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The largest industry in the Caribbean is tourism, providing a vibrant ecosystem for hotel and resort development. Sharp demographic segmentation by the industry provides fuel for new arrivals. Development projects are traditionally led by American interests, given the dominant role of US-based travelers to the region.
The idea of a pleasure trip in which the voyage itself is the hospitality experience is a modern-day concept. Vessels are floating resorts, subject to the whims of economic cycles and consumers preferences. Investors are drawn to these companies by their ability to generate cash, akin to the traditional lodging industry.
Given the potential economic impact of tourist spending, attracting visitors to a city or country is an important government function, with responsibility often nesting in tourist authorities or convention bureaus. The pandemic suspended these efforts worldwide, but more relaxed public-health standards are leading to aggressive marketing tactics to entice travelers.
The coronavirus era has upended spending patterns among consumers and businesses. Travel restrictions, at times unpredictable, suggest that any pickup in discretionary spending will be local or regional in scope. Some consumers may be willing to respond to price incentives, but tourism as an economic growth engine is sputtering.
Traveling to other countries for medical procedures is now routine. Common reasons include lower cost and better quality. Some opt for dental procedures; others schedule eye surgeries or heart operations. Especially across the developing world, countries compete aggressively for this hard-currency income stream.
Multinational companies set industry standards because of their ability to deploy development capital and leverage distribution networks. Importantly, most hotel enterprises embrace an asset-light strategy so they can maneuver nimbly as business strategies change. Their dominant position is challenged by those hoteliers operating successfully in niche markets.
Major investors traditionally look to hotel properties as a diversification play within real-estate portfolios. They may favor predictable cash-flow metrics or they may look to exposure as a way to leverage economic growth. An unspoken reason for these asset commitments is that hotels are a visceral investment, gliding through due-diligence concerns.
The travel sector has been reinvented by the internet. Booking sites are the core example, empowering consumers to think beyond traditional brick-and-mortar travel agencies. Seemingly-dominant players are vulnerable to niche competition. The shift to do-it-yourself reservations has simultaneously spawned a burgeoning travel-knowledge industry.
Every hotel has its own culture, even though that culture is sometimes shared with other assets across a brand portfolio. Destination properties rise above this replication standard through their location, architecture, or heritage. These one-of-a-kind holdings align aggressively with guests’ emotions, providing recurring room demand and upside margin flexibility.
Government officials advocate tourism development because of the outsized impact on local economies. At least that is the classic view. Increasingly, tourism is viewed as a two-edged sword, given the stress on public services and infrastructure. Economic gains can be fleeting as cash outlays are siphoned away by unprincipled companies.
While the history of fairs and carnivals can be traced back to the Middle Ages, the notion of a fixed setting for amusement is largely an innovation of the twentieth century. Skyrocketing growth in the theme-park industry was propelled by income gains in the US and Europe. Operators now look to emerging markets for aggressive expansion opportunities.
Technology has heavily influenced the evolution of the hospitality industry because of the positive impact on operating efficiency and customer service. Many startups are subject to a high degree of economic cyclicality because their revenue—either directly or indirectly—depends on consumers’ flow of discretionary income.
Sensationalized as spotlighting macabre activities, dark tourism is actually a reflective experience. Visiting places linked to death and disaster help us to wrestle with our fragility. Classic destinations are the Killing Fields of Cambodia or the World Trade Center in Manhattan. Many sites are controversial among politicians, historians, and even now even epidemiologists.
Banner shows cruise ship quayside at Valletta. Credit: ewg3D at iStock by Getty Images.