Over the course of the following weeks we will be running a series of five articles, contributed by PricewaterhouseCoopers, on the worldwide retirement tourism industry and the opportunities it offers Jamaica. Today’s article looks at the growth of the industry worldwide, and its potential

for Jamaica.

THE Tourism Master Plan, published in 2002, envisioned the return of the industry to the rapid rates of growth achieved during the 1980’s. A comprehensive and detailed strategy was outlined as part of the Plan, and an annual increase of 5.5% in stopover visitor numbers was set. Such growth, if realised, would see an increase in visitor numbers from 1.3 million in 2000 to 2.2 million in 2010. Unfortunately, a number of factors have impeded the achievement of this target. The adverse effects of 9/11 on world travel and several devastating hurricanes are just a few factors that have battered the performance of the local hospitality sector in recent years.

In order for Jamaica to meet the 2.2-million target, it will now need about two reruns of 2006’s performance, the only year in the decade when stopover arrivals grew by more than 200,000 visitors. With only 15 months to the 2010 deadline this target will more than likely be missed. This may be a bold statement, but it is not an irrational one. The worldwide recession will continue to have debilitating effects, and Jamaica still has to contend with what remains of this and another unpredictable hurricane season.

Having said this, many of the proposed initiatives outlined in the Master Plan still remain applicable today. Such initiatives were intended to improve the Jamaican product and the competitiveness of the industry, and included, amongst others, policies to improve the investment climate, proactively target large international chains and attract investors in large entertainment, sporting and leisure complexes.

The strategic objectives underpinning these initiatives were focused on enhancing the visitor experience by developing and diversifying the product, accelerating the tourism industry as a lead sector and improving socio-economic integration with the community at the centre. Although some of these objectives may have been achieved to a greater or lesser extent, one of these elements, the realisation of a diversified tourism product, is not quite noticeable, if at all present. Could more have been done to attract the potential market segments identified, especially the “mature market”, a segment that is silently booming? If tapped into, this market would contribute to increased stopover arrivals and increased visitor expenditure for years to come.

The Booming Mature Market

The mature market, as classified by the Jamaica Tourist Board, are those tourists over the age of 50. This segment has been growing steadily since 2000 and has almost doubled in size, to 477,689 visitors in 2008. As a result, the mature market accounted for almost 27% of stopover visitors in 2008 and is Jamaica’s fastest-growing segment compared with the other age cohorts.

A key driver of growth in this market is undoubtedly the major change in population age profiles across the world. According to the United Nations, the global population aged 60 or over is increasing at the fastest pace ever and will increase from over 700 million in 2009 to around 2 billion in 2050. In the US alone, 5 million baby boomers turn age 60 each year, or put another way, more than 10,000 per day or 9 per minute, meaning that the over 100 million baby boomers will retire in the next 20 years.

According to the Tourism Master Plan, in 2002, the population over 50 in the US was estimated at 75 million. Today, this figure has already increased to over 100 million, according to the US Census bureau. Of this total, approximately 18% took trips abroad, half of which were interested in warm-weather beach destinations such as Jamaica.

Furthermore, according to the retirement website “Boomers Abroad”, approximately seven million Americans and Canadians are currently living outside of their home countries, often in these same, warm-weather destinations. This statistic is not surprising, especially when many of these destinations offer individuals, including retirees the opportunity to realise their life dream, namely to live in comfort and achieve a higher standard of living at a much lower cost than could be achieved in their native country!

The master plan also identified non-resident Jamaicans as a possible market segment to target. Retirees from the Jamaican diaspora have a greater bond with Jamaica, and in the past have returned to comfortably enjoy their retirement. Information sourced from Wikipedia suggests that 500,000 Jamaicans are in the UK, close to 910,000 are in the state of NewYork and 230,000 are scattered across Canada. It is hard to estimate the population of retirees in the Jamaican diaspora. However, using a rough estimate that mirrors the age distribution of the population over 55 living in Jamaica, the estimated retiree population in the above-mentioned states is approximately over 200,000.

Retirement Villages

The increased tendency for retirees to move abroad and the growth of the over-50s population have led to an explosion in demand for overseas “retirement villages,” especially in the Latin American and Caribbean region. Such communities are akin to 5-star resorts, and feature luxury lifestyle amenities such as golf courses, theatres, restaurants, and entertainment complexes. Unsurprisingly, retirement villages are an attractive concept to North Americans, but with initial buy-in rates of up to US$1,400,000 and typical monthly service charges of between US$1,500 to US$4,000, many cannot afford to live in them.

The growth of overseas retirement villages has opened up a large segment of the market to pensioners who would not normally be able to afford the rates charged by five-star facilities in the US. In addition, with the onslaught of the global recession, which has punished pension and savings plans badly, retirees reluctant to downgrade their lifestyles (or worse yet, return to the workplace) are increasingly looking to foreign destinations as a way of maintaining their standard of living on a smaller budget — an opportunity which nimble operators are already exploiting.

So what does this mean for Jamaica? There are a few countries in the Latin American and Caribbean region, including Mexico, Belize, Panama, and Costa Rica that have recognised the opportunities in this segment of the hospitality industry. These countries have already embarked on the development of their national industry in a serious manner in several ways such as legislative change, infrastructure development, promotional activities etc. Although Jamaica can quite clearly compete with such destinations on all major fronts and the benefits to be derived are apparent, it is not yet clear if or when we intend to get on board this gravy train!

According to The Economist, the baby boomers will reach retirement age in 2010 (undoubtedly many of the more fortunate / affluent have taken early retirement), and most would have retired by 2025. This leaves Jamaica with a relatively narrow window of opportunity to successfully define, develop and capture our fair share of the retirement tourism industry whilst it is still in growth mode.

Unfortunately, however, in all too many instances, Jamaica has a history of trying to develop its industries when the train has not only left the station, but has made several journeys and is in the process of being decommissioned. The opportunity to develop a vibrant and successful retirement tourism industry currently exists; the real question therefore is when will Jamaica get on board …?

This article was written by Darren Singh and Keisha Tingling, of PricewaterhouseCoopers. For further information, contact darren.j.singh@jm.pwc.com.

Next week we take a closer look at some of the major factors that are driving the growth of

retirement tourism industry across the world.