Caribbean hotel bookings plunge as economy sags

SAN JUAN, Nov 7 (Reuters) - Hotel bookings in the Caribbean are plunging as financial turbulence dashes vacation plans, and hoteliers and governments are trying to ward off a deep slump by ramping up marketing efforts and slashing prices.

The big cruise operators, whose ships ply the warm, azure waters of the Caribbean and upon which many islands depend, have also warned of a slowdown in bookings worldwide.

The economic downturn following the global credit crunch -- and once-surging oil prices that increased air fares and prompted airlines to cut flights -- are already having an effect, with Caribbean hoteliers reporting drops of 30 percent to 50 percent in bookings.

But the real pain will be felt during the winter high season, from Dec. 15 through April 15, when many vacationers flee the cold north for the Caribbean’s sun-drenched beaches.

“The forecast is for a bad winter,” said Clarisa Jimenez, president of the Puerto Rico Hotel and Tourism Association.

The United States accounts for 50 percent of the Caribbean tourism market, which attracts 22 million visitors and injects $21.6 billion into the island economies each year.

Europe accounts for another 40 percent of the region’s tourists, according to the Caribbean Tourism Organization.

Bookings are off from both major sources, the CTO said.

In fact, the current economic problems will likely inflict greater harm on the region’s main industry than the Sept. 2001 attacks on New York and Washington, said Winfield Griffith, CTO information and statistics director.

“Tourism bounced back from 9/11 with remarkable speed. Two years after, we were back to pre-9/11 levels,” Griffith said. “This promises to be a little more drawn out.”


The world's leading cruise operator, Carnival Corp & Plc CCL.NCCL.L, last month said that it would suspend its quarterly dividend due to the slowdown and that advance bookings for the first half of 2009 lagged those of the prior year.

Royal Caribbean Cruises Ltd RCL.N, the world's second-largest cruise operator, warned that new bookings slowed considerably in September but leveled off over the last couple of weeks.

“I think there will definitely be some short term pain as consumers pull back,” said Robin Diedrich, cruise industry analyst at Edward Jones. “We are expecting a softer year going forward -- but our long-term outlook is still very, very positive.”

The Caribbean tourism industry first throttled back over the summer when airlines announced plans to cut flights to the region in the face of then-surging oil prices.

AMR Corp's AMR.N American Airlines, which controls 60 percent of the traffic out of San Juan, Puerto Rico's international airport, cut half its 38 daily flights from the U.S. mainland. It also cut to 33 from 55 the number of daily regional flights from San Juan to smaller Caribbean islands.

Small tourism destinations in the Eastern Caribbean have been particularly hard hit, said Wayne Cummings, director of business administration for Sandals Resorts International, which operates properties in Jamaica, the Bahamas, Antigua and St. Lucia.

“It’s distressing to see,” Cummings said. “To put it bluntly, some hotels are already sucking wind.”

To attract visitors in tough economic times, resorts are slashing prices. In some cases, they are also pitching in to bring down the cost of airfares.

“The prices have never been better in the winter than they are now,” Cummings said, adding that Sandals is reducing rates by as much as 50 percent on some of its products.

Other destinations are offering 40 percent off rates plus complimentary airfare, Jimenez said.

The Caribbean tourism industry and island governments are also kicking up their marketing efforts.

Puerto Rico began a special “emergency” marketing campaign, adding $12 million to the destination’s annual marketing budget of about $20 million. In Jamaica, the government is spending $5 million on an additional advertising blitz above its normal $30 million marketing budget, Cummings said.

“There are still are still a lot of people in the United States who have the ability to travel, and we have to capture their imagination,” Cummings added.

Griffith said the region’s marketing efforts are also focusing on places “less vulnerable” to the financial crisis, such as Canada. (Additional reporting by Mark McSherry in New York) (Editing by Michael Christie and Gerald E. McCormick)