Monday, October 6, 2008

Crisis Sparks Serious Concern For Caribbean Travel

By David Lewis

ACCRA, Ghana (Reuters): The global financial crisis will hit Caribbean tourism, raising "serious concern" for the industry which is the regional economy's largest earner, the head of the Caribbean Community (CARICOM) said on Friday.

[caption id="" align="alignleft" width="161" caption="Edwin Carrington, Caricom Secretary General"]Edwin Carrington, Caricom Secretary General[/caption]

CARICOM Secretary General Edwin Carrington said it was too early to quantify the impact but he said potential visitors from the United States and Europe, the main markets, would be hesitant about travelling with their economies were in turmoil.

Many Caribbean financial houses have spread their risk so have not been hit like some US or European counterparts but there are concerns over currencies in the 15-country bloc as they are linked in varying degrees to the dollar, he said.

The US House of Representatives passed a $700 billion bailout package for US banks on Friday, under heavy pressure from all sides to head off a spreading financial crisis.

In Paris, French Prime Minister Francois Fillon said the world stood on the "edge of the abyss" as European leaders were divided over their own response to the global crisis.

"What you are likely to find is an attitude of caution and that caution means holding on things like travel and holidays. And once they hold on holidays it hits our economy immediately." Carrington told Reuters in an interview.

"If you take the overall region, it is the single largest export earning so it's very, very important. It is a matter of serious concern," he added at a meeting in Accra, Ghana.

Carrington said countries would have to take steps such as looking for tourists within the region rather than the US, which accounts for over 50 percent of export revenues, to limit job losses in the economy.

Average revenues per room for a sample group of Caribbean hotels fell by 5.6 percent to $142.36 a night in the first seven months of 2008 compared to the same period of 2007, partly because construction of new rooms outpaced demand growth of 0.4 percent, according to Smith Travel Research.

Tourism is a vital source of income for many countries in the Caribbean, which is popular with Europeans and American for beach holidays and luxury cruise stop-offs.

Countries like the Bahamas and Barbados are far more dependent on tourism than the likes of Trinidad, Guyana and Suriname.

Carrington said the Caribbean finance sector has, for now, been spared the carnage that has seen multi-billion dollar bailouts for banks on both sides of the Atlantic.

"The early reports indicate that the financial institutions, central banks and the investment houses were all reasonably comfortable that their assets were all secure," he said.

"But as it got more and more intense and wider, I am not at this stage sure how confident those predictions were," he added.

The dollar has surged this week, remaining on track for its best weekly gain against a basket of currencies in 16 years on Friday.

Carrington warned of his region's vulnerability to any fall: "All our currencies are tied to the US dollar -- some are fixed, some are floating but stable. Anything, therefore, that affects the US dollar is of importance to us."

Source: CNN

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