Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals?
28 Pages Posted: 6 Feb 2015
Date Written: December 2014
The Caribbean share of the global tourism market has been declining. This study examines what is driving tourism flows. It estimates the determinants of tourism and explores variations based on sample differences, and also constructs a static nominal price comparison index. The paper finds that: (i) tourism arrivals and expenditure are sensitive to both price and income factors in source markets; (ii) price and income elasticities of tourism have declined since 2008; (iii) price elasticity is statistically insignificant for “high-end” destinations; and (iv) the nominal cost of an average one week beach holiday in the Caribbean is higher than in other beach destinations around the world. These results point to the need for structural reforms to raise product quality, cost reduction or containment in “low-end” destinations, including possibly via exchange rates, and an adjustment in aggregate consumption to adapt to the implications of a lower contribution to GDP from tourism.
Keywords: Tourism, Caribbean, Gross domestic product, Expenditures, Price elasticity, Real effective exchange rates, income elasticity, Carribean, tourism arrivals and expenditure, tourist, destinations, hotels, tourists, tourist arrivals, airlines, tourism organization, tourism demand, tourism flows, meals, tourism market, cruise, tourism sector, global tourism, tourism products, cruise passenger, travel, international tourism, tourism services, criteria, tourism growth, passengers, holiday destinations, tourism consumption, travelers, cruise passengers, small islands, tourism development, tourism research, tourism destinations, vacation, tourist attraction, destination countries, importance of touri
JEL Classification: C33, L83, N16, O54
Suggested Citation: Suggested Citation