What does a Trump Presidency mean for Caribbean Tourism?

So, it’s official. Donald Trump won the presidency. His victory over Hillary Clinton in the United States’ presidential election was surprising to many and sent ripples around the world. Despite his extensive background in business and hospitality, Mr. Trump’s win has generated some uncertainty from tourism industry leaders and influencers virtually everywhere.

Global stock markets were impacted the day after the election where the U.S. stock futures on the Dow Jones Industrial Average decreased by 5.1% and stocks in London fell over 4.3% before recovering some of the losses. The Mexican peso was one of the world’s hardest hit currencies, falling 12% to a record low of 20.5708 to the dollar early Wednesday. According to the Huffington Post, the Canadian loonie lost more than a cent in early trading the day after the vote, dropping to $0.768, for its largest drop in 18 months.

From a global tourism perspective, Travel Week highlights that there is a possibility that a weaker dollar over the longer term can result in cheaper holidays, not only in the U.S. but around the world. As oil is priced in U.S. dollars, the theory is that this can result in a decrease in the cost of airfare and other transportation, while cruises may also see a drop in prices. We’ll monitor how this all pans out.

Along with assessing the potential global tourism impact, it is important to understand the significance of the U.S. election results on the Caribbean. Opinions vary. In her Caribbean Trade Law blog, Alicia Nicholls outlines that the U.S. is a main trading partner for many Caribbean countries, a provider of foreign aid and a foreign policy ally. Additionally, for several Caribbean countries, the U.S. is the largest source market for tourist arrivals. Moreover, the U.S. is home to the biggest population of persons of Caribbean descent living outside of the Caribbean. Remittances matter hugely; and so does the vitally important and consistently growing segment of Diaspora travel. Consequently, any change in U.S. foreign, economic and commercial policy will have implications for the economies of the Caribbean.

Trade & Finance

According to David Jessop of the Caribbean Council, Trump’s adamancy to have other countries pay for U.S. support may result in his administration granting access to U.S. goods and services on the basis of reciprocity. If President Trump actually implements his plans to change U.S. trade relations, this may require the liberalization of policies which can result in a possible loss in revenue for Caribbean countries, as there would be a decline in U.S. investment in the region. Jessop further states that tax penalties would be levied on U.S. manufacturers who have offshored their manufacturing or assembly plants into locations like the Caribbean to take advantage of a more appealing tax environment.

Dr. Richard Bernal, Pro Vice Chancellor of Global Affairs at the University of the West Indies (UWI), states that Caribbean countries should be concerned with financial de-risking measures between Caribbean territories and the U.S. The de-risking process involves omitting financial ties with classified high-risk clients or businesses. This can have fallout effects on Caribbean investments and Caribbean businesses, specifically related to tourism and hospitality in the region.

 Immigration

According to market research company Euromonitor, Donald Trump’s America-centric platform, his threat to ban Muslims or residents of terrorism-affected countries, and to build a wall between the U.S. and Mexico can have overwhelming consequences on the tourism industry. The perceived attractiveness of the U.S. among foreign visitors will depend on these factors: How affordable it is to visit; what, if any policies the Trump administration establishes (new immigration procedures that make the customs and border process harder; the scrutiny of certain groups of people); and the perception of how welcoming and safe the U.S. is.

For international visitors traveling to the Caribbean who make connections in the U.S., particularly in Miami which serves as a main hub to the Caribbean, the traveling process could become even more tedious to get to and from the region.

In regard to Caribbean nationals living in the United States . Chancellor of the University of the West Indies (UWI), Sir Hilary Beckles warns the Caribbean to be prepared for returning nationals and other migrants from North America. He further stated that Mr. Trump’s philosophies and policies can lead to a demographic change in the Caribbean, over time.

Climate Change

Climate change is a current issue for the entire world, most particularly for small island developing states in the Caribbean, which, despite our minimal contribution to global greenhouse gas emissions, have been the most vulnerable to the adverse effects of climate change. Mr. Trump has pledged to discontinue U.S. support for the Paris climate change agreement, a deal to decrease greenhouse gas emissions and reduce dangerously high global temperatures that went into effect this November.

First orders of business from his administration reportedly will include canceling billions of dollars from U.N. climate change programs. This withdrawal can threaten Caribbean tourism’s clean energy initiatives by reducing or eliminating the aid available to developing countries for climate change adaption and mitigation.

U.S. Consumer Travel Behavior

As travel is a discretionary item, it is particularly vulnerable to economic shocks and cutbacks in consumer spending.

International Head of Travel at Euromonitor, Caroline Bremner felt that after Brexit, it was expected that the UK would benefit from Americans seeking value for money by taking advantage of the depreciation of the pound to visit the UK. However, increased levels of uncertainty about future economic policies in the U.S. may put a halt to outbound U.S. travel. It is reasonable to conclude that a contraction of this type, should it occur, would most certainly be felt in the Caribbean, a region which depends upon the U.S for most of its visitors.

On the other hand, this article from the New York Times explains that if high-earning Americans end up enjoying tax cuts under the Trump administration, they may decide to travel more. The cost of airfare will also be exciting to watch. U.S. legacy airlines typically don’t favor competition. They want American travelers to purchase their tickets. To that extent, they have been lobbying to decrease access to the American market by major foreign carriers, which would increase competition, forcing the airlines to improve and to lower airfares.

Even though competition would be a bonus for travelers, experts are indicating that legacy airlines are looking to prevent it by capitalizing on political “protectionism” to keep their competitors at a distance. If the protectionist approach succeeds, there will be fewer options and prices will remain high.

Fingers Crossed

In the Caribbean we understand better than most, that travel and tourism can be directly and indirectly impacted by government policies. What’s important to remember, however, is that as vulnerable and unpredictable as the tourism industry can be, it has a strong record of resilience.

In these early post-election days there are certainly more questions than answers. If that sounds familiar, it is because the same has been said many times in regard to Brexit. There are some interesting parallels here!

For sure we find the answers and keep you informed.  Working closely with the Caribbean Hotel & Tourism Association (CHTA) and other strategic partners we will provide you with relevant, up to date information. Keep watching this space for the latest

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s