The Bahamas spends on imports a greater percentage of every tourist dollar than all rival Caribbean countries, with $0.85 of every tourist $1 being repatriated outside this nation, an indication that the industry’s benefits are not trickling down to the Bahamian people and businesses.
Professor Anthony Clayton, giving a presentation on behalf of University of the West Indies (UWI) economist, Diaram Ramjeesingh, at yesterday’s Small Island Developing States (SIDS) tourism conference in Nassau, said the Bahamas was “right up there at the top” when it came to the ‘leakage’ of tourism dollars from its economy.
While the Bahamas saw 85 per cent of its tourism earnings spent outside this nation on imports, the rates for all other Caribbean states were much lower.
In the Cayman islands, just 65 per cent of tourism earnings was spent on imports. In Antigua & Barbuda, the percentage was 56 per cent; for Barbados 66 per cent; Bermuda, 59 per cent; Trinidad & Tobago, just 22 per cent; St Lucia, 62 per cent; St Kitts, 60 per cent; Jamaica, 50 per cent; and Turks & Caicos, 69 per cent.
Professor Clayton said: “Where you’ve got a high rate of leakage, that money is going out of the jurisdiction. More of what the industry requires is not being sourced locally.”
The findings are a damning indictment of the Bahamas’ failure to develop strong linkages between its hotel industry and smaller Bahamian-owned companies that could supply the sector with the goods it requires.
Professor Clayton added: “Countries like SIDS, that have few economic linkages and high leakage rates, usually have small income multiples.”
For the Bahamas, Mr Ramjeesingh showed that the tourism income multiplier was 0.79, meaning that for every tourist dollar spent in this nation, it only created an additional $0.79.
Professor Clayton said the tourism income multiplier for most SIDS was less than one, another indication that most of the benefits from the tourism industry were being felt outside the Bahamas and other economies.
In contrast, for developed nations such as Turkey, the multiplier was 1.96, indicating that each tourist dollar spent was generating almost another $2 through the money multiplier effect. The multiplier for the Bahamas and other SIDS was about half of that.
Professor Clayton said the onus on improving this situation also lay with smaller companies in the Bahamas and other SIDS, as in many cases their products were not up to quality standards, and in sufficient quantity, to interest hotels. He also suggested that micro-businesses should organise collectively.
Francesco Frangialli, the United Nations World Tourism Organisation’s (WTO) secretary-general, yesterday suggested that the tourism model the Bahamas had pursued may have been partly responsible for the high rate of tourism dollars `leakage’ from this nation.
He explained that the Bahamas had focused heavily on the five-star, top end of the market that featured large hotel chains with named brands. To provide an experience that matched the marketing, these properties would invest heavily on luxury goods and items, many of which needed to be imported from abroad.
“Reducing this [leakage] is some thing that should be done by the tourism sector, but also by the economy in general,” Mr Frangialli said.
“If you come to the Bahamas and stay in luxury, five-star accommodation, rather a high proportion of what you spend will leave the economy, because luxury hotels spend a lot on imports – state-of-the-art audio systems, food.”
However, Mr Frangialli pointed out that those who stayed in Bahamian ‘Bed and Breakfast’ style accommodation, while they might spend less per capita on rooms and meals, more of their dollars were likely to find their – way into the wider economy. This was because such businesses were more likely to source supplies locally.
“The model of tourism you are developing can make you more or less dependent,” Mr Frangialli said. “A lower average daily spend can bring more to the economy, creating more local jobs,”
The WTO secretary-general added that reducing the tourism industry’s reliance on imports, and ‘leakages’ was a question that needed to be debated between the Government and the hotel chains.
Mr Frangialli said the Government had instruments at its disposal to encourage hotels to purchase products from local Bahamian suppliers, such as tax and other incentives, plus the marketing support it provided to the industry and development approvals.
He added: “Economic leakages are quite common in small island states. The need to import a relatively high proportion of the inputs required by hotels, transport and other tourism companies, repatriation of benefits for foreign tourism companies operating in SIDS, management fees of foreign hotel operators, employment of expatriate staff are among the main generators of leakages.
“These need to be reduced through finding linkages with other industries in the local economy whenever possible, but also by imagining and putting in place innovative development and management models in the tourism sector itself.”
Jennifer Edwards, a sustainable tourism lecturer at UWI, said the tourism industry needed to be treated as an export industry by policymakers, moving beyond traditional schools of planning and thought.
She added that this required a new “mindset” from tourism and development planners, and urged the Bahamas and other SIDS to focus on enhancing linkages between the domestic economy and tourism, rather than trying to plug the leaks.
“The full economic potential ﾠof tourism is not being realised Ms Edwards said. Long-term competitiveness is being disadvantaged by not having participation of the local entrepreneur and the small man.”
In conjunction with a World Trade Organisation (WTO) strategist, Ms Edwards had developed a proposal for designing tourism ‘destination clusters’ as part of a Strategic National Export Strategy, believing this will help retain tourism dollars in local economies.
Neil Hartnell, Tribune Business Editor
