Tuesday, May 24, 2022

Can Tourism Hatch Golden Eggs?

By on May 20, 2017

With Puerto Rico bracing for looming austerity measures—called for by the fiscal oversight board and the government’s filing for Title III bankruptcy protection under the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) law—which are expected to hit much of the local economy, tourism remains one of the few bright lights for the island in this post-growth era.

In fact, with 90% of inbound travelers to Puerto Rico coming from the U.S., in particular New York, New Jersey, Florida, Texas and California, opportunities abound to attract tourists from other destinations stateside as well as from Canada and Europe, according to key findings in a study made public by the Puerto Rico Hotel & Tourism Association (PRHTA).

(iStock Photo)

The key findings were taken from data analysis and studies of tourists’ behaviors and trends that prove Puerto Rico has untapped opportunities and the potential to lead the tourism industry in the Caribbean.

Regional trends and tourism insights, intelligences and marketing initiatives, issues impacting tourism performance and outlook in the Caribbean, and specific local and regional leadership opportunities for the private sector were based on statistics from the Caribbean Hotel & Tourism Association (CHTA), compiled by its data partners MasterCard Advisors and Adara.

“We have been working for decades on focusing on the right strategies for our markets and with our friends at the CHTA, we are able to get to know the trends in the entire region. We firmly believe we are in the right moment to develop the tourism industry in Puerto Rico,” said Miguel Vega, chairman of the PRHTA, while characterizing the information presented as “an important tool to improve and contribute to developing this [tourism] ecosystem.”

In recent years, Puerto Rico has been trailing behind the Dominican Republic in terms of the number of foreign visitors. In 2014, the Dominican Republic received 5.1 million overnight visitors, according to Reuters, while Puerto Rico’s total overnight and cruiseship visitors was more than 4 million people during the same year, according to a 2016 Banco Popular (BP) “Economic Progress” report. The island’s four million tourists spent more than $3.3 billion in Puerto Rico, helping to generate 80,000 direct jobs and contributing $551 million in tax revenues to the local government, BP’s report stated.

Uber makes its case for access to Puerto Rico tourism zones

“Maintaining the competitiveness of this industry and the positioning of Puerto Rico as a tourism destination is crucial for the economic development of the island,” BP concluded.

As part of the study, John Muñoz, MasterCard Advisors Partnership director for Latin America & the Caribbean, presented MasterCard data based on consumer habits in airline transportation, tourism destinations and by business-class travelers, and all the information is being used to develop global marketing strategies. Emphasis was given to data that could potentially provide services and personnel according to the needs of high-season markets, media planning and optimization, strategies for global expansion, identify main home markets and changing patterns in tourist spending, among others.

USVI big spenders

According to MasterCard data, the top origination markets for tourism spending in Puerto Rico are the United States, U.S. Virgin Islands (USVI), Canada, the United Kingdom and Germany. U.S. visitors dominate the market in Puerto Rico by spending significantly more than any other tourist coming from another country. Nevertheless, by card account, visitors from the USVI spend the most, about three times more than those from the U.S. On average, visitors from the U.S. spent some $811 each during the 2015-2016 high-tourism season from December to March, while those coming from the USVI spent $2,395 each over the same period.

It should be noted that U.S. and USVI travelers spend significantly less in the travel-related categories such as hotels, which could indicate that many of them could be longer-term visitors, such as expats “or residents using foreign cards given the fact that Puerto Rico is a commonwealth (unincorporated territory of the United States),” according to the study.

Puerto Rico has plenty of room to grow, said Frank Comito, CEO & director general of the CHTA. “It’s the diversity of your offerings, it’s the access and proximity that you have as well, which is certainly an advantage. The airlift, particularly to the U.S., has incredible opportunities of growth that are astounding. Last year, despite what’s going on globally, the Caribbean had 6% growth in U.S. visitor arrivals. And, while we continue to diversify, the U.S. continues to be our greatest area of interest,” he explained.

But while almost all spending in Puerto Rico comes from the U.S., travelers are drastically decreasing their spending. According to the MasterCard data, in 2016, U.S. American travelers spent $866 million in Puerto Rico, or more than $100 million less than 2015’s $963 million.

Travelers coming from Canada and Germany also spent significantly less during the same period.

Outside of the U.S., the USVI and Canada were the top-two origination markets for Puerto Rico in 2016. However, both have shown a decline, when compared to the previous year, while the United Kingdom—the third origination market—has increased.

Eyes remain on the U.S.

Comito emphasized the U.S. origination market as the one to be targeted by tourism advertising and promotion initiatives, not only because it is the market that spends the most, but also because of its proximity and ease of travel.

“You have to notice that 90% of inbound travelers come from the U.S. And most [U.S.] Americans don’t have passports. It’s easier to travel from the U.S.,” Comito said, adding “don’t underestimate the [political] relation with the U.S. We are close to home.”

The CHTA executive explained that most U.S. American travelers come to Puerto Rico from the East Coast, particularly from New York, New Jersey and Florida, while Texas and California come in fourth and fifth place, respectively.

The remaining 10% of tourists come from elsewhere, including 3% from Europe.

“The challenge is in the resources…and proximity is the best in marketing. So, an alternative could be promoting shorter and more frequent vacations, more spontaneous…,” Comito suggested.

He also pointed out the regional competition Puerto Rico must face, but again emphasized the island’s diverse offerings.

Puerto Rico: Top in culinary delights

“The Dominican Republic’s main offering is the all-inclusive, the value of which stays within the walls of the resort. Cultural value is an afterthought,” Comito said. “But Puerto Rico has built itself from within. You have a phenomenal cultural infrastructure…strong customer service and your culinary product is second-to-none,” he added.

Comito mentioned the association has done research on what consumers say are the best destinations in the Caribbean for various types of experiences, and Puerto Rico comes up No. 1 in culinary offerings.

Comito also referred to events sponsored by the CHTA such as “Taste the Caribbean,” slated for June in Miami, where culinary teams from throughout the Caribbean compete against each other, and Puerto Rico has won the title of “Chef of the Year” five times, more than any other destination in the Caribbean, while the island has won the national team of the year three times.

“Culinary offerings, when we talk experiential tourism, that’s it…. I think we underestimate the amount of focus that has been placed on culinary development in the region. What you do with ‘Saborea,’ and the other things you do, is commendable,” said Comito, who admitted to being a great fan of chinchorreo, meaning going to small, informal restaurants where local delicacies and drinks are served.

DMO a key component

PRHTA chairman Vega reiterated Puerto Rico is “a natural destination for the U.S.,” and pointed to the role of the soon-to-be-developed Destination Marketing Organization (DMO) to oversee marketing efforts in tourism and spur more visitors to come to the island. According to Vega, the DMO would allow Puerto Rico to have “more strategic and continuous marketing” to the rest of the East Coast and other stateside venues.

“The top sellers for Puerto Rico are five states—New York, New Jersey and Florida, and then you go to Texas and California. But from the first three to those two, there is a big gap. But where are the other 45 states?” Vega questioned.

To that effect, Muñoz pointed to the relevance of the business intelligence that MasterCard provides for the development of effective strategies to “knock on the doors of those 45 states and other opportunities that are outside the U.S.”

Puerto Rico government urges private sector to create collaborative ties

 Vega argued in favor of putting Puerto Rico’s main marketing efforts in the U.S. because “why would you want to improvise in a situation like the one Puerto Rico is in today, when you know that a given market can afford your rates…and we can get our return investment as quick as we can.

“Then you can develop other emerging markets…and in the long term, you have to maintain Europe as a secondary market for Puerto Rico,” he said.

“The main thing is to make intelligent marketing decisions, not to improvise. There is no room for improvising because when you improvise with marketing dollars, it is super costly,” Vega added.

—Editor Rosario Fajardo contributed to this story.

You must be logged in to post a comment Login