INTRODUCTION Mr. Speaker I address this Honourable House against the background of a global economic landscape which was characterized by the worst recession in recent times and the prospects of a recovery that at best leaves the world in a cloud of uncertainty. Indeed as we say in tourism ‘the only certainty is uncertainty’.
Mr. Speaker, it is fair to say that some of the same challenges that we faced last year have persisted and some have even worsened. As such Mr. Speaker, they have acted as a catalyst for fundamental changes in the way we do business globally.
Mr. Speaker, the tourism sector for which I have responsibility, has been particularly challenged by the global trends, and as such we too have been forced to create a new architecture. So Mr. Speaker, what can we expect from tourism in the immediate future?
The job before us presents even greater challenges in 2010. This budget requires us to be more innovative to think outside of the box, not around the box. Indeed Mr. Speaker we may have to eliminate the box. In these times of austere measures, I am compelled to remind you of the saying – “Faithless is he who quits when the road darkens”.
Mr. Speaker, tourism has much to contribute to our economy, and offers us excellent prospects for further growth.
THE GLOBAL PICTURE
The downturn in the global economy brought on by the financial crisis that had its beginnings in the United States – our largest source market, suggested that our tourism product would be severely impacted. However we saw 1.8 million arrivals and for 2010/2011 we are projecting 2 million visitors which would be an all time high for Jamaica.
The financial crisis that erupted at the end of 2007 after the collapse of the subprime mortgage market was followed by the worst housing slump in decades and the credit crunch, which froze world markets. These have resulted in a high unemployment rate of 9.7 per cent in the United States and a contraction of many of the world’s leading economies.
This is important to us, because most of our visitors come from the US. We therefore want to know how deep will the downturn be; when will the recovery get underway; and how strong will it be? These answers will affect our plans.
According to the IMF’s January 2010 World Economic Outlook Update entitled ‘A Policy-Driven, Multispeed Recovery’, the global recovery is off to a stronger start than anticipated, but is proceeding at different speeds in the various regions. The IMF maintains that following the deepest global downturn in recent history, economic growth solidified and broadened to advanced economies in the second half of 2009. It is of the view that in 2010, world output is expected to rise 4 per cent. This represents an upward revision of three quarters of a percentage point from the October 2009 World Economic Outlook.
Mr. Speaker it is also interesting to note that both the IMF and the World Bank are anticipating that in most advanced economies the recovery is expected to remain sluggish by past standards, while in many emerging and developing economies activity is expected to be relatively vigorous, largely driven by buoyant internal demand.
Both the IMF and the recently concluded G-20 Summit believe that output in the advanced economies is now expected to expand by two per cent in 2010, following a sharp decline in output in 2009. In 2011 they are projecting growth to edge up further to two and a half percent.
Bottom line — the recovery in advanced economies is still expected to be weak by historical standards with real output remaining below its pre-crisis level until late 2011. Moreover high unemployment rates and public debt as well as not fully healed financial systems are presenting further challenges to the recovery in these economies.
Mr. Speaker, it is therefore critical that we keep a watchful eye on the global economy, particularly that of the United States where traditionally most of our tourists come from. The fact is that if the US unemployment rate continues to rise well in 2010, American consumers are unlikely to open their wallets to fund international vacations.
THE REGIONAL PICTURE
Caribbean economies have felt the full impact of the global downturn. But as the pundits anticipate albeit a sluggish recovery, is the region poised to take advantage of these opportunities?
According to Peter Hall of Export Development Canada “…from 2003 to 2008, pan-regional output grew at an average pace of 5% annually. World recession wreaked havoc with business and personal travel, investment activity and global financial flows. The abrupt change in the global economic climate jolted the region, with output growth slowing sharply to an estimated 1% last year.”
Tourism was a big part of the story. Many destinations saw double-digit declines in visitor arrival during 2009. On top of that, travelers were more frugal, putting an additional bite on dollars spent. More competitively priced destinations like Cuba and the Dominican Republic managed to keep pace with 2008 tourist levels, increasing market share at the expense of most others. Winter travel was hardest hit, and declines moderated later in the year.
According to the UNWTO, overall, visits were down an estimated 3.3% for the year, following 2.3% growth in 2008. It is too early to tell what this year’s numbers are like, but with Western consumers still under pressure, anecdotal information suggests that tourist activity remains slow.
Caribbean economies are also dependent on non-tourist trade. Export Development Canada maintains that the global recession reduced the Caribbean’s overall output by 1%, but exports sustained a much deeper 12% decline. This also affected prices for most commodities, which dealt a further blow to Caribbean exporters and by extension to associated government revenues.
Lower trade flows and the financial liquidity crunch pummeled foreign direct investment (FDI) activity, which, according to the World Trade Organisation (WTO), fell from US $1.7 trillion in 2008 to US$1.2 trillion last year.
This is crucial, for the Caribbean region since it handles a disproportionately high share of global FDI, which is partly destined for local residential and hotel investments. This is mostly tied to the offshore operations of large international investors. Substantially lower FDI’s have had a significant impact on the many international financial institutions that have a Caribbean presence. Moreover Mr. Speaker, calls for greater regulation and transparency in the wake of the late-2008 near-collapse of the financial system are likely to have a lasting impact on the region’s banking operations.
All this Mr. Speaker raises the question: will the expected global recovery in late 2010 reverse the region’s fortunes? Or will the Caribbean continue to lag behind? The answers are not easy Mr. Speaker.
First, Western consumers are expected to remain more frugal and choosy about their travel destinations.
Second, trade flows have picked up, but are still well below the previous peak.
Third, investment always lags behind the economic cycle; as such, FDI flows will stage a slower return to former heights. And
Fourth, slower overall activity has weighed on the public purse, threatening to stymie much-needed regional infrastructure projects.
The bottom line Mr. Speaker is that the Caribbean has a strong link to the world economy, and some of the results of this decline will slow the region’s response to recovery. There are early signs of growth which suggest that the region has turned the corner. The best evidence of this — hard currency reserves have staged a remarkable rebound.
In addition to the global economic challenges, Mr. Speaker, we cannot ignore the strong competition that we face regionally. For example, we must be mindful of the fact that once the United States lifts its 47- year travel ban on Cuba that country will be competing for the same US market share. In anticipation of this, Cuba is expected to expand its capacity of about 50,000 rooms with groundbreakings scheduled for at least nine hotels in 2010.
THE LOCAL PICTURE
Mr. Speaker, I am proud to say that in the face of the global and regional challenges, Jamaica has shown that we can compete with the world’s best. Today’s tourists demand value for money and a unique experience, and Jamaica is more than capable of meeting these demands by simply being Jamaican — through our culture, our hospitality, our cuisine and most of all, our people
Last week, the Minister of Finance the Hon. Audley Shaw presented a budget for the new fiscal year that indicated that the deficit target for the new fiscal year has been set at 6.5 per cent of GDP, half of what it was last year. The Minister is expecting growth despite the effects of the global financial crisis and the impact it has had on our local economy.
Tourism however, offers a ray of light in this turbulent economic environment. We believe that it is one of the key pillars on which Jamaica’s economic recovery can be built.
Mr. Speaker, let us now examine the performance of the tourism sector during this period of unprecedented challenges.
Despite the financial crisis and the economic downturn in the major markets overseas, we welcomed 1.757 million visitors in 2008, which was 63,000 more than the previous year and represented a 3.9 percent increase in visitor arrivals. In that year the U.S. accounted for 65 per cent of arrivals which represented an increase of 1.2 per cent over the figures for 2007. Gross receipts climbed to US$1.875 billion according to the JTB.
In 2009 Mr. Speaker, we bettered the position and welcomed more than 1.8 million visitors, a 3.6 percent increase over 2008, making Jamaica the only English speaking Caribbean destination to experience growth in visitor arrivals for the year. Tourism earnings for last year came in at US$1.97 billion, just short of the US$2 billion mark. The destination experienced growth in its two largest markets, an impressive 22.9 percent increase in Canadian visitors and a 1.9 percent increase in American visitors.
This was achieved at a time when many Caribbean destinations were experiencing double-digit declines. Last year Cancun declined by 15.6%; Cayman Islands 10.2%; Bahamas 11.4%; Puerto Rico 2.8%; US Virgin Islands 2.5%; British Virgin Islands 17.0%; Barbados 8.7%; Martinique 7.7%; St Maarten 7.4%; and Antigua 12.7%.
Only three of the major Caribbean destinations recorded increases: Dominican Republic 0.3%, Cuba 3.5% and Jamaica leading the way with 3.6%.
Looking to 2010 Mr. Speaker and buoyed by successive years of growth, we are projecting growth of 6%. The winter season thus far has recorded 700,000 visitors. And Mr. Speaker the month of March was spectacular. We had an all time record number of arrivals at 12.7% over last year. Mr. Speaker, our goal for this year is to welcome 2 million visitors, and to have gross earnings of US$2.06 billion.
Mr. Speaker, just so you know, the United Nations World Tourism Organisation (UNWTO) is projecting that international tourism will grow by between three and four per cent this year. However Mr. Speaker, for Jamaica we are projecting six percent growth.
Carlos Vogeler, Regional Representative for the Americas at the UNWTO, told delegates in attendance at Jamaica’s third Tourism Outlook Seminar at the Ritz Carlton Hotel in Montego Bay, just this past February, that the global recovery though occurring faster than expected, would mean a decline in arrivals and earnings for 2009. He also noted that experience shows that tourism earnings generally follow the trend in arrivals. He was pleased to note that Jamaica seems to have bucked the trend and increased visitor arrival and income — all very good news to report.
Our projected earnings of just over US$2 billion in 2010/201, represent 20 % of total GDP and in fact is more than the NIR which stands US$1.7 b. As it stands today, tourism represents well over 50% of foreign exchange earnings and a quarter of all jobs.
As the sector continues to grow it is also a boon to employment. Last year Mr. Speaker while the country lost 40,000 jobs, the accommodation sub-sector had a net gain of 3% from 35,257 in 2008 to 36,321 in 2009. And this year we are projecting a further increase of 2,250 when the Secrets Resorts and Palmyra come fully on stream.
Not only have we increased revenues and stopover arrivals, but we have also grown in the eyes of the world and I seek bragging rights Mr. Speaker, because at last November’s 16th Annual World Travel Awards in London, considered the Oscars of the travel industry, Jamaica celebrated a “Sweet 16” winning an outstanding 16 awards.
For the third consecutive year Jamaica was recognized as the Leading Caribbean Destination, World’s Leading Cruise Destination and Caribbean’s Leading Cruise Destination. Jamaica was also honoured for its “Once you go, you know” campaign, in a new category, Caribbean’s Leading Marketing Campaign. The Jamaica Tourist Board received the award for being the Caribbean’s Leading Tourist Board, for the third year in a row.
Many of Jamaica’s resorts and travel partners were also recognized, further illustrating the destination’s outstanding tourism product. Throughout the year, Jamaica won more than thirty awards, including Travel Weekly’s Reader’s Choice Award for Best Caribbean Destination, Best Commercial for JTB’s new TV ad featuring Usain Bolt at the recently held ITB in Berlin and being named on Modern Bride’s World’s 50 Best Honeymoon List – confirming what many travelers already know – Jamaica is a hot and much sought after destination.
Mr. Speaker, the success of the tourism sector is very closely connected to the success of agriculture, manufacturing, distribution, and food and beverage in Jamaica. As such Mr. Speaker, I wish to pause to look at some of the sectors that have contributed to our collective success. These sector leaders have granted us permission to mention them by name, having shared encouraging reports on revenues driven largely by the boost provided through a steadfast tourism sector.
Diageo’s Sales Director for Jamaica, Brian Pengelly indicated that perhaps somewhere in the region of above 20 percent of the company’s business services the tourism sector. He further added that with its financial year beginning in July it had most certainly seen an uptick in sales for that sector over the last nine months.
JPS’s Corporate Communication Director, Winsome Callum, is reporting that the tourism sector represents 9 percent of total sales and 14 percent of non-residential sales. It is not too hard to see those percentages going up incrementally with more arrivals and more hotels.
Lascelles’ Financial Director Anthony Bell estimates that about 25 per cent of the Group’s alcohol sales come from the tourism sector and points to the added value of a trickle down effect.
The managing director of a resurgent Jamaica Producers Group, Jeffery Hall says that the local tourism sector accounts for 12 per cent of the total fresh produce sales and that it has noted a growing increase in earnings from that sector.
The Chief Executive Officer of Wisynco, one of the largest distribution companies in Jamaica, William Mahfood is reporting stellar consumption and sales for the month of March fueled by full occupancy of the country’s hotels. Mr. Speaker, Wisynco has confirmed that ten per cent of its direct sales are attributed to tourism.
GraceKennedy, the country’s largest indigenous conglomerate goes to great lengths to service the local tourism sector. Grace Foods’ CEO, Irwin Burton, points out that tourism accounts for 9 per cent of its food and drink sales.
But Mr. Speaker, GraceKennedy’s involvement with tourism doesn’t stop there. The CEO of GraceKennedy Investments, Courtney Campbell said that its financial arm sees Jamaica’s tourism as a significant segment of its business. Some nine per cent of its loan portfolio is in the sector while 15 per cent of its monthly cambio volumes come from tourism. Its insurance business JIIC derives 5 per cent of its premium income from tourism.
Mr. Speaker it is not only commendable to BUY LOCAL but it creates linkages that can only benefit our economy.
Mr. Speaker, I would like to tell the people of Jamaica today, that we are all part and parcel of the engine of growth for our beloved island home Jamaica, through the tourism sector. Yes ‘Wi Likkle But Wi Tallawah”.
THE WAY FORWARD 2010/2011
Mr. Speaker the challenges for 2010/11 are real. Doing nothing is not an option. These are times which call for a new paradigm, new business models, a new architecture.
Mr. Speaker, we were able to weather the recession against all odds, when many people in our own sector thought it was not possible, and we have learned many lessons. One of the key lessons is the degree to which the markets have changed and the need for a new tourism architecture, which calls for:
New markets New technologiesNew investmentsNew partnerships New communication processes
The growing commoditization of tourism has created a global competitiveness which challenges our historic understanding of the industry. Jamaica, which previously had an enclave industry perspective, suddenly found it has to compete in a global marketplace on price point and value.
Consider Mr. Speaker, that for the first time, the US is now marketing itself as a destination which is competing with Jamaica. Our product is put against all other products in the world, in the same way that our bananas had to compete with all the other bananas in the world. We now have to reconfigure our business model to deal with these new realities. Mexico and Dubai for example, have already begun to retrofit their tourism economies, because they have found that their customers want the same quality for less. The challenge we face is how to make the adjustment.
This is especially significant in our situation, as we need to find ways of doing more with less. This calls for a reconfiguration of the business model, more efficient operations, better utilization of energy, better use of human capital and investments in green technologies. It calls for moving into non-traditional markets and driving legacy markets more strategically. It calls for utilizing information technology and social marketing. It calls for a new look at community tourism and SMEs.
Mr. Speaker, there is a growing inter-dependence in the industry. Distributors like travel agents, and suppliers like airlines, are all linked. It has become necessary for destinations to participate in multi-destination marketing efforts. For example, we are currently working on a relationship between ourselves and Cuba and we are collaborating with travel agencies and tour operators to bring more visitors to Jamaica. Specifically Mr. Speaker we are currently structuring an arrangement with TUI to deliver 33,000 German visitors over a three year period. Similar discussions are being held with other global travel power houses like Thomas Cooke.
The demands of today’s traveler, the cut backs on discretionary spending, and increased competition, force us to be more innovative and to work smarter, ensuring we get our piece of the tourism pie.
a. Jamaica’s Online Marketing Strategy
In the coming year, the Jamaica Tourist Board (JTB) will make greater use of technology and the Internet as important vehicles in the execution of its marketing plan to increase bookings. To this end, Mr. Speaker, the JTB has embarked on a comprehensive online marketing strategy.
In addition to redesigning www.visitjamaica.com , the official travel site for Jamaica, the JTB has also embarked upon an aggressive use of social media aimed at engaging, educating and captivating travelers online. Plans are underway to further expand Jamaica’s presence on Facebook, Twitter and YouTube as well as reaching travelers through their smart phones.
b. Market Diversification
Mr. Speaker, the tourism industry is increasingly more dynamic and diversified, calling for us to be similarly more dynamic and diversified, in our strategic approach to the business. A key strategy is to focus on those attributes of Jamaica, which match the passions of potential travelers. This will be a key factor in maintaining Jamaica’s competitiveness in the marketplace. These include:
BridalGolf Family Faith basedGroups and ConventionsAfrican-American Soft AdventureEpicureanDiaspora SportsMusic, Festivals & EventsNature/Bird-watchingHealth and WellnessVoluntourismDomestic Travel
Important in this mix is our local market. The JTB continues to encourage residents to explore and experience the island’s tourism products. Significant to note, Mr. Speaker, according to STATIN Jamaicans at home contribute an impressive $27 Billion annually to the tourism sector.
THE IMPORTANCE OF AIRLIFT
Mr. Speaker, it is a well known fact that when an airline touches down in a destination it brings opportunities to create great wealth for that country through employment, and the supply of goods and services. Indeed the extent to which a destination can grow is a direct function of its airlift capacity. In recent times the airline industry has undergone significant changes as many have down-sized, right-sized and even capsized. There have been mergers, acquisition and bankruptcies as a result of the global economic turmoil.
We can recall Mr. Speaker that toward the end of 2008, the Caribbean faced an aviation crisis when American Airlines announced that they would be dismantling the Puerto Rico hub and cutting services to the Caribbean. In the case of Jamaica, they stated their intention to withdraw a number of routes including Dallas, and Miami and reducing their frequency out of New York.
Members of this Honourable House, it must be clear, that combined with Air Jamaica’s announcement of its divestment plans and its rationalization programmes, there was great uncertainty in tourism circles in Jamaica and in the marketplace. It was, , imperative that we took swift action to secure Jamaica’s airlift capacity, given the serious dilemma with which Jamaica was faced and the possibility of an airlift crisis.
As the Prime Minister himself pointed out in Parliament only last month, “.the arrangements with American Airlines were entered into at a time when the global recession was taking a heavy toll on airline travel and aviation costs were skyrocketing. Airlines were drastically shedding routes and curtailing flights. In these circumstances, the possibility of maintaining service by American Airlines on these strategic routes was considered much more achievable than persuading other airlines to introduce the new service.”
Mr. Speaker, the decision to enter into arrangements with American Airlines to retain important gateways and to add the strategic gateway of Chicago ensured our strength in the important Midwest. The alternative was to have NO SERVICE for thousands of travelers. Mr. Speaker, the facts speak for themselves:
The flights guaranteed by the agreements with American Airlines yielded 74,070 passengers. The Chicago route made a surplus of US$181,000.Of the total guarantees of US$4.5 million, the net amount which will have to be paid is US$2.9 million. Mr. Speaker American Airlines is continuing to provide its services out of these gateways without any further commitment in 2010.
Mr. Speaker, it is significant to note that other Caribbean destinations spent between US$30 and US$40 million to secure far fewer air seats, which negatively impacted their arrivals.
As it now stands, we have been able to adequately meet the demand particularly over this winter season with the additional one million seats with a 70% load factor. As a result Mr. Speaker, Jamaica is number one in the region both in terms of growth and connectivity.
Mr. Speaker in one year, we have attracted four new airlift providers including:
JetBlueJet Air Air TranWestJet
We have also expanded the scheduled services of our legacy carriers:
US Airways American AirlinesBritish Airways Delta
In addition there are new scheduled and charter services out of Europe. This brings the total number of seats to 2.6 million. Mr. Speaker going forward, we will continue our efforts:
to open new markets in South and Central America to improve our position in Europe to strengthen existing markets
We expect that JamVac will be adequately funded to continue its role of risk sharing and seat support programmes to achieve the objective of providing adequate airlift for the destination.
We are expecting to spend approximately US$4.4 Million to support 186,097 seats. The expected gross earnings from this will be US$168 Million. The TEF is also expected to earn US$1.86 Million.
CREATING AN ENABLING ENVIRONMENT —
a. New Partnerships: Modernization and Rationalization
Mr. Speaker, two years ago, in this Honourable House I articulated, as part of our strategic vision, a set of values which we called the “New Tourism Paradigm”. An essential element was strong partnership between Government and the tourism private sector. I spoke of our commitment to provide the institutional, policy and fiscal framework to encourage viable investments and a strong and competitive tourism industry.
In this regard, Mr. Speaker, I recently named a committee with members from my Ministry and the JHTA and charged them with two tasks:
To identify ways and means of generating a sustainable pool of funds to be used solely for the marketing of Destination Jamaica, and To discuss and agree on opportunities for greater collaboration in marketing activities so that greater synergies can be realized through the sharing of costs for various activities in the marketplace.
The discussions are well underway and there are some exciting prospects.
Another initiative that we are currently exploring is the facilitation of ongoing modernization of the tourism plant. In 1968 when the Hotels Incentives Act (HIA) was tabled, the policy focus was to stimulate investment in new hotel development. A facility was also incorporated to encourage the expansion of existing hotels. Hence the benefits under the HIA are income tax, import duties and GCT relief for new and expanding hotels.
Today Mr. Speaker, we have in many respects a mature hotel sector and a demonstrated need to refresh and renew. The Ministry is therefore giving consideration to extending the review of the existing incentives under the Act as part of a strategy to promote the modernization of the sector through “rolling over” access to the incentive, for example, every five years. This will better allow hotels to refurbish their properties on a regular basis in keeping with the requirements of competitiveness.
We fully recognize that to be competitive in today’s market, the hotel property has to be perpetually “fresh and crisp”. Again the dialogue continues with the tourism private sector.
b. Streamlining Tourism Agencies
Mr. Speaker, the Ministry of Tourism has been working with the Public Sector Transformation Unit in the Office of the Prime Minister to rationalize the structure of the Ministry and its agencies in order to realize greater efficiency and effective service delivery. In this exercise we have redefined our core functions, our growth strategies and marketing tactics, our investment and product development strategies. We have embraced the role of technology and are modernizing our systems and procedures and have reviewed our organizational structures. The outcome will be a consolidation of our plant, greater streamlining of our functions, improved service delivery and a smaller more effective team.
c. Legislative initiatives
Over the past fiscal year, the Ministry made major strides in creating an enabling environment within which tourism businesses can improve their competitiveness. In this regard, Mr. Speaker, Cabinet has approved the amendment of three pieces of key tourism legislation.
The first speaks to the amendment to the Duty Free Shopping Act to allow for:
– Expansion of the duty free list,
– Incoming passengers to purchase items duty free,
– Increasing the fines for non-compliance
In addition, the sales tax rate has been reduced from 10.5% to 6% referred to as deferred Additional Stamp Duty (ASD). The Customs User Fee (CUF) and Environment Levy were also removed.
Second, approval was given for the amendment to the Hotel Incentive Act mostly to clarify and remove ambiguities in the following areas:
The redefining of a convention hotel; – Section 2 (c), Clarifying the meaning of “substantial structural alteration” – Section 4 (2) b,Requesting ‘approved’ building plans instead of ‘certified’; – Regulations 2 (c), Encouraging investors to purchase locally available capital items, which are included in the Second Schedule of the HIA without attracting GCT. In addition the Minister will have the authority to expand the list of items in response to the permutations of the industry.
And the third Mr. Speaker is the amendment to the Travel Agency Act to improve the framework within which the industry operates, to ensure that they function in keeping with current international operating trends. This was done after broad consultation with the Jamaica Association of Travel Agents (JATA). The Ministry will continue to monitor the operations of registered travel agencies under the current Travel Agency Act and will publish the list of registered and closed agencies.
Mr. Speaker, the Ministry is continuing dialogue within the sector to review the Tourist Board Act, to ensure that their input and recommendations are incorporated in the revised Act. The revised Act which will cover all the sub-sectors of the industry is expected to be submitted to Cabinet for approval in the final quarter of the current financial year.
d. Policy initiatives
Mr. Speaker, our policy unit has been busy as there is still more work to be done. The final draft of the Time Share Concept Paper is now being reviewed and pending the vital information provided from the cost benefit analysis, the policy document will be finalized and submitted to Cabinet by the end of 2010.
With the increase in the diverse range of water sports recreational activities and equipment now available in tourism, a new Water Sports Policy is being finalized to streamline and integrate the management of motorized and non-motorized water based leisure sports in marine and ‘riverine’ recreational areas.
In all areas of policy development and review of existing legislation, the relevant stakeholders and partners have been engaged in consultation to ensure that their recommendations are considered.
Mr. Speaker, this Ministry is participating in a US$15 million Government of Jamaica / World Bank Rural Economic Development Initiative Project (REDI) which is being administered by the Jamaica Social Investment Fund (JSIF). TPDCo recently signed an MOU with JSIF to provide technical support to the programme. In support of our agenda Mr. Speaker, a community based tourism policy and strategy is being developed by the Ministry as part of the project.
Mr. Speaker among the more important policy initiatives being developed in my Ministry is the Pension Scheme Policy. The Ministry has over the past year sought to develop a mechanism for promoting the development of the tourism workforce through improved financial security. This year the Ministry, in partnership with the private sector, will implement an intensive campaign to promote participation of tourism employers and employees in a range of pension and retirement schemes. We do this because we want to ensure that a larger number of employees, including self-employed, will end up being covered under some retirement plan that will provide for them in old age.
The Master Plan for Sustainable Tourism Development Mr. Speaker is currently being reviewed. Consultants have already completed a draft final report which is at this time being assessed by the Ministry. Based on the findings of the review the Master Plan will be revised and updated and become part of the medium-term (2010-2015) policy framework for the tourism sector.
Mr. Speaker, we continue to be committed to Small, Micro and Medium Sized Enterprises (SMME’s). In 2009, the Tourism Enhancement Fund (TEF) continued to assist the development of the accommodations, attractions and tourism transportation (contract carriage) sub-sector. This programme is administered through the Jamaica National Small Business Loan Programme which disbursed approximately J$175 million.
e. New Investments: Positioning for Growth
Mr. Speaker, the economic growth that we seek will be facilitated in part by our strategy for investment generation. It is true that over the last decade the tourism industry has been responsible for attracting significant foreign direct investments and this has taken the form of accommodation, airport expansions and attractions. Our investment policy is driven by the need to expand our capacity, diversify our product offering and refresh our existing plant, the outcome of which will generate new employment and expand our earning capabilities.
As a result of the Jamaica Debt Exchange, the subsequent reduction of interest rates and the government’s efforts to create a better investment climate, tourism is well positioned to be a primary engine of growth. The last few years will attest to this, but there is still much to be done.
This low interest rate environment will mean that projects that have been shelved will now become feasible. In addition new investments will become attractive. In the economies of our major trading and investing partners, we are now receiving reports of recovery in their capital markets which could result in the re-evaluation of a number of tourism projects which were placed on hold.
A number of international investors are keen to establish ventures in Jamaica, despite the global economic crisis. These investments will bring employment and opportunities for Jamaica through much needed Foreign Direct Investment. But, let us not forget that we have local players who have made a major contribution to our country’s tourism product and are still willing to invest in their home country.
Existing tourism projects injected approximately J$14.702 billion into the economy for the financial year 2009/ 2010. This expenditure took place between Goldeneye in Oracabessa, HOSPITEN in Montego Bay, Secrets Resorts in Montego Bay, and the Palmyra Condominium project.
Mr. Speaker, two new hotels are to be built in Kingston, one being a Sandals City, a corporate hotel, which is expected to open in 2013. The other is a major US chain hotel, which is now finalizing land purchases and will commence soon.
Michael Lee Chin’s Trident Hotel and the Castle both in Port Antonio are now back on track. Port Antonio will also welcome back the Blue Lagoon development. These projects will help transform Port Antonio into a diversified region and provide a much needed boost to the area’s economy.
The Burrowes family has announced plans to open a second Dolphin Cove attraction in Lucea.
Phase two of the expansion of the Bahia Principe and the Palladium are under way.
In addition, Grupo Exellence has indicated a readiness to move forward with phase one of their 350-room project.
Falmouth is also coming on stream. The cruise port development which is to be completed by 2011 will have an additional quarter billion dollar investment in port side and shore excursions. The Urban Development Company and the Ministry of Tourism are deeply involved in this project. Indeed, TEF is spending J$53 Million dollars on this project.
In addition Mr. Speaker as a result of my recent visit to Spain, two European investors will be here in Jamaica in May to tour two prospective sites in St. James and St. Elizabeth. And Mr. Speaker we expect representatives from Alcudiamar to arrive in Jamaica soon to look at the potential for developing a marina village at a Montego Bay location.
Two weeks ago we saw the unveiling of the 350-room Secrets Wild Orchid Hotel in Montego Bay. Its sister property, Secrets St James, with an additional 350 rooms, opens officially next month during the annual Jamaica Product Exchange (JAPEX) trade show on May 12. To date, the two resort projects are estimated to cost US$180 million and US$100 million respectively, and will also create 1,500 jobs during construction and provide an additional 950 jobs.
The operators of these hotels, AM Resorts, say that within their first year the two hotels are projected to receive 52,000 guests with an average occupancy rate of 70 per cent for the period.
President and CEO of AM Resorts, Alex Zozoya, in underscoring the island’s ripe climate for investment said: “Not only has Jamaica consistently remained strong during these tough economic times, but its natural beauty, premium tourism offerings and consistent appeal makes it a destination of choice for Secrets Resorts& Spas.”
The US$150 million Palmyra, a Solis Resort and Spa, located in the exclusive enclave of Rose Hall in Montego Bay, recently announced that Sabal Palm, the first of its hotel and residential towers, is open and in full operation for unit owners as well as select hotel guests. The second tower, Silver Palm, is expected to open by the end of May, providing employment for 1,300 more workers.
The end of this year should see the completion of the Montego Bay Convention Centre, which is expected to be another major source of employment. Mr. Speaker, we are happy to announce that the new Convention Centre has already secured an important international event for early 2011.
Casinos were recently given the green light with legislation making its way through Parliament. This should help to stimulate two additional billion dollar projects – the Tavistock Group and Celebration Jamaica. Indeed Mr. Speaker, the announcement of the passage through the House of the Casino Legislation has generated renewed interest in Jamaica, and our hope for increased employment.
Mr. Speaker, these projects demonstrate that Jamaica is still an attractive investment location. But we are not only working to attract new projects; we are equally committed to improving the product we have. Mr. Speaker, the Tourism Product Development Company Limited, TPDCo – guided by the New Tourism architecture – will focus on maintaining standards and improving our product.
Mr. Speaker I begin with Spruce Up Jamaica. This programme was created with the sole objective of strengthening the tourism product, through ongoing maintenance and beautification of our resort areas. It will continue to be a major initiative of my Ministry. We are collaborating with the National Solid Waste Management Authority on this project which has created over 5,000 jobs across Jamaica.
In addition to sprucing-up the country, Mr. Speaker, we are moving aggressively to reduce visitor harassment. The Courtesy Corp is now in its third year. Just over three hundred persons are employed through this programme. Indeed, we have been gratified Mr. Speaker, by positive reports from sector partners and visitors.
The development of the Elegant Corridor in Montego Bay remains a priority for this Ministry to include landscaping and adequate lighting as part of our Comprehensive Resort Upgrading Programme.
In addition, Mr. Speaker, some of the activities to be undertaken under this programme include:
Upgrading of Gloucester Avenue (Hip Strip) – Montego BayDevelopment of the Old Fort Heritage site – Montego BayConstruction of Norman Manley Sea Park – NegrilDevelopment of historic Falmouth phase 1Improvement of the rafting experience through the redevelopment of rafting on the Rio Grande andDevelopment of Milk River Bath into a spa and wellness complex
Mr. Speaker, a highly competent and efficient workforce is imperative to creating and maintaining a truly world-class tourism product. TPDCo will be focusing on the training and development of Jamaica’s workforce. The Agency will be working with HEART-NTA to improve the skill sets of entry level employees, and collaborating with the University of Technology to improve the proficiency level of supervisors and middle management staff for the sector.
A critical driver in the new tourism architecture is the development of community tourism within a ten mile radius of all the resort towns. It is our intention to ensure that the economic benefits of the tourism sector are distributed to the citizens who live in resort communities. This community tourism thrust includes agro-tourism, bed and breakfast, arts and crafts, heritage and culinary.
But beyond this we are interested in improving the physical communities. Mr. Speaker, this Honourable House will recall that last year at the urging of the Honourable Prime Minister, we took the bold but necessary step to allocate J$1B from the TEF toward a massive social intervention programme within our resort towns.
This programme which is expected to be implemented over a three year period is being spearheaded by the Housing Agency of Jamaica and in the first phase will focus on the resort communities of Shaw Park in St Ann and Lilliput, Grange Pen and Norwood in St James.
The abiding principle driving this programme is the notion that when citizens own their places of residence, they take more pride in the development and maintenance of their communities. Ownership is evidenced by a title, but for a title to be issued minimum infrastructure must be in place. This programme Mr. Speaker will see the construction of roads, water supply installation and construction of storm water drains.
Approximately 2,700 households will benefit directly. This project will result in improved living conditions of residents and reduced environmental degradation. Regularization of land tenure by transferring titles to residents, will put them in a position to pledge their title and obtain financing for business opportunities. Another benefit will be improved police access moving toward a reduction in crime and violence.
Mr. Speaker, we are also very committed to service excellence. Indeed, our objective is to deliver come-to-mind service to every visitor, for we know that it is the people in our sector who are the heroes. Two years ago we embarked on the Tourism Service Excellence Programme (TSEP). The programme has grown so rapidly that in the second year the number of individuals and companies nominated has almost doubled. Last year’s winner in the individual category Ms Fiona Hartley of Beaches Boscobel and the company winner Island Car Rentals ably led by Mr. Michael Campbell, are sterling examples of what is possible in our industry. The TSEP programme moves from strength to strength as we work toward developing a culture of hospitality.
Mr. Speaker, as we strive to improve our hospitality standards, we are working to help our partners improve efficiency and effectiveness of their operations so that they can compete in this global marketplace. We are committed to the utilization of new technologies such as the Tourism Enterprise Management System, TEMS, which is expected to help in this regard. TEMS, Mr. Speaker, will facilitate the enhancement of service delivery to industry partners in the assessment and evaluation of attractions, hotel properties and tour operators. This is an important step in the granting of a license by the JTB.
Mr. Speaker, the one area that continues to be of concern to us is the domestic crime rate as this is proving to be detrimental to investments. We appeal to all Jamaicans to join us in tackling this scourge that has marred our image and has made the marketing of this beautiful destination that much more difficult.
As we position Jamaica’s tourism for further growth, several key strategies are being pursued including: the enhancement of the tourism product and providing for a more diversified visitor experience in areas such as casino gaming, entertainment, duty-free shopping, and new accommodations. We are also concentrating on improved efficiency, productivity and competitiveness, which must become watchwords in how we manage the economy from here on.
THE IMPORTANCE OF THE SUPPLY SIDE OF TOURISM
Mr. Speaker, I have heard it said that too much emphasis is placed on arrivals and scant regard is paid to tourism spend. I would contend that you cannot generate spend if you do not have adequate visitor arrivals and the infrastructure to accommodate a diversified tourism product. It is imperative that the tourism dollar trickles down, indeed percolates through the wider economy and does not become too concentrated in just a few pockets. Data from the Jamaica Tourist Board reveals that 57.3 per cent of the stopover visitor dollar goes to accommodation; 9.8 per cent to shopping; 10.4 per cent to entertainment; 5.8 per cent to transportation; 7.2 per cent to food and beverage; 9.5 per cent- miscellaneous
A cursory look at the cruise ship dollar paints a far different picture. Here 58.3 per cent goes to shopping; 3.9 per cent to food and beverage; 2.1 per cent to transportation; 12.2 per cent to tax and tips; 22.6 per cent to attractions. In effect 42.7 per cent of the expenditure stays here in Jamaica. One can therefore see how important it is to form linkages between tourism and the other sectors of the economy.
Tourism has traditionally been viewed as a demand rather than a supply driven industry but that can no longer be the whole story. With us now able to accommodate 2 million visitors a year, the question is can we meet their demands and can our indigenous industries supply them? It stands to reason that if our homegrown firms can supply a growing tourism industry the entire economy can benefit.
In other words Mr. Speaker, the banana farmer who has lost his competitive edge in Europe can sell his product in Montego Bay. But in order to profit from this opportunity, our companies must be up for the challenge, paying particular attention to quality and cost competitiveness.
As a country we must now endeavor to ensure that the demand created by the tourism sector can be met by local production. In essence tourism can create a third market for goods and services to be exported without having to treat with cross border tariff regimes.
a. The Story Of Eggs
Mr. Speaker, let us look at how tourism stimulates demand for eggs. With 30,000 rooms at 65 per cent occupancy, and two persons in each room, there are 39,000 persons demanding eggs. If these two persons consume say four eggs daily between omelets, bread and pastry, the sector needs 56 million eggs a year. Who Mr. Speaker in Jamaica is supplying eggs for them? Does that egg producer need a partner? Does that egg producer need to see the bank manager for a loan to acquire equipment to meet the demand?
Happily Mr. Speaker farmers are delivering eggs. In 2007, 115 Million eggs were produced in Jamaica. In 2009, 130 Million eggs were produced.
This is the demand Mr. Speaker, about which we speak. The demand created by tourism, can be a catalyst to the productive sector. The value of food inputs in the tourism industry is US $500 million. Mr. Speaker, we want a significant amount of these food items to be supplied locally.
But this is not the whole story Mr. Speaker. There are significant opportunities in manufacturing. Full consideration was given to the local manufacturing sector in designing the Hotel Incentive Act (HIA) which allows hotels to import goods needed for the establishment and upgrading of hotels without paying the normal taxes on materials. There are no goods on the schedule eligible for duty-free entry, which effectively compete with locally manufactured goods. Indeed Mr. Speaker, further changes like the removal of GCT payable on local materials, will allow locally manufactured goods to enjoy the same status of imported goods, in terms of ability to supply the tourism industry. In other words, Mr. Speaker, what this will do is to place local manufacturers on a level playing field as far as supplying the tourism industry is concerned.
b. The Coverman Family
I have another story Mr. Speaker, the story of the Coverman family. Let us look at a tourism case study. Craig Coverman from Notting Hill London decides to take his family which is his wife Claire and two sons Harry 12, and Jacob 10 on a two week vacation to Jamaica’s Round Hill Hotel and Villas in Montego Bay. After a long flight they arrive at Sangster’s International Airport where they make their way to the immigration desk. Their passports are processed by Jamaican civil servants.
Then they head to the baggage carousel where Claire lends her husband a hand with the suitcases. They make a bee-line for Customs where they are again met by Jamaican civil servants who determine they have nothing to declare.
They then meet Vernon the porter who helps them with their bags. He earns ten pounds for his labours. He bids them goodbye and leaves them in the capable hands of the minibus driver who transports them to Round Hill Hotel. The driver collects
INTRODUCTION Mr. Speaker I address this Honourable House against the background of a global economic landscape which was characterized by the worst recession in recent times and the prospects of a recovery that at best leaves the world in a cloud of uncertainty. Indeed as we say in tourism ‘the only certainty is uncertainty’.