World Tourism Day, September 27th: Some Interesting Reflections.

These remarks follow an interesting set of presentations, made by the Aruba Toiurism Authority, on Tuesday, in celebration of World Tourism Day, at the Marriott Aruba resort & Stellaris Casino.

The theme of the day, set by the United Nations World Tourism Organization (UNWTO), was : Rethinking Tourism.”

Why does the UNWTO believe the world needs to rethink tourism?

Obviously, the impact of the measures implemented in 2020 to curb the spread of the covid 19 virus had a huge negative impact on international travel. But, even prior to 2020, serious questions were being asked about the future direction of tourism, even here in Aruba.

The UNWTO said Tuesday would be an opportunity to rethink how we do tourism. They said this meant putting people and the planet first and bringing everyone from governments and businesses to local communities together around a shared vision for a more sustainable, inclusive, and resilient sector.

Clearly Aruba has some short and long term issues facing its tourism industry, issues which need to be addressed and resolved.

In the short term Aruba, like many other countries, is still recovering from the negative impact of the measures taken to control the spread of the pandemic on the growth of its tourism industry.

While some of these issues were talked about in broad terms on Tuesday there appear to be a number of short term issues which didn’t really get discussed.

One slide established the relationship between the growth in Aruba’s GDP and growth in tourism credits (spending by our visitors).

So, if our GDP is to increase then it would seem tourist spending has to grow to drive that desired increase in GDP.

However, the ATA is projecting a 5% increase in stopovers for 2023 compared to 2019, that is 1,174,891 compared to 1,118,944 in 2019, or 1.2% p.a. between 2019 and 2023 and 5% more stopovers in 2023 than in 2022.

And they project that tourism credits will grow by 17% between 2019 and 2023, from 3.741 billion AFL in gross credits to 4.378 billion AFL in 2023, while that’s an average of 4% p.a. growth rate, and a projected increase of 4.5% in credits in 2023 compared to 2022, with local inflation running at 6% per annum that is no real gain in real spending.

One of the reasons for a slower than expected increase in stopover visitors is that growth in traffic is really constrained by lack of capacity at the airport. Not enough gates at key arrival times.

Interestingly the airport is projecting fewer seats from the USA in 2023 than in 2022 so I guess these high value tourists will be coming from Latin America and Europe.

In fact, the airport is projecting a 12% growth in Revenue Generating Passengers for 2023 which will be 7% more than the 2019 total. So, if you average that over 2020 through 2023 that’s a growth rate of just 1.8% per year. Not very much. Phase One of the expansion is not scheduled to be completed until 2024. Let’s hope they meet that deadline.

A second concern is a strong trend of visitors moving from hotels to other types of accommodation.

Aruba: Total Stopover Visitors by Place of Stay YTD 2022 August
2022 % share 2019 % share % chg 22/21
Hotels               336,970 45.7%          402,439 51.9% -16.3%
Timeshare               218,900 29.7%          207,619 26.8% 5.4%
Other Accommodation               182,231 24.7%          165,155 21.3% 10.3%
Total               738,101 100.0%          775,213 100.0% -4.8%

Aruba may be increasing the number of stopover visitors but more of them are going into short term rental accommodations which contribute less to the economy and these guests are also taking up the limited air seats which should go to higher spending hotel visitors.

Third, there is a new 330 room hotel opening this December. We have about 5,600 hotel rooms now so adding 330 rooms is a 6% expansion in hotel room capacity. If we only grow stopover visitors by 5% compared to 2022 and if the new hotel gets its fair share of business the other hotels do not move forward.

Fourth, Aruba’s tourism sector is facing a huge problem attracting staff, so no one is quite sure who is going to work at the Embassy Suites, nor is it clearly understood what the impact will be on staffing at the existing hotels.

Fifth, we have at least two if not three more hotels opening in 2024. So, these challenges will continue into 2024.

And finally, it was interesting to learn that one florin invested in marketing results in 134 florins in tourism spending. But how do we know if that is a good number? What are similar numbers for Mexico, or the Dominican Republic, or The Bahamas, or Puerto Rico? Or for smaller destinations such as the Cayman Islands or the USVI or the Turks and Caicos Islands who all do well in attracting high value tourists.

And we didn’t even address where Aruba’s tourism might be in ten years’ time.

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October 01, 2022
Rona Coster