Stuck on deep discounting

Undoubtedly and unavoidably, the great recession has hit Caribbean tourism hard.

The significantly upscale element of our tourism product has not suffered as much as the mass-market offerings. The latter condition is not difficult to grasp. A brief tour of the normally busy spots at this time of year, chats with taxi drivers, and local operators of facilities catering to tourists all indicate business across the region is down when compared to the performance of just a few years ago.

Watching US cable television also suggests the same story. Our all-inclusives continue to offer discounts, in some cases as deep as 65 per cent.

Question is, how long shall this continue? Perhaps the better question is, how long can the tourism business sustain this condition? What can we do to remedy the situation?

For the greater part of our visitor pool, their holiday with us must be considered part of discretionary expenditure. In good times, indeed, 'Jamaica no problem' rules, whereas in a downturn, the situation changes. No one knows how long the recession will last.

Ride out recession

Given that the US is our major market, should we continue with the same model? Slack demand could well continue for two years, if not more. Americans have begun to save more and spend less, use credit cards gingerly, and maintain a wait-and-see attitude.

A common refrain among consumers is the notion of trying to 'ride out the recession', foreclosure and job loss, and holding strain. A fundamental part of the problem is that consumers who took equity out of real estate and those who got caught up in the subprime bubble benefited from precious little relief from all of President Obama and Con- gress' efforts to create a better deal for them.

Banks, mortgage companies, and servicers know that a foreclosure brings more fees than a loan modification, which reworks payment arrangements in which the two sides split the burden of loss in property value.

A US court recently found one of these companies to be in breach of its obligations. So, while the industry watches these developments carefully, the fact is the Wall Street bailout has not been in any way passed on to distressed homeowners.

Millions of foreclosures are, therefore, still to come, and US unemployment rates hover around eight per cent. Businesses sit on billions of dollars of idle investible funds. In this climate, it is difficult to see any big change in pessimistic attitudes in the short run.

For years we have tended to rate and rank our tourism performance by the magic visitor-arrival number. Never a very good proxy measure of tourism's impact on the economy today, given deep discounting, its limited usefulness comes more sharply into perspective.

The picture is not completely bleak, however. Adversity presents opportunities. The tourism industry desperately needs innovation. Innovation can come with collaboration.

Those with great ideas may not necessarily be those with either available funds for investment or the capacity to borrow. What is required is a strategy that takes both a short- and long-run perspective - perspectives that consider attitudes, community, and a fair shake for all stakeholders.

Perhaps the tough times shall force us to begin to understand how we might marry the existing tourism product with other features of Jamaica - its enchanting landscape, history, and culture that so far have been minimally, occasionally almost as an afterthought, given centre stage as attractions which visitors may find alluring.

Sun, sea, and sand is not the all-encompassing answer.

Postscript: I do wonder, as perhaps some of my readers might, what is the Republican Party in America up to? To be blunt, is this parochial, reflection of a level of ignorance, xenophobia, even racism that allows them to 'dis' the Chinese president by their House Speaker John Boehner's refusal to attend a state dinner? Could this, perhaps, be the signature difference between the knowledge and attitudes embodied in the British Empire upon which the sun literally never set and those of the US in its role as sole superpower? Is this mental baggage or blockage part of the difference that allowed a few British good fellows sitting at the pub or on the docks in Istanbul or Iran to understand so much more of the imperial world than trillions of dollars worth of intelligence-gathering technology could do for the Americans?