Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals?

By Nicole Laframboise, Nkunde Mwase, Joonkyu Park, Yingke Zhou

December 18, 2014

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Nicole Laframboise, Nkunde Mwase, Joonkyu Park, and Yingke Zhou. Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals?, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Economic sectors, Expenditure, Financial crises, Foreign exchange, Global financial crisis of 2008-2009, National accounts, Personal income, Real exchange rates, Tourism

Keywords: Caribbean, Carribean, Cost, Exchange rate, Expenditure, Global, Global financial crisis of 2008-2009, Income elasticity, Personal income, Price elasticity, Real exchange rates, Tourism, Tourism arrival, Tourism arrivals, Tourism competitiveness, Tourism demand, Tourism flow, Tourism performance, Tourism product, Tourism sector, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/229
Stock No:

WPIEA2014229
ISBN:

9781498351560
ISSN:

1018-5941

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