Lucia, St, Maarten, St. Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands,and the US Virgin Islands.5Data obtained from the World Bank Development indicators 2005.


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Table 3 displays the top ten destinations in the Caribbean region. Of the 29 possible

destinations, Puerto Rico, Dominican Republic and Cuba have emerge as the top 3

preferred destinations with market shares of 19.5, 19 and 11.1 percent, respectively.

Thus, almost half of tourists to the region go to these three areas. In this regard, the

best performer is Cuba, which in 1989 on accounted for only 2.9 percent of the

market but has since saw a six-fold increase in its arrivals.

Table 1-3: Caribbeans Top Ten Destinations for International Tourists Arrivals

Arrivals in Mill ions Caribbean Ranking Market Share (%)

1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004

Caribbean 11.40 14.10 17.10 18.20

Puerto Rico 2.56 3.13 3.34 3.54 1 1 1 1 22.5 22.2 19.5 19.5

Dominican Rep. 1.31 1.78 2.98 3.45 3 2 2 2 11.4 12.6 17.4 19.0

Cuba 0.33 0.74 1.74 2.02 11 5 3 3 2.9 5.3 10.2 11.1

Bahamas 1.56 1.60 1.54 1.56 2 3 4 4 13.7 11.3 9.0 8.6

Jamaica 0.99 1.15 1.32 1.42 4 4 5 5 8.7 8.2 7.7 7.8

Aruba 0.43 0.62 0.72 0.73 8 7 6 6 3.8 4.4 4.2 4.0

Barbados 0.43 0.44 0.55 0.55 9 11 9 7 3.8 3.1 3.2 3.0

US Virgin Is. 0.46 0.45 0.55 0.54 6 9 8 8 4.1 3 3.2 3.0

St. Maarten 0.55 0.45 0.43 0.48 5 10 11 9 4.8 3.2 2.5 2.6

Martinique 0.28 0.46 0.53 0.47 12 8 10 10 2.5 3.2 3.1 2.6

Data source: WTO (2006, Annex 5) and directly from CTO.

1.6.1 Market performance

In 2004, the Caribbean region received 53 percent of its long-stay visitors from the

USA, 24 percent from the European region, 8 percent from Canada, 6 percent for

within the Caribbean, and 9 percent from other markets including Japan.

Figure 1-4: Tourists Arrivals to the Caribbean by Main Markets (2004)

USA

53%

CANADA

8%

EUROPE

24%

CARIBBEAN

6%

Other

9%

2004

USA

58%

CANADA

6%

EUROPE

13%

CARIBBE

AN

9%

Other

14%

1988

Source: Data obtained directly from CTO


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Figure 1-4 shows clearly the dominance of the USA market as tourist generators to

the Caribbean and the relative significance of the European and Regional markets.

In 1988, 58 percent of tourism arrivals came from the USA and although percentage

has declined slightly over the years, more than half of arrivals still originate in that

market. However, the European market has seen the greatest improvement over the

years, as the share of visitors from that market increased from 13 percent in 1988 to

24 percent in 2004.

1.6.2 Distribution of earnings

Tourist expenditure amounted to approximately US$19.2 billion in the Caribbean in

2004. Table 1-4 shows the top ten Caribbean countries earning tourism dollars and

their pervious rankings. As expected, the top tourism destinations are also the top

recipients of tourism expenditure. These ten countries together accounted for 81

percent of total tourism earning in the Caribbean in 2004, with the remaining 19

percent dispersed among the other 19 Caribbean countries. Dominican Republic

heads the list with 16.6 percent of total expenditure, followed by Puerto Rico with

15.8 percent, and Cuba is third with 10 percent.

Table 1-4: Caribbeans Top Ten Tourism Earners

Receipts (US$ bil l ions) Caribbean Ranking Market Share (%)

1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004

Caribbean 8.73 12.25 17.15 19.15

Dominican Rep. 0.90 1.57 2.86 3.18 3 2 1 1 10.3 12.8 16.7 16.6

Puerto Rico 1.37 1.83 2.29 3.02 1 1 2 2 15.6 14.9 13.3 15.8

Cuba 0.24 0.96 1.74 1.92 11 5 3 3 2.8 7.9 10.1 10.0

Bahamas 1.33 1.35 1.73 1.88 2 3 4 4 15.3 11.0 10.1 9.8

Jamaica 0.74 1.07 1.33 1.44 4 4 5 5 8.5 8.7 7.8 7.5

US Virgin Is. 0.70 0.82 1.21 1.36 5 6 6 6 8.0 6.7 7.0 7.1

Neth. Antilles n.a 0.56 0.77 0.92 8 8 7 n.a 4.6 4.5 4.8

Barbados 0.49 0.62 0.72 0.83 6 7 9 8 5.7 5.1 4.2 4.3

St. Maarten 0.32 0.35 0.51 0.61 9 14 11 9 3.6 2.8 3.0 3.2

Bernuda 0.49 0.49 0.43 0.35 7 10 12 10 5.6 4.0 2.5 1.8

Source: data obtained from WTO (2006, Annex 12) and directly from CTO.

1.6.3 Importance of Tourism to the Caribbean

Estimates by the WTTC (2006, pp. 22) highlight the importance of tourism to theCaribbean region. The industry generates approximately US$50 billion in demand,


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supplies roughly 16.4 percent of the region GDP, 18.4 percent of exports of goods

and services, and provides employment for about 20 percent of the labour force. In

addition, the sector is the leading source of income in at least six of the islands:

Antigua, the Bahamas, Barbados, Grenada, St. Kitts-Nevis, and the Dominican

Republic, and close to being so in many of the others.

Employment

Tourism generates direct employment for 881,000 people in the Caribbean, which

represents 5 percent of total employment. However, another 1.7 million people (15

percent of total employment) indirectly earns a living from tourism. These include taxi

drivers, bar workers, restaurants, casinos and souvenir shops. The top three

countries to benefit in terms of employment (both direct and indirect) are Aruba with

71 percent, Barbados with 59.5 and the Virgin Islands with 58.1 (WTTC, 2006, pp.

22-24).

Income

Although the contribution of the tourism industry to the national income or GDP of

the Caribbean is on average 16.4 percent, it varies considerably across the

countries. For the majority of countries, tourism makes a significant contribution in

the range of 20 to 55 percent of GDP. Such countries include Bahamas (50.1

percent) and Barbados (41.4 percent). However, for some countries more than two-

thirds of their GDP comes from tourism. These include Antigua and Barbuda (85.4

percent), Aruba (78 percent) and Anguilla (74 percent). While for a few countries,

tourism contribution is less than 10 percent. These include Puerto Rico (6.2 percent)

and Curacao (4.1 percent).

Government Revenue

The government also benefits from tourism through the variety of taxes which it

receives directly and indirectly from the tourist sector. Such taxes include; hotel

occupancy taxes; departure tax, liquor tax, road tolls, harbour revenues, customs

duties, profit (corporate) tax, hotel land tax, taxi and car rental licenses and casino

license tax. Data is not currently available to give a complete picture of the

aggregate contribution of all of these revenue categories to total government

revenues. The case of hotel occupancy tax is examined.


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Hotel occupancy taxes complement government revenues by between US$ 10 and

US$13 million in Antigua and Barbuda, Aruba, Cayman Islands and the Virgin

Islands. It is interesting to note further that revenue from hotel occupancy tax

contributes the least in Barbados (US$ 0.20 million in 2005) (Caribbean Tourism

Organisation, 2005, pp. 263).

1.6.4 Some challenges for the region

The Caribbean has certainly benefited from the tourism industry and continues to do.

However, there are a number of challenges facing the region. These include

competition from traditional tourist generating regions. Additionally, there are several

new emerging destinations. In addition, there is the challenge of maintaining the

quality of the tourism product in order to meet the needs and expectations of the

tourists while preserving the integrity of the regions resource base.

Our earlier discussion indicated that Europe (particularly France, Spain, and UK) and

the Americas (particularly USA and Mexico) are still the main tourist-receiving

regions, while East Asia and Pacific region is the fastest growing region and is

emerging a major destination on the tourist schedule. The increased performance of

these regions presents a challenge for the Caribbean. Moreover, nearly half of the

world's population lives within a five-hour flight from Hong Kong, and in China, there

are in excess of 30 airports. This all suggests that, all things being equal, arrivals to

the Caribbean region will slow in the coming years.

In terms of product enhancement, CTO (2003) estimates that the Caribbean will

require an additional 120,000 rooms by 2010; and that there will be need for

extensive refurbishment of accommodation since in 1993 about 63 percent of the

rooms in the region were already over 15 years old. There is also clearly a need for

improvement and additions to the attractions, infrastructure and services as there is

for enhanced human resource development in the Caribbean. CTO (2003) also

notes that these improvements will require approximately US$5 billion annually.


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2. The Tourism Industry in Barbados

2.1 Introduction

Barbados is the most easterly of the Caribbean chain of islands (Figure 2-1) and is

located at 13 degrees north, 59 degrees west, approximately 100 miles from thenearest landmass. The island is 34 kilometres in length and 23 kilometres wide with

a total land area of approximately 431 square kilometres. It was first settled by the

British in 1627 and remained a British colony until 1961. Barbados gained full

independence in 1966 but maintained ties to the British monarchy as a member of

the Commonwealth. It has a population of 279,912 (CIA, 2006).

Figure 2-1: A Map of the Caribbean and Barbados

Sourced from the Barbados Ministry of Tourism and downloaded fromhttp://www.barmot.gov.bb/geninfo.htmon 12-06-2006

Part of the uniqueness of Barbados as a tourist destination versus the other

Caribbean countries lies in its formation as a coral Island. The Caribbean island

chain was formed by a volcanic eruption during the collision of the Atlantic and

Caribbean plates and as such the islands are very rugged and mountainous.

However, Barbados is not of volcanic origin but was formed later as coral began to

accumulate and eventually rose to 300 feet above the seabed. Thus, Barbados

unlike the other islands is mostly flat (Figure 2-2) and surrounded by coral reefs,
http://www.barmot.gov.bb/geninfo.htmhttp://www.barmot.gov.bb/geninfo.htm


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which provide excellent conditions for snorkelling and scuba diving activities.

Although it is not mountainous, there are a number of hills (the highest point being

Mount Hillaby at 336 metres) and many deep ridges and gullies, with an interesting

distribution of flora and fauna. Within the Barbados coral core there is a vast array of

caves and underground lakes which provide an excellent supply of drinking water

that is amongst the purest in the world. Rainwater percolates quickly through the

islands underlying coral limestone cap, draining into the underground streams and

adds to its water supply.

Figure 2-2: Map of Barbados

Source: World Atlas downloaded from http://www.worldatlas.com. on 29-06-2006

Foreign travel to Barbados predates the period of this study by more than two

centuries. However, it was not until the advent of the steamship in the nineteenth

century that travel exclusively for pleasure blossomed. The industrial revolution
http://www.worldatlas.com/http://www.worldatlas.com/


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which had produced the steamship, opened new avenues of prosperity and allowed

wealthy persons to travel to exotic destinations around the world.

Until well into the 1960s, most of Barbados tourist accommodation was of the

exclusive variety, catering to visitors who preferred high quality and full service.

Travelling to the Caribbean for holidays became extremely fashionable for a small

group of wealthy North Americans who had become accustomed to spending winter

in a warm climate. In addition, Barbados attracted visitors from the Caribbean who

took advantage of inter-island shipping services to visit the island. They were

generally less affluent than their North American counterparts and stayed primarily

with friends and relatives or in guest houses.

The early development of the hotel industry in Barbados was marked by a high

degree of foreign ownership. There was relatively little marketing done and

practically no governmental guidance or control. The entrepreneurs were mainly

European or North American businessmen with some experience in the travel and

/or hospitality business and they organised all the elements of the tourist trade, from

transportation to accommodation facilities and some ancillary services. Since the

1960s, however, increased participation by local entrepreneurs has been a

significant feature of the growth in tourist accommodation. Today, approximately two-

thirds of the accommodation establishments are owned by locals.

Tourism in Barbados emerged as a major economic activity in the late 1950s. Long-

stay6visitors to the island have increased from 17,829 in 1956 to 547,501 in 2005.

Barbados has also benefited from the development of the international cruise

industry with an increase in cruise passengers from 12,391 in 1956 to 563,588 in

2005.7 Moreover, the contributions of the tourism sector to real Gross Domestic

6Any tourist that enters Barbados via the airport is classified as a long-stay tourist, while those thatarrive on cruise ships are referred to as cruise ship arrivals. This classification is to highlight the factthat cruise ship passengers normally stay for less than a day and contributes on average less to theeconomy than those than come by air. This information was obtained in the course of a telephoneinterview with Roland Craigwell, Deputy Director of the Research Department of the Central Bank of

Barbados.7All data is obtained from various publication of Annual Statistical Digest of the Central Bank ofBarbados; Tables H12 to H14.


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Product (GDP), foreign exchange earnings and employment have risen considerable

during the period under review.

2.2 Structure and Development of the industry

Figure 2-3 plots the number of tourist arrivals to Barbados over the period 1956 to

20058. It also plots the underlying trend9in tourist arrivals in order to give a clearer

picture of the evolution of arrivals over time and also to assist in identifying possible

phases in the development of the tourism product. The trend line can also be seen

as corresponding to the Butler (1980) curve. Butler posits that a tourist destination

goes through six key phases; exploration, involvement, development, consolidation,

stagnation and, decline and/or rejuvenation. Not every destination follows these

phases in the exact sequence and neither is every phase identifiable in each

destination. However, Butlers curve has proven to be a useful diagnostic tool (Choy,

1992, pp. 12) and has been extensively utilised to aid in describing the evolution of

destinations (see for example, Douglas, 1997; Essex et al., 2004; Haywood, 1986;

Lundtorp S. and Wanhill, 2001).

In the case of Barbados, it is possible to identify four distinct stages in the pattern of

tourist arrivals. The period from 1956 to 1964 marks the beginnings of a well-

organised local tourist industry and the start of the international travel boom. The

second stage dates from 1965 to 1972 and features the introduction of national

package promotions in the North American market. It also coincides with the

development of inclusive tour charters, new air traffic regulations, changing fare

policies and competitive practices which effectively reduced transportation cost. The

third stage, 1973 to 1992, was a period of mixed performance. It began with a

recession and featured three growth spurs, each followed by a recession. Stage four,

1993 to 2005, is marked by renewed growth in the established markets and new

market developments in Europe and, to a lesser extent, in Caricom countries.

8No data is available prior to 1956. However, this is not a problem since it is only in the late 1950sthat tourism began to emerge as a major economic activity following the introduction of the Hotel AidsAct of 1956, which allowed extensive fiscal concessions for the construction and operation of touristaccommodations. Also note that the Barbados Tourism Board was established in 1958 to furtherdevelop the sector.9To estimate the trend we use the Hodrick-Prescott (1997) Filter, which is a smoothing method used

extensively in macroeconomic research to obtain a smooth estimate of the long-term trendcomponent of a series and is a feature of most econometric and statistical packages. In this regard,we utilise the Eviews 5.1 software package.


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Figure 2-3: Tourist Arrivals to Barbados 1956 2005 (in thousands)

0

100

200

300

400

500

600

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Arrivals trend

Source: Data obtained from various publication of the Annual Statistical Digest of the CentralBank of Barbados (1981, 1990, 1996 and 2005).

2.2.1 Exploration and Involvement (1956-1964)

Prior to the 1950s, tourism activity in Barbados was relatively uncoordinated and

powered entirely by private sector initiative. There was no common association or

organisation responsible for the management of tourism and no governmental

support or regulation for the sector. The first significant signs of organisation and

government involvement came in the late 1950s with the introduction of an Act to

encourage the expansion of hotel facilities. The Hotel Aids Act (1956) provided

exemption from customs duties on building materials and equipment for new hotel

development and granted a seven-year income tax holiday for eligible

establishments10. Additionally, the Barbados Development (Amendment) Act of 1958

gave permission for the Barbados Development Board to make loans for

construction and expansion of hotels (Watson, 1990, pp. 14).

At the same time, hotel owners started to organise themselves as a group and in

1957 the Barbados Hotel Association was formed. This organisation played a major

role in the development of the tourism industry and is now the main trade association

10The Hotel Aids Act was amended in 1958 to include beach cottages .


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in the industry11. In the following year, the Barbados Tourist Board was established

by Government to promote Barbados in international tourism markets (Downes,

2003, pp. 9). The Board of Tourism, as it was later renamed, was funded exclusively

by Government grants, and from its inception devoted its total annual budget to

advertising. With its establishment tourism began to record strong rates of growth.

In 1956 Caricom islands were the largest single source of visitors to Barbados,

representing 41 percent of the total (Table 2-1, in panel labelled exploration and

involvement), with Trinidad and Tobago accounting for roughly 45 percent of all

Caribbean tourists. However, Caricoms share of the market has been gradually

sliding as the international markets grew in importance.

Arrivals grew at an annual average rate of 16.1 percent during this stage, moving

from 17.8 thousand in 1956 to 57.6 thousand in 1964. The fastest growth (25.6

percent) was recorded in the Canadian market (also evident from the steep rise in

the Canadian line in Figure 2-4, in section labelled exploration and involvement).

This reflects the fact that the Barbados Tourist Board concentrated heavily on the

Canadian market during this period. Total promotional expenditures in the three main

extra-regional markets (USA, UK and Canada) more than tripled between 1960 and

1964, rising from Bd$90,000 in 1960 to Bd$306,000 in 1964. Canadas share of the

advertising budget increased almost thirteen-fold compared with a growth of 43

percent for the US. Expenditures in the UK increased nine-fold, but that brought

them only to one-third the level of promotion in Canada (data obtained from Clark et

al., 1985, pp. 39).

The USA market, where most of the advertising was done, grew at an annual

average rate of 18.8 percent. Although arrivals from the Caribbean grew most slowly

during this phase, they still accounted for the largest share of total arrivals. Barbados

is an important shopping and holiday centre for the islands of the Organisation of

11See the Barbados Hotel and Tourism Association website for a list of the achievements andinvolvement in the industry: http://www.bhta.org/index.htm.


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Table 2-1: Tourist Arrivals to Barbados by Market: Shares and Growth Rate (1956-

2005)

year UK USA Canada Caricom Other UK USA Canada Caricom Other Total Average

1956 6.5 23.1 10.4 41.3 18.7

1957 5.9 28.3 9.0 39.8 17.0 20.8 63.5 15.7 28.7 21.7 33.6

1958 6.1 28.4 10.0 37.4 18.1 8.9 5.2 16.7 -1.3 11.5 4.91959 5.7 28.3 11.1 38.6 16.3 13.9 21.0 34.4 25.0 9.2 21.3

1960 5.9 27.3 10.6 41.2 15.0 21.2 13.6 11.8 25.5 7.9 17.5

1961 7.8 27.9 14.6 37.7 11.9 38.0 6.2 44.6 -4.5 -16.9 4.3

1962 7.6 26.5 18.0 36.8 11.0 15.9 13.2 46.3 16.0 9.5 18.9

1963 9.4 26.0 19.7 33.5 11.3 41.7 12.5 25.8 4.7 17.9 14.8

1964 10.7 26.3 19.0 33.4 10.6 29.6 15.1 9.3 13.5 7.3 13.9

Average 7.3 26.9 13.6 37.8 14.4 23.8 18.8 25.6 13.4 8.5 16.1

1965 9.8 29.0 20.8 30.5 10.1 8.1 30.9 30.1 8.2 12.3 18.7

1966 10.5 30.1 20.7 29.3 9.4 24.4 20.3 15.2 11.1 8.3 15.6

1967 10.5 32.6 20.0 27.0 10.0 15.9 25.1 11.7 6.8 22.4 15.8

1968 9.9 35.7 24.1 20.8 9.4 19.4 38.5 52.4 -2.4 19.7 26.4

1969 7.6 39.2 23.5 19.0 10.7 -11.5 27.6 13.4 5.8 31.1 16.1

1970 7.7 36.5 25.3 21.4 9.1 18.8 8.4 25.3 31.1 -1.0 16.5

1971 7.2 36.2 28.4 17.9 10.3 12.7 19.9 35.6 1.3 36.9 20.91972 7.1 35.9 29.4 17.4 10.2 9.0 10.3 15.3 8.0 10.6 11.3

Average 8.8 34.4 24.0 22.9 9.9 12.1 22.6 24.9 8.7 17.5 17.6

1973 8.0 33.7 30.9 16.4 11.1 19.1 -1.0 10.9 -0.7 14.8 5.6

1974 10.3 28.7 33.5 16.5 11.0 34.4 -11.4 12.5 4.9 2.8 3.9

1975 11.2 24.8 34.1 17.2 12.7 4.3 -17.1 -2.2 -0.2 11.4 -4.0 1.7

1976 11.5 25.0 32.5 17.2 13.8 4.2 2.1 -3.3 1.2 9.6 1.3

1977 9.5 26.1 31.1 17.6 15.7 -1.4 25.6 14.7 23.3 36.5 20.1

1978 11.3 27.0 28.8 17.1 15.8 40.2 21.4 8.9 14.4 18.9 17.7 18.3

1979 13.3 24.6 25.0 20.5 16.6 38.4 6.9 1.7 39.8 22.4 17.1

1980 15.2 23.2 23.0 22.8 15.8 13.7 -5.9 -8.4 11.1 -4.9 -0.3

1981 20.4 21.1 19.8 24.6 14.0 28.2 -13.4 -17.7 2.9 -15.7 -4.7 -6.3

1982 16.8 24.9 19.6 26.9 11.8 -29.1 1.4 -14.7 -6.1 -27.0 -13.8

1983 14.5 34.7 16.2 25.5 9.0 -6.8 51.0 -10.8 2.7 -17.4 8.1

1984 12.6 38.1 18.3 22.8 8.2 -2.9 23.0 26.5 0.0 1.3 12.0 10.01985 10.8 41.2 19.7 19.7 8.6 -16.1 5.6 4.9 -15.4 2.2 -2.3

1986 12.9 45.0 16.3 16.6 9.2 22.6 12.3 -14.6 -13.3 11.1 3.0

1987 18.8 41.5 15.3 15.1 9.4 66.3 5.3 6.7 3.3 16.3 14.1 6.6

1988 22.4 37.8 14.5 14.0 11.2 27.9 -2.5 2.0 -0.2 26.8 7.0

1989 25.6 33.4 14.2 13.6 13.1 16.7 -9.7 -0.1 -0.9 19.9 2.2

1990 22.0 33.2 13.4 14.4 17.1 -19.7 -7.1 -11.8 -0.9 22.0 -6.3

1991 22.4 30.2 11.7 14.7 21.0 -7.1 -16.9 -20.0 -6.9 12.1 -8.8 -5.8

1992 23.0 28.7 13.0 13.7 21.6 0.7 -7.0 8.0 -8.9 0.6 -2.2

Average 15.6 31.2 21.5 18.4 13.3 11.7 3.1 -0.3 2.5 8.2 3.5

1993 25.3 28.5 12.4 13.2 20.6 12.7 1.9 -1.6 -0.7 -2.0 2.7

1994 29.0 25.6 12.3 12.1 21.0 23.4 -3.2 6.3 -1.9 9.6 7.5

1995 28.6 25.3 12.1 13.3 20.7 2.6 2.7 2.1 13.9 2.4 3.9

1996 31.2 25.0 12.3 12.7 18.8 10.2 -0.2 2.9 -3.2 -8.1 1.1

1997 33.0 22.9 12.5 13.5 18.2 11.7 -3.3 7.1 12.0 2.0 5.6

1998 36.4 20.7 11.7 13.7 17.4 19.7 -1.7 1.9 10.7 3.8 8.5

1999 39.4 20.4 11.1 16.7 12.3 8.6 -1.3 -4.4 22.4 -28.8 0.4

2000 41.6 20.6 11.0 16.1 10.7 11.8 6.9 4.6 1.5 -8.0 5.8

2001 42.9 21.0 10.3 15.8 10.0 -4.1 -4.9 -12.6 -8.4 -13.5 -6.9

2002 38.7 24.8 9.4 18.0 9.2 -11.4 15.8 -10.7 11.7 -9.7 -1.8

2003 38.1 24.3 9.3 18.2 10.0 5.2 4.8 6.2 8.2 15.9 6.7

2004 38.8 23.5 9.1 18.9 9.7 5.6 0.3 0.8 7.9 1.1 3.8

2005 37.0 23.9 8.7 21.0 9.4 -5.2 1.0 -4.7 9.9 -4.0 -0.7

Average 35.4 23.6 10.9 15.6 14.4 7.0 1.4 -0.2 6.5 -3.0 2.8

Con

solidation

Rejuvenation

Market Shares (in percent) Growth Rates (in percent)

Explorationan

d

Involvement

D

evelopment

Source: Authors calculation with data obtained from Table H12 of variouspublication of the Annual Statistical Digest of the Central Bank of Barbados (1981,1990, 1996 and 2005)


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12 September 2006

Figure 2-4: Tourist Arrivals to Barbados by Market: 1956-2005 (in tho

0

50000

100000

150000

200000

250000

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

U.K. U.S.A Canada Caricom Other

Source: Authors calculation with data obtained from Table H12 of various publication of the Annual StatBank of Barbados (1981, 1990, 1996 and 2005)


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Eastern Caribbean States12 (OECS), Trinidad and Tobago and Guyana. It is also

linked to them through the many Barbadians who migrated to these countries in the

early part of the century.

2.2.2 Development- accelerating growth (1965-1972)

By 1965 the rapid growth in world tourism led to considerably stronger growth in

arrivals from extra-regional markets and by 1966 the USA had become Barbados

largest source market with a share of 30.1 percent, compared with 23.1 percent in

1956. The Caribbean constituted the second largest source of visitors though its

share fell to 29.3 percent in 1966. Canadas share had increased to 20.7 percent and

that of the UK to 10.5 percent. The strong performance of tourism, in particular, the

Canadian market, drew attention to the enormous growth potential and led

government to become more involved in the development of the industry. Part of its

efforts included a Barbados Bonanza advertising programme in Canada and the

USA. The Bonanza was an all-inclusive package tour13 for a minimum stay of six

nights and seven days. The Hotel Aids Act was amended in 1968 to give relief from

income tax to new hotel developments. Government also got involved in developing

some of the islands tourist attractions (Watson, 1990, pp. 13)

Total arrivals for this period increased from 68,418 in 1965 to 210,349 in 1972, which

is an annual average growth rate of 17.6 percent. The Canadian market again

recorded the fasted growth, expanding by an average of 24.9 percent per year, as

the number of Canadian visitors rose from 14,212 in 1965 to 61,918 by 1972 (Table

2-1, in panel labelled developmentand Figure 2-4, in section labelled development).

The USA market turned in the second best performance as the number of American

tourists to Barbados grew at an average rate of 22.6 percent over the period as a

whole. A reduction in the real cost of air transportation from North America was a

major contributing factor in the strong performance of the Canadian and USA

markets during this period (Dalrymple and Mascoll, 1993, pp. 232).

12The OECS is a nine member grouping comprising Antigua and Barbuda, Commonwealth ofDominica, Grenada, Montserrat, St Kitts and Nevis, St. Lucia and St Vincent and the Grenadines.

Anguilla and the British Virgin Islands are associate members of the OECS (seehttp://www.oecs.org/index.htmfor further details on these islands).


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In the UK, slower economic growth during this period, combined with reduced

promotional efforts by the Barbados Board of Tourism, led to a slowdown in the

growth of the market to 12.1 percent. In addition, the pound sterling devalued in

196814 and a considerable portion of the marketing expenditure was switched from

the UK to the more lucrative markets of North America. By 1972 more than 70

percent of the total budget of the Barbados Board of Tourism was being spent on the

Canadian and US markets (Clarke et al., 1985, pp. 39). Barbados other major

market, the Caricom, received no significant promotional effort and grew by a

modest eight percent.

Government negotiated with various airlines in order to increase air access to

Barbados. Towards the end of this period the establishment of air links between

Europe and Barbados opened up the European market and the first promotional

campaign in European markets began in 1971. International Caribbean Airways

(ICA), established in 1970 jointly by Laker Airway and local entrepreneurs,

commenced scheduled flights between Barbados and Luxemburg as well as regular

charters from Canada and West Germany. The airlines fares were less than half the

normal return economy fare approved by the international airlines regulatory body

(Clarke, et al. 1985, pp. 3).

2.2.3 Consolidation decelerating growth (1973-1992)

This stage is referred to as one of consolidation, primarily because the growth in

arrivals was much slower than in the previous stages identified even though

Barbados sought to attract more tourists in the face of a number of external shocks.

During this period, total arrivals increased at an annual average rate of 3.5 percent,

moving from 222,080 in 1973 to 385,472 in 1992. However, this was not a period of

consistent growth but one marked with a number of sub-periods of expansions and

contractions (see Table 2-1, in panel labelled consolidation).

Between 1973 and 1976, arrivals to Barbados suffered a drastic slowdown as the

international economic recession, caused by the oil crisis of 1973-74, severely

13An all-inclusive package tour is where transportation and accommodation (and sometimes otherservices) are sold under one price, which is usually lower than can be obtain separately.


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restricted the growth in arrivals from North America (Downes, 2003, pp. 12).

However, the UK market proved extremely resilient, mainly because of cheaper air

fares (Dalrymple and Mascoll, 1993, pp. 233).

The first signs of a slowdown had begun to appear as early as 1973. The growth in

arrivals in that year (5.6 percent) was the lowest since the 4.3 percent recorded in

1961. The USA economy had began to weaken from as early as 1969 and had an

adverse effect on tourist travel from that country in subsequent years. By 1974 most

industrial countries were in the grip of severed recessions and Barbados tourism

suffered its biggest setback since 1956. Arrivals increased by just 1.7 percent, on

average, between 1973 and 1976, with an actual decline of four percent in 1975. The

most severe difficulties occurred in the USA market, which contracted by 9.8 percent

(annual average over 1973 to 1976), and in the Canadian market, which recorded

growth of only 2.7 percent (also annual average over 1973 to 1976) compared with

its 35.6 percent growth in 1971. In contrast, arrivals from the U.K. averaged annual

growth of 19.3 percent during the 1973 to 1976 period.

The category labelled other also recorded significant growth between 1973 and

1976, mainly reflecting the good performance of the European market. Expansion

may be attributed partly to the relative strength of the West German and Swiss

economies between 1969 and 1976, versus the USA economy. In addition, it

became significantly cheaper for Europeans to travel to destinations like the

Caribbean where prices were set in US dollars, as the value of their currencies

appreciated. Between 1970 and 1978, the purchasing power of the US dollar

declined by almost 50 percent relative to the Mark and by as much as 62 percent

relative to the Swiss Franc.15Barbados tourism prices have usually been set in USA

dollars and the Barbados dollar was officially pegged to the US dollar in 1975.

The three years immediately following this recessionary phase was a period of

extraordinarily strong growth in tourist arrivals, which expanded at an annual

average rate of 18.3 percent. A notable feature of this expansion is that all markets

14From 0.362 pence per US$1 to 0.417 pence per US$1 (data from theWorld Development indicators2005).15Data from the World Development Indicators (2005, CD-Rom) published by the World Bank.


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did well, which Dalrymple and Mascoll (1993, pp. 228) attributed to the diversification

in marketing emphasis. The expansion reflected renewed growth in USA and

Canadian arrivals, but the rapid development of the European and Caricom markets

was an even more significant factor.

The slow growth in the leading markets of earlier periods prompted the government

to intensify its promotion in the Caribbean area. Trinidad and Tobago and Venezuela

had been experiencing rapid income growth for most of the 1970s owing to the

sharp rise in oil prices after 1973, and their growing wealth encouraged greater

foreign travel. The Caricom market grew on average by 25.8 percent annually for the

period 1977 to 1979. The UK market turned in the best performance among

Barbados major markets, averaging 25.7 percent per annum.

However, in 1980 the international economy slipped into recession again, as oil and

commodity prices increased (Downes, 2003, pp.11). Total tourist arrivals to

Barbados declined by an average of 6.3 percent over the next 3 years. The number

of visitors from the USA, Canada and Europe declined sharply although arrivals from

the UK and the Caribbean continued to increase.

The international economy began its recovery in 1983 as the USA economy picked

up. This, along with intensified marketing in the USA by the Barbados Tourism

Board, led to rapid increases in USA arrivals to Barbados. Total arrivals rose from

303,795 in 1982 to 461,259 in 1989, an annual average of 6.3 percent, with only a

slight dip in arrivals in 1985. The USA market performed best during this period (see

Figure 2-4, in section labelled consolidation) increasing at an annual average rate of

12.1 percent. Consequently, the USA emerged as Barbadoss number 1 tourist

market, accounting for more than one-third of all arrivals to the island. The UK

market also did well during this period and emerged as the second most important

source of tourist to Barbados. In contrast, both the Canadian and Caricom markets

declined over the period and their share of the market fell considerably.

Tourist arrivals entered into a three-year slump in 1990 as total arrivals declined by

5.8 percent. All the main markets fell during this period (1990-1992), with the USA

market suffering the largest decline (10.7 percent per year). This has been largely


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attributed to: the 1990 Gulf War and the resulting hike in fuel prices, which adversely

impacted on world tourism; and, the effects of an aging tourism plant and product in

Barbados (Dalrymple and Mascoll, 1993, pp. 229). In regards to the latter point,

Potter and Phillips (2004, pp. 242-243) argue that by 1993 many of the hotels in

Barbados were in pressing need of upgrading, while many of the beaches were

suffering from environmental degradation.

2.2.4 Rejuvenation (1993-2005)

This period is referred to as one of rejuvenation because it features significant efforts

by the Barbadian authorities to rejuvenate the industry. Such efforts included the

building of a number of hotels, extensive landscaping and increased open spaces in

resorts; and, the provision of golf courses. Tourist arrivals to Barbados increased

every year during the period except for two occasions: 2001 to 2002, which can be

attributed to the September 11 terrorists attacks on the USA and the subsequent

USA-led invasion of Iraq; and, 2005 reflecting reduced airlift capacity out of the

USA (Central Bank of Barbados, 2005b, pp. 4).

Between 1993 and 2005, total arrivals increased at an annual average rate of 2.8

percent, (2-1, in panel labelled rejuvenation), rising from 395,979 to 547,501. The

best performing market during this period was the UK as the number, as the number

of visitors from that market more than double, moving from 100,071 in 1993 to

202,765 in 2005 which is an annual average growth rate of 7 percent (see Figure 2-

4, in section labelled rejuvenation). Such was the pace of expansion that it overtook

the USA as the number one source market in 1994. The number of American visitors

grew by just 1.4 per annum, as just 18,272 more USA tourists visited Barbados

during the period under review. Nevertheless, the USA is still a main source market

for Barbados and accounts for over 20 percent of its tourists. The Caricom market

also did well during the period as visitors from the region to Barbados increased from

52,462 in 1993 to 114,775 in 2005, representing an average growth rate of 6.5

percent each year.


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2.3 Barbados Tourism Product Just Beyond your Imagination 16

Barbados views its tourism product as the total vacation experience, starting from

when the tourist travels to Barbados and includes the accommodation and transport

facilities used, the activities in which the tourist participates, the services used, the

infrastructure, the level of safety and security that exists and the quality of the

physical, human, socio-cultural and natural environment.

While Barbados, like most tropical island destinations, is known because of the

primary natural attributes of its climate and coastal environment, the other

components, particularly its stable political environment, friendly people and well-

developed cultural and natural heritage elements are of critical importance.

Barbados product is also diversed in quality and quantity and includes an

accommodation complement of 11,237 rooms (Table H14, of the Annual Statistical

Digest of the Central Bank of Barbados, 2005a), many restaurants and other food

and beverage facilities, nature attractions including underground caves and marine

parks, historic sites, festivals, golf courses and a range of other activities (see Table

A4 in Appendix and also the Barbados Ministry of Tourism website).

As noted in the previous section, the government made considerable effort to

reposition and rejuvenate its tourism industry in the early 1990s. In this regard, the

Ministry of Tourism was given overall governance for the sector and to coordinate all

the various activities of the different stakeholders in the industry. In addition, the

Barbados Tourism Authority (BTA) was established in 1993 as a statutory

corporation under the Ministry of Tourism with sole responsibility for marketing. 17

Since then a number of public and private sector agencies were formed to deal with

aspects of the industry (see Figure 2-5).

16The official slogan for the Barbados tourism product and is usually accompanied by a logo which isa picture of a flying fish (see the photo in the contents page), a fish that is plentiful in the waters

surrounding the island and has the remarkable ability to glide through the air up to distances of 30-40metres.


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Figure 2-5: Organisational Chart for the Barbados Tourism Industry

Source: Barbados Ministry of Tourism, available at http://www.barmot.gov.bb.

One of the main tasks of the Ministry of Tourism was to encourage the upgrading

and expansion of the hotel facilities on the island. To this end a number of projects

were undertaken by the Ministry. For example, one of the first proje

disertation (masters)

Documents