CORAL GABLES, Florida — The Caribbean's proximity to the United States makes it particularly vulnerable to ripple effects caused by trade, tariffs and tourism changes on the mainland. But hoteliers and investors in the Caribbean say collaboration and advocacy are the keys to reducing its reliance on the U.S., fortifying other demand sources and building regional strength.
Shipping fees and sourcing materials
Most recently, Caribbean nations rallied to change a U.S. Trade Representative policy set earlier this year that would impose port fees of up to $1.5 million per port call on Chinese-built and operated vessels, which dominate Caribbean shipping.
Strong advocacy resulted in exemption from the fees — a big win, said Sanovnik Destang, president of the Caribbean Hotel & Tourism Association and executive director of Bay Gardens Resorts on St. Lucia.
"The amount of trade between the U.S. and the Caribbean is not inconsequential. We're talking about almost half a billion dollars that would be impacted" by the port fees, Destang said. "So we collaborated with the shipping companies, we shared the information and it showed the importance of sharing our data and information."
Andy Ingraham, president and CEO of the National Association of Black Hotel Owners, Operators and Developers; and president and CEO of Horizons Marketing Group International, said part of that positive outcome came about because advocates had to show the U.S. government that the issue was affecting American citizens and companies, too.
Issues like that, along with worries over a drop in tourism to the Caribbean from U.S. travelers thanks to high inflation, mean it's time now more than ever to look at other markets for tourism and more regional self-sufficiency as well, Ingraham said.
"Feeder markets [slowing down] and tariffs are going to cause us to relook at alternatives," he said.
Identifying alternate shipping routes are one possible solution, Destang said.
"Are there other routes, like through Jamaica or the Bahamas?" he said. "They certainly see this as an opportunity, and one we're exploring to make sure we're not so totally dependent" on the U.S.
Sourcing more building materials regionally is another approach hoteliers are maximizing.
William Phelan, president of Tropicalia, said sourcing materials locally is increasingly important. Tropicalia is a sustainable resort and residential real estate development under construction by the Cisneros Group in Miches, Dominican Republic. Thirty-five percent of the development's construction materials are from the Dominican Republic, Phelan said.
"Rebar and cement are the main components," he said. "And more than 60% of all construction materials in our project are from the Caribbean. So for the remaining construction materials, we're looking at alternatives, to Europe, to the rest of Latin America, to be proactive in case something does happen" regarding high costs sourcing from the U.S.
The Four Seasons Resorts and Residences Dominican Republic at Tropicalia is under construction, including 95 resort rooms and 25 private residences.
Easing costs of regional travel
"Anytime you have these challenges, it means you need to focus on other markets," Destang said, citing intra-Caribbean travel in particular. "There are 40 million people who call the Caribbean home, but getting around here is difficult and expensive."
The high cost of travel within the Caribbean is a hot-button issue. Right now, most Caribbean nations levy tourism-related fees on all entrants, including citizens of other Caribbean nations. Regional airlines are well-known for high taxes on regional air travel. The fees are critical in supporting overall tourism initiatives in the individual nations, but they create barriers for regional demand.
But thanks to advocacy efforts, St. Lucia and Barbados both are reducing some regional travel-related fees this summer, and "hopefully that creates a ripple effect," Destang said.