IN 2010, Jamaica welcomed almost 2 million stopover visitors and 910,000 cruise visitors, contributing an estimated US$2 billion of foreign exchange earnings to the local economy.
But at that time, estimates were that as little as 25 per cent of the total tourism earnings were retained in Jamaica. Recognising the issue, the tourism ministry commissioned a study to understand the problem in order to take steps in improving the situation.
That Tourism Demand Study, which was published in October 2015 showed that for the manufacturing sector, leakages due to imports to the tourism sector alone amounted to $65.4 billion and for agriculture, up to $5 billion.
Recognising that they could benefit from the growth in tourism sector, stakeholders in manufacturing, agricultural and creative sectors noted the existence of opportunities for import substitution to meet tourist demand for food and other goods and services.
Local suppliers could supply products such as bed frames and headboards, chairs, standing lamps, pillows, towels, toothpaste, sanitizers, Irish potatoes, iceberg lettuce, onions, and corn.
At the same time, the Government of Jamaica identified that the development of economic linkages between the tourism sector and the other sectors of the economy was critical to promoting growth in and development of these other domestic sectors.
But while players in the tourism sector welcomed the idea of import substitution, they also recognised challenges that local producers could face to meet the demand. Did they have the capacity to supply in significant quantities? Would they be consistent in supplying to hotel? Could their products meet quality expectation of hotels?
As such the Ministry of Tourism commissioned a study funded by the Jamaica Social Investment Fund and conducted by the Centre for Leadership and Governance at The University of the West Indies, Mona.
Here they sought to:
1. Identify areas where there are strong opportunities for increased consumption of local goods and services in the local tourism sector;
2. Increase understanding of the supply chain for the tourism sector;
3. Identify specific constraints and limitations hindering tourism linkage with the domestic economy;
4. Estimate the value of leakages due to expenditure on imported goods and services;
5. Determine the receptivity among the tourism sector for use of local goods and services within the sector.
The result: The Tourism Demand Study has identified opportunities for linkages between the tourism sector and the wider Jamaican economy and the development of supply chains.
"The principle of establishing the linkages network is first of all to identify why people travel," Tourism Minister Edmund Bartlett told the Jamaica Observer. He said the study identified five reasons why tourists travel. "These areas are gastronomy where they come to enjoy local foods, shopping, health and wellness, entertainment and sports and then there is knowledge where people travel for learning and seminars."
"These things are owned by people in the destination and when they come and buy these things the money is spent here," he continued.
"We know we don't produce everything, because we don't grow rice or wheat, but we grow fresh fruits and vegetables such as bananas and yams, we can then do canning like for agro-processing to produce things like jams and jellies, manufacturers can produce sheets and blankets which will also help to retain more of the money in Jamaica.
Bartlett said since the study, the government has been giving incentives for those interested in producing for the tourism sector and extending financing to facilitate ventures.
And they have been seeing success.
"We were able throughout that process to increase the retention of the tourism dollar from 25 cents in 2010 to 40 cents in 2019," he told Sunday Finance. "And at 40 cents we are 20 cents away from the best-performing destination for tourism dollar retention in the world which is India, which retains 60 cents of its tourism earnings."
In the Caribbean, the country retaining the highest level of tourism dollar is the Dominican Republic which retains 50 cents out of every dollar its tourism sector earns. That country earns about US$8 billion from tourism which means US$4 billion is retained that country.
For Jamaica, tourism earnings in 2019 amounted to US$3.7 billion which meant just under US$1.5 billion was retained in Jamaica. This year, the country is forecasting earnings around that same level as the sector rebounds from the pandemic-induced decline and the tourism minister believes even more of the money the sector earns can be retained in Jamaica.
"My take is that the pandemic has created a new opportunity for local goods to be consumed by tourists and we are now trying to do the research on that to determine properly if the retention has increased," he said as he added that he believes it has.
He shares that one of the reasons for his belief is the supply chain issues affecting everyone, pointing out that hotels are turning more to local farmers and manufacturers to satisfy the tourists demand.
Bartlett says he also thinks Jamaica's tourism retention rate can increase from 40 cents of every dollar to 50 cents if Jamaican farmers and manufacturers, entertainers and retailers and knowledge producers ramp up their offers to the sector which boasts 32,000 rooms and is set to welcome over 3 million stop over tourists this year.
"The challenge of taking it to 60 cents is strong, but I think we can take it to 50 cents. We have some constraints that we may not be able to overcome to push to the level of India, so we are aiming to retain at least half of the money spent by tourists in Jamaica."
He listed some of these constraints as being able to produce some premium cuts of meat and things like wines, rice and wheat.
"There are some items which we will still have to import at least in the short term until someone decides to produce them here," he added.
"If however we get the tourism supplies logistics centre in the free zones, that would encourage more local manufacturing of tourism input that can satisfy our local market and even imports, then we can put a further dent in it. That's a big part of the strategy, and we are talking to the Saudi's about setting up operations here to do it, and they have showed an interest. It is something that we will be pursuing with them when we return for a visit to Saudi Arabia in November."
The pandemic, too, has shown how much the economy has depended on tourism.
But are we too dependent on the sector and is deepening the linkages a wise move?
Bartlett pointed out that a lot of local companies such as Red Stripe, Appleton, Wisynco were impacted by the downturn in tourism during the period. Companies that produce items such as tissue and napkins were also impacted because a lot of their sales go to the hotels. Farmers were impacted as well and so on. There were scenes on television in the midst of the pandemic with egg farmers killing thousands of birds because the cost of feeding them was too great, especially with no sales to the hotel sector.
But Bartlett said no, the economy is not too dependent on tourism and the events of the last two years do not mean the linkages should not be deepened further.
Instead, he calls for it to be interlinked even more.
"Tourism is the fastest way of transferring wealth from the rich to the poor," he countered as he called on others to invest to sell to the sector.
"The banks need to be more responsive to the producers, the farmers need to produce more, the providers of entertainment must also get to the point of providing an event every week. In Mexico, they have 365 festivals per year, one a day. We need to look at attracting people for weddings," he concluded.