Tourism Industry In Grenada Tourism Essay

Tourism being the worlds largest and fastest growing industry, has survived many eras for many reasons. The industry is diverse and very easily adaptable. Diverse in this sense refers to the many varying segments making up the tourism industry, for example hospitality, dining, entertainment and travel. This industry is also challenging, from the point of view that each and every experience within this industry is uniquely different. These are some of the features that maintains and sustains this diverse and yet uniquely challenging industry. Tourism according to side store is the travel of anyone for predominantly recreational or leisure purposes or the provision of services to support this leisure travel (side store, 2009). The World Tourism Organization defines tourists as people who “travel to and stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited” (WTO, 2010).

Tourism in Grenada went through many era’s before reaching the level at which it is today. One can basically say that there are three distinctive periods that tourism in Grenada passed through. These stages are the pre-revolutionary stage from 1955 to 1979, the revolutionary phase from 1980 to 1983 and the existing era which started in 1984. Each of these periods is marked with the occurrence of a major event in Grenada’s history.

The building of the St. George’s pier in 1939 and the opening of the Pearls Airport together presented a need for basic infra-structure that contributed to the introduction of tourism in a “scientific manner” to Grenada. However, there are only records to show the storage of visitors from 1955.

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The feat of the Grenada Revolution in 1979 didn’t do well for Grenada as a destination. There was a sudden drop in arrivals from customary markets due to the negative publicity that was bestowed on Grenada as a result of these practices. Nevertheless, there was a bold move by the then Prime Minister, Maurice Bishop, who implored nationals abroad to “Come to Grenada and see the positive changes that are happening”. This proved a success in some way as there were arrivals of nationals and “sympathizers from Eastern Europe and Cuba.

The big opportunity for tourism in Grenada came at the start of its third epoch, which was marked by the opening of the brand new international airport. The fact that the airport was very close to world famous Grand Anse beach and other surrounding beaches resulted in a building boom. Unmistakably, this third stage of the development of tourism in Grenada concurred with the emergence of the industry internationally and Grenada has been progressing constantly as a tourist destination ever since.

The tourism industry is presently the largest industry in Grenada, in desperation to sustain itself the officials are engaging in numerous strategies to do so. Grenada, as recently as 15 years ago, depended solely on Agriculture as their source of revenue, which was slowly declining. The officials responsible saw the potential of the tourism industry decided to change their focus away from agriculture. Thus investing money and ample time into the industry was their final decision. In this research my sole aim is to link the present global economic recession to Grenada’s tourism sector. Determine the areas that were affected as a result of this crisis. Also examine similar countries facing this crisis, so as to reduce the bias on the paper.

The tourism industry was affected by the Global recession in many ways which resulted in change in the country’s economy and industries linked to the tourism industry namely; loss of jobs, decline in travel both land and sea, closure of major tourist based businesses and increased crime.

The existing economy of Grenada is termed unstable and on a decline, according to Mr. Lennox Andrews (Economist for Grenada). The country’s Gross domestic product is on a decline, in the sense it is below negative. This means that the total market value of final goods and products is less than equal to consumer goods and export goods. In light of this tourism within the country is also declining slowly and displayed inability to sustain itself.

The author has therefore decided to do some primary research on the most commonly utilized areas within the tourism industry of Grenada. These area’s being; Travel, Hospitality and Entertainment. The sectors were further broken down into samples, for example travel (LIAT), Hospitality accommodation (Grand view inn), Hospitality dining (Le Chateau) and entertainment (Taxi driver).

To effectively accomplish this milestone the author has decided to ascertain a list of objectives:

Give a history of the tourism industry in Grenada.

Give a synopsis of the economy of Grenada.

List and discuss the areas within the tourism industry in Grenada that were affected by the financial crisis.

Make necessary recommendations.

In efforts to help reduce the impact of the existing global recession on the tourism industry

The author has come up some possible recommendations;

Officials should sort ways to reduce government spending where possible.

Implement a contingency fund.

They should also seek to reduce the many taxes imposed.

Try to optimize the use of recurrent revenue.

Try to be self sufficient in their agriculture produce, avoid unnecessary imports.

Create an enabling environment for local businesses to thrive.

Implement programs to train persons to be versatile in terms of finding alternative employment.

Topic:

Research question:

How has the present global financial crisis affected the tourism industry in Grenada?

Aim:

Carefully examine the areas within the tourism industry that was adversely affected by this global recession.

Objectives:

Give a history of the tourism industry in Grenada.

Give a synopsis of the economic situation of Grenada.

List and discuss the areas within the tourism industry in Grenada that were affected by the financial crisis.

Make necessary recommendations.

Rationale for the selection of the topic chosen:

Like most persons, the global financial crisis has affected me personally. It has reduced my spending power immensely. Therefore it is a growing concern for me as an individual, as to just how long and far is this recession going to progress. Around the world today the issue of the financial crisis is the most popular issue at hand. Judging from the fact it is leaving many persons unemployed, homeless and dead, it should really be a global number one concern. This is the basis for which I have decided to carry out this research, with the hope of finding some logical recommendations.

Research Methods:

As a means of effectively completing this paper both primary and secondary research methods were utilized. The purpose for undertaking both methods is to avoid bias of information. At the same time give the participants an opportunity to freely express themselves. The author’s intent is also to give readers an objective view of the topic.

Sample population used:

In carrying out research for this paper a suitable sample size was selected. Due to the fact that the tourism industry tends to be such a diverse area, which may involve numerous persons. The author sort it fit to focus on segments rather than individuals. Therefore, utilizing three major segments within the industry here in Grenada. The areas selected were LIAT (Travel), Grand View Inn (Accommodation) and Le chateau (Dining).

Historical data was also collected from reputable sources, as a means of completing this paper.

Definition of Financial Crisis and Recession:

A financial crisis:

A situation in which the supply of money is outpaced by the demand for money. This means that liquidity is quickly evaporated because available money is withdrawn from banks (called a run), forcing banks either to sell other investments to make up for the shortfall or to collapse. See also recession (Business dictionary, 2010).

A recession:

Period of general economic decline, defined usually as a contraction in the GDP for six months (two consecutive quarters) or longer. Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally does not last longer than one year and is much milder than a depression. Although recessions are considered a normal part of a capitalist economy, there is no unanimity of economists on its causes (.Business dictionary, 2010)

Question/Survey:

Dear Participant,

This survey/questionnaire is intended to be of utmost confidentiality. This is a survey carried out by Donika Christopher-James, a Tourism and hospitality major at the St. George’s University. The purpose of this survey is to determine some of the adverse effects the existing global recession has on the tourism industry in Grenada. With the sole aim of finding some possible recommendations on completion of this study. Therefore, participants are asked not to submit their name or organization name as a means of keeping this information confidential.

Thank you,

_______________________

Donika Christopher-James

Are you aware of the existing Global financial crisis?

Yes No

Has the Crisis affected you……….

Directly Indirectly

State in what way was your organization was affected?

What percent of your business is owed to tourist?

Below 30%

30-40%

40-50%

Higher than 50%

Do you have repeat guest yearly?

Yes No

What is the percent of return guests yearly?

10- 30%

30-50%

Higher than 50%

Has there been any change in the patronage of your organization by return guest within the last year?

Yes No

Indicate whether there was increase or decrease, by how much?

Increase— Decrease—

Less than 10%

10-20%

20-30%

30-40%

Over 40%

In your opinion do you think there is a solution to the crisis?

Yes No

Can you give some recommendation(s) to the persons affected within the tourism industry?

________________________________________________________________________________________________________________________________________________________________________________________________________________________

Data analysis:

Are you aware of the existing global financial crisis?

Figure 1.1: The Graph indicates that 75% of the respondents were aware of the financial crisis in the world, where as the remaining 25% was very much unaware.

Figure 1.2: This chart indicates how many persons were affected by the financial crisis directly leading to financial decisions being made or indirectly the trickle down effect; 100% were affected directly and there were none indirectly affected.

State ways in which you as a business was affected.

Figure 1.3: Is an indication as to how the four various sectors were affected by the crisis; 25% indicated they had to make position redundant, another 25% indicated that they suffered higher utility cost e.g fuel, 25% also said that their employees were forced to accept lower wages and the final 25 % stated that they were unable to market efficiently and effectively.

What percent of your business is owed to tourist?

Figure 1.4: Is an analysis as to how much the various business depend on the tourist for their existence, 25% indicates that 40-50% of their business comes from tourist and 75% of the patrons said that over 50% of their business revenues comes from tourists.

Do you have repeat guest yearly?

Figure 1.5: This chart indicates that 100% of the participants have repeat guest on a yearly basis.

What is the percent of repeat guest yearly?

Figure 1.6: This chart illustrates the percentage of repeat guest to the varying sectors yearly; 25% of the participants indicated that over 50% of their guest are repeaters, another 25% indicated that the return guest account for 30-50% of contributions and the remaining 50% said that return guest contributes to 10-30% of business yearly.

Has there been any change in the patronage of your organization by return guest within the last year?

Yes

No

100%

0%

Figure 1.7

Was there an increase or decrease in the patronage of tourist and by how much?

Participant 1

Participant 2

Participant 3

Participant 4

Increase

Decrease

10-20%

Over 40%

30-40%

10-20%

Figure 1.8

Figure 1.9: This graph is and analysis as to whether the participants believe there is a possible solution to the financial crisis. Where 75% look at it objectively and said yes they believe there is a solution for it and the next 25%indicated no there is no possible solution to the problem.

Grenada’s employment situation:

According to information from the Minister of Finance Grenada (Peter David), unemployment rate at the end of 2009 was predicted to reach 30%. In basic mathematics, this could mean at least 23,000 persons out of work, in a population of roughly 100,000 persons. This is a vast difference in comparison to the (CIA’s) Central Intelligence Agency’s prediction in 2000 of 12% of potential unemployed persons (CIA, 2010).

Present Economic situation of Grenada:

The economy of Grenada has rebounded immensely following the devastation and impact of Hurricanes Ivan and Emily in 2004 and 2005, with the recovery centered mainly on reconstruction and the 2007 Cricket World Cup preparations. The economic outlook was most favorable, since several major tourism investment projects were underway. At that point inflation has been subdued. The country’s fiscal performance, however, has been much weaker than programmed in 2006 to 2007, owing it to capital expenditure overruns. Public debt reached 125 percent of GDP at the end of 2006, leaving little room for maneuver in the event of exogenous shocks (CKMC, 2010).

According to the Economist Intelligence Unit (EIU), on the 25th of November 2009 Grenada’s application for a disbursement of US$6.2m under its three-year International Monetary Fund (IMF) poverty reduction and growth facility Poverty Reduction and Growth Facility (PRGF) was approved, boosting total disbursements under the programme to US$23.5m. The IMF noted the severity of the impact of the global recession on Grenada’s economy, appointed to a marked decline in the country’s output. Owing to fall in tourism receipts, Foreign Direct Investment (FDI) and remittance, a rise in the unemployment situation, and large revenue shortfalls in 2009. With estimated public-sector debt totaling nearly 109% of GDP at end-2008 (and estimated to have risen slightly in 2009), the IMF also warned that Grenada remains at a high risk of debt distress. However, the IMF commended Grenada on its efforts to cope with the short-term impact of the external shocks and its commitment to implementing structural reforms, including the introduction of VAT in February 2010.

The introduction of the VAT is one of several government initiatives to boost sagging revenue, which has been hit hard by the downturn in the tourism sector (stopover arrivals were down by 14.4% year on year in the first nine months of 2009, which has pulled down earnings). The government has also indicated that it will implement a fraud control plan at customs and boost enforcement to collect tax arrears in 2010. Capital spending is expected to be cut in 2010, by as much as 50% compared with 2009, as the government diverts its scarce resources to boost social spending.

Based on preliminary estimates, which reveals that economic activity in Grenada contracted by 7.7 per cent in 2009 compared to real growth of 2.2 per cent in 2008.  This performance reflected declines in construction (52.4 percent), mining and quarrying (29.9 per cent), hotels and restaurants (20.8 per cent), wholesale and retail trade (17.9 percent), transport services (12.3 percent), manufacturing (11.8 per cent), government services (3.8 percent) and communications (2.0 percent).  This therefore indicated there were some bright spots. Agriculture increased by 9.3 percent, Other Services which is dominated by St. George’s University increased by 8.0 percent and Banking and Insurance increased by 8.6 percent.

Between January to November 2009, stay-over tourist arrivals declined by 12.8% with a total of 84,240 arrivals in comparison to 96,588 arrivals for the corresponding period of 2008. All the major source markets experienced declines: United States by 1.5%; United Kingdom by 23.2% and the Caribbean by 12.6%. It is believed that the recession experienced in Grenada’s major source markets combined with the high cost of air travel contributed to the decline in the number of stay-over visitors. For the period January to November 2009, Cruise Arrivals totaled 276,858 compared to 227,937 for the same period in 2008, an increase of 21.5%. Similarly, cruise calls also increased by 13.5% with a total of 202 calls compared to 178. That said, it is estimated that the average expenditure of these visitors fell reflecting the global economic situation (CKMC, 2010).

According to Economist Lennox Andrews the Grenadian economy is projected to grow by 0.8 percent compared with a projected contraction of 2.3 percent for the ECCU.  I should note that Government’s projection is higher than the IMF and ECCB projections are a decline of 2.0% and 1.8% respectively but is based on our most recent information on the projects (public and private) which will commence this year.

SWOT analysis of the Tourism Industry in Grenada:

Strengths:

Enrichment of culture-

Learning about various cultures is an integral part of any individual’s development. It gives one a chance to understand various ways of problem solving; different practices, beliefs, religions, norms and values. In turn this will assist in counteracting the issue of discrimination.

Increase in Foreign direct investments-

As a result of the evolution of tourism, the Grenadian economy has seen the likes of many new developments in terms of foreign investments. For example; The Port Louis development, Grand harbor development at Egmont point, Bacolet bay Resort development, Prickley bay marina development and the Livera national development.

Increase in foreign exchange for the country-

This is the main area where the mass foreign exchange for the country is derived. This occurs when tourist engage in tours, dining, outdoor adventures, accommodation and communication via telephone or e-mail.

Opportunities for employment-

The unemployment situation in Grenada has been a known factor for the country for a number of years, tourism offers opportunities for employment both direct, for example; within the hotels or restaurants or indirect like the vendors and tour guides.

Sustain and preserve our environment-

The Grenadian officials have seen the need to preserve their natural habitats, numerous historical sites and beaches. Some of the measures they have put in place to do so is regulations and laws like; fees paid to see the forts, no one can visit the mangroves during a certain period and stopping of the locals from mining sand from the beaches.

Weaknesses:

The industry is very labor intensive-

Tourism within Grenada and around the world is seen as a service oriented industry. Therefore it rely’s on the personal touch of human to bring about the much needed satisfaction to the guest. This may be detrimental, in the event that there is situation like industrial actions or mass outbreaks of illness, the business will be on a stand still.

Encourages huge sums in expenditures-

Within the island of Grenada over the years it is quite noticeable that there has been a lot of infrastructural development. For example roads, cruise ship terminals and marinas. These development calls for huge sums of expenditure on the part of the Government.

Increased in criminal activities-

The tourism sector over the years has lured many new investors into the country, though it is seen as an asset it is also negative, since there is the opportunity for white collar crime such as money laundering and theft.

Opportunities:

The country can create a well known brand-

“Grenada the isle of spice” may seem to be a strong brand, but not everyone is willing to travel thousands of miles for only spice. There is the opportunity to develop the country’s brand.

Diversify into various markets-

Diversity is imperative as is in any business, this is to gain as much clients and market share as one possibly can.

Threats:

The present Global recession-

Grenada like many other destinations is faced with the wrath of the economic crunch. It has affected the tourism sectors immensely, since most business has seen a decline in clientele as compared to the past. Most persons spending power has reduced critically.

Natural and manmade disasters-

Natural disasters is a critical issue for Grenada though, history has shown they are far and few. The country is located within the tropics and concerns of hurricanes and storms are growing, for example hurricanes Ivan and Emily in 2004 and 2005. Manmade disasters are likely to occur if care and caution is not taken, for example; fires which is a very destructive feature.

Increased competition-

Possible completion is always a concern for any industry and business. Within the tourism industry competition will occur with new and emerging destination markets.

Areas within the tourism industry that was affected by the financial crisis:

The Global recession has affected the tourism industry in Grenada holistically; because there have been persons who are faced directly with this crisis, for example in North America, their spending power has been reduced considerably. The tourism industry like most other countries is made up of numerous sectors. Furthermore the sectors which have felt the wrath of the economic down turn in Grenada are:

Travel: (airlines, taxi drivers, tour operators, cruise ship operators and travel agents)

Accommodation and dining: (restaurants, hotels, guest houses and travel agents)

Shopping: (supermarkets, retail shops, stores and vendors)

Entertainment: (Local bands-(steel bands, vocalist), night clubs)

Over the past 2 years these sectors has seen a considerable decline in their patronage especially those from tourist, which they were and most cases are still heavily dependent.

The key players involved Tourist movement:

The tourism industry based on its service oriented nature has numerous key players; these key players are persons involved in the hospitality sector of tourism, the regulatory bodies and the tourist themselves.

Within the hospitality sector there are persons or organizations that provide service to tourist. In providing those services they generally ensure that it is sustainable and economically viable to the industry and environment. These sectors are the hotels; who provide accommodation to tourist visiting the island of Grenada, the restaurants; most of these restaurants are located especially within the south of the island are heavily dependent on tourist to sustain them , cruise lines; which is one form of transportation taking persons from varying destinations to Grenada, a large percent of stop-over tourist is accounted for as cruise passengers and airlines; the airline traveling to and from Grenada account for 70% of tourist visiting the country.

The second group of person’s within the tourism sector of Grenada are the regulatory bodies, which involves; the minister and ministry of tourism who is responsible for a portion of public relations in tourism, as well as implementing rules and policies to help sustain and protect the environment and visitors alike. Another sector within the regulatory body is the tourism board of Grenada who engages in ample marketing for the destination and assists in promoting some of the historical sites.

The final major supporters of the tourism industry in Grenada are the tourist themselves, without the much needed tourist travelling from their usual place of resident and work, tourism will not be an industry that Grenada can depend on.

Types of effects:

The Global recession has affected countries worldwide and more so the tourism sector around the world immensely. Within the Grenadian community the global economic downturn has affected the tourism industry in numerous ways;

There is a decline in the visitors to the country.

Implementation of new taxes.

Loss of skilled laborers within the industry, because of numerous job terminations.

Decrease in marketing initiatives and ability by the regulatory bodies.

Pull out of airline/transportation service to the island.

Higher air fares.

Decrease in (FDI’s) foreign direct investments.

There were businesses facing permanent closure, e.g craft shops, supermarkets.

Increase in crime.

Measures taken to resolve the situation:

Like many of the larger developed and developing countries Grenada has tried numerous strategies to resolve the situation, or to some extent cushion the burden of this crisis. Without success they continue to feel the wrath of this economic downturn. Some of the measures taken by the officials of Grenada to withstand the crisis are; the sort financial assistance to pay out the outstanding debts from the World Bank. The World Bank being an institution that is presently faced with the said situation is unable to assist. Another strategy was to implement the value added tax (VAT), which is only a month old and simply too premature to see any benefits derived. The third and most common strategy was to forcibly reduce wages, rotate and terminate employee’s positions. The tourism and hospitality sector has felt the blow hardest from this crisis, simply because of its uncertainty and vulnerability in response to change in the economy.

Conclusion:

While tourism retains the title of the largest and fastest growing industry worldwide, its dynamism is owed to the many efforts to satisfy consumer demands. Similarly within the Grenadian economy tourism today is deemed the number one industry and main source of revenue for the country for over a decade. However, the tourism sector was impacted by many external factors, but most predominantly over the past (2 ½) years by the existing Global financial crisis. The effects of this crisis were as follows and by no means exhausted; Loss of Jobs, decrease in visitors arrivals, decrease in foreign direct investments, loss of skilled workers, higher air fares, decrease in marketing initiatives, pull out of major airlines and crime. Though persons in authority have engaged in numerous measures to counteract the problem of the financial crisis on the tourism sector in Grenada, they were unsuccessful. Based on my analysis of the effects the financial crisis having on Grenada’s tourism carried out in this research, it is seemingly unethical and to an extent difficult to try to solve this situation. Because of the nature of a global recession, it is more ethical to let the system take its course. Thus try to implement means to cushion the economy when it is complete at the same time use this era to better prepare for a similar situation.

Recommendations:

This paper will be deemed incomplete without finding meaningful and yet realistic solutions to the existing problem facing the tourism and hospitality industry in Grenada “The Global Recession”. In efforts to help resolve this resounding problem the author has come up with a number of recommendations which are as follows:

The officials and the key players as mentioned within the paper must develop more programs to encourage spending by the tourist, thus moving away from the usual ordinary activities. Since a recession is usually caused by failure to inject monies back into the economy so it can have the spin off effect, they must implement activities such as; an all you can eat fruit fest for the health conscious tourist or drum by moonlight where they get to hear a bit of our heritage and become a part of it.

Implement a contingency fund for the industry, the industry is seen as fickle, but like any other industry it has its peak points and its down falls. Monies must be placed a side or invested to reap profits, in that situations like the financial crisis occurs, the industry will more or less be cushioned and can sustain itself for a longer period.

Seek ways to reduce the many taxes being enforced, though taxation is the number one means of most government’s revenue. The implementation of taxes will only sort to worsen the recession situation, since a recession is basically failure of the people to inject monies back into the economy. Taxes will only allow them to continually avoid spending.

They should try to optimize or maximize the use of the recurrent revenues. Every country, no matter the size has recurrent revenues, which is revenue that is predictable, stable and can be counted on in the future with a high degree of certainty. Try to utilize these revenues for many needed purposes instead of focusing on one given area.

Seek to become self sufficient in areas such as agriculture, this is as a means of reducing imports, though the globalization process is inevitable.

Create an enabling environment for local businesses to thrive. It is always good for a country to welcome foreign direct investments, but the survival of local businesses is important. Implementing laws and regulations that will not facilitate local business will only put additional burdens on the economy in terms of unemployment.

Implement programs to train persons to be versatile in terms of finding alternative employment. This is important in that statistics indicates how many persons are today unemployed within the tourism sector, because of the economic downturn.