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Rethinking Caribbean Tourism ii Acknowledgements A World Bank team from the Finance, Competitiveness, and Innovation (FCI) Global Practice led by Amadou Dem (Senior Economist), Jessie McComb (Senior Private Sector Specialist), and Louise Twining-Ward (Senior Private Sector Specialist) and consisting of Paula Bellas Suarez (Analyst), Jhanelle Rae Elizabeth Bowie (Operations Analyst), David Jose Corcino Paulino (Private Sector Specialist), Shaun Mann (Senior Private Sector Development Specialist), Sebastian Ogando (Intern), Vincent Palmade (Lead Economist), Monica Parra Torrado (Senior Economist), Francis Ratsimbazafy (Economist), Alba Suris Coll-Vinent (Consultant), Jose Miguel Villascusa Cerezo (Private Sector Specialist), and Jessica Wilson (Consultant) prepared this report. The core team was assisted by inputs from the Poverty Global Practice: Ronald Cueva (Consultant), Ruth Llovet (Economist), Trinidad Saavedra (Economist), and Romina Safojan (Consultant). External support was received from Tenisha Brown-Williams (Consultant), Kennedy Pemberton (Consultant) and NielsenIQ consulting company. The team worked under the guidance of Lilia Burunciuc (Country Director, Caribbean region), and Yira Mascaro (Practice Manager, FCI for Latin America and Caribbean). Guidance was also received from JB Collier (Program Leader, Sustainable Development, Caribbean), Mario Guadamillas (Practice Manager, FCI Global), Martha Licetti (Practice Manager, FCI for Europe and Central Asia), and Nataliya Mylenko (Lead Country Economist, Caribbean). This report would not have been possible without the extensive cooperation of organizations, businesses, institutions, and stakeholders across the region and in the global benchmark countries. Rethinking Caribbean Tourism iii Table of Contents Acronyms ...............................................................................................................viii Executive Summary ................................................................................................. xi Chapter 1. Caribbean Tourism Now ............................................................................ 1 Chapter 2. Cruise Segment ...................................................................................... 21 2.1. Introduction ....................................................................................................... 21 2.2. Development challenges .................................................................................... 25 2.3. Policy Guidance ................................................................................................. 38 Chapter 3. Accommodation Segment ....................................................................... 47 3.1. Introduction ....................................................................................................... 47 3.2. Development challenges .................................................................................... 52 3.3. Policy guidance .................................................................................................. 58 Chapter 4. Adventure Segment ................................................................................ 67 4.1. Introduction ....................................................................................................... 67 4.2. Development challenges .................................................................................... 72 4.3. Policy guidance .................................................................................................. 82 Chapter 5. Policy Summary and Forward Look .......................................................... 96 References ............................................................................................................110 Annexes ................................................................................................................122 Annex 1. Overview of Methodology .............................................................................. 122 Annex 2. Segment Approach Methodology ................................................................... 124 Annex 3. Data Analysis Methodologies ......................................................................... 133 Rethinking Caribbean Tourism iv List of Figures Figure 1. Tourism total contribution to GDP, Caribbean countries and selected comparators, 2023 .....................xii Figure 2. Tourism direct employment by gender in hotels and restaurants in selected Caribbean economies, 2019 or last available year .......................................................................................................................................... xiii Figure 3. Direct Travel & Tourism sector employment, as share of total national employment by age group, top 10 countries for proportion of young people (15-24), 2019 ...................................................................................... xiii Figure 4. Average regional spending per arrival, Caribbean and Pacific, 2009–19 ................................................ xiv Figure 5. Relationship between share of cruise visitors and expenditure per arrival, 2009–19 .............................. xiv Figure 6. Job quality in the tourism sector by gender (2016–20) .......................................................................... xvii Figure 7. Job quality in the tourism sector by geographic area (2016–20) ............................................................ xvii Figure 8. Tourism Economy Impact Framework .................................................................................................. xix Figure 9. Cross-cutting Tourism Policy Matrix for the Caribbean ........................................................................ xxii Figure 10. Tourism total contribution to GDP, Caribbean countries*, average for Caribbean, and selected comparators, (%) 2023 ........................................................................................................................................ 2 Figure 11. Tourism total and direct contribution to jobs, 2023 and 2019 or last available year, (%) ......................... 3 Figure 12. Tourism direct employment by gender in hotels and restaurants in selected Caribbean economies, 2019 or last available year, (%) ..................................................................................................................................... 4 Figure 13. Direct Travel & Tourism sector employment, as share of total national employment by age group, top 10 countries for proportion of young people (15-24), 2019 ........................................................................................ 4 Figure 14. Average regional spending per arrival including cruise and stayover, Caribbean and Pacific, 2009–19 ... 5 Figure 15. Number of overnight and cruise arrivals to the Caribbean, 1989–2023 .................................................. 6 Figure 16. Relationship between share of cruise visitors and expenditure per arrival, 2009–19 .............................. 6 Figure 17. Share of overnight arrivals to Caribbean by country size, 2003–23 ........................................................ 7 Figure 18. Share of cruise arrivals to Caribbean by country size, 2003–23 ............................................................. 7 Figure 19. Overnight arrivals of non-resident tourists to Caribbean, by country of residence, 2010–23 (thousands)8 Figure 20. Overnight arrivals of non-resident tourists to individual Caribbean countries, by country of residence, 2023.................................................................................................................................................................... 8 Figure 21. Job quality in the tourism sector by age group (2016–20) ...................................................................... 9 Figure 22. Job quality in the tourism sector by gender (2016–20) ........................................................................... 9 Figure 23. Job quality in the tourism sector by geographic area (2016–20) ............................................................. 9 Figure 24. Job quality by economic sector .......................................................................................................... 10 Figure 25. Job quality dimensions in the tourism sector and other sectors by country ......................................... 10 Figure 26. Travel and tourism contribution to total GHG emissions (% of total emissions), 2010 and 2019 ........... 11 Figure 27. Travel and tourism GDP growth versus GHG emissions growth, 2010–19 ............................................ 11 Figure 28. Industries contributing most to travel and tourism GHG emissions 2021 (% of total energy usage) ...... 12 Figure 29. Freshwater consumption linked to travel and tourism (thousand cubic meters of withdrawals per US$ million of GDP) .................................................................................................................................................. 12 Figure 30. Litter found in coastal cleanups, Caribbean vs global averages .......................................................... 13 Figure 31. Destination selection factors for US outbound adventure tourists, 2024 ............................................. 16 Figure 32. Tourism Economy Impact Framework ................................................................................................ 18 Figure 33. Percentage of Caribbean stop-over arrivals versus cruise (2023) ........................................................ 22 Figure 34. Cruise passenger arrivals by country (thousands) .............................................................................. 23 Figure 35. Passenger market share of cruise lines to the Caribbean in 2024 ........................................................ 25 Figure 36. Share of revenue (%) from “on board and others”, 2023 ..................................................................... 27 Figure 37. Share of shore excursions (%), by channel, by country, 2024 .............................................................. 27 Figure 38. Caribbean cruise versus stop-over expenditure, 2024 ........................................................................ 28 Figure 39. Employment contribution, 2024 ......................................................................................................... 29 Figure 40. Total cruise line, passenger, and crew expenditure by country (in millions US$), 2024 ........................ 29 Figure 41. Total amount spent at each port per person compared with number of hours in port .......................... 30 Figure 42. Time spent at each port compared to number of physical activities undertaken .................................. 30 Figure 43. Cruise visitor spending categories, 2020–24....................................................................................... 31 Figure 44. Overnight tourist spending categories, 2023....................................................................................... 31 Rethinking Caribbean Tourism v Figure 45. Behavior reflecting sustainable travel and tourism ............................................................................. 34 Figure 46. Attitude towards sustainability (cruise passengers versus adventure tourists) .................................... 34 Figure 47. Share of policies outlining specific tourism-related taxes ................................................................... 37 Figure 48. Caribbean accommodation pipeline in 2023 by numbers of projects and rooms ................................. 48 Figure 49. Number and selected typologies of hotels and resorts in Caribbean countries, 2023 .......................... 49 Figure 50. Estimated number of vacation rentals and hotel rooms in the Caribbean, 2024 .................................. 51 Figure 51. Back-up infrastructure ownership by country in the hotel sector (%), 2020 ......................................... 57 Figure 52. Most important source of electricity in the hotel sector (%), 2020 ....................................................... 57 Figure 53. Main source of water for general use in hotels (%), 2020 ..................................................................... 57 Figure 54. Main source of drinking water for clients in hotels (%), 2020 ............................................................... 57 Figure 55. Adventure tourism supply chain ......................................................................................................... 71 Figure 56. ATTA Industry Snapshot ranking of forecasted demand by region, Caribbean ...................................... 73 Figure 57. Demographics for Caribbean adventure travelers and global adventure travelers ............................... 76 Figure 58. Destination awareness compared to consideration for future travel intention (in the next 3 years), Caribbean Adventure Travelers and Global Adventure Travelers ......................................................................... 77 Figure 59. Share of TripAdvisor listings by tourism segment and country ............................................................. 78 Figure 60. Average number of TripAdvisor reviews per segment indexed by average number of reviews for all listings in the country .................................................................................................................................................... 79 Figure 61. Number of adventure activity TripAdvisor listings in 12 Caribbean countries ....................................... 80 Figure 62. Activities undertaken during last adventure trip to the Caribbean compared to activities respondents wanted to be offered more, Caribbean adventure travelers ................................................................................ 80 Figure 63. Average TripAdvisor bubble review scores for adventure activity listings ............................................. 81 Figure 64. Cross-cutting tourism policy matrix for Caribbean ........................................................................... 103 Figure 65. Staged approach to conducting research with key milestones .......................................................... 123 Figure 66. Share of policies and countries that prioritize market segments ....................................................... 125 Figure 67. Evaluation of global market segment growth potential by global average revenue per tourist ............ 125 Figure 68. Evaluation of tourism market segments by social and environmental impacts .................................. 126 Figure 69. Consolidated evaluation and shortlisting of tourism market segments ............................................. 127 Figure 70. Phases of web scrapping ................................................................................................................. 136 List of Tables Table 1. Benchmark and deep dive countries for market segments ........................................................................... 19 Table 2. Environmental and passenger fees in the Caribbean and select small islands ....................................... 26 Table 3. Perceptions of the Caribbean by US outbound adventure tourists, normalized across competitor destinations, Caribbean adventure travelers and global adventure travelers ...................................................... 74 Table 4. Policy recommendations for cruise ....................................................................................................... 97 Table 5. Policy recommendations for accommodation ....................................................................................... 99 Table 6. Policy recommendations for adventure ............................................................................................... 100 Table 7. Long List of Tourism Market Segments ................................................................................................ 124 Table 8. Dimensions of the Job Quality Index .................................................................................................... 134 Table 9. Filtering criteria for data extraction and categorization of segments (Hotels) ........................................ 137 List of Boxes Box 1. Caribbean tourism job quality analysis .................................................................................................... 10 Box 2. World Bank’s 360º Resilience highlights .................................................................................................. 14 Box 3. Deep dive Barbados: growing focus on boutique cruise vessels ............................................................... 25 Box 4. Barbados: local linkages ......................................................................................................................... 32 Box 5. Deep dive Antigua and Barbuda: environmental impacts .......................................................................... 35 Box 6. Deep dive Antigua and Barbuda, and Barbados: tourism taxes ................................................................. 36 Rethinking Caribbean Tourism vi Box 7. Deep dive Barbados: homeporting ........................................................................................................... 38 Box 8. Benchmark insight Vanuatu: integrating local business into cruises supply chains ................................... 40 Box 9. Benchmark insight European Union: OPS implementation ....................................................................... 43 Box 10. Benchmark insight Alaska: Marine Fee Program’s transparency and accountability ................................ 44 Box 11. Cruise fee hikes: which destinations are raising rates? ........................................................................... 45 Box 12. Deep dive Jamaica: accommodation sector growth ............................................................................... 53 Box 13. Deep dive Jamaica: post-pandemic hospitality labor market .................................................................. 53 Box 14. Deep dive St. Lucia: short-term rental landscape ................................................................................... 54 Box 15. Deep dive Jamaica: costly licensing of homestays.................................................................................. 56 Box 16. Deep dive St. Lucia: Tourism Enhancement Fund ................................................................................... 58 Box 17. Deep dive Jamaica: agriculture linkages exchange ................................................................................. 59 Box 18. Benchmark insight Dominican Republic: tourism planning at all area levels ........................................... 60 Box 19. Benchmark insight Japan: evolving development impact of short-term rentals ....................................... 62 Box 20. Deep dive St. Lucia: incentives landscape ............................................................................................. 63 Box 21. Deep dive Dominican Republic: circular economy good practices .......................................................... 64 Box 22. Benchmark insight Türkiye: certifying sustainable tourism operations .................................................... 65 Box 23. Illustrative list of adventure activities per category ................................................................................. 68 Box 24. Consumer market research adventure tourism ...................................................................................... 69 Box 25. Adventure tourism market segmentation ............................................................................................... 70 Box 26. Traditional adventure tourism industry structure .................................................................................... 71 Box 27. Benchmark insight New Zealand and Costa Rica: snapshot of adventure tourism ................................... 83 Box 28. Benchmark insight New Zealand and Costa Rica: examples of programs to stimulate a culture of exploration and access to skills ........................................................................................................................................... 84 Box 29. Benchmark insight New Zealand and Costa Rica: examples of policies to increase sustainable use and development of protected areas for adventure tourism ...................................................................................... 86 Box 30. Deep dive Dominican Republic: waterfalls co-management success case ............................................ 86 Box 31. Benchmark insight New Zealand: investment into protected areas and tourism infrastructure ................ 88 Box 32. Deep dive Dominica: adventure product development ........................................................................... 89 Box 33. Benchmark insight New Zealand and Costa Rica: adventure safety standards and regulations ............... 90 Box 34. Benchmark insight New Zealand and Costa Rica: examples of quality and sustainability standards ........ 91 Box 35. Benchmark insight New Zealand: example of innovative liability coverage .............................................. 92 Box 36. Benchmark insight New Zealand: example of addressing information asymmetries ................................ 93 Box 37. Benchmark insight New Zealand and Costa Rica: example of whole-of-government approach to tourism planning and development ................................................................................................................................ 94 Box 38. OECS CCDR recommendations ........................................................................................................... 107 Rethinking Caribbean Tourism vii Acronyms ACC Accident Corporate Corporation AI Artificial Intelligence ALEX Agriculture Linkages Exchange ATDI Adventure Travel Development Index ATTA Adventure Travel Trade Association CARICOM Caribbean Community CCDR Country Climate Development Report CHTA Caribbean Hotel and Tourism Association CLIA Cruise Lines International Association CMR Consumer Market Research CO2 Carbon dioxide COVID-19 Coronavirus disease 2019 CTO Caribbean Tourism Organization DFAT Department of Foreign Affairs and Trade (Australia) DOC Department of Conservation (New Zealand) EC$ East Caribbean Dollar EPA Environmental Protection Agency (USA) EU European Union FCCA Florida-Caribbean Cruise Association FCI (World Bank’s) Finance, Competitiveness, and Innovation Practice GDP Gross Domestic Product GHG Greenhouse Gas GIZ German International Cooperation Society GSTC Global Sustainable Tourism Council GTRCMC Global Tourism Resilience & Crisis Management Center HVAC Heating, ventilation and air conditioning ICT Costa Rica Instituto Costarricense de Turismo IFC International Finance Corporation IMF International Monetary Fund JAMPRO Jamaica Promotions Corporation LGBTIQA+ Lesbian, gay, bisexual, transgender, intersex, queer/questioning, asexual Rethinking Caribbean Tourism viii LNG Liquefied Natural Gas MARPOL International Convention for the Prevention of Pollution from Ships MBIE Ministry of Business, Innovation and Employment (New Zealand) MSME Micro, small and medium enterprise NZ$ New Zealand Dollar NZCT New Zealand Cycle Trails OECS Organisation of Eastern Caribbean States OPS Onshore power supply POS Point-of-sale PPP Public-Private Partnership R&D Research and development RMA Resource Management Act SIDS Small Island Developing State SINAC Costa Rica National System of Conservation Areas SLHTA Saint Lucia Hospitality and Tourism Association SME Small and medium enterprise STR Short-term rental T&T Travel and tourism TEF Tourism Enhancement Fund TfT TVET for Tourism program TGA Türkiye Tourism Development and Promotion Agency TIA Tourism Industry Aotearoa TNZ Tourism New Zealand TVET Technical and Vocational Education and Training UK United Kingdom UN United Nations UNDP United Nations Development Programme UNEP United Nations Environment Programme UN United Nations Tourism Tourism US$ United States Dollar US United States WB World Bank WTTC World Travel & Tourism Council Rethinking Caribbean Tourism ix Executive Summary Rethinking Caribbean Tourism x Executive Summary Tourism in the Caribbean has arrived at a critical juncture. The COVID-19 pandemic exposed the structural vulnerabilities of the volume-based tourism model and governments are now asking how to create a more valuable tourism industry. They are seeking ways to create more and better jobs, reduce the environmental footprint of tourism, and attract the sustainable private sector investment needed to entice discerning high-value tourists. This shift in governmental vision is aligned with increasing consumer demand for sustainability, authentic experiences, and local buying. Together, this provides an exciting opportunity for countries in the Caribbean to rethink tourism with strategies for a more sustainable future. This report assesses the current performance of tourism in the Caribbean1 and, in light of the new trends, identifies future pathways and policies for sustainable growth in three targeted segments. These segments were selected to include the traditional markets of cruise and all-inclusive resort accommodation as well as new opportunities in the high-value segment of adventure tourism. Cruise and all-inclusive resorts continue to be priorities for governments as they provide jobs, stimulate foreign direct investment (FDI), and generate the majority of regional demand (WTTC, 2022) (CTO, 2020). However, influence and market power in these segments have also created environmental and social risks and inhibited tourism diversification. Adventure tourism offers potential to add value and diversity to the rich endowment of natural and cultural assets and expand the value proposition and local economic impact of traditional markets. Additionally, it can create a new ecosystem of suppliers appealing to an entirely different market segment of high-spending tourists. Segment selection was based on analysis of current impacts, growth projections, and scales of environmental and social externalities that examined the importance and value of the segments to the Caribbean. It also integrated feedback from consultations with key stakeholders and alignment with national policies and trends. The objective of this work is to encourage stakeholders to think beyond the past 50 years of ‘sun, sea, and sand’ holidays to a longer-term and more sustainable future. The report recommends a range of policies across the three segments to activate governments, investors, and development partners to respond to global trends and pressures. They include policies that respond to threats related to climate change, rising unemployment, and inequality as well as to opportunities to build more resilient, impactful, and sustainable tourism ecosystems. Together, the guidance seeks to create local jobs, drive product 1 The report includes the following countries: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Jamaica, St. Kitts and Nevis, St. Lucia, Sint Maarten, and St. Vincent and the Grenadines. Rethinking Caribbean Tourism xi diversification and innovation, and strengthen potential outcomes from the connected blue and green economic opportunities of the region. Tourism drives the Caribbean economy, but there is a need to rethink its future to achieve yield, equity, and sustainability Tourism is a vital economic driver of the Caribbean’s blue economy, contributing around 22 percent of the region’s gross domestic product (GDP) in 2019 and 2.75 million total2 jobs in 20233 (WTTC, 2024a). In comparison to other Small Island Developing States (SIDS) in the Pacific, East and West Africa, and the Indian Ocean, tourism in the Caribbean seems to have a stronger relative importance for GDP and employment (Figure 1). Tourism jobs are particularly important as they drive women and youth employment and create indirect jobs in the tourism value chain. Women represented 57–70 percent of workers directly employed in the hospitality as well as food and beverage industries pre-pandemic (Figure 2), higher than the global reported average (54 percent) of women’s employment in tourism (UN Tourism, 2019a), and in other sectors combined in the Caribbean (World Bank, 2023a). Similarly, the Caribbean is home to five of the top 10 countries globally with a higher proportion of youth directly employed in tourism (Figure 3). The region also has a higher proportion of youth directly employed in tourism than in other sectors (World Bank, 2023a). Figure 1. Tourism total contribution to GDP, Caribbean countries and selected comparators, 2023 100 90 80 % Contribution 70 60 50 40 30 20 10 0 Belize Dominica Tonga Jamaica St. Lucia Vanuatu Seychelles Kiribati Solomon Islands The Bahamas Dominican Republic Maldives Average Caribbean Fiji Sao Tome and Principe Grenada Barbados Mauritius St. Vincent and the Grenadines Antigua and Barbuda St. Kitts and Nevis Caribbean Comparators Source: WTTC, 2024a 2 Accounts for direct, indirect, and induced tourism jobs. 3 Includes the 12 countries in this study and accounts for direct, indirect, and induced tourism contributions to GDP. Rethinking Caribbean Tourism xii Figure 2. Tourism direct employment by gender in Figure 3. Direct Travel & Tourism sector hotels and restaurants in selected Caribbean employment, as share of total national employment economies, 2019 or last available year by age group, top 10 countries for proportion of young people (15-24), 2019 Antigua and Barbuda % youth sector employment The Bahamas 0 10 20 30 40 50 60 Barbados St. Lucia Dominica Cayman Islands Macao, China Dominican Republic St. Kitts and Nevis Jamaica Bermuda The Bahamas St. Kitts and Nevis Grenada St. Lucia Maldives St. Vincent and the Grenadines 0% 20% 40% 60% 80% Croatia % Women % Men Source: Labor Force Surveys, Population and Source: WTTC, 2023. Housing Census While the Caribbean was the world’s most tourism dependent region pre-pandemic, it was also a relatively poor performer in terms of yield per tourist (spend per arrival). The Caribbean has successfully leveraged tourism to help drive overall growth and had the highest tourism contribution to GDP in 2019 (WTTC, 2024a). However, an historic focus on the volume and cruise segments has delivered low tourism spending per arrival, limited fiscal revenues, and placed pressure on island infrastructure and fragile marine environment. Compared to other regions, spending per arrival in the Caribbean has typically been lower than in other regions (Figure 4). Average spending per arrival in the Caribbean (US$712) was half that in the Pacific (US$1,428) in 2019 (UN Tourism, 2024). This is largely driven by the high proportion of cruise and ‘sun, sand, and sea’ visitors, with more than 83 percent of international tourism arrivals to the Caribbean4 in 2019 traveling for this purpose (WTTC, 2022; CTO, 2020). Similarly, cruise arrivals have become dominant with cruise arrivals starting to exceed overnight arrivals since 2004. However, Caribbean countries with higher cruise volumes suffer from lower spending per arrival, with a direct negative correlation between the share of cruise arrivals to overnight visitors and expenditure per visitor (Figure 5). 4 Includes arrivals to the region as a whole. Rethinking Caribbean Tourism xiii Figure 4. Average regional spending per Figure 5. Relationship between share of arrival, Caribbean and Pacific, 2009–19 cruise visitors and expenditure per arrival, 2009–19 $1,600 $1,400 100% St. Kitts and St. Vincent and the Spend per Arrival US$ Percentage of cruise arrivals / Nevis $1,200 The Grenadines $1,000 80% Bahamas total visitor arrivals Antigua and Belize Barbuda $800 Grenada 60% Dominica $600 St. Lucia Barbados $400 40% Jamaica $200 $- 20% Dominican 0% Republic 0 500 1000 1500 Caribbean - Average Spend per Arrival Expenditure per visitor arrival (US$) - 2009-19 Pacific - Average Spend per Arrival average Source: UN Tourism, 2024 Source: WB analysis based on UN Tourism data The COVID-19 pandemic severely affected the region, with more tourism dependent countries hit harder. In 2020, total travel and tourism GDP in the Caribbean plummeted by 53.2 percent, more severe than the average global decrease (50.4 percent). Meanwhile, the sector’s employment declined by 25.8 percent compared to 2019’s levels, amounting to a loss of 708,000 total jobs in the Caribbean (WTTC, 2022). Economy-wide GDP losses in 2020 varied by country, with more tourism dependent nations experiencing generally larger economy-wide GDP declines (World Bank, 2024a). The region’s stagnant tourism performance over the past two decades is connected to policy choices that have systematically incentivized all-inclusive resort development and cruise tourism, with few guardrails to protect and nurture local environments, communities, and businesses. The pandemic highlighted the extent to which high-volume tourism can be extractive when it relies on foreign markets to support fiscal balances, local businesses, employment, and environmental and cultural attractions that depend on tourists' fees. While the short-term economic benefits of high volumes of tourists are seemingly high and easy to measure, they are often undermined by high leakages and limited spillover effects for local economies. In the longer term, volume tourism can exacerbate inequality, with profits concentrated in large international operators (Oviedo-García, González-Rodríguez, & Vega- Vázquez, 2018), while in other cases when economies of scale are present, local businesses can be well integrated into the value chain (Pratt, 2015). The large volume approach comes with high environmental costs, threatening blue tourism assets that make the Caribbean attractive to visitors. All-inclusive resorts and cruise ships can result in pollution, with high water and energy consumption, waste generation, and a large carbon footprint. Rethinking Caribbean Tourism xiv Volume-focused growth has spurred overdevelopment and limited local benefits Tourism has been a reliable and steady earner for Caribbean economies since the 1970s, when large cruise ships and all-inclusive resorts were the dominant segments of tourism. Volume tourism is a consequence of rapid industry growth in the mid-20th century, driven by increasing incomes in the US, advances in aviation, and market shifts towards international beach vacations. Given the underdeveloped infrastructure and weak local private sector, Caribbean countries opted for self-contained, enclave tourism investments supported by FDI and fed by tour operators as packages. This model allowed the region to quickly tap into growing demand and benefit from foreign exchange, FDI, and, in some cases, privately-funded connectivity infrastructure. However, in most cases, these investments were not linked to local value chains resulting in limited local development and often came with significant environmental and social risks. Decades of following this large-scale property development model created a political economy of vested interests, slowed responsiveness to changes in demand, and made the industry vulnerable to shocks. The growth of these segments, with inherent structural and operational characteristics, have come at a cost to the economies they entered (ECLAC, 2009a; ECLAC, 2009b; Bauer, 2008) . High capital investment costs of all-inclusive resorts and cruise ships dictates foreign ownership, usually by large multi-national corporations. Average costs per square foot for development of a five-star resort in the Caribbean span US$352 to US$619 but can be as high as US$1,040 in The Bahamas and US$715 in Antigua and Barbuda and St. Lucia (RLB, 2024). Similarly, global cruise line company Royal Caribbean’s recently launched 8,000 passenger “Icon of the Seas” ship reportedly cost US$2 billion to build (Yeginsu, 2024). Debts linked to these investments further require they generate revenues in the currencies of their debt. This, in turn, drives a vertically integrated business model that is incentivized to minimize local input costs (land, labor, consumables, utilities, taxes and fees) and maximize opportunities for revenues in source markets through upfront payments of destination services in home country currencies. All-inclusive resorts and cruise ships are large investments made viable by scale, turnover and international promotion spending, but do not guarantee growth. Governments in the region have viewed large all-inclusive resort investments or cruise ship visits as major coups for their tourism sectors: they are market-making game-changers. Basic calculations estimate that a 500-room resort running at 50 percent double occupancy could boost tourism numbers by 180,000 bed nights a year. Similarly, a single large cruise ship, such as global cruise line company Carnival’s Excel-class Celebration, could boost cruise arrivals to one destination by 150,000 to 170,000 over a calendar year.5 However, these supply dirven gains are not guaranteed and do not always translate into spending and local economic benefits. 5 Authors’ calculation based on itinerary and data from Cruisemapper.com Rethinking Caribbean Tourism xv Policy decisions to grow volume tourism have led to trade-offs Using tax incentives as a policy instrument, governments have pursued investors and cruise lines by offering a range of tax holidays and concessions. Governments regularly negotiate with investors and grant incentive packages on a case-by-case basis, often in direct competition with one another. Countries feel compelled to offer generous incentives packages to existing and potential investors to secure investments, fearing investors will move their potential investments to another country in the region. In the cruise sector, the domination by a few large players gives these oligopolies significant bargaining and market power over ports and destinations. As with large all-inclusive resort investments, there is a lack of transparency regarding concessions granted, revenue collection and governance mechanisms for fees, including environmental levies. Fiscal trade-offs, such as extended tax holidays and tax and duty exemptions, represented forgone tax revenue between 4.4–7 percent of GDP across a sample of Caribbean countries between 2010–13 (McIntyre, 2017). Governments make these trade- offs under the assumption that increased numbers of tourists will lead to positive local economic spillovers. Beyond the erosion of the tax base, the myopic focus on large resort developers undermines the sustainability of smaller accommodations and business-focused segments like adventure tourism as well as creates an uneven playing field for domestic investment. Competition between countries to attract investments in large resorts and cruise tourism has made it challenging to advance regional cooperation. Such synergies could otherwise help address transportation access between islands, support shared labor pools, and encourage common policies on investment incentives, tax structures, environmental standards, and development of local linkages. Limited public investment also results in inefficient coordination mechanisms and information asymmetries within countries. This hinders development of local supply chains and limits micro, small and medium enterprise (MSME) inclusion. Such coordination is essential for development of new and higher-value segments, such as adventure tourism, and to support the flow of tourism benefits throughout the value chain. In agriculture, for instance, local linkages are impeded by difficulties in achieving necessary quality and scale to supply large resorts or to re-supply cruise ships, as well as often unmanageable contractual and payment arrangements. These challenges, amongst others, point to areas where regional governments have not fully followed through on initiatives to ensure spillovers actually occur. Off- and on-shore infrastructure requirements for large-scale resorts or cruise ships have resulted in extensive environmental impacts. These developments come at a cost to coastal ecosystems such as mangroves, lagoons, coral reefs, and marine life. Poor land use planning and enforcement of compliance with environmental standards have exacerbated these impacts in high-potential tourism areas. Sub-optimal management of waste from large- scale tourism activities is a perpetual concern for local municipalities and residents, so too is Rethinking Caribbean Tourism xvi the strain on often limited resources like water and energy. Ultimately poor environmental management has degraded the assets on which tourism is built and inhibited the growth of more sustainable tourism markets, such as adventure tourism. Despite high employment inclusion, volume-led tourism models have yet to deliver results for women and rural communities with tourism job quality lower for these groups. While younger workers in the Caribbean tourism sector experience equal or higher quality jobs than in other sectors, gaps exist in job quality for women and rural employees (Figure 6 and Figure 7). Gender gaps in tourism are pronounced in the Dominican Republic and Grenada, while St. Lucia is the only Caribbean country analyzed in a World Bank Job Quality Index study where the quality of tourism jobs for both women and men surpasses that of other sectors. Job quality was found to be higher in urban rather than rural areas, possibly due to higher competition for trained workers in urban areas (World Bank, 2023a). Figure 6. Job quality in the tourism Figure 7. Job quality in the tourism sector by gender (2016–20) sector by geographic area (2016–20) 80% 80% 70% 70% Job Quality Index Job Qualty Index 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Dominican Republic Grenada Costa Rica St. Lucia Vanuatu Dominican Republic St. Lucia Costa Rica Barbados Grenada Vanuatu Caribbean countries Comparator Caribbean Countries Comparator countries Countries Women - Tourism Men - Tourism Rural Tourism Urban Tourism Women - Other Sectors Men - Other Sectors Rural Other sectors Urban Other sectors Source: World Bank, 2023a Source: World Bank, 2023a New opportunities can revive regional competitiveness—before it is too late Several global tourism trends are driving significant change in the Caribbean, pushing the region to adapt its strategies and offerings to remain competitive and sustainable. These trends reflect shifts in traveler behavior, preferences, and technological advancements, as well as growing concerns about environmental sustainability and social responsibility. Rethinking Caribbean Tourism xvii • Blue economy and blue tourism offer an opportunity to integrate conservation, climate resilience, and sustainable use of marine and coastal ecosystems into tourism development and increase coordination across oceanic sectors. The blue economy involves the sustainable use of ocean resources for economic growth, improved livelihoods and job creation, while preserving the health of ocean ecosystems. Blue tourism is a model that not only champions sustainable products, but also sustainable operations and infrastructure. • Sustainability has become a central concern for travelers globally. World Bank research on US outbound adventure travelers found that sustainability was the primary deciding factor when selecting a destination for their next holiday (World Bank, 2024b). Consumers and buyers are calling for greater transparency and higher standards as well as green certifications, local products, and experiences. • Cruise tourism remains a dominant force in the Caribbean, with travelers commonly seeking multi-destination journeys that offer a blend of luxury, entertainment, and relaxation. However, there is an increasing emphasis on sustainable practices within the cruise industry. The region is experiencing increased demand for non-hotel accommodation options, such as short- and longer-term vacation rentals. In Jamaica, the number of stopover visitors staying in the short-term rental platform Airbnb has increased six-fold in four years (2019–23) (Jamaica Tourist Board). • Authentic and immersive experiences are now driving traveler decisions rather than traditional ‘sun, sea, and sand’ products. Adventure tourism is one of the fastest growing market segments with visitors seeking to connect with local cultures, communities, and nature through activities like local food tours, cultural heritage experiences, and adventure activities. • The growing reliance on digital technology – including mobile apps, artificial intelligence, and big data – is transforming how travelers plan, experience, and share their vacations. Smart tourism technologies are reshaping the visitor experience with real-time information, personalized services, and contactless options. • There is a surge in luxury and wellness experiences with travelers increasingly seeking exclusive, personalized, and high-quality travel experiences. These travelers often prefer remote or less crowded destinations, private villas, bespoke services, and luxury experiences. Wellness tourism, focusing on physical and mental health, has experienced significant growth globally. Travelers are seeking destinations that offer relaxation, fitness, mindfulness, and overall well-being. Caribbean countries are starting to adapt to these trends, but governments need to prioritize quality and sustainable growth over visitor numbers. Caribbean countries are gradually embracing sustainability and diversifying tourism offerings to appeal to environmentally conscious, experience-seeking travelers. While efforts to decarbonize tourism, adopt circular economy principles, and enhance digitization are underway, they have been hampered by slow progress and budget deficits. Without intensive action to transition towards sustainability, Caribbean tourism’s competitiveness is at risk. Governments need to Rethinking Caribbean Tourism xviii shift their focus from traditional volume-based growth targets to value-driven and development-oriented tourism strategies. By implementing forward-thinking policies, strategic planning, and targeted investments, the region can capture emerging sustainable tourism markets and establish itself as a leader in balancing economic, social, and environmental priorities. This momentum for sustainability offers an opportunity to create a more equitable and resilient tourism future. A holistic framework for tourism development is needed to leverage new opportunities across market segments The Caribbean faces growing urgency to address underlying constraints hindering the realization of its full tourism potential, including structural issues, vested interests, and capacity gaps. Transitioning the industry to generate greater domestic benefits, while mitigating adverse environmental and social impacts, requires an understanding of available development pathways and policy priorities. The World Bank’s Tourism Economy Impact Framework provides a holistic approach to conceptualizing blue tourism development. The framework (Figure 8) emphasizes that tourism development relies on a coordinated approach to demand, supply, and assets within the context of regulations and policies that influence the industry, exogenous factors (such as climate change), and endogenous factors (such as destination infrastructure). The framework highlights the need for a balanced approach to utilizing and preserving tourism assets, as neglecting social and environmental considerations can damage critical resources underpinning the industry. However, most Caribbean governments have historically prioritized demand and economic gains without adequately reinvesting in marine assets, cultural heritage, or sustainable practices, resulting in deteriorating marine ecosystems, depleted water reserves, and growing landfills. Figure 8. Tourism Economy Impact Framework Source: Authors’ elaboration. Rethinking Caribbean Tourism xix Policy recommendations Building on previous work by the World Bank and regional organizations, global benchmarks, regional deep dive studies, and the analysis in this report, a range of policy options are recommended to address challenges faced in each of the segments in this review: cruise, all- inclusive accommodation, and adventure tourism. The emphasis of cruise-focused recommendations across destination types is on extracting greater value per visitor to compensate for high infrastructure and environmental costs. The chapter presents examples of how cruise tourism value can be enhanced through adjusted passenger and environmental fees, improved local linkages, and greater investment in environmental sustainability. For some destinations, a greater focus on smaller high-end cruises staying for an extended period may be possible with corresponding infrastructure and policies. Homeporting is another option that can help expand revenue capture in secondary markets but requires investment in ports, strong airline connectivity, and effective solutions for waste and energy. Lastly, the chapter highlights the importance of greater regional collaboration to better promote destinations, enhance countries' bargaining power to negotiate, and strengthen partnerships with international cruises companies. In the accommodation segment, the policy guidance urges governments to leverage new consumer and investment trends. Specifically, this entails regulating the short-term rental market, addressing inadequate land-use planning, encouraging the uptake of sustainability practices by the government and private sector, and tackling skills gaps and shortages of human capital. Despite recent improvements in some countries, the chapter also suggests more needs to be done to ensure a fair distribution of tax incentives and subsidies, as well as strengthening local linkages. Sustainability initiatives emerging in the region and globally offer key lessons and opportunities for Caribbean governments. For example, some all-inclusive resort chains in the Caribbean are already implementing voluntary corporate strategies for sustainability that offer opportunities for partnerships to scale and replicate initiatives. Other private sector initiatives, like the St. Lucia Hospitality and Tourism Association’s (SLHTA) Tourism Enhancement Fund, are leveraging new consumer trends to collect voluntary contributions for sustainability-focused projects in their country and beyond. Governments themselves have also started to design and, in some cases, implement policies and regulations directed at addressing inclusion challenges. There are also global examples. Türkiye's accommodation- wide mandatory Sustainable Tourism Program is designed to move the sector towards improved sustainability outcomes, particularly in waste management, water efficiency, cleaner energy sources, and increased local purchasing. The Caribbean’s potential for adventure tourism is enormous, but it lacks well-defined and competitive products. Adventure tourism offers the largest potential value and jobs per tourist with the segment comprising approximately 30 percent of global leisure tourism and contributing $683 billion in global tourism expenditures in 2022 (ATTA, 2023a). However, the Rethinking Caribbean Tourism xx Adventure Travel Development Index (ATDI) ranks the Caribbean region at or below the global average in most categories, notably it ranked low in cultural resources, natural resources, entrepreneurship, and image (ATTA & GWU, 2024). The Caribbean has also consistently ranked poorly in terms of forward booking demand for adventure tourism trips, which acts as a demand forecast indicator, in the Adventure Travel Trade Association’s (ATTA) Industry Snapshot (ATTA, 2024). Developing adventure tourism requires active facilitation, policy reforms, and investment. Policy priorities involve investing in public goods to support adventure tourism infrastructure, such as trails and safety measures in protected areas, and creating regulatory pathways for transparent and market-based private sector investment in protected areas. Strengthening protected area management, conservation efforts, and concessions frameworks are also crucial to ensure that natural assets that attract adventure tourists are preserved, and that private sector has reliable and managed access to them. The fragmented nature of MSMEs in the adventure tourism sector also hinders cohesive product offerings, branding, and marketing efforts. There are untapped opportunities to develop products with strong market demand, such as community-based tourism, camping, and kayaking. However, capturing the market’s value will require significant up -front investment and support from the public and private sectors in both destination marketing and product development. Limited or uncoordinated regulations regarding protected area access and activity safety standards hinder investment and product development. This lack of effective regulations and standards is often driven by poor coordination across government agencies, but it creates significant barriers to market for MSMEs through increased insurance costs. Caribbean countries can learn from good practices in top adventure destinations, in the region and elsewhere. Two deep-dive case studies, from Dominica and the Dominican Republic, provide examples of adventure tourism practices in the region. Dominica developed the Caribbean’s longest hiking trail, the Waitukubuli National Trail, that traverses the island. In the Dominican Republic, despite adventure tourism being a secondary market, participation in adventure activities is growing, driven by successful cross-ministry management of protected areas and private sector participation in management and conservation efforts. Looking at global benchmark destinations, Costa Rica and New Zealand have a significant share of their tourism market driven by adventure tourism arrivals which generate strong economic impacts. Both destinations take a whole-of-government approach to tourism management and have invested in developing adventure tourism in a sustainable way over recent decades. A regional approach to adventure activity regulations can help to harmonize safety and quality across the Caribbean as well as support public sector efficiency. Finally, addressing information asymmetries and fostering sector and industry coordination are required to improve the overall quality and sustainability of adventure tourism offerings typically delivered through a loosely organized collection of MSMEs. The examples of Costa Rica and New Zealand provide details on how adventure tourism policies can be implemented. Rethinking Caribbean Tourism xxi In addition to segment-specific policies, the following matrix in Figure 9 helps visualize cross-cutting policy areas for potential interventions. The matrix shows the main policy action areas across the segments and the priority level of each. Policies were prioritized based on discussions with policy makers, industry representatives, relevant national and regional entities, as well agencies from countries with relevant experiences. The report’s recommendations deliver five important and cross-cutting messages: (i) modernize tourism governance to reinvest in underlying tourism assets, (ii) optimize the business environment for small operators, (iii) incentivize improved environmental sustainability across all segments, (iv) spur more job creation through enhanced linkages, and (v) collaborate across the region to address common regional challenges. Figure 9. Cross-cutting Tourism Policy Matrix for the Caribbean Source: Authors’ elaboration, adapted from World Bank report on Future of Pacific Tourism, World Bank 2023b 1. Modernize tourism governance to boost government revenues and allow for reinvesting in underlying tourism assets. Across all segments, the region has systematically undermined its competitiveness by lowering its tourism and conservation fees to an unsustainable level and failing to reinvest in the assets on which its tourism attraction is based. It is critical to reverse this trend. • In cruise, greater transparency in setting and using passenger disembarkation and/or environmental fees will allow for more public consultations on needed Rethinking Caribbean Tourism xxii infrastructure improvements in waste and urban planning. Given the industry structure, this is an opportunity for regional cooperation. • In accommodation, more transparent and uniform investment incentives tied to improved environmental performance can give governments more influence over investment choices. Regularizing the short-term rental sector can also contribute more tax revenues, while mitigating risks of uncontrolled and informal growth. • In adventure, it is critical to invest in destination marketing and new models for park management, maintenance, and investment, paired with policies that define how entrance fees are used to enhance product quality and manage environmental impacts. • Finally, across all sectors, data as well as R&D has been under-resourced and left the industry exposed. This report has demonstrated that the use of alternative data sources, regional solutions and data hubs can be developed to address these gaps and ensure the industry is not left behind. 2. Improve business environment to sway the pendulum towards smaller, local, and more sustainable operators. Throughout the region, governments have systematically prioritized large international investments instead of small locally-run properties. • In accommodation, the report highlights how investment incentives often favor larger, international investors rather than locally-owned and run products. A change is required to use incentives more strategically to encourage sustainable accommodation that provides greater domestic value capture, local sourcing, and better employment opportunities. This, in turn, will require changes to accommodation standards that are often international quality, but less well adapted to ecolodges or alternative accommodation options. • In adventure, the high cost and limited availability of safety equipment, certifications/standards, and insurance is a significant barrier to market entry. Regional engagement on adventure-specific quality and safety standards, and regulations would support harmonization across the Caribbean, paving the way for regional insurance products. • For small operators in all segments, greater access is needed for point-of-sale (POS) density to underpin growth in small adventure tourism operations, homestays, or sales of local products at tourism events and markets with smaller local operators. 3. Improve environmental sustainability across segments. The region has failed to consistently reinvest in environmental assets that sit at the core of blue tourism attraction. • While the cruise sector is under international regulatory scrutiny for air pollution and carbon emissions, there is far less destination-level scrutiny where localized impacts can reduce the potential of other forms of marine tourism. Greater Rethinking Caribbean Tourism xxiii environmental monitoring is needed with stricter mechanisms to enforce compliance. Opportunities for public-private investments in waste management facilities, particularly in destinations with growing homeporting activities, should be further explored. • The region’s accommodation sector has a major water, waste, and energy footprint, with consumer markets demanding change. Future developments need to better consider environmental sustainability in land use plans, while governments must ensure accommodation operators install and operate more efficient water, energy, and waste management equipment and systems. Given limited space and options for recycling, reductions in use of plastics is also of critical importance with the onus on governments to limit single use plastics or encourage alternatives. Increasing composting can also help dramatically reduce landfill waste. Several accommodation operators in the region have zero-waste- to-landfill policies and these voluntary standards should become the norm. Countries will need to move from voluntary standards to compulsory environmental monitoring of tourism with increased awareness and education. • For adventure tourism, underinvestment in protected areas has limited product quality and competitiveness. Moving forward, it is critical to enhance protected area management, establish reasonable usage fees and develop well-managed concession frameworks that integrate local land use planning and empower local stakeholders. 4. Boost the quality and breadth of job creation in tourism through enhanced local linkages. Numerous opportunities for better quality jobs are left on the table, despite youth unemployment becoming a critical concern. • In cruise and accommodation more can be done to encourage local artistic and food sourcing, local content branding, developing and promoting immersive local cultural and gastronomy experiences for visitors. • In accommodation, improving skills is key to boosting job quality, particularly for women and young people. Technology advancements and digitalization provide higher skilled opportunities in operations, systems design, and environmental sustainability that are attractive to younger skilled professionals, but more training is needed. • In adventure, specialist skilled-related opportunities require product-specific training currently absent across the region. Immigration policies need to allow for the import of such specialist skills linked with conditions for local capacity building. • Across all segments, broadening job impacts requires better linkage programs, entrepreneurship, and digital skills development. There is much to learn from existing World Bank interventions, such as recent SME projects in Jamaica, Sint Maarten, and the Organisation of Eastern Caribbean States (OECS). Rethinking Caribbean Tourism xxiv 5. Collaborate across public and private sectors to address common challenges across all sectors. • In cruise, there are numerous opportunities for regional collaboration to address these common areas, harmonize policies, and leverage collective bargaining power with large industry players. • In accommodation, new standards are needed across the region to encourage sustainability and carbon emissions reductions. • For adventure, regional solutions can help advance safety, insurance, capacity building, and quality assurance challenges as well as support regional destination awareness and marketing. • Across all segments, regional entities such as the Caribbean Tourism Organization and Caribbean Community (CARICOM) can play a crucial role in facilitating knowledge exchanges, supporting innovative pilot programs, and developing a unified approach to sustainable tourism development along with common environmental standards. This report identifies critical areas for cross-cutting and segment-specific policy support and provides a menu of possible next steps. Recommendations include regional policy dialogues and validation, regional knowledge sharing, innovative pilot programs on strategy and data as well as leveraging World Bank Country Climate Development Reports (CCDRs) to inform tourism resilience policies. In addition, the supplementary annex volume, published as a separate document, includes the full deep dive case studies and a compendium of tools and resources. The future of tourism in the Caribbean hinges on the ability to adapt to new trends and challenges, including environmental concerns and the call for greater social and economic inclusion. By adopting proactive policies and investing in their implementation, leveraging regional collaboration as well as country-specific strategies, the Caribbean can enhance the quality, impact, and sustainability of its tourism sector, ensuring long-term benefits for local communities and the environment. Rethinking Caribbean Tourism xxv Chapter 1. Caribbean Tourism Now Rethinking Caribbean Tourism xxvi Chapter 1. Caribbean Tourism Now Abundant blue tourism resources give the Caribbean region an inherent tourism advantage, but recent market changes are exposing significant structural weaknesses in the model that has driven regional growth. Made up of thousands of islands, cays, islets, reefs and numerous beaches, forests, and rivers, the tourism sector has been the predominant driver of jobs and foreign investment since the decline of the sugar industry. In addition to blue economy resources, the region also has a rich history and diverse cultures, is well connected by major airlines, and is located proximate to the US as one of the world’s largest tourism markets. All this should make for unlimited tourism potential, but the pandemic revealed underlying structural weaknesses in the volume-based model that has driven the tourism economy across most of the region. Competition is high, climate change impacts are intensifying, consumer demand is changing, and Caribbean tourism is struggling to keep up. In response, this report assesses the current performance of tourism in the Caribbean and, in light of new trends, identifies future pathways and policies for sustainable growth of three targeted segments. The report provides recommendations to help Caribbean policy makers achieve greater value from tourism, while minimizing negative environmental and social costs. The analysis provides practical guidance on achieving more sustainable outcomes by pushing traditional models of tourism, including cruise and all-inclusive resort segments, to integrate environmental standards and increase local value capture through following recommendations on how to develop new forms of higher value arrivals in the form of adventure tourism. The analysis flows from three in-depth research phases that: i) assessed regional trends and identified priority tourism market segments, ii) conducted a value chain analysis of these segments, and iii) synthesized results to provide actionable policy recommendations (see Annex 1 for more details). Following this framing chapter, the report includes one chapter on each of the three prioritized segments with a concluding chapter that brings together the recommendations. It highlights opportunities for implementing policy reforms and programs through regional approaches to achieve greater impact. This report covers 12 World Bank member Caribbean countries: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Jamaica, Sint Maarten, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Guyana, Suriname, and Trinidad and Tobago were excluded given their limited dependence on tourism. Non-World Bank member countries and territories were also excluded from report coverage. Rethinking Caribbean Tourism 1 1.1. Caribbean looks to tourism as a source of jobs, a solution for high youth unemployment, and a generator of FDI Tourism is a vital economic driver of the Caribbean’s blue economy, contributing around 22 percent of the region’s GDP in 2019.6 Total tourism’s contribution to GDP ranged from 15.3 percent in the Dominican Republic to 87.1 percent in Antigua and Barbuda (WTTC, 2024a), highlighting the different tourism impacts across the region. In comparison to other Small Island Developing States (SIDS) in the Pacific, East and West Africa, and the Indian Ocean, tourism in the Caribbean seems to have a stronger relative importance when accounting for direct, indirect, and induced contributions (Figure 10). In 2023, the tourism industry was responsible for 2.75 million total7 jobs in the 12 countries covered by this study (WTTC, 2024a). In 11 of the 12 countries, tourism created 1.54 million total jobs, with it contributing a further 1.21 million total jobs in the Dominican Republic. Overall, there was higher tourism employment relative to other comparator countries. Total dependency on tourism jobs ranged from 16.6 percent in the Dominican Republic to 88.6 percent in Antigua and Barbuda (WTTC, 2024a) (Figure 11). This is compared to 58.9 percent dependency on tourism for jobs in the Maldives, 52.1 percent in Seychelles and 35 percent in Fiji. Figure 10. Tourism total contribution to GDP, Caribbean countries*, average for Caribbean, and selected comparators, (%) 2023 100 90 80 % Contribution 70 60 50 40 30 20 10 0 Tonga Belize Jamaica Dominica Seychelles St. Lucia Vanuatu Solomon Islands The Bahamas Dominican Republic Maldives Fiji Kiribati Average Caribbean Barbados Sao Tome and Principe Grenada St. Vincent and the Grenadines Mauritius Antigua and Barbuda St. Kitts and Nevis Caribbean Comparators Source: WTTC, Labor Force Surveys, Population and Housing Census, Tourism Satellite Accounts. Note: For most countries, direct jobs just capture the accommodation and food sectors. For Dominica, data is from 2011. Sint Maarten is excluded as job contribution data is not available. 6 Includes the 12 countries in this study and accounts for direct, indirect, and induced tourism contributions to GDP. 7 Accounts for direct, indirect, and induced tourism jobs. Rethinking Caribbean Tourism 2 Figure 11. Tourism total and direct contribution to jobs, 2023 and 2019 or last available year, (%) 100 90 80 % Contribution 70 60 50 40 30 20 10 0 Direct and indirect jobs (2023) Direct jobs (2019 or last available year) Source: WTTC, Labor Force Surveys, Population and Housing Census, Tourism Satellite Accounts. Note: for most countries, direct jobs just capture the accommodation and food sectors. For Dominica, data is from 2011. Sint Maarten is excluded as job contribution data is not available. Tourism jobs are particularly important as they drive women and youth employment and create indirect jobs in the tourism value chain. Women represented 57–70 percent of workers directly employed in the hospitality as well as food and beverage industries pre- pandemic, higher than the global reported average (54 percent) of women’s employment in tourism (UN Tourism, 2019a), and higher than in other sectors combined in the Caribbean (Figure 12) (World Bank, 2023a). Likewise, The Bahamas, Grenada, St. Lucia, St. Kitts and Nevis, and St. Vincent and the Grenadines are among the top 10 countries globally with a higher proportion of youth directly employed in tourism (Figure 13), with percentages reaching 55.6 in the case of St. Lucia (WTTC, 2023). The proportion of youth8 directly employed in tourism is also higher than in other sectors in the Caribbean (World Bank, 2023a). In addition to direct tourism jobs in hotels, tour operators, restaurants and other tourism industries, the sector also creates indirect jobs through linkages in agriculture, fisheries, marketing, business services, and other areas of the tourism value chain. While tourism has driven positive GDP trends for Caribbean nations, overall youth unemployment remains a challenge. Historically, tourism has delivered positive growth, with GDP per capita in tourism-dependent countries in the region exceeding that of commodity-dependent peers (IFC, 2023). However, progress towards improved living standards has slowed and youth unemployment remains high, preventing countries from reaping the full benefits of their young populations and prompting the migration of talent (IFC, 2023). Limited economic diversification has also heightened volatility in growth, investment, and consumption patterns. For example, the region suffered a prolonged growth slowdown 8 Youth age range based on the World Bank Job Quality Index definition is 15–24 years old. Rethinking Caribbean Tourism 3 after the Global Financial Crisis of 2007–08 that led to lower FDI, tourism activity, and reduced fiscal revenues (IFC, 2023). Figure 12. Tourism direct employment by Figure 13. Direct Travel & Tourism sector gender in hotels and restaurants in selected employment, as share of total national Caribbean economies, 2019 or last available employment by age group, top 10 countries year, (%) for proportion of young people (15-24), 2019 Antigua and Barbuda % youth sector employment The Bahamas 0 10 20 30 40 50 60 Barbados St. Lucia Cayman Islands Dominica Macao, China Dominican Republic St. Kitts and Nevis Jamaica Bermuda The Bahamas St. Kitts and Nevis Grenada St. Lucia Maldives St. Vincent and the Grenadines 0% 20% 40% 60% 80% Croatia % Women % Men Source: Labor Force Surveys, Population and Source: WTTC, 2023. Housing Census. The COVID-19 health crisis impacted the region, with more tourism dependent countries hit harder. In 2020, total travel and tourism GDP in the Caribbean plummeted by 53.2 percent, more severe than the global average fall (50.4 percent). Meanwhile, the sector’s employment declined by 25.8 percent, amounting to a loss of 708,000 total jobs (WTTC, 2022). Economy- wide GDP losses in 2020 varied by country, with more tourism dependent countries experiencing generally larger declines. St. Lucia, The Bahamas, and Antigua and Barbuda suffered the highest GDP annual declines (25, 21, and 19 percent, respectively), whereas St. Vincent and the Grenadines, Dominican Republic, and Jamaica, performed better (falls of 4, 7, and 10 percent of GDP) (World Bank, 2024a). The pandemic highlighted that different forms of tourism deliver different returns, exposing the current volume-focused tourism model as undermining industry sustainability in the region. The economic benefits of high-volume tourism in the short-term are seemingly high and easy to measure. However, these quick wins are often undermined by high leakage and limited spillover effects for local economies. In the longer term, tourism can exacerbate inequality, with profits concentrated in large international operators (Oviedo- García, González-Rodríguez, & Vega-Vázquez, 2018), while in other cases when economies of scale are present, local businesses can be well integrated into the value chain (Pratt, 2015). The large volume approach comes with high environmental costs, threatening the blue tourism assets that make the Caribbean attractive to visitors. All-inclusive resorts and cruise Rethinking Caribbean Tourism 4 ships can result in pollution, with high water and energy consumption, waste generation, and a large carbon footprint. Volume-focused growth has spurred overdevelopment and set the stage for a race to the bottom Tourism policies focused on volume-led markets – such as ‘sun, sea and sand’ and cruise tourism – drive down revenue per arrival especially compared to other regions. An historic focus on volume and the cruise segment has delivered low tourism spending per arrival, limited fiscal revenues, and placed pressure on island infrastructure and the fragile marine environment. Compared to other regions, historically spending per arrival has been low (Figure 14). Average spending per arrival in the Caribbean (US$712) was half that per arrival in the Pacific (US$1,428) in 2019 (UN Tourism, 2024). In 2019, more than 83 percent of international tourism arrivals to the Caribbean9 visited the region to enjoy its ‘sun, sand, and sea’ (WTTC, 2022; CTO, 2020), with cruise arrivals starting to exceed overnight arrivals since 2004 (Figure 15). In 2023, cruise visitors totaled 17 million across the 12 countries analyzed, comprising 53 percent of arrivals. The share of cruise arrivals varies from 22 percent in the Dominican Republic to 88 percent in St. Kitts and Nevis. Countries with higher cruise volumes suffer from lower spending per arrival, with a direct negative correlation between the share of cruise arrivals to overnight visitors and expenditure per visitor (Figure 16). This is driven by low per person spending of cruise visitors (US$37 to US$139) in Caribbean ports compared to an average US$1,60010 spend per overnight tourists and US$2,350 spend per adventure tourist in the region (World Bank, 2024b). Figure 14. Average regional spending per arrival including cruise and stayover, Caribbean and Pacific, 2009–19 $1,600 $1,400 Spend per arrival US$ $1,200 $1,000 $800 $600 $400 $200 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Caribbean - Average Spend per Arrival Pacific - Average Spend per Arrival Source: UN Tourism, 2024. 9 Includes arrivals to the region as a whole. 10 Excludes accommodation, international flights, travel visa, and insurance. Rethinking Caribbean Tourism 5 Figure 15. Number of overnight and cruise Figure 16. Relationship between share of arrivals to the Caribbean, 1989–2023 cruise visitors and expenditure per arrival, 2009–19 18,000 100% St. Kitts and Tourist arrivals (thousands) Nevis Percentage of cruise arrivals / 16,000 90% St. Vincent and the 14,000 The 80% Grenadines total visitor arrivals 12,000 Bahamas 70% Antigua and Barbuda 10,000 60% Dominica Grenada 8,000 6,000 50% Barbados St. Lucia 4,000 40% Aruba 2,000 Jamaica 30% 0 20% Trinidad and Tobago 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 10% Dominican Republic 0% 200 400 600 800 1000 1200 Overnight arrivals Cruise arrivals Expenditure per visitor arrival (US$) – 2009-19 average Source: CTO, from national tourism and statistical Source: WB analysis based on UN Tourism data. offices in member countries. The volume-led model has resulted in high value capture by large international players and minimal domestic value addition. Volume tourism is a consequence of rapid tourism industry growth in the mid-20th century, driven by increasing incomes in the US, advances in aviation, and market shifts towards international beach vacations. Given the underdeveloped infrastructure and weak local private sector, Caribbean countries opted for self-contained, enclave tourism investments supported by FDI and fed by tour operators as packages. This model allowed the region to quickly tap into growing demand and benefit from foreign exchange, FDI, and, in some cases, privately-funded connectivity infrastructure. However, in most cases these investments were not linked to local value chains resulting in limited local development and often came with significant environmental and social risks. Decades of following this large-scale property development model created a political economy of vested interests, slowed responsiveness to changes in demand, and made the industry vulnerable to shocks. The growth of these segments, with inherent structural and operational characteristics, have come at a cost to the economies they entered (ECLAC, 2009a; ECLAC, 2009b; Bauer, 2008). In this context, smaller local value chains have not been able to effectively link to the industry, limiting positive tourism impacts on local private sector development. Local agriculture linkages are weak due to availability, price, and quality issues raised by buyers (World Bank, 2015; IFC, 2020). Most farms are small and lack the means to become reliable suppliers, while most young people do not regard agriculture as a successful career (Ibid). Rethinking Caribbean Tourism 6 Other issues hold farmers back such as poor market intelligence, weak logistics and cold storage, limited access to finance, and duty-free concessions for importation of certain food products, making it hard for local producers to compete on quality, quantity or price (Ibid). Beyond agriculture, labor market challenges such as skills (soft and hard), compensation issues, and mismatches between supply and demand create challenges for Caribbean employers to hire local labor (CTO, 2022). Smaller countries have a less diverse tax base, weakening their ability to invest in diversification of tourism infrastructure. Countries such as Antigua and Barbuda, Grenada, or St. Lucia are heavily tourism dependent for GDP (total tourism contribution more than 50 percent) and employment (more than 43 percent) and currently do not have many economic alternatives (WTTC, 2024a). Geographically smaller countries have also struggled to regain market share in the aftermath of the pandemic (Figure 17 and Figure 18). Reliance on high- volume tourism and limited development of other sectors has resulted in a narrow tax base for fiscal revenues. This, in turn, has resulted in lower levels of public sector investment in tourism and tourism-related industries and infrastructure. The reliance on tourism has also meant limited negotiation power with large, international players. Pandemic recovery rates have shown that smaller countries are struggling to recapture pre-pandemic market shares, while recovery in larger countries was rapid. Figure 17. Share of overnight arrivals to Figure 18. Share of cruise arrivals to Caribbean by country size, 2003–23 Caribbean by country size, 2003–23 100% 100% 90% 80% 80% 70% 60% 60% 50% 40% 40% 20% 30% 20% 0% 10% 2003 2007 2011 2015 2019 2023 0% 2003 2007 2011 2015 2019 2023 Big countries - Overnight Small countries - Overnight Small countries - Cruise Big countries - Cruise Source: CTO, from national tourism and statistical offices in member countries. Note: Small countries: Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, Sint Maarten, St. Vincent and the Grenadines. Large countries: The Bahamas, Dominican Republic and, Jamaica. Post-pandemic, competition for the same source markets is fiercer than ever, driving down spending and increasing risks from potential demand-side shocks. More than half of all overnight arrivals to the Caribbean come from North America (US and Canada) (Figure 19), with The Bahamas, Belize, and Jamaica receiving more than 65 percent of arrivals from Rethinking Caribbean Tourism 7 the US. This not only creates high competition within dominant source markets that drives down prices, but it also puts countries at risk of exogenous demand-side shocks. In response, some countries are seeking to diversify source markets – largely a factor of aviation connectivity, historical ties, and product orientation. Barbados and select OECS countries have been successfully attracting European tourists, likely driven by an increase in fifth- freedom aviation rights through Barbados’ Grantley Adams International Airport (Figure 20). There has been growth in new markets, particularly South American arrivals, which have grown 10 percent annually between 2010 and 2019, albeit from a low base. Dominica and the Dominican Republic have been able to tap into this growth, helping them diversify their markets over time. Figure 19. Overnight arrivals of non-resident Figure 20. Overnight arrivals of non- tourists to Caribbean, by country of resident tourists to individual Caribbean residence, 2010–23 (thousands) countries, by country of residence, 2023 US Europe Canada US Europe Canada South America Caribbean Other South America Caribbean Other 16,000 100% 90% 14,000 80% 12,000 70% % of arrivals Thousand arrivals 10,000 60% 50% 8,000 40% 6,000 30% 20% 4,000 10% 2,000 0% 0 2016 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 2021 2022 2023 Source: CTO, from national tourism and statistical offices in member countries. Despite high employment inclusion, tourism models have yet to deliver results for women and rural communities with tourism job quality lower for these groups. While younger workers in the Caribbean tourism sector experience equal or higher quality jobs than in other sectors (Figure 21), gaps exist in job quality for women and rural employees (World Bank, 2023a). From countries analyzed through the World Bank Tourism Job Quality Index in the Caribbean, just Barbados offers higher quality tourism jobs for women than men, with the quality lower than in the other sectors combined (Figure 22). Gender gaps in tourism are pronounced in Grenada and the Dominican Republic. St. Lucia is the only Caribbean country where the quality of tourism jobs for women and men surpasses the quality in other sectors. Job quality was found to be higher in urban rather than rural areas, possibly due to higher competition for trained workers in urban areas (Figure 23) (World Bank, 2023a). Rethinking Caribbean Tourism 8 Figure 21. Job quality in the tourism sector by age group (2016–20) 80% 70% 60% Job Quality Index 50% 40% 30% 20% 10% 0% Barbados Dominican Grenada St. Lucia Costa Rica Vanuatu Republic Caribbean Countries Comparator Countries 15-24 years, Tourism 25-40 years, Tourism 41-64 years, Tourism 15-24 years, Other sectors 25-40 years, Other sectors 41-64 years, Other sectors Source: World Bank, 2023a. Figure 22. Job quality in the tourism sector Figure 23. Job quality in the tourism sector by by gender (2016–20) geographic area (2016–20) 80% 80% 70% 70% Job Quality Index 60% 60% Job Qualty Index 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Dominican Republic St. Lucia Costa Rica Grenada Vanuatu Dominican Republic Costa Rica Barbados St. Lucia Grenada Vanuatu Caribbean Countries Comparator Caribbean Countries Comparator Countries Countries Women - Tourism Men - Tourism Rural Tourism Urban Tourism Women - Other Sectors Men - Other Sectors Rural Other sectors Urban Other sectors Source: World Bank, 2023a. Source: World Bank, 2023a. Note: no data for Barbados. Rethinking Caribbean Tourism 9 Box 1. Caribbean tourism job quality analysis Development of human capital is critical to optimize the job benefits of tourism. The World Bank undertook an analysis of tourism job quality by leveraging the Job Quality Index that measures job quality using a multidimensional index with four dimensions: (i) sufficient income to overcome poverty, (ii) access to employment benefits, (iii) job stability, and (iv) adequate working conditions.11 Tourism job quality in higher than primary sectors in some Caribbean countries. While tourism is often perceived as providing low-quality jobs, tourism job quality in the Dominica Republic, Grenada and St. Lucia is higher than for the primary sector (Figure 24). In St. Lucia, tourism job quality is also higher than in industry (i.e. manufacturing) and other services sectors. Of the four countries with data, St. Lucia has the highest job quality (65 percent) comparable with Costa Rica (59 percent). Barbados, Dominican Republic, and Grenada display lower job quality performance. Factors contributing to higher job quality performance vary by country. St. Lucia leads in nearly all categories with its lowest rating at 75 percent for the income dimension. Barbados leads on the stability dimension, however it trails significantly in the benefits and working conditions dimensions at 45 percent and 43 percent, respectively. Grenada performs nearly as well as St. Lucia, except in the income category, where it rates 48 percent compared to St. Lucia’s 75 percent. Finally, the Dominica Republic has relatively good stability ratings, but lags at about the 50 percent mark across all other categories (World Bank, 2023a) (Figure 25). The analysis shows that even in countries with similar market compositions and geographic conditions, job quality can vary depending on local policies. Figure 24. Job quality by economic sector Figure 25. Job quality dimensions in the tourism sector and other sectors by country 70% 100% 90% Job Quality IxDimensions 60% 80% 50% 70% 60% 40% 50% 30% 40% 30% 20% 20% 10% 10% 0% 0% Dominican Republic Dominican Republic Dominican Republic Dominican Republic Barbados Grenada Barbados St. Lucia Barbados St. Lucia Barbados St. Lucia St. Lucia Grenada Grenada Grenada Barbados St. Lucia Dominican Costa Rica Grenada Vanuatu Republic Caribbean Countries Comparator Countries Tourism Sector Primary Benefits Income Stability Working (US$6.85) Conditions Industry Other Services Tourism Other Sectors Source: World Bank, 2023a. 11 This section adopts the methodology proposed by Brummund et al. (2018) and updated by Hovhannisyan et al. (2022). Country microdata has been gathered from Household Surveys/Surveys of Living Conditions. More details on the methodology and data sources can be found in Annex 3. Countries were included based on data availability. The analysis also considered two comparators with available data: Costa Rica and Vanuatu. Rethinking Caribbean Tourism 10 Decades of overlooking tourism’s environmental impacts have put natural assets at risk and reduced regional competitiveness Travel and tourism’s contribution to total greenhouse gas (GHG) emissions in the Caribbean has increased over the last decade in all countries except Sint Maarten, exceeding tourism growth rates in some of them. In nearly all countries, tourism’s proportional contribution to total GHG emissions increased from 2010 to 2019 (Figure 26) (WTTC, 2024b), corresponding to rises in tourism’s contribution to GDP. Figure 27 shows that for five countries, the tourism evolution in pollution has been higher than the evolution in contributions to the economy (Barbados, Belize, Bahamas, St. Vincent and the Grenadines and St. Kitts and Nevis). Improving performance is not enough, a transformation is needed. Figure 26. Travel and tourism contribution Figure 27. Travel and tourism GDP growth to total GHG emissions (% of total versus GHG emissions growth, 2010–19 emissions), 2010 and 2019 90% 10% 80% KNA 8% 70% GRD 60% 6% DOM BLZ 50% JAM VCT 40% 4% LCA BHS T&T GDP growth 30% ATG 2% 20% 10% 0% BRB 0% -10% -5% 0% 5% 10% DMA -2% -4% -6% -8% T&T GHG emissions 2010 2019 2019 Contribution to GDP Source: WTTC, 2024.b Source: WTTC, 2024b. Note: Dashed line depicts points where travel and tourism (T&T) GDP and GHG emissions growth is the same. Red dots indicate countries where T&T GHG emissions growth has been higher than T&T GDP growth, and the contrary for green dots. Antigua and Barbuda (ATG), The Bahamas (BHS), Barbados (BRB), Belize (BLZ), Dominica (DMA), Dominican Republic (DOM), Jamaica (JAM), Grenada (GRD), St. Kitts (KNA), St. Lucia (LCA), St. Vincent and the Grenadines (VCT). Rethinking Caribbean Tourism 11 The Dominican Republic, Jamaica, and Dominica have the highest relative utilities and freshwater consumption usage in the travel and tourism industry (Figure 28 and Figure 29). When compared with other countries, the trio have higher utilities emissions relative to other tourism industries, and higher freshwater consumption relative to their tourism revenues. In contrast, Belize, The Bahamas, Grenada, and St. Vincent and the Grenadines have lower relative utilities usage (WTTC, 2024b). This disparity partly highlights the varying levels of resource dependency and sustainability practices in energy and water across the region. Transportation is overwhelmingly the biggest sectoral emissions contributor. A recent regional policy review by the World Bank revealed policy gaps in climate change, adaptation actions and limited linkages in sustainability to measure goals (World Bank, 2024c). Additional insights also reveal gaps in insurance coverage against climate-driven disasters. Figure 28. Industries contributing most to travel and tourism GHG emissions 2021 (% of total energy usage) 0% 20% 40% 60% 80% 100% Antigua and Barbuda The Bahamas Barbados Belize Dominica Dominican Republic Grenada Jamaica St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Transportation Utilities Manufacturing Agriculture & Food Other Source: WTTC, 2024b Figure 29. Freshwater consumption linked to travel and tourism (thousand cubic meters of withdrawals per US$ million of GDP) 90 80 70 2010 60 50 40 2019 30 20 10 0 Source: WTTC, 2024b. Rethinking Caribbean Tourism 12 Waste management in the region, complicated by typical limitations of islands, remains a significant challenge. The region's waste management systems are often inadequate, with no waste separation or recycling. The cost of transporting goods to and from the islands exacerbates this. No Caribbean countries have proper plastic waste disposal systems for sorting and recycling, resulting in significant plastic pollution. Specifically, an estimated 322,745 tons of plastic go uncollected each year across selected Caribbean countries (Mols, 2021). Litter found in coastal clean-ups is higher than the global average (Ocean Conservancy, 2017) (Figure 30). Out of seven countries included in this study, the highest coastal litter concentrations were found in Jamaica and Dominican Republic, with plastic beverage bottles most common. Furthermore, 85 percent of wastewater goes untreated into the ocean, posing significant threats to marine life and public health (Michele Diez, et al., 2019). Solid waste management is equally problematic. Figure 30. Litter found in coastal cleanups, Caribbean vs global averages 2000 1800 1600 Foam food containers 1400 Straw-stirrers 1200 items/km Plastic lids 1000 800 Plastic grocery bags 600 Plastic bottle caps 400 Plastic beverage bottles 200 Total litter Concentration 0 Average Common items Global average Common items Caribbean Caribbean (Global) Source: Ocean Conservancy, 2017. Natural disasters, made worse by climate change, will continue to impact Caribbean tourism and its competitiveness. Despite significant uncertainty, extreme weather events are expected to increase in intensity and frequency with climate change (EEA, 2024). Disasters affect tourism businesses directly by damaging their assets and indirectly by disrupting services, supply chains, and public infrastructure on which they rely. Many hotels are located in coastal areas at higher risk of business disruptions due to beach loss, especially in Antigua and Barbuda, The Bahamas, and St. Lucia (Browne, et al., 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks, 2021). Rethinking Caribbean Tourism 13 Box 2. World Bank’s 360º Resilience highlights The World Bank's 360° Resilience report highlights the Caribbean tourism sector's vulnerability to escalating natural disasters, climate change, and global disruptions like COVID-19, which have collectively caused significant economic losses. Frequent hurricanes, flooding, and rising sea levels threaten the region's infrastructure and appeal, while economic shocks disrupt tourist arrivals and revenues. To address these challenges, the report emphasizes adopting a Resilient Tourism Framework that includes risk assessments, strategic planning, and investments in disaster-resilient infrastructure. Preparedness measures, rapid recovery protocols, and long-term sustainability through climate adaptation and eco-tourism are critical to maintaining competitiveness and ensuring the sector's future resilience. Source: (Erman, De Vries Robbe, Browne, & Solis Uehara, 2021). More recently, the proliferation of sargassum seaweed poses an additional threat to Caribbean tourism. Since 2011, the region has experienced seasonal influxes of sargassum, with some areas receiving more than 200 times the usual biomass, leading to severe disruptions in tourism and local economies. The seaweed often washes ashore in large quantities, blocking beaches and emitting foul odors as it decomposes, which deters tourists and disrupts beach activities (World Bank, 2018). The situation is compounded by factors such as climate change, which create favorable conditions for the growth and spread of sargassum (Michele Diez, et al., 2019). The Caribbean tourism sector faces increasing market demand and regulatory pressure to address environmental sustainability as part of global and regional efforts to combat climate change and protect fragile ecosystems. Tourism is under scrutiny for its contributions to carbon emissions, especially from transportation and infrastructure, and its impact on water and waste systems. Key international agreements, such as the Paris Agreement, require countries to implement policies that limit carbon emissions and enhance resilience to climate impacts. The Glasgow Declaration on Climate Action in Tourism declaration places additional pressure on Caribbean destinations, pushing for compulsory sustainability reporting and greater transparency in environmental impacts. Nations within the region are compelled to align tourism strategies with their Nationally Determined Contributions, which include commitments to reduce emissions, increase renewable energy use, and protect coastal areas. While some countries have taken action—notably The Bahamas, Barbados, and Jamaica—the region faces looming deadlines, as more source market countries are mandating sustainability practices, and financial penalties for non- compliance are becoming more common (WTTC, 2024c). Rethinking Caribbean Tourism 14 New opportunities can revive regional competitiveness—before it is too late With increasing market interest in blue tourism, there is an opportunity to integrate conservation, climate resilience, and sustainable use of marine and costal ecosystems into tourism development. Tourism in the Caribbean has long been intrinsically tied to its rich marine and coastal assets, central to the region's identity and economic growth. Over time, these assets have shaped the development of foundational tourism offerings, from white sandy beaches to vibrant coral reefs. However, the region's traditional approach to marine tourism is proving inadequate in delivering value for the economy and protecting the very assets upon which it relies. As explored in the World Bank’s “Blue Tourism in Islands and Small Tourism-Dependent Coastal States” report, a blue tourism model involves not only sustainable products, but also sustainable operations and infrastructure (World Bank, 2022). There is an urgent opportunity to leverage the blue economy framework and shift the industry towards blue tourism. Building on extensive analytical work,12 Rethinking Caribbean Tourism outlines the opportunities for reimagining tourism as a driver of sustainable development. By transitioning to a blue tourism model, Caribbean destinations can ensure the long-term viability of their tourism sectors, while addressing challenges posed by environmental degradation and climate change. This shift not only protects the assets on which the region depends, but also opens pathways for greater economic diversification, regional integration, and resilience. Global travel preferences are rapidly evolving, creating a unique opportunity for Caribbean nations to capitalize on growing interest in sustainable tourism. World Bank research on US outbound adventure travelers found that sustainability was the primary deciding factor when selecting a destination for their next holiday (Figure 31) (World Bank, 2024b). This means that destinations need to market and deliver on a sustainable tourism promise to attract these higher value tourists. Further, Booking.com’s “2024 Sustainable Travel Report” highlights that 83 percent of global travelers considered sustainable travel important, with 75 percent planning to make more environmentally conscious choices in the coming year (Booking.com, 2024). Post-pandemic travelers are also shifting to sustainable and low energy modes of transport, driven by increased awareness of climate change. In 2022, air travel alone accounted for 2 percent of global energy-related emissions (International Energy Agency, 2023). 12 Caribbean Blue Port study, the Future of Pacific Tourism study, and OECS Regional Partnership Framework. Rethinking Caribbean Tourism 15 Figure 31. Destination selection factors for US outbound adventure tourists, 2024 Sustainability Safety, Health, and Stability Tourism Planning and Support Shopping, Entertainment, and Dining Access to Destination In Destination Accessiblity Utilities and Financial Services Natural Disasters Accommodation and Hotels Tourism Activities Price Competitiveness Natural and Cultural Assets Visa Requirements Climate Langauge 0 2 4 6 8 10 12 14 16 18 20 Derived Importance Level Source: World Bank, 2024b. Improved technology will also significantly influence future tourism interventions, unlocking new opportunities to obtain more value from tourism. Digitalization is further shaping travel behavior, with young people relying on reviews instead of guidebooks (Bremner, 2023) and researching travel and booking travel on mobile phones, without the need for intermediaries such as tour operators and travel agencies. The role of Artificial Intelligence will also transform travel behavior, from destination research to booking, and provide more information about sustainability performance of countries and companies. With appropriate regulations and skills development, digitalization creates new opportunities for destinations to generate and capture more expenditure per visitor by connecting more products to markets. Recognizing this global shift toward sustainability and local experiences, many Caribbean countries are beginning to build more sustainable products and value chains. To attract environmentally aware experience-seeking travelers, the region is starting to diversify tourism products to focus on community-based tourism, festivals, cultural tourism, and nature-based offerings. Some Caribbean destinations are also starting to decarbonize their tourism sectors, integrate circular economy thinking, and enhance digitization to future- proof their destinations and products. But progress is slow and has been set back by budget deficits. If further action is not taken to transition to sustainability, the competitiveness of the Caribbean brand will be further undermined. Decisive action is needed from governments to shift their focus from traditional volume- based growth targets to value-driven and development-oriented tourism strategies. This pivot acknowledges that the quality of tourism experiences and their alignment with sustainability goals are more critical to long-term success than simply increasing visitor Rethinking Caribbean Tourism 16 numbers. To build diversified market segments that reflect emerging consumer preferences, countries must prioritize forward-thinking policies, strategic planning, and targeted investments. By doing so, they can not only capture a growing share of sustainable tourism markets, but also position themselves as pioneers in balancing economic, social, and environmental priorities. The current momentum for sustainability offers a chance to lay the foundation for a more equitable and resilient tourism future across the region. A holistic framework for tourism development is needed to leverage new opportunities across market segments Against this backdrop, there is increasing urgency to address the underlying constraints keeping the region from fully benefiting from tourism. Addressing the plethora of historical and new challenges will require recognition of structural issues, vested interests, and capacity gaps that exist in the region. It will also require an understanding of different development pathways available and the policy priorities to transition the sector to generate greater domestic benefits, while reducing adverse environmental and social effects. The World Bank’s Tourism Economy Impact Framework offers a holistic approach to conceptualizing blue tourism development pathways for the Caribbean. The framework (Figure 32) illustrates how tourism development relies on a coordinated approach to generating the right type of demand, creating market-oriented tourism services and products, and facilitating sustainable access to tourism assets. These interactions are influenced by the regulatory and policy frameworks that support the industry as well as exogenous factors (such as climate change), and endogenous factors (such as destination infrastructure). Together, these factors result in impacts, positive and negative, on the economic, social, and environmental outcomes in the destination. The infinity loop framework demonstrates how tourism is inherently dynamic, that the tourism economy is a result of the inter-play between economic, social, and environmental impacts and their management. The framework illustrates the need to strike a balance between utilization and preservation of tourism assets, as negative social and environmental tourism outcomes can damage the critical natural and social assets on which tourism is built. To date, most Caribbean governments have prioritized demand and economic impacts while failing to reinvest in blue tourism, cultural and heritage assets that attract visitors. This has led to a downward spiral of reduced quality marine assets, depleted water reserves, and ever-expanding landfills. Rethinking Caribbean Tourism 17 Figure 32. Tourism Economy Impact Framework Source: Authors’ elaboration. This report provides specific policy advice to help rebalance the Caribbean tourism model and generate more value, improve environmental outcomes, and stimulate new types of demand. Three tourism market segments – cruise, accommodation, and adventure tourism – were selected using a multi-phase process to examine how to optimize traditional forms of tourism and unlock new forms of sustainable tourism. Segment selection was based on analysis of current impacts, growth projections, and consultations that examined the importance and value of these segments to the Caribbean. Alignment with national and regional policies, global trends, scale of environmental and social externalities, and research gaps were also considered (Annex 1). The analysis of mainstream well-established cruise and accommodation segments focuses on tourism impacts, analyzing potential negative economic, social, and environmental outcomes of existing tourism models and identifying policies to enable sustainable and positive tourism impacts. Adventure, as an emerging and high potential market segment in the region, focuses on policy enablers to stimulate new demand, products and supply, while facilitating sustainable access to and use of tourism assets. The segment approach provides a unique opportunity to rethink tourism in the Caribbean and develop strategies for a more sustainable future. Whereas previous sectoral reports have used a geographic or typology lens to analyze the whole sector by country and country groups, the segment approach focuses attention on the tourism model’s structure. Specifically, the analysis examines each segment’s current situation, aligns this against trends, and identifies potential and policy levers needed to deliver more domestic value, while mitigating negative environmental and social costs and adapting to climate change. This study included job quality analysis, web scraping, primary consumer market research on US outbound travelers, and secondary data. To leverage global experience, benchmark case studies from around the world as well as Caribbean destination deep dives are included (Table 1). Annex 1 provides an overview of the methodology used in the report with full methodologies Rethinking Caribbean Tourism 18 for each of segment approach in Annex 2. In addition, the supplementary annex volume, published as a separate document, includes the full deep dive case studies as well as a compendium of tools and resources. Table 1. Benchmark and deep dive countries for market segments Segment Cruise Accommodation Adventure Benchmarks Alaska Dominican Republic Costa Rica European Union Japan New Zealand Vanuatu Türkiye Deep Dives Antigua and Barbuda Jamaica Dominica Barbados St. Lucia Dominican Republic While this report builds on other comprehensive works on the region, it does not attempt to cover all aspects of the tourism economy. This report draws from World Bank studies including “Lessons Learned and Insights from 10 Years of World Bank Tourism Analytics and Operations and the Future of Pacific Tourism” (World Bank, 2023b). Regionally, the report draws from important studies and data from Caribbean Tourism Organization (CTO) and Compete Caribbean that provide detailed analysis on skills, digitalization, investment, and product development.13 This report does not focus on connectivity or aviation and only lightly on skills and innovation, as these are topics covered adequately by other projects and studies (see supplementary annexes). It also only provides a light focus on climate change and resilience, thoroughly covered in World Bank “360 Resilience” and “Country Climate Development” reports. Issues such as the increasing prevalence of sargassum seaweed, while relevant to tourism in the region, are also covered in separate studies. 13 The 2022 Regional Human Resources Development Knowledge and Skills Audit for the Tourism Industry, the 2021 Digital Toolkit for Tourism Businesses, the 2020 Caribbean Sustainable Tourism Policy Framework, the 2019 Caribbean Tourism & Hospitality Investment Guide, the 2019 Diversification of Caribbean Tourism Experiences, the 2019 Community-Based Tourism Enterprise Handbook, the Caribbean Tourism Legislation Database. Rethinking Caribbean Tourism 19 Chapter 2. Cruise Segment Rethinking Caribbean Tourism 20 Chapter 2. Cruise Segment Key takeaways: • The cruise segment accounts for more than half of arrivals in most Caribbean destinations, but its economic contribution is limited compared to overnight tourism. • Caribbean countries face significant challenges in monitoring cruise pollution and enforcing environmental regulations due to limited capacity and technological constraints. • The lack of comprehensive data on cruise environmental impacts partly contributes to the absence or low levels of environmental fees in many Caribbean countries. Cruise passengers are generally supportive of environmental fees, with one-in-two willing to pay more for sustainability enhancements. • Addressing environmental concerns requires empowering key stakeholders with improved capacity for monitoring and mitigation. This includes imposing stricter enforcement mechanisms and penalties to ensure compliance with environmental regulations. • Homeporting presents a regional opportunity for greater local revenue and job creation. Currently, only seven Caribbean countries serve as cruise homeports, and those that do have yet to fully capitalize on its potential benefits. • Regional collaboration is essential for harmonizing passenger and environmental fees across the Caribbean. Greater transparency in the use and allocation of such fees will also help build trust among key stakeholders. • To further local value addition, a clear policy framework and dedicated fund for targeted interventions should be established. These measures can enhance cruise linkages with the local economy by strengthening the ecosystem to connect local businesses with cruise lines and implement youth skill-development programs. 2.1. Introduction The cruise sector has an oversized importance for the Caribbean, representing more than half of arrivals for most destinations. The Caribbean is, by far, the most important region for cruise globally, receiving around 40 percent of all cruise passengers (CLIA, 2023a). Although significant differences exist between countries in the Caribbean, the cruise sector largely dominant in terms of passenger volume when compared to overnight tourists (Figure 33). St. Rethinking Caribbean Tourism 21 Kitts and Nevis, followed by The Bahamas and Dominica, have the largest percentages of cruise passengers to overnighters. Figure 33. Percentage of Caribbean stop-over arrivals versus cruise (2023) Dominican Republic Jamaica Barbados St. Lucia Grenada Belize Antigua and Barbuda St. Vincent and the Grenadines Sint Maarten Dominica The Bahamas St. Kitts and Nevis 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Overnight Cruise Source: CTO, 2024. The cruise sector has provided some positive economic benefits to destinations. For many countries, particularly for those with limited tourism connectivity and infrastructure, the cruise sector is a crucial source of tourism revenue. Beyond fees collected by ports, cruise stops inject money into local economies by creating income opportunities for informal and micro businesses, such as craft and souvenir vendors, many of which are run by women. Additionally, homeporting offers greater economic opportunity, as it generates higher government revenues and increases local spending. For instance, in Barbados, transit passengers spend on average US$60.99 per person, while homeport passengers average US$125 per person (Business Research & Economic Advisors, 2024). With passengers and crew members staying longer, often overnight, their expenditures on accommodation, dining, transportation, and other services further boost economic activity. The cruise sector was significantly impacted by the pandemic, but the Caribbean recovered quickly. In 2023, cruise arrivals to the region surpassed pre-pandemic levels. However, this recovery is primarily driven by major players such as The Bahamas and Dominican Republic. These countries experienced sharp increases in arrivals, with the Dominican Republic seeing a 105 percent leap and The Bahamas a 43 percent rise from 2019 to 2023. In contrast, most other countries have not yet fully recovered (Figure 34). Rethinking Caribbean Tourism 22 Figure 34. Cruise passenger arrivals by country (thousands) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2019 2022 2023 Source: CTO, from national tourism and statistical offices in member countries. This chapter analyzes trends affecting cruise tourism and explores strategies that governments can implement to foster positive and more inclusive economic outcomes. These findings were drawn from desk research, the World Bank consumer market research14 with US outbound travelers, benchmarking on three destinations that succeeded in selected policy areas (Alaska, European Union (EU), and Vanuatu), and deep dive destination case studies on Antigua and Barbuda, and Barbados (see supplementary annexes). The chapter ends with policy guidance in three critical policy areas. Cruise trends Post-pandemic, five main trends have emerged or strengthened in the Caribbean cruise sector, reshaping its structure and priorities: 1. The oligopolistic structure of the cruise tourism sector has become more pronounced in recent years, particularly as a result of the pandemic. With smaller cruise lines facing financial strain caused by the health crisis and exiting the market, a small number of large players consolidated their dominant market share (Cruise Industry News, 2024). With strong bargaining power, they are able to control pricing (port and other fees), environmental regulations, and are in a better position to impose conditions on destinations that compete for arrivals. 14 The complete methodology of the consumer market research can be found in Annex 3. Rethinking Caribbean Tourism 23 2. Cruise lines and travelers are placing more emphasis on environmental impacts in line with commitments to reduce their carbon footprint. Many cruise lines are adopting greener technologies like liquefied natural gas (LNG)-powered vessels, advanced wastewater treatment systems, shoreside power capabilities to connect to onshore power supply, as well as implementing stricter policies to reduce single-use plastics and carbon emissions (CLIA, 2024). 3. More cruise lines are homeporting in Caribbean destinations, which is intensifying competition among countries. A greater number of cruise lines, especially those targeting non-US cruisers, start and end their voyages in the region. This reduces reliance on US ports as the primary departure point and allows Caribbean countries to benefit more from cruise-related economic activities such as pre- and post-cruise spending on hotels, restaurants, excursions, transportation, and port services. Expectations of greater economic benefits are intensifying competition among destinations. Sint Maarten is an example of cruise homeporting which started in 2021 with Royal Caribbean’s Celebrity Millenium, partly as a result of restrictions in the US during the pandemic. 4. Destinations are increasingly emphasizing the importance of stronger economic linkages with local Caribbean economies. This means supporting local businesses more directly. Efforts to enhance benefits to communities involve sourcing local goods and services, creating employment, and encouraging passengers to spend in local economies rather than solely within the ship’s amenities. 5. Cruise lines are launching larger ships with more amenities to attract travelers and increase onshore spending. To increase revenues and better compete post-pandemic, bigger vessels can accommodate more passengers, offering more services, helping offset revenue losses from the health crisis. Royal Caribbean recently launched the 8,000 passenger “Icon of the Seas,” which reportedly cost US$2 billion to build (Yeginsu, 2024). On average, a single large cruise ship (with 2,500–6,000 berths) might visit a popular port, such as Nassau, about 30–40 times per year (Cruisemapper.com, 2025). Similarly, a single large cruise ship, such as the Carnival’s Excel-class Celebration, could boost cruise arrivals to one destination by 150,000–170,000 over a calendar year.15 However, larger ships mean fewer ports can accommodate them and even for those that can, there are significant challenges in congestion and traffic management. Larger ships also mean more visitors choose not to disembark in the cruise port, further minimizing visitor spend. At the same time, there is a growing interest in smaller luxury cruise. As well as larger ships, there is also growth in smaller luxury cruises and yachts linked to hotel chains, for example the Ritz Carlon Yacht Collection Barbados. Also, Barbados is focusing on these boutique vessels for its homeporting operations, as passengers typically engage more in pre- and post-cruise stays (Box 3). 15 Authors’ calculation based on itinerary and data from Cruisemapper.com. Rethinking Caribbean Tourism 24 Box 3. Deep dive Barbados: growing focus on boutique cruise vessels Barbados is increasingly catering to smaller boutique cruise vessels with specific ports for the premium consumer market and new vessels coming online in the coming years. Boutique cruisers tend to spend more, are environmentally conscious, frequently engage in pre- and post- cruise stays, and contribute additional value to the local economy. Most passengers on these cruises are retirees or individuals with significant vacation time, seeking a more personalized, high-end experience compared to larger cruise liners. Currently, most homeporting operations in Barbados are focused on these smaller cruises. However, Barbados faces competition from other Caribbean destinations like St. Lucia and Sint Maarten, which are targeting the same premium market. 2.2. Development challenges Specific market and government failures hinder cruise sector development in the region. Market structure As noted above, the cruise sector operates under an oligopolistic structure. As illustrated in Figure 35, three companies―Royal Caribbean Group, Norwegian Cruise Line, and Carnival Corporation―dominated and controlled nearly 80 percent of the total passenger market in 2024 (Cruise Market Watch, 2024). This dominance creates substantial barriers to entry and promotes vertical integration. Operationally, the sector is characterized by tight supply chains and short port calls, which complicate local sourcing and involvement of third-party local service providers. Figure 35. Passenger market share of cruise lines to the Caribbean in 2024 22.1% Carnival Corporation Royal Caribbean 42.9% Norwegian Cruise Line 9.4% Other 25.7% Source: Cruise Market Watch, 2024. At the destination and regional levels, coordination failures are evident. The absence of effective coordination mechanisms results in poor internal and regional collaboration among stakeholders, such as port authorities, tourism boards, and service providers, as well as regional collaboration between neighboring countries on shared policies and strategies. This is exacerbated by the oligopolistic market structure, which grants cruise lines significant bargaining power over ports and destinations. For that reason, countries are largely “price Rethinking Caribbean Tourism 25 takers” as they have limited capacity to negotiate fees and taxes from cruise lines. They face challenges in implementing fees policies in line with good practices and reflecting the cost of services or negative social and environmental impacts. Political economy factors further contribute to these issues, with countries competing for the favor of cruise lines and a mentality of revenue-capture by the elites. The lack of data, transparency and publication of collected revenue makes it difficult to conduct regional benchmarking and analyses to inform regional and national policies. To illustrate, for countries where data are available, a wide variation in environmental fees across the region is apparent, while OECS countries have kept the same levels since 2000 (Table 2). Differences in environmental fees should be investigated as variations in the extent of pollution are likely the same across the region. A comparison with Pacific Islands shows marked differences, which could inform more in-depth benchmarking analyses.16 Table 2. Environmental and passenger fees in the Caribbean and select small islands17 Country Passenger Fee Environmental Fee Total Estimated (US$) (US$) Revenue (millions, US$) The Bahamas 23 5 654.78 Western Belize 7 No data 88.57 Jamaica 15 No fee 197.84 Antigua and Barbuda 1.5 1.5 88.95 Eastern Dominica 5 1.5 20.88 St. Kitts and Nevis 6 1.5 113.11 Sint Maarten 6 No data 237.80 Barbados 12* No fee 83.49 Southern Grenada 4.5 1.5 22.43 St. Lucia 5 1.5 72.71 St. Vincent and the Grenadines 10 1.5 19.28 Fiji 10–15 21.4 (2018) Pacific Islands Papua New Guinea 5–15 3.5 (2016) Tahiti 20–30 Over 129.94 (2018) Samoa 5–10 No data Vanuatu 10–20 16.91 (2020) Source: Business Research & Economic Advisors, 2024, online research and stakeholders’ consultations. Note: it was doubled in 2024 after 30 years. 16 Data obtained from the Pacific Islands often combined passenger and environmental fees. 17 Passenger fee: charged for each passenger on board the vessel, typically by a port, city, or country where the ship docks. This fee is intended to cover costs associated with infrastructure and services needed to accommodate large numbers of tourists arriving via cruise ships. Environmental fee: charges levied on passengers or the cruise line itself to cover the costs associated with mitigating the environmental impacts of cruising. These fees are intended to support environmental initiatives and regulations that help reduce pollution, conserve marine life, and protect coastal and island ecosystems. Rethinking Caribbean Tourism 26 Limited production capacity further complicates economic contributions of the cruise sector in the region. Caribbean destinations often lack locally-demanded goods, and certain niche products remain unknown to cruise lines or local businesses. Small service providers struggle to meet the quality standards of cruise companies due to their limited capacity. Market inefficiencies tied to the sector’s revenue models also limit the potential for local economic contributions. As shown on Figure 36, more than 30 percent of all cruise revenue stems from selling “on board and others”, which include shore excursions and onboard entertainment such as casinos. Onboard sales are critical for cruise lines. Most passengers prefer the payment ease and security of purchasing excursions directly on board the ship rather than using lower-priced cash-based local tour operators despite significantly higher prices onboard (US$74.68) compared to those bought onshore (US$32.4) (Figure 37) (Business Research & Economic Advisors, 2024). Figure 36. Share of revenue (%) from “on Figure 37. Share of shore excursions (%), by board and others”, 2023 channel, by country, 2024 St. Vincent and the Grenadines Sint Maarten Carnival Corporation St. Lucia St. Kitts and Nevis Jamaica Grenada Norwegian Dominican Republic Dominica Belize Barbados The Bahamas Royal Caribbean Antigua and Barbuda 0% 20% 40% 60% 80% 100% 28% 30% 32% 34% 36% Cruise Line On shore Travel agent Source: World Bank staff from firms’ annual reports Source: Business Research & Economic Advisors, 2024. Carnival Corporation, 2023; Norwegian Cruise Line Holdings Ltd, 2023; Royal Caribbean Cruises Ltd., 2023. Contribution to the local economy As a result of the sector’s structure and scale, the contribution of cruises to the local economy is relatively limited compared to stop-over tourism. In terms of expenditure, cruise passengers represent only a fraction of the overall in-country tourism expenditure (Figure 38). In addition to shore excursions, direct spending by passengers primarily focuses on tax-free luxury items such as watches, jewelry, and clothing, which are not produced locally. This minimizes the economic contribution to local communities. Further, larger cruise Rethinking Caribbean Tourism 27 ships offering more choices of entertainment and shopping amenities on board reduce the likelihood of tourists spending offshore. In addition, depending on the itinerary and specific ports of call, cruises usually spend only four to six hours onshore, which limits prospects for in-country expenditures. Figure 38. Caribbean cruise versus stop-over expenditure, 2024 St. Kitts and Nevis Dominica The Bahamas Belize Antigua and Barbuda Barbados St. Lucia St. Vincent and the Grenadines Jamaica Grenada Dominican Republic 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Stay-over expenditure Cruise expenditure SSource: World Bank analysis based on data from Business Research & Economic Advisors, 2024 and WTTC 2024a. With larger vessels offering more amenities and limited shore-time, cruises do not have the same job creation and economic contribution impacts as stop-over tourists in the Caribbean. As per Figure 39, most tourism industry employment at the destination level is not related to the cruise sector, even in destinations with high levels of cruise passenger arrivals. Similarly, on a per arrival basis, cruise passengers contribute much less than stop-over tourists, while passengers account for the higher proportion of expenditure from cruises overall (Figure 38). Rethinking Caribbean Tourism 28 Figure 39. Employment contribution, 2024 Dominica St. Kitts and Nevis St. Vincent and the Grenadines Grenada Antigua and Barbuda Barbados St. Lucia Belize The Bahamas Jamaica Dominican Republic 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Cruise Non-Cruise Source: Business Research & Economic Advisors, 2024, WTTC 2024a. Figure 40. Total cruise line,18 passenger, and crew expenditure by country (in millions US$), 2024 St. Vincent and the Grenadines Dominica Grenada St. Lucia Barbados Belize Antigua and Barbuda St. Kitts and Nevis Jamaica Sint Maarten Dominican Republic The Bahamas 0 100 200 300 400 500 600 700 Cruise Line Expenditure Passenger Expenditure Crew Expenditures Source: Business Research & Economic Advisors, 2024 Expenditure patterns at various ports exhibit significant variation, with a correlation between the duration of stay and amount spent by cruise passengers. World Bank consumer market research indicates that the ports of Freeport (Bahamas), and St. John’s (Antigua and Barbuda) register some of the highest average expenditures at US$94, and US$81 respectively (Figure 41). These two cities are also where the number of activities undertaken is relatively high (Figure 42). Coco Cay (Royal Caribbean’s private island in the Bahamas) and Montego Bay (Jamaica) are outliers with relatively high expenditures per person, although the time spent is not the highest. This might be due to the fact that these two ports of call are where cruise passengers undertake the highest number of activities (World Bank, 2024b). 18 Cruise line expenditures include items such as port fees and taxes, utilities, navigation services and ship supplies paid by cruise lines. Supplies include payments cruise lines make to local businesses for supplies and services, such as food and beverages, hotel supplies and other stores, and other land side purchases of good and services (Business Research & Economic Advisors, 2024) Rethinking Caribbean Tourism 29 Figure 41. Total amount spent at each port per person compared with number of hours in port 160 140 Coco Cay Amount Spent at Each Port 120 100 (average US$) Freeport 80 St. John's Montego Bay Bridgetown 60 Nassau Ocho Rios Castaway Cay Amber… Port Zante, Belize City 40 Port Philipsburg Basseterre Port Castries Half Moon Cay Falmouth 20 0 0 5 10 15 20 25 30 35 40 45 Time spent at port (% of those that spent 7hrs or more) Source: World Bank, 2024b. Figure 42. Time spent at each port compared to number of physical activities19 undertaken 1.2 Avg. number of physical activities Coco Cay Montego Bay Freeport Bridgetown undertaken Nassau St. John's 0.8 Port Castries Half Moon Cay Castaway Cay Ocho Rios Belize City Port Zante, Basseterre Amber Port Philipsburg Cove/Puerto Falmouth Plata 0.4 0 10 20 30 40 50 Time spent at port (% of those that spent 7hrs or more) Source: World Bank, 2024b. 19 Physical activities include: hiking and walking, snorkeling, open water swimming, caving/canyoning, ziplining, bungee jumping, mountain and rock climbing, kayaking/canoeing, mountain biking, scuba diving, horse riding, road cycling, surfing, sport fishing/hunting, off-roading, sailing, sandboarding, free diving, sand-up paddle boating, major sporting events, kite surfing or wind sailing, rafting, paragliding/hang gliding. Rethinking Caribbean Tourism 30 Analysis of spending categories in the World Bank consumer market research and Visa Destination Insight data reveals that food and beverage are the primary expenses for cruise passengers, with 19 percent making these purchases. Tours and excursions also represent a significant portion of spending with 15 percent of passengers. Clothing purchases are made by 12 percent of passengers, while handicrafts, souvenirs, and artwork account for 10 percent of expenditures (Figure 43) (World Bank, 2024b). In contrast, data for overnight visitors, who stay in the destination longer, reveal that almost 42 percent of their total spending was on restaurants, dining and groceries, while 34 percent was spent on retail (Figure 44) (Visa, 2023). Figure 43. Cruise visitor spending categories, 2020–24 Food & Beverage Tours or excursions Purchasing clothing (including T-shirts) Purchasing handicrafts, souvenirs, artwork Entertainment Spent money on ground transportation - e.g train, bus, taxi Duty free shopping - e.g. alcohol, tobacco, cosmetics, jewelery Entrance fees at various sites or attractions Purchase of watches & jewellery Supermarket/general store items Rental/hire of car/motorbike/bicycle/golf cart Spent money on services e.g. massages, hairdressing, spa Other purchases Donations 0% 5% 10% 15% 20% 25% Source: World Bank, 2024b. Note: includes the 12 Caribbean countries of the study. Figure 44. Overnight tourist spending categories, 2023 Restaurants, dining and groceries Retail Travel Services Transportation Home Improvement & Supply Entertainment Fuel Drug Stores & Pharmacies Automotive Wholesale Clubs 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: World Bank’s estimate is based on an extrapolated from aggregate card usage data provided by Visa Destination Insights for the period of January through December 2023. Note: includes the 12 Caribbean countries of the study. Rethinking Caribbean Tourism 31 Despite the overall lower economic contributions of cruise tourism, there is some interest in increasing local purchases. Some governments are pushing cruise lines to purchase more locally. Procuring selected local food items can help cruise lines improve their social sustainability story, though it can be challenging for local producers to meet quantity and quality requirements. Some cruise lines are working with organizations to help countries certify and provision local food products (Marine Stewardship Council, the Aquaculture Stewardship Council).20 They are increasingly offering local shore excursions that directly benefit communities. However, contributions from these excursions depend on involvement of local travel agents and operators as well as revenue sharing arrangements. Local travel agents and operators may not have the required capacity to organize logistics, ensure safety and timing. Barbados for example, has been actively working to strengthen local linkages by encouraging local businesses to connect with cruise lines through various initiatives, such as hosting joint forums (Box 4). Box 4. Barbados: local linkages Barbados is actively encouraging more local businesses to participate in the cruise market . Efforts include hosting joint forums and encouraging MSMEs to attend cruise-related events. Workshops for local entrepreneurs have been organized by the Ministry of Tourism and the Barbados Port Inc. Local craft and culinary exhibitions have also been organized. These initiatives allow local businesses to gain insights into the sector’s operational needs, procurement processes, and quality standards, equipping them to better engage with cruise lines. Food and beverage, handicrafts and artwork are two categories of expenditures which could be promoted for greater local linkages, since these are among products which could be produced locally. Environmental challenges While there are many international regulations surrounding the operation of cruise ships, over the past two decades, Caribbean destinations have had limited capacity to monitor their environmental performance. The US Environmental Protection Agency (EPA) estimates that a single cruise ship carrying 3,000 passengers can produce around 150,000 gallons of sewage per week. This translates to more than one billion gallons of sewage annually that must be disposed of and treated. In addition to the risks of wastewater pollution, cruise ships contribute to air pollution due to use of low-grade fuel. The fuel combustion leads to the emission of harmful pollutants, including nitrogen oxides (NOx), sulfur oxides (SOx), carbon dioxide (CO2), and diesel particulate matter. A large cruise ship can have a carbon footprint greater than 12,000 cars.21 Even while docked, these vessels often operate diesel engines to provide power to onboard amenities, further exacerbating air quality issues which affect local communities. Moreover, technological limitations exacerbate environmental issues, as the high costs of 20 CLIA, State of the Industry 2023. 21 “Environmental and Human Health Impacts of Cruise Tourism: a Review”, Marine Pollution Bulletin, 2021. Rethinking Caribbean Tourism 32 adopting cleaner technologies, such as onshore power supply (OPS), pose significant barriers for vessels and shore facilities. Climate change poses a threat to the sector with more frequent and severe hurricanes expected to cause extensive damage to port infrastructure, leading to cruises rerouting or ceasing visiting altogether. Rising sea levels are also expected to accelerate beach erosion, further diminishing the region’s appeal (Browne, et al., 2021). With 36 percent of cruise passengers spending time at ports to relax on beaches, according to World Bank consumer market research, the loss of these beaches will have a direct and considerable impact on tourism in the region (World Bank, 2024b). Coral reefs, which are vital to marine biodiversity and tourism economies, are also sensitive to pollution and climate change. Considering that reef-associated tourism22 in the Caribbean generates more than US$7.9 billion annually, the protection of coral reefs is of paramount importance, especially for small developing island nations such as Anguilla, Antigua and Barbuda, Bermuda, St. Kitts and Nevis, and St. Martin (The Nature Conservancy, 2019). These ecosystems are also crucial for local fisheries, which support food security and coastal livelihoods, making it integral to the blue economy. While coral reefs are not the only draw of cruise tourism, many passengers engage in blue tourism activities, such as snorkeling and diving, directly interacting with coral reefs. However, both cruise ships and visitors contribute to the degradation of these fragile ecosystems in distinct ways. Cruise ships, when they use their anchors, can cause significant damage to coral reefs. A stark example of this occurred during the pandemic when ships anchored in coastal waters off Barbados, leading to widespread reef damage (Small & Oxenford , 2022). This highlights the vulnerability of coral reefs to both the physical impacts of cruise ships and pressures from tourism activities, emphasizing the urgent need for sustainable practices that balance the benefits of tourism with protection of these vital marine resources. Importantly, World Bank consumer market research reveals that cruise passengers are not informed nor particularly concerned about the environmental impacts of their holidays. According to this 2024 research, only 36 percent of passengers considered sustainability a top priority or quite important compared to 55 percent for adventure tourists (Figure 45) (World Bank, 2024b). 22 Reef-associated tourism is a sector segment that depends on coral reefs but does not make direct use of them in the way that diving or snorkeling do. Rethinking Caribbean Tourism 33 Figure 45. Behavior reflecting sustainable travel and tourism 100% I plan and understand my travel based 90% 13% on sustainable choices, and 30% sustainability is the top priority 80% I try to plan and undertake my travel 23% based on sustainable choices - 70% sustainability is quite important 60% 25% Other things are more important, but I 50% 30% look for ways to include sustainable options if possible when I plan travel 40% Other things are more important, and I 30% 13% 30% will only chose sustainable options if 20% easily available when I plan travel I don't really think about sustainability 10% 21% 7% when I plan travel 8% 0% Caribbean Cruise Travelers Caribbean Adventure Travelers Source: World Bank, 2024b. The lack of information on environmental impacts partly explains the relatively low, cruise-related environmental levies or their absence in the region. According to World Bank consumer market research, only one-in-three cruisers are aware of an environmental levy being added to their bill by cruise destinations. However, this research indicated most passengers were favorable to being informed about the levy (three-in-four) and one-in-two passengers were happy to pay. Those not willing to pay noted concerns about transparency in how the funds would be used. In general, there is a lack of sensitization and awareness as more than half of cruiser respondents believed communication on sustainability issues was critical, and government and businesses need to take more accountability to drive sustainability. In general, as shown in Figure 46, adventure tourists demonstrate higher interest and awareness of sustainability-related issues (World Bank, 2024b). Figure 46. Attitude towards sustainability (cruise passengers versus adventure tourists) Source: World Bank 2024b Rethinking Caribbean Tourism 34 In addition to environmental pollution, larger ships contribute to urban congestion and disruption of social services during cruise seasons. Public transport, roads and spaces are overcrowded when large cruise ships dock, while most cruise destinations face waste management and water treatment challenges. For instance, Antigua and Barbuda receive approximately 15,000 tourists daily, which overwhelms transportation systems and strains tour operators that struggle to meet this demand (Box 5). Box 5. Deep dive Antigua and Barbuda: environmental impacts Cruise arrivals are a major driver of Antigua and Barbuda’s tourism, with passengers accounting for approximately 70 percent of total tourist arrivals (CTO, 2020). However, the influx of cruise ships has led to significant environmental challenges, particularly damage to reefs and seagrass beds. These vital ecosystems not only support biodiversity but also attract tourists, making their degradation a serious concern for the environment and economy. In addition to environmental degradation, waste management poses a critical issue. Existing infrastructure is inadequate to handle the volume of waste generated by cruise ships, highlighting the need for improvements. Cruise ship arrivals also often lead to congestion and strain on local infrastructure in many destinations. According to consultations, Antigua and Barbuda receive around 15,000 tourists in season, overwhelming the island’s transportation system and putting immense pressure on local resources and services. Tour operators frequently struggle to accommodate this surge in demand. To address these issues, Antigua and Barbuda is exploring opportunities to extend the winter cruise season into the summer, aiming to distribute the flow of tourists more evenly throughout the year and maximize the economic benefits of cruise tourism. Recommendations on how to address congestion are presented in the “2024 OECS Common Sustainable Tourism Policy ” which places specific attention on the need for traffic management and enforcement of carrying capacity of beaches and attractions. Contribution to government revenue Given the oligopolistic structure on the cruise sector, most Caribbean countries have weak negotiation power exacerbated by limited regional collaboration. Fee-setting policies are unclear and do not seem to be based on the local economy, environmental impacts, and sector standards, but rather on the negotiating power of the destination. Prior to the pandemic, there was a strong emphasis on maintaining low passenger fees within the cruise sector to attract cruisers. However, World Bank consumer market research indicates a shift in passenger behavior, with 67 percent of US outbound cruise passengers agreeing that environmental levies for cruises are a ‘good’ or ‘very good’ idea and 57 percent showing a positive willingness to pay higher fees (World Bank, 2024b). Similarly, according to interviews conducted for this study, cruise lines are showing a willingness to increase fees provided they are negotiated and communicated well in advance. This shift presents opportunities for ports and destinations to increase fees which have been kept at a Rethinking Caribbean Tourism 35 relatively low level partly due to countries’ limited bargaining power, high competition across the region, and strategic choices to focus on volume with the expectation that lower fees would attract higher numbers of tourists and, hence, greater spending with local businesses (Box 6). Box 6. Deep dive Antigua and Barbuda, and Barbados: tourism taxes Since the 2000s, Antigua and Barbuda has implemented an environmental tax of US$1.50 per cruise passenger. This rate has remained unchanged for several years, and efforts to raise it to US$2.00 have faced opposition from cruise lines. Negotiations have been complicated by the involvement of a third-party port management company as well as cruise lines’ hesitancy to adopt an environment-specific fee they feel might cast a negative light on the industry. As a result, the government is actively seeking advice and financial support to develop and implement necessary waste management infrastructure, aiming to safeguard the environment and promote the sustainability of the tourism sector. In Barbados after three decades of maintaining its head tax at US$6, it implemented a significant increase in November 2024 to US$12. This adjustment is essential for funding necessary modernization and expansion projects at the Port of Bridgetown, ensuring that the facility meets the evolving expectations of cruise passengers. The government has faced no opposition to the fee increase, thanks to its proactive and transparent approach during discussions with cruise operators and its decision to have one single head tax fee. By holding these meetings well in advance, operators were able to adjust to the increase without difficulty and pass the cost onto their customers, thus avoiding financially burdening themselves. A lack of transparency on environmental fee levels and payments by passengers and cruise lines is apparent. Cruise lines usually prefer not to itemize these as separate charges due to the potential negative impacts on the sector’s reputation.23 Instead, they integrate environmental costs within the existing head or port taxes. This approach is practiced by several countries, where a portion of the port tax revenue is allocated for mitigating environmental impacts of cruise operations. The review of regional tourism policies conducted as part of the study indicated that only 3 percent of policies specifically outline environmental taxes compared to 28 and 17 percent for corporate and accommodation taxes (Figure 47), which points to a lack of focus on environmental tax as a policy instrument during regular dialogues with stakeholders. The Caribbean is perceived as an inexpensive region by US outbound cruisers according to World Bank consumer market research, which indicates a missed opportunity to raise more government revenues. In the minds of cruise travelers, according to consumer market research, the region comes across as relatively inexpensive or good value for money versus other regions. Caribbean destinations over indexed by 1.5 points on perceptions of inexpensiveness compared to the Mediterranean, Australia and New Zealand, the Pacific, and South America that indexed at -1.2, -2.0, -0.7, and -0.6, respectively on perceptions of 23 From consultations with the Florida-Caribbean Cruise Association. Rethinking Caribbean Tourism 36 inexpensiveness (World Bank, 2024b). Even though this does not imply that the region is underpriced, it suggests that fee-setting policies could be revisited based on a thorough analysis of services pricing in other regions which could be used for benchmarking. Figure 47. Share of policies outlining specific tourism-related taxes 60% Percentage of Policies 50% 40% 30% 20% 10% 0% Source: World Bank, 2024c. Opportunities for increased government revenues are constrained by underdeveloped homeporting in the region. Only seven Caribbean islands24 serve as homeports, the start and endpoints of cruises. Homeporting is underdeveloped in the region due to several factors including proximity to the US where the majority of passengers prefer to depart due to well- established ports, inadequate transport infrastructure including airlift capacity and ground transport to move passengers to and from ports, poor port infrastructure to service cruise ships including refueling, waste management, provisioning and logistics to handle supplies, and essential services as well as vulnerability to seasonal extreme weather which can disrupt cruise line operations. The choice of homeport significantly affects related ports of call and tourist destinations as it generates revenue for the governments and local economy. The total economic contribution of homeporting generally exceeds that of ports of call with cruise lines purchasing higher levels of goods and services from port suppliers, passengers being more likely to stay overnight at local hotels, and crew members spending more. Cruise Lines International Association (CLIA) estimates daily passenger spending before boarding a cruise at US$376, compared to US$101 at a port of call (CLIA, 2020). Additionally, homeporting generates revenue from local services such as waste management, bunker supplies, and freshwater provisioning. Barbados, for instance, currently engages primarily in air-to-sea homeporting, limiting the full benefits that homeporting can provide. Recognizing this opportunity, the country aims to expand its homeporting operations and increase pre- and post-cruise stays (Box 7). 24 Antigua and Barbuda, Barbados, The Bahamas, Dominican Republic, Jamaica, Sint Maarten, and St. Lucia. Rethinking Caribbean Tourism 37 Box 7. Deep dive Barbados: homeporting Barbados draws significant revenue from homeporting passengers, that increased from 119,851 to 227,192 during 2015–19, as reported by Barbados Port Inc. However, there is still substantial untapped potential and larger economic advantages, such as increased spending from pre- and post-cruise stays. The current air-to-sea model, where most passengers fly directly to the island and are transported to their cruise ships, primarily benefits transportation operations. Recognizing this gap, the country aims to promote longer stays by cruise passengers. However, the accommodation sector's minimum stay requirements can limit the appeal of extended visits, as cruise passengers typically prefer shorter stays. 2.3. Policy Guidance The preceding diagnostic has helped identify three policy areas with opportunities for sustainability gains: local linkages, environmental outcomes, and government revenue. Creating local linkages A clear policy framework and a dedicated fund to help foster cruise linkages with local economies should be promoted. A comprehensive survey and review of all policies in the Caribbean conducted as part of this study indicated that most countries did not have a clear policy and strategy to create and support local linkages. To maximize the cruise sector’s economic contribution to local communities, Caribbean countries should establish a policy framework that allocates a portion of cruise fees collected specifically for funding local cruise- related initiatives. Support to cruise-related initiatives could include developing platforms to connect local tour operators with cruise lines and enhancing cultural and heritage sites. In Vanuatu, for instance, the Technical and Vocational Education and Training (TVET) for Tourism (TfT) initiative partnered with local training providers to offer specialized courses in collaboration with cruise operators. A notable success is the Santo Fire Walk & Cultural Tour, which experienced a significant increase in tourist use due to a contract secured with a cruise ship onshore tour agent, facilitated by TfT industry experts (Box 8). By directing funds towards these areas, countries can create more meaningful and engaging experiences for cruise passengers. To effectively implement this policy, it is crucial to engage local communities in the planning and execution of funded projects. This will ensure that projects meet local needs and foster a sense of ownership among residents. The capacity of tour operators should be strengthened through training and matching grants for example, to deliver better services to cruise passengers and, hence, ensure that a greater share of excursion revenue is captured locally. Consultations with stakeholders indicated a growing trend among cruise passengers seeking unique experiences at their destinations. This presents a valuable opportunity Rethinking Caribbean Tourism 38 within creative industries, as passengers are increasingly interested in immersive tours that showcase a country’s history and heritage, including culinary experiences, visits to local communities, and opportunities to purchase authentic local crafts and handicrafts while engaging with artisans. To capitalize on this trend, it is essential to develop and promote immersive cultural experiences. This can be achieved by curating cultural tours in partnership with local guides who can showcase diverse cultural heritages of communities, including traditions, daily activities, and cuisine. Developing local craft markets and establishing workshops where visitors can observe artisans at work and even actively participate in creating traditional crafts will also provide immersive experiences that passengers seek. Supporting local production and suppliers’ networks as well as required logistics to facilitate provisioning of niche local products to cruises is also important. By improving logistics, local producers and service providers can more effectively supply goods and services to cruise lines and passengers in response to their growing interest to source local foods and services to support communities. Backing local production through vendor support programs focused on quality, quantity and, safety of goods will also help respond to the emerging needs of cruisers, with more than a third of CMR respondents indicating that purchasing locally produced goods and foods was their main action to support sustainable tourism. Developing a digital platform that links cruise lines with local food suppliers and other vendors can streamline this process, making it easier for local businesses to participate. Additionally, providing training and capacity-building programs for local businesses is essential to ensure they meet cruise sector quality and quantity demands. Hazard Analysis Critical Control Point (HACCP)25 is seen as an essential food safety standard for local suppliers to meet. These programs can include workshops on international standards, marketing strategies, and businesses management. Establishing regional training facilities can further support these initiatives. Training of local youth in cruise services-related jobs could create employment opportunities. This requires more active labor market policies and targeted TVET programs ideally designed in partnership with and supported by cruise lines. Incentives to promote local employment could also be considered to help cruise lines recruit locally for positions onboard or offshore, that will also increase country skills bases needed to create and grow homeporting opportunities overtime. The emerging trend of smaller, luxury cruises and homeporting offer a significant opportunity to drive greater benefits to the local economy. Passengers on these vessels often extend their stays and seek more authentic, immersive experiences that drive increased local spending. To fully capitalize on this opportunity, it is crucial to develop specialized services and infrastructure tailored to the needs of these exclusive ships. Focusing on these smaller ships will also help alleviate congestion at busier ports. 25 HACCP is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product (U.S. Food & Drug Administration). Rethinking Caribbean Tourism 39 Box 8. Benchmark insight Vanuatu: integrating local business into cruises supply chains In 2014, International Finance Corporation (IFC), Carnival Australia, and Australia’s Department of Foreign Affairs and Trade (DFAT) partnered to assess the cruise sector’s economic contribution to Vanuatu. The study aimed to maximize local benefits by boosting employment, integrating local businesses into the cruise supply chain, and addressing challenges in the handicraft sector. At that time, around 120 ni-Vanuatu were employed on three P&O cruise ships that frequented the region. The Vanuatu Government incentivized this practice by offering port fee discounts. However, employees commonly faced significant challenges in adapting to the unfamiliar environment on-board, leading to high turnover rates. To mitigate these issues, the study proposed cultural induction seminars and a comprehensive training program. A key element of strengthening local linkages was the involvement of Vanuatu TVET Centers. The TfT initiative aimed to support provincial tourism operators in improving their businesses and enhancing the capacity of government departments. To extend its contribution, TfT collaborated with local training providers to offer courses tailored in collaboration with cruise operators. One of the most significant TfT program contributions was its support for cultural revitalization within the community associated with the Santo Fire Walk & Cultural Tour. After joining the TfT program, the tour experienced an increase in tourists, largely due to a contract with a cruise ship onshore tour agent facilitated by TfT industry experts. The success of this tour not only supported the local economy but also strengthened the community's cultural identity. The 2014 study identified significant potential for integrating local Vanuatu-based businesses into the cruise sector’s supply chain and proposed strategies for increased local procurement. For instance, P&O Cruises introduced locally-sourced products, such as Vanuatu Water and Tanna Coffee, on its ships to demonstrate viable models for local procurement. By expanding the range of locally-sourced products—such as coffee, bottled water, local beer, beauty products, and fresh produce—there was an opportunity to significantly boost the local economy. The handicraft sector also faced several challenges, including market saturation, reliance on imported products, poor product quality, and negative perceptions among cruise passengers regarding safety of local items. The Vanuatu Tourism Assistance Program was designed to address these challenges. In 2016, P&O became the first cruise line to showcase Vanuatu products onboard, strengthening the relationship with the Vanuatu community and providing a platform for local artisans. Source: IFC, Carnival Australia, DFAT-Australian Aid, 2014; DFAT. Australian Government, 2016; Carnival Corporation, 2016. Enhancing environmental outcomes The cruise sector is responding to growing environmental concerns and increased demand for sustainable travel options by committing to reducing its environmental footprint. This was also prompted by the International Maritime Organization26 with new 26 The International Maritime Organization is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships: https://www.imo.org/ Rethinking Caribbean Tourism 40 regulations and requirements as part of a Carbon Intensity Indicator, which came into force in January 2023. This indicator is a measure designed to assess the energy efficiency of cruises by applying ratings based on carbon intensity. Cruises with poor ratings are required to adopt corrective measures, including reducing speeds or distances. In the future, financial penalties may be introduced if cruises do not adopt sufficient corrective measures. Cruise lines are actively pursuing strategies for net-zero emissions with a goal to achieve this by 2050. This commitment involves more investments in cleaner energy sources, such as green methanol, green hydrogen, hydrogen fuel cells, and solar energy. Moreover, cruise lines are enhancing their sustainability initiatives, with 78 percent of CLIA’s member ships now equipped with advanced wastewater treatment systems (CLIA, 2023b). These efforts align with broader goals of integrating renewable energy into maritime operations, offering synergies with the energy sector while creating opportunities for innovation and job creation. As the sector progresses towards these ambitious goals, collaboration with ports and destinations is also being strengthened to support necessary infrastructure for sustainable cruising. This includes development of onshore power supply (OPS)27 facilities, which enable ships to connect to local electricity grids while docked, thereby further reducing emissions and improving air quality in port cities. Currently, 46 percent of CLIA’s fleet is equipped with OPS capability. Although less than 2 percent of the world’s cruise ports have OPS facilities and none are located in the Caribbean, this percentage is expected to increase as new regulations are implemented (CLIA, 2023b). For instance, in the EU, countries are already equipping ports with OPS to meet zero-emission requirements at berth mandated by the upcoming Fuel EU Maritime Regulation (Box 9). While development of required infrastructure takes time, regulations can be implemented to control and monitor cruise ship air emissions. Access to LNG could reduce use of more polluting heavy fuels. There are arguments for and against LNG environmentally, but in the absence of alternatives it has potential to reduce sulfur emissions. Increased access to LNG could help reduce pollution as long as methane slip could be mitigated with use of appropriated technologies. Increased access to LNG could strengthen the regional energy sector by creating LNG hubs that serve tourism and local shipping needs. However, most Caribbean countries have limited capability to invest in LNG and OPS infrastructure. By leveraging public-private partnerships (PPPs), countries can attract private investment to enhance cruise port facilities, ensuring they meet modern standards and adopt cleaner technologies like LNG and OPS. Growing interest in LNG-focused PPPs for bunkering and supply could be supported by stronger legal and regulatory frameworks and government capacity to negotiate and manage PPP contracts. Countries including Antigua and Barbuda, Bahamas, and Jamaica are currently developing or exploring PPP opportunities in LNG. Even smaller countries with limited capacity to attract investors could benefit from global actor engagement. Global Port 27 OPS enables vessels to shut down their engines while at the quayside as they are connected to an onshore power source. This reduces emissions linked to bad air quality. Rethinking Caribbean Tourism 41 Holdings, one of the world’s largest cruise port operators, is facilitating a PPP in LNG supply in Antigua and Barbuda, while exploring similar initiatives in Nassau, Bahamas. It already manages ports in these two countries and is expanding services. Provisioning of LNG or other alternative energies requires a clear PPP regulatory framework and strengthened government capacity to negotiate and manage contracts. While smaller ports may have limited capacity, they can benefit by engaging in regional cooperation to develop regional LNG bunkering facilities that can serve multiple ports, making sustainable cruising feasible across the region. Achieving this requires strong regional coordination to develop and share LNG resources, expertise and infrastructure in collaboration with existing or potential investors. Increased investment in waste management should be facilitated to better cater to cruise operators’ needs, especially in countries with homeporting opportunities. While facilities to process waste generated by cruise ships are essential, cruise waste is considered “international waste” and should be managed separately from domestic waste as per the International Convention for the Prevention of Pollution from Ships (MARPOL). To meet cruise waste processing needs, special purpose regulations and facilities are required. Mobilizing local investors could be supported to respond to needs for small waste management facilities, outside the scope of large foreign investors. These investments would further contribute to the blue economy by promoting sustainable practices in marine resource management, waste disposal, and reducing the environmental impacts of cruise tourism. Clear environmental fee-setting policies reflecting environmental impacts as well as greater harmonization across the region are essential to promote sustainable cruise tourism. Most countries have held down environmental fees at US$1.50 per cruise passenger, not always commensurate with environmental costs. Reassessing and increasing these fees can provide additional revenue to support programs to mitigate the negative cruise tourism impacts, such as through marine conservation projects and pollution control measures. For these policies to be effective, regional cooperation is paramount. A coordinated approach can strengthen their negotiating position with cruise lines, which typically hold significant bargaining power due to their oligopolistic structure. Greater transparency on environmental fee collections and use is key to raising environmental awareness of all stakeholders, including passengers and local communities, to address environmental impacts. For governments, greater transparency on the use of environmental levies may help countries better negotiate environmental fees, especially as more than 60 percent of World Bank consumer market research respondents agreed with the principle of setting environmental fees (World Bank, 2024b). Rethinking Caribbean Tourism 42 Box 9. Benchmark insight European Union: OPS implementation To address environmental impacts, the EU has integrated cruise tourism into its broader environmental and economic strategy: the European Green Deal. This initiative aims for net-zero carbon emissions by 2050 with measures affecting different sectors, including energy, industry, and transport. Some measures affect the cruise sector, including the Fuel-EU Maritime Regulation, which is designed to ensure that GHG emissions decrease over time. This new regulation helps achieve the goal of the Fit-for-55 package measures of cutting GHG emissions by at least 55 percent by 2030. The scope of the Fuel-EU Maritime Regulation covers vessels above 5,000 gross tonnage, calling on European Economic Area ports, no matter what flag they fly. This regulation not only targets CO2 emissions, but also methane and nitrous oxide. Additionally, it introduces an additional zero-emission requirement at berth through the use of zero- emission technologies like OPS which will become mandatory in 2030 for EU ports covered by the Alternative Fuels Infrastructure Regulation and for all EU ports in 2035 (EMSA) (European Commission, n.d.). Some countries have already implemented OPS at their ports, while others are constructing facilities to comply with regulations. Altona’s terminal in Hamburg began offering OPS in 2016 following an investment of EUR10 million by the port of Hamburg which paid for a major part of the initial investment and maintenance of OPS installation (European Commission, 2023). Increasing government revenue In the post-pandemic context of a tourism rebound amid a greater focus on sustainable tourism and local development, fee increases could be negotiated with cruise lines if justified and communicated well in advance. This approach ensures any additional costs can be incorporated into final pricing. Despite favorable conditions, cruise lines remain hesitant to endorse fee increases. Their reluctance appears to primarily stem from concerns about transparency and proper utilization of fees collected by governments. The absence of clear information on how these funds are utilized has eroded trust, making it difficult for governments to justify proposed increases. The experience of the Alaska Tourism Board, which raised fees based on active negotiations, highlights the need to balance the costs and benefits for local communities and cruise lines (Box 10). However, there are inherent limitations to how much fees can be raised without risking the loss of cruise line partnerships. Destinations with strategic locations, such as The Bahamas, can command higher fees due to their proximity to major cruise routes. Rethinking Caribbean Tourism 43 Box 10. Benchmark insight Alaska: Marine Fee Program’s transparency and accountability To enhance the tourism experience and limit negative cruise sector impacts on Alaska, Juneau introduced a US$5 marine fee per cruise ship passenger . This initiative, passed as Proposition 1 in 1999, was specifically designated to fund projects supporting these objectives. The fees levels are marine passenger fee (US$5), port development fee (US$3) and state commercial passenger vessel fee (US$5). In 2008, the Assembly amended the ordinance to enhance transparency by requiring the City and Borough of Juneau to post solicitation notices on their website. Following this amendment, an annual proposal document is published, detailing projects funded by the marine passenger fee. The list is based on requests from the industry, city departments, businesses, and citizens. The document provides estimates of fees to be collected for the year as well as how funds will be allocated to proposed projects (City and Borough of Juneau, n.d.). Collected passenger fees have funded numerous projects, many of which are focused on reducing cruise ship environmental impacts. Notable projects include: • Shore power infrastructure: loans paid through the marine fee program. • Infrastructure improvements: upgrades to port facilities (expanded docking areas and improved passenger amenities) have enhanced the overall visitor experience, while accommodating growing numbers of cruise passengers. • Community enhancements: improving public spaces, including parks and waterfront areas. The City and Borough of Juneau emphasize transparency and accountability in the use of passenger fees. The annual publication of the proposal document ensures community awareness regarding fund allocation and expenditure. Public input is actively sought to ensure scrutiny and feedback from stakeholders, including cruise lines. Juneau aims to continue leveraging passenger fees to balance tourism growth with environmental stewardship. Planned projects include further investments in sustainable tourism practices, such as additional shore power installations and initiatives to protect marine life. The city is also exploring ways to enhance cultural and historical aspects of the visitor experience, ensuring that tourism development honors and preserves Juneau's unique heritage. Greater consistency in cruise fee-setting policies across the region is critical to address a lack of transparency and coordination. Currently, each country negotiates its fees independently, resulting in disparate tariffs across the region. Additionally, these fees are not made public in line with good practices. This lack of transparency and coordination weakens the bargaining power of individual nations, making it more challenging to negotiate favorable terms with cruise lines. A more effective approach would be to negotiate from a regional standpoint, initiated through greater transparency. It is crucial for each country to publish and regularly update its cruise fees, fostering a cooperative environment and enhancing collective bargaining power. Rethinking Caribbean Tourism 44 Box 11. Cruise fee hikes: which destinations are raising rates? Recently, several countries have announced cruise fee increases, primarily to address overtourism and pressures on the environment and local communities. In 2023, The Bahamas announced an increase in passenger taxes, from US$18 to US$23 for cruise passengers calling at Nassau and Freeport, and US$25 for private islands. Though initially set to launch in mid-2023, this increase was delayed until January 2024 to allow cruise lines more time to adjust. Additionally, a US$5 environmental tax and a US$2 tourism enhancement fee will take effect, alongside plans to introduce taxes on goods and services in private islands. These changes aim to support significant government investment in upgrading the Nassau cruise port and its facilities (Travel Market Report, 2023) (Travel Weekly, 2024). Mexico is also introducing new fees, with plans for a US$42 fee per passenger by 2025, in addition to the existing US$5 tax in some states. Previously, cruise passengers were exempt from the US$42 charges due to their "in-transit" status, but this will no longer apply. The cruise industry expressed strong opposition, with the FCCA arguing that the changes could make Mexico 213 percent more expensive than regional competitors, potentially driving away cruise business. Moreover, controversy surrounds allocation of funds, as only a third will be used for port improvements, with the remainder directed to military funding (CNN Travel, 2024). In the Mediterranean, Greece has announced fee increases to tackle overtourism and recover from natural disasters. Starting in 2025, Mykonos and Santorini will impose a €20 charge per cruise passenger, while smaller islands will charge €5. These measures respond to complaints about excessive numbers of daily visitors during peak seasons and aim to enhance port infrastructure and support local governments to manage tourism's economic and environmental impacts (Maritime Executive, 2024). While these increases are intended to balance tourism growth with sustainability and infrastructure needs, their long-term effects on cruise traffic and destination popularity remain uncertain. It is yet to be seen whether such measures will deter cruise lines and travelers from visiting these destinations, making it essential to monitor impacts over time. As with environmental fees, transparency on the use of all cruise-related fees is needed to garner support from the cruise sector. In many countries, there is little clarity on the projects that fees fund. This opacity can undermine trust and engagement from local communities, who may not see the direct benefits of fees collected. By being more transparent about allocation and use of these funds, governments can increase local community involvement and cruise sector support. Clearly communicating how fees are used to support infrastructure improvements, and community development can help build trust and ensure cruise tourism’s sustainable growth in the region. Rethinking Caribbean Tourism 45 Chapter 3. Accommodation Segment Rethinking Caribbean Tourism 46 Chapter 3. Accommodation Segment Key Takeaways: • The Caribbean accommodation sector, historically a key driver of investment and employment, faces growing scrutiny over its ability to generate local economic value, particularly from the all-inclusive resort model. • Emerging demand and supply trends present an opportunity for the region to enhance economic value from overnight visitors, while positively impacting the social and environmental landscape. Key trends include the rise of alternative accommodation models, diversification of all-inclusive resorts, growth in luxury and sustainable tourism, and digital transformation. • To fully leverage new trends, the sector must address critical challenges such as a shortage of skilled labor, poor land-use planning, and limited adoption of sustainability practices by governments and private stakeholders. • Tackling these challenges will require targeted policies to correct market and institutional failures, with a focus on strengthening workforce capacity, improving land-use management, and embedding sustainability in accommodation development strategies. 3.1. Introduction Accommodation for tourists in the Caribbean has been and will continue to be a driver of investment and job creation, but there is much variation between countries. The Dominican Republic and Jamaica, with more than 80,000 and nearly 25,000 hotel rooms respectively, dwarf other countries in the region, most of which each have 1,000–5,000 rooms. Despite a temporary slow-down during the pandemic, FDI in accommodation in the Caribbean countries of analysis was strong until 2019. More than 40 greenfield projects were registered in the five years before the health crisis, creating 30,000 jobs (fDi Markets, 2022). In 2023, the investment pipeline remained strong, with more than 100 accommodation projects and 22,000 rooms planned, requiring at least 35,000 new jobs. The continued dominance of Dominican Republic and Jamaica is expected, with considerable growth planned for Antigua and Barbuda as well as St. Lucia (Figure 48). Rethinking Caribbean Tourism 47 Figure 48. Caribbean accommodation pipeline in 2023 by numbers of projects and rooms 1 10 100 1000 10000 Antigua and Barbuda The Bahamas Barbados Dominica Dominican Republic Grenada Jamaica St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Projects Rooms Source: Extract from CHTA, Caribbean Hotel & Resort Investment Summit (CHRIS) 2023 While the traditional accommodation model of large resorts has successfully attracted tourists to the region, it does not generate the greatest local value. The all-inclusive resort model, pioneered by Club Méditerranée (Club Med) in the 1950s and later by other European operators like Thomas Cook, Virgin Holidays, Thomson Holidays, First Choice and TUI, provided tourists with a simple-to-book holiday that bundled a package of services—charter flights, transfers, accommodation, food and beverage, and activities—with the convenience of booking and paying on almost any high street in Europe (Jafari, 2001). While these options suited consumers of these packages, sellers gained significant cost efficiencies, foreign exchange benefits, local purchasing power, and control over demand in markets. In some destinations, it led to enclaves where tourists spent their entire holiday inside a resort property. The all-inclusive model is still predominant today (Figure 49). Rethinking Caribbean Tourism 48 Figure 49. Number and selected typologies of hotels and resorts in Caribbean countries, 202328 1 10 100 Antigua and Barbuda The Bahamas Barbados Belize Dominica Dominican Republic Grenada Jamaica Sint Maarten St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Total Hotels & Resorts All-inclusive Luxury Source: Extracted from TripAdvisor.com, December 2023 Over time, the accommodation mix throughout the Caribbean has evolved beyond all- inclusive resorts. It now includes short-term rentals, eco-lodges, and boutique hotels, but ex-ante inclusive and resilient planning is largely missing. In some locations – like Punta Cana and Puerto Plata in the Dominican Republic, and Montego Bay and Negril in Jamaica – development of a particular type of accommodation is planned and incentivized by governments. However, beyond these examples, accommodation development across the Caribbean has been largely opportunistic and unplanned (Telfer & Sharpley, 2008). Governments often exercise discretion in negotiating with investors and granting incentive packages on a case-by-case basis, which could leave investors concerned about unequal treatment and favoritism. The lack of a rules-based and transparent system for accommodation development incentive policies could create governance challenges for the region. This chapter explores instruments that governments can deploy to catalyze positive and more inclusive economic outcomes from different accommodation investments. These findings were drawn from desk research and the World Bank consumer market research with US outbound travelers, benchmarking on three destinations that succeeded in selected policy areas (Dominican Republic, Japan and Türkiye), and deep dive destination case studies on Jamaica and St. Lucia (see supplementary annexes). The chapter ends with policy guidance in six critical policy areas. 28 All-inclusive resorts are reported to have more rooms on average that other types of resorts. For instance, in Jamaica, all- inclusive resorts represented 41 percent of licensed hotel establishments and 90 percent of hotel rooms in 2023 (Jamaica Tourist Board). Rethinking Caribbean Tourism 49 Accommodation trends Changing traveler preferences are influencing accommodation development in the Caribbean. While the accommodation sector has never been larger or more diverse, demand on limited resources and space is forcing Caribbean governments to rethink tourism and by extension, accommodation growth models. Four trends are coalescing as drivers of new thinking and policies: 1. Increased diversity of all-inclusive properties and demand for luxury. Since Club Med pioneered the concept in the 1950s to cater to cost conscious European consumers looking for all-you-can-eat-and-drink ‘sun, sea, and sand’ holidays, all-inclusive offerings have matured into a diverse range of offerings catering to multiple price points and specific market segments. Luxury, family and group travel, health and wellness offerings, and authentic local experiences are the major value adding trends prominent in all-inclusive offerings in the Caribbean (STR, 2022). Recent World Bank consumer market research revealed that 61 and 43 percent of US all-inclusive travelers to the Caribbean stayed in four- and five-star resorts, respectively, in the past five years (World Bank, 2024b). STR data from 2023 shows a higher proportion of hotels in the Caribbean being constructed in upscale-luxury categories, corroborated by pre-pandemic pipeline data from other sources (Horwath HTL, 2019). Similarly, Jones Lang LaSalle reports a robust luxury all- inclusive resort pipeline (JLL, 2022). 2. Increased demand for alternative (non-hotel) accommodation options. Listings of short-term rentals, vacation rentals, and long-term stays on digital platforms like Airbnb, Vrbo, Booking.com, HomeAway and Flipkey are cited to have grown by 35 percent across the Caribbean since 2019 (AirDNA, 2022). In most Caribbean countries, these options now absorb more than 30 percent of all tourist accommodation stays (Figure 50). The growth of short-term rentals has transformed the accommodation landscape, offering travelers diverse lodging and remote work (Deloitte, 2020) options beyond traditional hotels (McKinsey & Company, 2021). They have also opened new markets such as digital nomad, snowbird, workation, and local experience packages, generating a demand in a secondary market for a variety of jobs such as property managers, cleaning staff, maintenance technicians, guest services coordinators, photographers and videographers, interior designers, personal chefs, and local guides. Short-term rentals can also increase the demand for local retail businesses such as restaurants, bars, supermarkets, cafes, gyms, transport services, car and bike rentals. Rethinking Caribbean Tourism 50 Figure 50. Estimated number of vacation rentals and hotel rooms in the Caribbean, 202429 120 Estimated rooms (thousands) 100 80 60 40 20 0 Estimated number of rooms listed on Airbnb Estimated number of registered hotel rooms Source: Airbnb, 2024; TripAdvisor, 2023; ASONAHORES, 2024; Jamaica Tourist Board, 2024; St. Lucia Tourism Authority, 2024. 3. Sustainability and local linkages. Consumer markets and wholesale buyers are increasingly pushing for green or sustainability certification from their accommodation choices (UN Tourism, 2021). Some 54 percent of all-inclusive US travelers to the Caribbean always seek to minimize their impacts on the local environment and 42 percent always look at sustainability and resource efficiency measures in place when booking (World Bank, 2024b). Similarly, the Booking.com 2024 Sustainable Travel Report revealed that 75 percent of travelers want to travel more sustainably over the next 12 months (Booking.com, 2024). Increased tourism pressure on ecosystems, coupled with disruptive climate events, surging temperatures and decreasing rainfall, additionally contribute to justify investments in sustainable water, energy, and waste management infrastructure. 4. Technology integration and digital transformation are enhancing operations, guest experiences, and overall efficiency and profitability. Digital technology has significantly enhanced opportunities for local linkages in the Caribbean tourism sector by improving marketing, facilitating direct bookings, providing valuable customer insights, enabling contactless check-ins and payments, and fostering sustainable practices. These advancements empower local businesses to compete globally, maintain cultural authenticity, and contribute to the economic growth of their communities (Law & Buhalis, 2015). Trends such as education and training through e-learning and contactless services that were accelerated by the pandemic (STR, 2020), smart rooms that incorporate smart technology such as voice-activated controls and Internet of Things devices, mobile apps, 29 The high number of available listings on platforms like Airbnb do not necessarily have the same weight as hotel rooms because occupancy rates differ significantly. While Airbnb listings reflect an available inventory averaging 25–120 nights of occupancy per year, hotel rooms run at 70 percent occupancy and are occupied for 255 nights, for example. Rethinking Caribbean Tourism 51 customer relationship management systems, and the use of data analytics to tailor personalized marketing on social media and on-site services are all contributing to enhanced guest experiences. Property and energy management systems are helping enhance efficiencies and track sustainability metrics in real time. Digital marketing strategies through social media platforms are becoming primary distribution channels (Deloitte, 2021). 3.2. Development challenges The Caribbean’s accommodation sector faces structural challenges that limit its competitiveness, inclusivity, and sustainability. Large luxury and all-inclusive resorts dominate due to their market power and control over distribution channels, making it challenging for smaller accommodation establishments to access markets and integrate into local supply chains. Coordination failures and information asymmetries, especially on market demand and trends, further weaken linkages between large resorts and local businesses, restricting opportunities for economic inclusion. Poor information flows can also hinder development of market-driven skills. Meanwhile, the rapid and often unregulated growth of short-term rentals has intensified pressure on infrastructure, air capacity, and contributed to rising living costs in tourism-dependent areas. Inefficient investment planning and discretionary incentives have also led to resource misallocation, exacerbating trade-offs in tourism development. Environmental sustainability remains a major challenge, with tourism placing increasing pressure on fragile ecosystems. Despite rising consumer demand for sustainable tourism options, the adoption of green practices is hindered by a lack of incentives, financing, and enforcement mechanisms. Public-private misalignment in policy development has further stalled efforts to create a regulatory environment that encourages sustainability. These market failures stem from poor industry coordination, a lack of targeted investment planning, and an absence of policies that could level the playing field for MSMEs, while promoting environmental responsibility. Strengthening regulatory frameworks and facilitating access to finance and market information will be essential for a more resilient and inclusive accommodation sector in the Caribbean. Long-term potential of large resort investments is not captured There are trade-offs between large resorts and sustainability. Caribbean governments are commonly dependent on large resorts for foreign exchange as well as direct and indirect job creation opportunities (IMF, 2020). However, these resorts require significant investment. For example, the average cost per square foot for the development of a five-star resort in the Caribbean spans US$352 to US$619, but can be as high as US$1,040 in The Bahamas and US$715 in St. Lucia and also in Antigua and Barbuda (RLB, 2024). Large transnational corporations are vertically or horizontally integrated and use subsidiary companies to service much of a tourist’s visit, including accommodation, transport, activities, and attractions. This Rethinking Caribbean Tourism 52 leads to economic leakages to foreign-owned businesses, leaving little opportunity for smaller, local enterprises to benefit from tourist expenditure (Hampton & Jeyacheya, 2020) (Box 12 explores accommodation sector growth in Jamaica). Box 12. Deep dive Jamaica: accommodation sector growth The Jamaica Promotions Corporation (JAMPRO) recently identified that there is a trend towards larger properties featuring 800–1,200 rooms compared to traditional investments with 100–400 rooms. A notable example is a new 2,500-room property in Hanover. Along with the increase in room numbers, hotels have also expanded offerings to include activities such as water and theme parks. Planning agencies have noted an increase in applications for overwater structures, villas, guesthouses, bed and breakfasts, and mixed-use developments. Land space along the coastline is scarce and hotels are moving to less popular areas, such as Trelawny, to build developments. There has also been an increase in building heights over the years with developments requested for 20–30 floors (National Environment and Planning Agency of Jamaica). Human capital in short supply The pandemic exacerbated structural challenges in the Caribbean tourism labor market, further inhibiting its ability to supply new accommodation investments with quality, skilled labor. Based on press releases from labor ministries in Jamaica (Jamaica Observer, 2022), St. Lucia (Saint Lucia Times, 2021), and the Dominican Republic (Dominican Today, 2022) an average of 30–50 percent of hospitality workers did not return to the sector after the health crisis. A CTO-commissioned 2022 report30 revealed some reasons for this outcome: 1) uncertainty surrounding the tourism sector recovery, 2) workers found alternative employment in other sectors that offered stable or better work conditions, and 3) already low salaries cut even further during the pandemic. Additionally, the pandemic prompted shifts in consumer preferences and operational models in tourism, leading to a mismatch between the skills of laid-off workers and the needs of the evolving sector (Box 13). The report also found that many training and higher education institutions do not have the facilities or capacity to offer required digital training to target smart destinations and businesses sector (A-Z Information Jamaica Limited, 2022). These reasons are consistent with findings of a World Bank analysis that found that job quality in the tourism sector is lower than other sectors in some cases, especially when it comes to stability (World Bank, 2023a). Box 13. Deep dive Jamaica: post-pandemic hospitality labor market Post-pandemic, Jamaica’s accommodation sector has struggled to source suitable employees for entry level positions. While the government has not had to import labor, there are concerns that with new rooms coming onstream the current labor market may not be able to fill this gap. The Jamaica Centre for Tourism Innovation is working with the hotels, Human Employment and 30 “Regional Human Resource Development Knowledge and Skills Audit for the Tourism Industry.” Rethinking Caribbean Tourism 53 Resource Training Trust/National Service Training Agency, and local universities and colleges to address this gap and ensure that hotel needs are aligned with the curriculum being taught. Alignment is critical as hotels have complained that students graduating from local universities often do not have relevant skillsets required for new sectoral demands. Local area tourism planning is not the norm Land planning and allocation play a critical role in shaping accommodation development in the Caribbean but are largely absent in development strategies. Limited freshwater in the Caribbean—with half of the countries studied situated among the top 16 water-stressed nations in the world (World Resources Institute, 2013)—creates trade-offs between tourism and local population needs or other sectors, such as agriculture. Accommodation investments in the Caribbean can lead to increased land prices through heightened demand, infrastructure development, speculative investments, and potential gentrification where residents may be priced out of the housing market due to rising land values, rental prices, and the growing short-term rentals market. These dynamics illustrate the complex interplay between tourism development and local real estate markets and residents. In response, it is important that tourism accommodation planning takes into account zoning regulations, environmental protections, community engagement, economic incentives, cultural preservation, and infrastructure as these multiple dimensions affect the environmental and social sustainability of tourism accommodation. Short-term rentals are unaccounted for in policymaking The short-term rental sector is expanding rapidly across the region, often without sufficient planning and regulation. A significant gap exists between formally registered and listed short-term rentals in the studied Caribbean countries. For example, Airbnb listed more than 9,000 accommodation options at the time of writing, while the Barbados Tourism Product Authority reported only 78 registered apartment rentals in 2023 (BTPA, 2024). This trend is also evident in St. Lucia (Box 14). This disparity not only results in substantial volumes of uncollected income tax, but also creates unfair competition for registered accommodation, which must comply with safety and security regulations. Additionally, environmental concerns such as waste management and social issues like noise disturbances further highlight the need for additional and/or stricter short-term rental regulations. Box 14. Deep dive St. Lucia: short-term rental landscape In 2024, the short-term rental-dominated non-registered sector had a larger inventory of available rooms than the hotel sector (5,584 versus 4,449 rooms, respectively). Recently, the St. Lucia Tourism Authority conducted a market assessment and concluded that less than 10 percent of short-term rentals were registered with it. Large hotels represent 11 percent of registered Rethinking Caribbean Tourism 54 properties and 67 percent of registered rooms. The Tourism Development Act of 2024 regulates the holiday rental industry by introducing a certification program to ensure compliance with international standards. This act mandates that all property owners, local and foreign, offering tourism services must obtain certification. It includes residential properties like apartments and villas. The act also formalizes the online hospitality service sector, requiring adherence to local legislative requirements, such as trade licenses. This aims to create a more inclusive and standardized tourism sector. Capital allocation is uneven Caribbean governments are foregoing future fiscal revenues by granting tax incentives and concessions to large resort accommodation developers, undermining the sustainability of smaller establishments. Tax incentives are widespread in the Caribbean, with the absence of an effective regional agreement on tax harmonization meaning virtually all countries have special incentive regimes aimed at attracting and retaining private investment, notably in tourism and manufacturing, creating intense tax competition (McIntyre, 2017). The IMF estimated that fiscal trade-offs, such as extended tax holidays and a range of tax and duty exemptions, resulted in forgone tax revenue worth 4.4–7 percent of GDP across a sample of Caribbean countries from 2010–13 (McIntyre, 2017). These incentives can reduce government revenues from the private sector, limiting available public funding to invest in tourism and non- tourism infrastructure improvements. Tax incentives and holidays are costly for Caribbean countries. Not only do they create an uneven playing field for domestic investment, they result in negative externalities that undermine countries’ efforts to raise revenues to finance human and capital investment (IMF, 2020). As many Caribbean countries face growing fiscal costs, how to enhance revenue collections without hurting competitiveness becomes a key policy challenge. Additionally, governments make these trade-offs under the assumption that increased numbers of tourists will lead to positive local economic spillovers. Beyond erosion of the tax base, the myopic focus on large resort developers undermines the sustainability of smaller accommodation and small business focused segments, like adventure tourism, creating an uneven playing field for domestic investment. Some destinations like St. Kitts have been successful in developing a travel philanthropy model where voluntary guest contributions are used to fund product and sustainability enhancements.31 Others, such as St. Lucia, have a private sector- run fund (see Box 15 for an example of barriers to incentives for smaller establishments). 31 See https://www.heartofstkitts.org/ Rethinking Caribbean Tourism 55 Box 15. Deep dive Jamaica: costly licensing of homestays In Jamaica, extensive and costly approval processes make it difficult for homestays to gain fiscal incentives. Currently, the Jamaica Tourist Board Act requires tourism accommodation to be licensed by the board through the Tourism Product Development Company. Based on the category, accommodations receive licenses for which they must meet several requirements and submit relevant documentation. To access fiscal incentives, property owners must change their designation from residential to commercial, an issue for those who obtained initial build approval from local parish councils for residential properties, as is the case with most of the current inventory. Sustainability practices are lagging Despite the direct impact that climate change is poised to have on hotels and resorts in the region, mostly located in coastal areas, adoption of resource efficiency measures is limited. This is due to several challenges, including technical, knowledge, financial, and policy barriers. Many businesses lack awareness and understanding of the benefits and implementation of resource efficiency measures. Additionally, high upfront costs deter investment, particularly for SMEs with limited access to financing and cash flows (Erman, De Vries Robbe, Browne, & Solis Uehara, 2021). Successful examples of adoption of these practices are mostly confined to high-end resorts. Large gaps in environmental integration within tourism operations are apparent. This trend was revealed by a World Bank firm-level survey that collected data from 1,413 firms (including 470 hotels) in the tourism industry in 13 countries across the Caribbean between March and November 2020 revealed large gaps in environmental integration within operations. Specifically, the survey found that most hotels in all countries owned a backup generator while very few have solar power, with notable differences across countries (Figure 51). Additionally, solar power is used as a main source of electricity in just a few hotels mainly located in Dominica and St. Lucia (Figure 52). The survey also revealed that while most hotels own a water tank, just a few of them—mainly located in St. Vincent and the Grenadines—use rain- fed water as a main source of water for general use (Figure 53), and none use a rain-fed water tank with appropriate systems in place to provide drinking water to clients (Figure 54). Rather, water bottled in plastic was the preferred option with some exceptions such as Barbados, Dominica and Sint Maarten (Erman, De Vries Robbe, Browne, & Solis Uehara, 2021). Rethinking Caribbean Tourism 56 Figure 51. Back-up infrastructure ownership Figure 52. Most important source of electricity by country in the hotel sector (%), 2020 in the hotel sector (%), 2020 Antigua and Barbuda Antigua and Barbuda The Bahamas The Bahamas Barbados Barbados Dominica Dominica Dominican Republic Dominican Republic Grenada Grenada Jamaica Jamaica St. Kitts and Nevis St. Kitts and Nevis St. Lucia St. Lucia Sint Maarten Sint Maarten St. Vincent and the Grenadines St. Vincent and the Grenadines 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Water tank Generator Solar power Generator Grid power Solar power Source: Erman, De Vries Robbe, Browne, & Solis Uehara, 2021. Note: Grid power in Figure 52 can also come from solar-generated power, even though the percentage would still be small. For instance, in St. Lucia solar power comprises 3.48 percent of total generation. Figure 53. Main source of water for general Figure 54. Main source of drinking water for use in hotels (%), 2020 clients in hotels (%), 2020 Antigua and Barbuda Antigua and Barbuda Barbados Barbados Dominica Dominica Dominican Republic Dominican Republic Grenada Grenada Jamaica Jamaica St. Kitts and Nevis St. Kitts and Nevis St. Lucia St. Lucia Sint Maarten Sint Maarten St. Vincent and the Grenadines St. Vincent and the Grenadines The Bahamas The Bahamas 0% 20% 40% 60% 80% 100% 0% 50% 100% Bottled water Central distribution Central distribution Do not use general water to maintain business activities Do not offer drinking water to clients Local well Other Other Rain-fed water tank Water vendor Source: Erman, De Vries Robbe, Browne, & Solis Uehara, 2021. Rethinking Caribbean Tourism 57 3.3. Policy guidance The following policy guidance intends to provide governments and stakeholders with options. It also shows that integrated and complementary actions are needed to support development outcomes overall. Leverage the presence and expansion of high-end resorts for sustainability There is a missed opportunity to leverage the presence and expansion of the accommodation segment for sustainability and local value creation. Quality is becoming synonymous with sustainability. Many all-inclusive resort chains in the Caribbean are implementing voluntary corporate strategies for sustainability in the absence of government- led planning and policy.32 There is a clear opportunity for Caribbean governments to coordinate in scaling and replicating their initiatives to synergize them with the business environment, local linkages (Box 16 and Box 17), PPP schemes, and to mandate new investors to incorporate sustainability standards through licensing regulations or investment requirements. In Jamaica, JAMPRO is developing a tech accelerator program which will give hotel guests the ability to get information on activities taking place in the country (concerts, parties) and purchase tickets through a legitimate channel. In collaboration with local licensed ground transportation providers, guests will be transported to and from these events, allowing them to experience more of Jamaica’s culture beyond hotel premises. Box 16. Deep dive St. Lucia: Tourism Enhancement Fund The St. Lucia Hospitality & Tourism Association (SLHTA) manages the Tourism Enhancement Fund (TEF), an expanding voluntary initiative which has supported close to 300 projects. Since 2013, the association has collected a US$2 voluntary contribution per guest in program participant accommodation establishments. Funds collected directly at properties have totaled between US$500,000 and US$750,000 million annually, aside from during the pandemic. In a decade, the TEF has sponsored close to 300 projects in the areas of environment, health and wellness, human resources, safety and security, entrepreneurship, community, and product development. Projects are competitively selected through an application process, and disbursements above minimal amounts are linked to performance indicators. Currently, the TEF is looking to expand to other tourism service providers, such as the duty-free retail sector, which will also collect voluntary contributions from cruise passengers. 32 See supplementary annexes for more information on corporate sustainability programs and an analysis of government policies. Rethinking Caribbean Tourism 58 Box 17. Deep dive Jamaica: agriculture linkages exchange Jamaica’s Agriculture Linkages Exchange (ALEX) online platform connect s local farmers and their produce with purchasing hotels. Created in 2017 by the Rural Agricultural Development Agency, ALEX has facilitated sales of US$7 million and connected 6,000 farmers with hotels. Although sales made through ALEX are remarkable, the platform faces challenges. Hotels have found it easier to purchase goods through purveyors, who offer full-service solutions, including delivery, cold storage, and quality assurance. Additionally, farmers struggle with delayed payments, as hotels can take up to 90 days to pay. Purveyors, better equipped to handle these terms, pay farmers faster and wait for hotel payments themselves. ALEX benefits smaller farmers that may not have good wholesale agent connections, with lessons for other countries looking to replicate the model. ALEX could evolve to include a local financial institution for advancement of payments to farmers through factoring, which would assist with short-term cash flows. It could also be expanded to include all players in the value chain (transportation, logistics, cold storage, and quality assurance). In addition to advancements with ALEX, farmers asked the Ministry of Tourism to urge hotels to share data on consumption patterns. Grand Bahia Principe, a 1,500-room hotel in St. Ann, for example shared that its annual consumption of Irish potatoes is 2,200kg per week. If farmers regularly received quarterly consumption estimates from hotels, they could better meet market demand. Address human capital needs With a growing accommodation market in the pipeline, availability of qualified labor in the hospitality industry is a key element of policymaking. Addressing this will require strategic investment in training, improved work conditions, and enhanced recruitment efforts to address labor availability and skills gaps. More sophisticated investments require higher skills sets as well. Stronger regional collaboration in training and deploying human resources across islands is needed. A further discussion of training needs can be found in CTO’s 2022 report “Regional Human Resources Development Knowledge and Skills Audit for the Tourism Industry.”33 Develop strategic land use plans for accommodation Development and implementation of integrated local area plans with clear zoning is critical to balance growth and sustainability. These plans, encompassing sustainable urban and rural zoning strategies, can enhance resilience to environmental and economic change. Boosting government coordination and upgrading information systems is also essential for comprehensive accommodation planning. Local area plans complemented with ex-ante 33 https://www.onecaribbean.org/our-work/human-resource-development/regional-hr-development-knowledge-skills-audit/ Rethinking Caribbean Tourism 59 impact evaluations are important to mitigate pressure on ecosystems by pre-assessing, delimiting, organizing the needs and impacts of future accommodation operations. Some countries like the Dominican Republic (Box 18) and Jamaica have already started investing in these plans. Investment incentives need to be aligned with desired market segments and local area plans. For instance, a country looking to develop its adventure market would want to encourage development of accommodation preferences for such consumers. In the case of US adventure travelers to the Caribbean, they mostly prefer to stay in hotels (35 percent), resorts (32 percent), or rented apartments (14 percent) (World Bank, 2024b). Box 18. Benchmark insight Dominican Republic: tourism planning at all area levels The Dominican Republic offers a good example of a government that combines destinations with sustainable local area planning. The country’s Ministry of Tourism has been promoting tourism multi-circuits for more than a decade, focusing on creating thematic routes that differentiate various regions and attractions (see map pictured right), and encourage tourists to explore beyond traditional beach resorts. This initiative aims to diversify and make the tourism industry more sustainable, by also trying to decongest the coast (Montilla, 2019). Recently, the government published the Tourism Development Plan for Cabo Rojo, Pedernales, building on prior development studies and performing benchmarking of best practice destinations. Previous development studies served as a starting point for the report, Rethinking Caribbean Tourism 60 including the Economic Commission for Latin America’s 2017 “Strengthening of the tourism value chain in Pedernales” report, requested by the Ministry of Industry and Commerce. The plan benchmarked successful global models of sustainable tourism including Belize, Lanzarote, and Maldives (Dirección General de Alianzas Público-Privadas, 2021). Sustainability is the core of the plan, which aligns with the Sustainable Development Goals (SDGs) and the National Development Strategy 2030. The strategy, designed with participation of the Pedernales community and the province’s social and environmental groups, includes fostering an ecosystem-based vision for coastal development, enhancing protected areas with educational trails, promoting sustainable community enterprises, and reusing infrastructure. It focuses on energy conservation, carbon offsetting with native flora, efficient waste handling, and considers establishing a university campus and a research station to bolster environmental and tourism education. The tourism development of Cabo Rojo is guided by the Dominican System of Sustainable Tourism Indicators, in collaboration with the Ministry of Tourism, and Ministry of Environment and Natural Resources, with support from UNDP's Coastal Biodiversity and Tourism Project. It is expected that Pedernales will become a destination with differentiated tourism offerings around eco- and adventure tourism, attracting higher value profiles. The proposal is expected to attract high-standard, adventurous tourists who spend more and engage closely with the community. This approach aims to diversify Dominican Republic tourism by emphasizing ecological and cultural experiences, differing from the current tourism model (Presidencia de la República Dominicana, 2019). Pedernales is just one of the areas targeted in the multi-destination strategy of Dominican Republic. Previously, for example, the north-west of the country (Dajabón province) received funding in 2015 from the Ministry of Tourism to integrate communities into the development of tourism activities. This was done in coordination with local governments and through tourism education campaigns, training programs, and development of MSMEs, among others (Ministerio de Economía, Planificación y Desarrollo, 2015). Formalize and license short-term rentals Short-term rentals need to be accounted for, licensed and considered as part of countries’ integrated tourism planning. Effective regulations are essential to ensure these rentals operate within the bounds of local laws, respect community standards, and contribute fairly to the economy. Additionally, comprehensive data collection and analysis are crucial for understanding the impact of short-term rentals on housing markets and community dynamics. Critically, data on ownership and market share of short-term rental properties can give cause for a differentiated policy that levels the playing field. Examples from around the world can serve as a baseline for critical options in short-term rentals policymaking, including zoning strategies, limits on numbers of properties, ownership, or periods of time rented, taxation, and environmental regulations, amongst others (Box 19). Rethinking Caribbean Tourism 61 Box 19. Benchmark insight Japan: evolving development impact of short-term rentals Japan's Minpaku Law, formally known as the Private Lodging Business Act, came into effect in mid-2017 to regulate the burgeoning short-term rental market. A government survey in 2016 of 15,127 minpaku34 listings in Japan revealed that just 16.5 percent where licensed, whereas 30.6 percent were unlicensed and 52.9 percent could not be identified or were under investigation (Hosokawa, 2018). In response, the law sets out the legal framework for private individuals and businesses to rent out properties for short-term stays. Aside from provisions like registration or hygiene standards, properties have an operational limit of 180 days per year, while local governments have the authority to impose stricter regulations, including shorter rental periods or zoning restrictions. On the other hand, there are special zone certifications (Tokku Minpaku), which can be obtained in more touristic locations and not limit operational days under some conditions (Japan Tourism Agency (a); RE/MAX APEX, 2023). The Minpaku Law is a crucial regulatory framework that aligns the growth of Japan's tourism industry with broader sustainability goals. It enhances economic sustainability by formalizing the short-term rental sector and creating income opportunities for locals, while ensuring fair competition with hotels. It promotes social sustainability by mitigating community issues like noise and overcrowding through rental day limits and local government enforcement. It aids tourism environmental sustainability by encouraging the efficient use of existing properties for tourism and by supporting improved waste and energy management of properties through mandatory safety and hygiene standards. Reported results have been mixed to date, with lessons to be learnt. International Visitor Survey statistics from 2019 show that residential accommodation accounted for 7.40 percent of total visitor nights between July and September, a 6.70 percent increase against the same period in 2018, but lower than 10.1 percent in 2017 (Japan Tourism Agency (b)). In fact, there were reports of a sudden decrease in listings due to the inability of hosts to meet all new requirements (Hosokawa, 2018; Nikkei Asia, 2018). On the other hand, UN Tourism listed Japan as one of the only countries studied complying with planning and sustainability rules and regulations of the short-term-rental industry (UN Tourism, 2019b). Learnings from the enactment of the Minpaku Law will allow other countries to optimize measures. Simplify and level incentive programs Incentive programs should be streamlined and standardized to ensure transparency and fairness across the sector. Enhanced communication and coordination between tourism agencies is also critical to ensure investment agencies and legislation are aligned with national tourism strategies moving forward (Box 20). 34 Japanese term for private lodging or short-term rental accommodation. Rethinking Caribbean Tourism 62 Box 20. Deep dive St. Lucia: incentives landscape Over time, St. Lucia’s tourism regulatory landscape has evolved to include provisions for smaller accommodations and less favored districts. Income tax incentives and other fiscal concessions are provided under the Fiscal Incentives Act, Tourism Incentives Act, Special Development Areas Act, and other concessions granted by the Cabinet of Ministers (PwC, 2024). The extent of incentives and concessions granted are specific to legislation or Cabinet conclusions and dependent on the impacts that an investment would have on local employment, exports, and generation of foreign exchange earnings. In 2022, the Community Tourism Development Act was enacted to involve Saint Lucians in the tourism industry35, and established the Community Tourism Agency, a collaborative partner which supports small local entrepreneurs. Before enactment of the Act, accommodation establishments with six or more rooms would qualify for incentives and other forms of support from the government. Additionally, the recent enactment of the Tourism Development Act (2024) aims to create a more inclusive tourism sector by mandating all property owners (local and foreign) offering tourism services to obtain certification. Additionally, it formalizes the online hospitality service sector. With the new Act, the tourism levy 36 will expand its coverage and is expected to increase revenues for financing of the St. Lucia Tourism Authority. Empower stakeholders for a green transition Stakeholder coordination can facilitate the adoption of resource efficient systems for waste, water, and energy. Especially for hotels, a balance between renewable energy investments and grid energy reliance is necessary. As hotels invest more in renewables, grid energy costs may increase, yet a stable grid connection remains essential to counter variabilities in renewable sources. This scenario demands careful public-private coordination to maintain an energy mix that supports sustainability and economic stability. Moreover, while the private sector often spearheads resource efficiency investments, these ventures usually require a coordinated approach which may involve alignment within a sector, forming public- private partnerships, or coordinating across different regions, such as islands. Government interventions are often needed to support these efforts through regulations, incentives, or infrastructure investments, ensuring adoption of resource-efficient systems is not only environmentally sound, but also economically feasible. Shifting to circular economy business models can significantly lessen environmental impacts in the accommodation sector, aligning with guest preferences for sustainable lodging. A circular economy approach intends to uncouple economic growth from resource consumption and its associated environmental impacts, while enhancing social value (World Bank, 2024d). It rethinks the linear “take-make-dispose” model by reshaping design, business models, and policies to regenerate natural systems and keep materials in use. In tourism, 35 The Act supports MSMEs with funds and financing, operational support, capacity building, marketing and technical assistance on various topics such as environmental impact assessments. In the case of accommodation, it supports establishments that have one to 10 rooms. 36 The tourism levy is a night head tax which goes from EC$8 (US$3) to EC$16 (US$6). The amount tourists need to pay depends on whether the property is big or small. Rethinking Caribbean Tourism 63 public and private sectors can implement circular economy initiatives to promote eco-friendly practices. For instance, hotels can adopt recycling and upcycling initiatives, reduce single- use plastics, and promote renewable energy sources. Governments can support these efforts through policies that encourage sustainable infrastructure, green certifications, and incentives for eco-conscious operations (see Box 21 for an example from the Dominican Republic).37 Sustainable certification standards are a way to monitor and manage environmental and social impacts, with ways to guarantee a more inclusive application. In the absence of a compulsory reporting system for hotels, voluntary certification can serve as a powerful tool. It is important to recognize that sustainable certification standards can be designed to be inclusive by ensuring they are accessible to a wide range of businesses, including small and locally-owned hotels, not just large international chains. This can be achieved by offering tiered certification levels with simplified options, providing technical assistance, or reducing costs for smaller establishments. The Caribbean Alliance for Sustainable Tourism, managed by the Caribbean Hotel and Tourism Association (CHTA), is best placed to act as the coordinating agency for environmental certification having previously led similar programs, such as the Caribbean Hotel Energy Efficiency Action Program (CHENACT).38 Currently, CHTA has endorsed and is promoting the WTTC Hotel Sustainability Basics program39, which can be complemented with technical assistance, simplified paperwork, and tracking programs (see Box 22 for a case study from Türkiye). Box 21. Deep dive Dominican Republic: circular economy good practices In response to environmental impacts of tourism-related waste, private stakeholders in the Dominican Republic have adopted sustainable practices that could be replicated in national parks and other adventure destinations. The Punta Cana Group Foundation partnered with the Inter-American Development Bank's Innovation Lab to implement the project “Circular Economy Model for Organic Waste in Tourist Zones”, addressing issue of food waste in the country. Similarly, Punta Cana Group Foundation implemented “Zero Waste,” a solid waste management program geared towards recycling efforts, reducing landfill waste, minimizing health risks, and protecting the community from pollution, all while making Punta Cana Resort & Club a better place to visit. Other group-run programs focus on coral restoration and conservation, and sea turtle conservation. Similarly, the widespread use of single-use plastics is being tackled by the government through effective regulations to limit their impact . During 2023, the Ministry of Environment and Natural Resources enacted a resolution to eliminate the use of polystyrene foam and single-use plastics within the island's protected areas, such as Cotubanamá National Park and Catalina Island Natural Monument. This regulation, part of a broader initiative called "Saona Sostenible," aims to foster sustainability by working closely with local communities, tour operators, and other stakeholders. However, the transition to a plastic-free environment requires active participation of 37 See supplementary annexes for more tools and examples for circular economy actions. 38 CHENACT was a three-year program funded by the Inter-American Development Bank, European Union, UNEP, and GIZ. CHENACT was executed by the CTO, CHTA, and Caribbean Alliance for Sustainable Tourism. 39 Hotel Sustainability Basics is a set of sustainability indicators which represent 12 actions that are fundamental to hotel sustainability. For more information see: https://wttc.org/initiatives/hotel-sustainability-basics Rethinking Caribbean Tourism 64 all parties involved – including residents, tourists, and local businesses – to reduce pollution and promote responsible waste management practices. Box 22. Benchmark insight Türkiye: certifying sustainable tourism operations In July 2021, a new Tourism Law Number 7334 was gazetted in Türkiye requiring all tourism accommodation establishments to receive sustainability certification (Esin Attorney Partnership, 2021). The Türkiye Tourism Development and Promotion Agency (TGA), established in 2019 by ministerial decree, is tasked with implementing a sector-wide Sustainable Tourism Program requiring compliance with sustainability certification by all accommodation and service providers by 2030 (TGA, 2022). TGA signed a collaboration agreement with the Global Sustainable Tourism Council (GSTC) through which Türkiye’s government is the world’s first to develop a mandatory national program linked to defined business targets for sustainability. The cost of training certifiers (250 trained and actively inspecting), awareness campaigns, and technical assistance to TGA over three years is US$500,000. After this time, it is expected that 40,000 hotels will have been inspected and be on a path to full sustainability certification. TGA and GSTC have partnered with Cappadocia University to monitor and implement the program.1 More challenging is sourcing investment funds to support necessary retrofits and system changes to comply with sustainability certification standards . In Türkiye, local financial institutions have been approached by IFC, among others, to create risk-sharing facilities to support sustainability conversion. Returns on investment for “green” improvements to lighting systems, heating, ventilation and air conditioning (HVAC) and building systems, rooftop solar, refrigeration, and zero-waste to landfill all have payback periods of less than four years, making risk-sharing facilities potentially attractive. Results to date: 7,200 hotels (out of 40,000) have received sustainability certification and are implementing sustainability measures at the time of writing (TGA, 2024). Rethinking Caribbean Tourism 65 Chapter 4. Adventure Segment Rethinking Caribbean Tourism 66 Chapter 4. Adventure Segment Key Takeaways: • Adventure tourism is a large and rapidly growing global segment comprised of tourists who spend more, support local communities, and create more jobs than conventional tourism. • The Caribbean has yet to fully benefit from this valuable market segment as it lacks competitiveness in adventure tourism. Despite its strong natural tourism assets and quality protected areas, the region struggles with limited product diversity, weak branding, and fragmented coordination. • Caribbean countries have an opportunity to develop their nascent adventure tourism industries, increase the value of tourism for local economies, and generate income to enhance protected areas. • Product diversification can be improved through public sector investments in adventure tourism skills and infrastructure in protected areas paired with regulatory reforms to facilitate private sector access to protected areas, improve quality and safety standards, and lower insurance costs. • Tourism industry coordination can be improved through whole-of-government tourism strategies, destination-level planning, and MSME coordination programs. Destination branding can be improved through consistent marketing and promotion funding for national tourism organizations and investments in market intelligence. • The creation of a regional adventure tourism working group can help raise the Caribbean’s profile for adventure tourism as well as standardize quality and product innovation. 4.1. Introduction Adventure tourism is a large and rapidly growing global tourism segment comprised of visitors who spend more, support local communities, and create more jobs than conventional tourism. Adventure tourism comprised approximately 30 percent of global leisure tourism and contributed US$683 billion in global tourism expenditures from 270 million visitors in 2022 (ATTA, 2023a). Over the past decade, adventure tourism has become one of the fastest growing segments, with a 11 percent compound annual growth rate between 2013 and 2021 (UN Tourism, 2014) (ATTA, 2023a). World Bank research found that adventure- focused travelers spent 25 percent more than average tourists on trips (World Bank, 2021) and Rethinking Caribbean Tourism 67 prefer to purchase activities and goods from local businesses. Similarly, the Adventure Travel Trade Association (ATTA) found that 75 percent of total trip expenditure went to local suppliers (ATTA, 2024), compared with 14 percent of revenues from conventional tourism (UN Tourism, 2014). Together, these impacts support local job creation with adventure tourism spending generating 70 percent more jobs per dollar spent than conventional tourism (ATTA, 2020). Adventure tourism trips combine interactions with nature, physical activity in an environment of real or perceived risk, and cultural experiences. ATTA defines adventure tourism as a trip that includes “at least two of the following three experiences: participation in a physical activity, a visit to a natural environment, and a culturally immersive experience” (p. 8) (ATTA & GWU, 2024). It typically involves engaging in activities or traveling to destinations that have actual or perceived risks and sometimes require specialized skills and physical exertion. Motivations for adventure travel range from transformation/learning (47 percent) and exploration (29 percent) to excitement and challenges (15 percent) and a desire to connect and create memories (9 percent) (ATTA, 2017). Activities typically fall into categories of hard, soft, and cultural adventure activities based on levels of risk, skills, and physical fitness required (Box 23). Adventure tourism is often considered a sub-segment of other markets such as nature-based, rural, responsible, eco, or wildlife tourism. In the Caribbean, much of adventure tourism would also be considered blue tourism. Box 23. Illustrative list of adventure activities per category Hard Adventure Activities Soft Adventure Activities Cultural Adventure Activities Bungee jumping, caving, Backpacking/hiking, Visiting World Heritage Sites, mountain/rock climbing, heli- birdwatching, camping, architectural or cultural tour, skiing, kayaking, canoeing, horseback riding, cultural folk or religious festivals, sea/whitewater rafting, kite orienteering, road cycling, cooking classes, gastronomy surfing, motorized sports sand boarding, safaris, tours, handcraft market or (motorcycle, jet ski), snorkeling, skiing, demonstrations, visiting tribal or mountaineering, mountain snowboarding, stand-up indigenous villages, cultural biking, paragliding, scuba paddleboarding and performances, homestays, local diving, sky diving, surfing and ziplining. language classes and traditional trekking. medicine/plant tours. Source: Authors’ elaboration. This chapter analyzes trends impacting adventure tourism destinations, presents the rationale for growing adventure tourism in the Caribbean, and explores strategies that governments can implement to develop this valuable and inclusive tourism segment. These findings were drawn from desk research, World Bank consumer market research with US outbound travelers (Box 24), benchmarking on two successful adventure tourism destinations (Costa Rica and New Zealand), and deep dive destination case studies on Rethinking Caribbean Tourism 68 Dominica and the Dominican Republic.40 Learnings from benchmarking and deep dive destinations are included throughout the chapter, which ends with policy guidance in six critical areas for adventure tourism development. Box 24. Consumer market research adventure tourism The World Bank conducted consumer market research on US outbound travelers to collect primary data on two tourism markets: 1) US international travelers who visited the Caribbean on adventure tourism holidays and 2) US international adventure travelers who have not visited the Caribbean for adventure tourism holidays. Throughout the report the first group is referred to as “Caribbean adventure travelers” and the second group as “global adventure travelers”. Data was collected from each group to understand the differences between them with the goal to attract more of these “non-visitor” global adventure travelers to the region. For this research, the Caribbean refers to the 12 countries in this report. Both segments are part of the same overall adventure tourism market (see Annex 3 for the full methodology) (World Bank, 2024b). Adventure tourism trends Three trends impact destinations seeking to develop or grow adventure tourism: diversification of the adventure tourism market, ongoing disintermediation, and climate change. Adventure tourism diversification Adventure tourism markets are diversifying, both geographically and demographically, as new travelers discover adventure activities (Box 25 outlines adventure market segmentation). While most adventure tourists originate from Europe, North and South America, and Australia (UN Tourism, 2014), there is increasing interest in adventure tourism from Asian markets, particularly China and Singapore. The growing Chinese adventure tourism market is sized at 16.3 percent of Chinese outbound travelers (Bannikin Travel and Tourism, 2019) compared to 19 and 29 percent of US and Australia outbound travelers, respectively (IFC, 2019). Chinese adventure travelers have a lower risk profile than traditional adventure tourists, which influences destination choices (Bannikin Travel and Tourism, 2019). Adventure operators and destinations also target niche segments to combat increasing competition, including focusing on families, travelers aged 50 years plus, women-only group trips, and LGBTQIA+ travelers. Prior to the pandemic, there was also a trend toward solo adventure travel, which was leading to trip price restructuring. 40 See Annex 2 for full methodology of the segment analysis and supplementary annexes for full case studies. Rethinking Caribbean Tourism 69 Box 25. Adventure tourism market segmentation The adventure tourism market can be segmented based on psychographic motivations for travel, intensity of adventure experiences, and perceived risk. In all global adventure segments, travelers tend to travel as couples (57–67 percent), followed by families, solo trips, and friends. Only a small portion travel with a formally organized and packaged tour group (1 –9 percent) (World Bank, 2021). IFC and ATTA identified three adventure travel segments in US and Australian outbound markets: • Adventure intensives engage in more intensive physical activity and are comfortable with higher levels of risk and discomfort. They participate in “hard adventure” activities that require high levels of technical skill and physical fitness, such as mountain and rock climbing, kayaking, white water rafting, mountain biking, and scuba diving. They tend to be younger, with 93 percent aged 25–44 years and are more likely to be male (56 percent for Australia and 66 percent for US). • Experience samplers engage in a range of “soft adventure” and cultural activities such as camping, backpacking, hiking, snorkeling, and horseback riding. They enjoy higher levels of perceived risk but avoid actual risk-taking behavior, are more likely to be women (60 percent for Australia and 51 percent for US), and skew slightly older (62 percent aged 45–55 years). • Cultural explorers prioritize cultural activities while also engaging in nature-based activities like hiking, birdwatching, and camping. They actively avoid perceived and actual risks in their activity selection. They are the oldest segment with nearly all aged above 55 years with generally equal gender split in US and Australian markets. Tourism industry disintermediation An ongoing trend towards disintermediation has reduced the role of buyers and intermediaries, with increased pressure on supplier MSMEs to engage in direct marketing and customer service. As consumers seek more authentic and unique experiences and engage further in the planning stages of travel, they are increasingly bypassing buyers and intermediaries to book directly with destination management companies or individual activity providers (Box 26). This trend towards disintermediation has increased since the early 2000s (UN Tourism, 2014) and is particularly strong for Adventure Intensive travelers, with 59 percent of US and 66 percent of Australian travelers booking all elements of trips directly, compared to 53 percent of US and 45 percent of Australian Cultural travelers (World Bank, 2021). While the process has created opportunities for increased value capture at supplier level, it obliges them to take on additional roles such as direct marketing and consumer payment processing, increasing operational costs and testing their capacity. Direct marketing in particular can be a challenge for small adventure tourism businesses that often face information asymmetries around market intelligence and potential demand forecasting. Disintermediation has created complex value chains and spawned coordination failures across the private sector. Complexity arises from consumers mixing distribution channels, such as booking some parts of trips directly, through buyers or online travel agents, and multiple suppliers on the ground. For example, a quarter of American Experience Sampler Rethinking Caribbean Tourism 70 travelers booked their last adventure trip using a mix of tour operators and direct booking (IFC, 2019). Supplier businesses now take on multiple roles with accommodation providers acting as tour operators or travel agents in some cases. Together, this creates a complex distribution system and can create coordination challenges within the destination. Box 26. Traditional adventure tourism industry structure The adventure tourism industry is split into consumers, tour operators (buyers and suppliers), and destinations. Travel buyers are intermediaries who source products from supplier tour operators at destinations, compose itineraries, and engage in business-to-consumer marketing. Buyers can be full-service outbound tour operators, 41 travel agencies, travel advisors, and online travel agents, such as Expedia, Viator, or TripAdvisor. Tour operator suppliers are businesses in the destination who provide on-the-ground services to buyers and consumers. Suppliers are split between first-tier suppliers (provide goods and services directly to tourists) and second-tier suppliers (provide goods and services to first-tier suppliers) (Figure 55). Destination management companies, also known as inbound tour operators, are suppliers who provide services and package itineraries for that destination. They differ from outbound tour operators in that they typically function only in one destination (sub-national, national, or regional). Figure 55. Adventure tourism supply chain Source: ATTA, 2023b. Climate change The impacts of climate change are being felt by adventure tourism destinations and firms globally. Given the dominance of blue tourism in the Caribbean’s adventure tourism segment, the climate crisis is having significant impacts on demand and supply. Climate change is not 41 The two leading global adventure tourism outbound tour operators are Intrepid Tours based in Australia and G-Adventures based in Canada. Other key players include Natural Habitat Adventures, Lindblad Expeditions (adventure cruise), Geoex, and Wilderness Travel. Rethinking Caribbean Tourism 71 only endangering tourism assets (coral bleaching) but also impacting operations (water shortages and power outages) and creating disruptions in planning for demand and business continuity. A 2022 global study by UN Tourism and ATTA found that 75 percent of tour operators were engaged in climate action, but not in a systematic manner such as through climate action plans; the measuring, monitoring and disclosing of emissions; emissions- related sustainability certifications; or staff sustainability training. Additionally, while there was recognition within the adventure tourism industry that all types of tourism could contribute to global emissions, only 26 percent of respondent firms and 10 percent of destinations reported measuring and tracking emissions (UN Tourism and ATTA, 2022). The climate crisis has also pushed operators to focus on regional and local travelers, with 22 and 16 percent of ATTA 2024 Industry Snapshot respondents citing a new focus on these segments, respectively (ATTA, 2024). 4.2. Development challenges Nearly all Caribbean country governments prioritize the adventure segment in their tourism strategies or policies as a way to derive more value out of tourism. The World Bank’s Caribbean Tourism Policy Review (World Bank, 2024c) conducted for this report revealed a shift from economic growth orientated tourism policies to ones taking a more holistic sustainable development approach. To deliver on these broader development goals, Caribbean countries are shifting focus to market segments that promote sustainability and local economic development. The review found that 11 out of the 12 countries42 have specifically identified adventure tourism or one of its subset segments as a priority to derive more value out of tourism. World Bank consumer market research conducted for this study found that Caribbean adventure travelers spend 23 percent more than all-inclusive resort visitors (US$4,523 compared to US$3,676 per person per trip, respectively) and that 55 percent prioritize sustainability in holiday planning, compared to 36 percent for cruisers and 42 percent for all inclusive visitors (World Bank, 2024b). However, the Caribbean’s lack of competitiveness in adventure tourism means they are not able to benefit from the segment’s rapidly growing and high-potential market. The Adventure Tourism Development Index (ATDI), developed by the ATTA and George Washington University, scores countries across 10 pillars to assess their competitiveness, readiness and potential for adventure tourism. In 2024’s ATDI, the Caribbean region ranked below the global average in every category except sustainability, safety, climate resilience, and infrastructure. The region ranked notably lowly in cultural resources, natural resources, entrepreneurship, and image (ATTA & GWU, 2024). Additionally, since 2011, a Caribbean country has only once ranked in the top 20 Developing Country ATDI when Dominica was 13th in 2020. The Caribbean has also consistently ranked poorly in terms of forward booking demand for adventure tourism trips, which acts as a demand forecast indicator. The Caribbean ranked 19th and 16th out of 23 regions in terms of forward bookings demand among ATTA tour operators in 2023 and 2024, 42 Dominican Republic, the only country not prioritizing adventure, did include cultural, community-based tourism, and culinary tourism as priorities, often viewed as part of an adventure tourism offering. Rethinking Caribbean Tourism 72 respectively (Figure 56). The only exceptions were jumps in demand interest in 2021 and 2022 related to the pandemic as Caribbean destinations were open before many other global ones. These weaknesses, along with limited market intelligence and data on the segment, have resulted in limited adventure tourism supply and poor brand positioning in core markets. Figure 56. ATTA Industry Snapshot ranking of forecasted demand by region, Caribbean 2020 2021 2022 2023 2024 1 2 3 4 Ranking of Forecasted Demand by Region 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Caribbean 21 22 23 Source: Authors’ elaboration with data from ATTA, 2020; ATTA, 2021; ATTA, 2022; ATTA, 2023c; ATTA, 2024. Each colored dot represents a destination or region. When compared to other competitor destinations,43 the Caribbean underperforms on tourism products and destination-wide systems and infrastructure, despite performing well on accessibility. The World Bank consumer market research analyzed how US adventure tourists perceived Caribbean and competitor destinations to understand their performance on 29 destination parameters. Evaluated against competitors, the Caribbean performs well on access factors (flight options and pricing, accessibility, and visa requirements), price competitiveness, and language skills with Caribbean adventure travelers (those who have been to the region for adventure trips). However, with global adventure travelers (those who have not travelled to the region for adventure) the Caribbean underperforms on perceptions of the availability and quality cultural and natural assets, local food and crafts, shopping, quality cuisine, activities, and range of accommodation ( Table 3). Importantly, for global adventure travelers, the region significantly underperforms on destination-wide issues, such as quality and stable utilities; reliable healthcare; trust in government to respond well to an emergency; ability to respond to natural disasters; crime; political stability; and infrastructure as well as hygiene and sanitation. These factors could be driving potential adventure tourists away to other destinations, particularly the Mediterranean, Australia, New Zealand and South Pacific islands, which overperform for global adventure travelers (World Bank, 2024b). 43 Mediterranean, Australia and New Zealand, South Pacific Islands, Central America, South America, and Southeast Asia. Rethinking Caribbean Tourism 73 Table 3. Perceptions of the Caribbean by US outbound adventure tourists, normalized across competitor destinations, Caribbean adventure travelers and global adventure travelers Sources: Authors’ elaboration from consumer market research data World Bank 2024b. Low competitiveness is driven by fragmented coordination across the collection of MSMEs that create the adventure tourism offering. Adventure tourism experiences are delivered through a loosely organized collection of MSME suppliers including accommodation owners, restaurants, tour operators, and activity providers. ATTA’s 2024 Industry Snapshot found that 70 percent of global respondents have fewer than 10 full-time staff (ATTA, 2024). More specifically, in the Caribbean, 99 percent of Dominica’s accommodation, tour operators and activity providers predominately focused on adventure tourism are MSMEs. The disparate nature of these enterprises can create challenges in defining and implementing a cohesive and quality adventure itinerary and brand image within a destination. This is driven by coordination failures in the industry. Individual MSMEs also often face challenges in garnering sufficient market power to effectively advocate on behalf of the industry. This structure means that investments tend to be small-scale, especially in early-stage adventure destinations. Rethinking Caribbean Tourism 74 Finally, many Caribbean destinations suffer from low market penetration in outbound adventure tourism markets due to limited funding for marketing and inadequate MSME- level marketing efforts. Destination branding and marketing can suffer in an industry structure centered on MSMEs, as individual firms do not have adequate funds, access to market intelligence, or marketing skills to successfully target outbound adventure travelers through destination marketing (Ateljevic, 2009). Public sector supported destination marketing typically counteracts these coordination failures. However, Caribbean adventure travelers were 6 percent less likely to be inspired to take a trip to a specific destination based on an official destination website than global adventure travelers, indicating a potential weakness in official marketing (World Bank, 2024b). Adventure tourism demand in the Caribbean The adventure tourism opportunity for the Caribbean is substantial. Already 20 percent of the US outbound travel market traveled to the Caribbean for adventure purposes between 2019 and 2024. Importantly, World Bank research conducted on US outbound travelers found that Caribbean adventure travelers and global adventure travelers differed in demographics, travel behavior and attitudes to travel. Caribbean adventure travelers are more likely to be male, younger, and living with a partner and children in the southeastern US than global adventure travelers (Figure 57). This is likely driven by the proximity of the Caribbean and ease of access. Caribbean adventure travelers also travel overseas more frequently (averaged 6.4 international trips in the past five years) comparted to global adventure travelers (4.9 trips in past five years). While many travel behaviors are the same across the two segments (predominately travel with their partner and no children, have limited interest in taking a package holiday, and do not mind discomfort when traveling), there are marked differences in travel motivations and psychographic characteristics. Caribbean adventure travelers are more interested in traveling to destinations closer to home, pairing adventure holidays with relaxing in the sun and enjoying nightlight, and are more likely to consider the sustainability of their accommodation. Global adventure travelers tend to be more open minded, seek new experiences during their travels, and interact with nature. Rethinking Caribbean Tourism 75 Figure 57. Demographics for Caribbean adventure travelers and global adventure travelers Note: Caribbean adventure travelers are those who have travelled to the region for adventure tourism in the past five years. Global adventure travelers are adventure travelers who have not travelled to the Caribbean for adventure travel in the past five years. Source: Authors based on World Bank consumer market research World Bank, 2024b. Caribbean adventure travelers are attracted by natural and cultural assets and adventure activities but also make destination selection decisions based on entertainment options. The World Bank consumer market research highlights trends in destination selection and travel behaviors (World Bank, 2024b). Caribbean adventure travelers select destinations based on a few drivers, including the destination’s natural and cultural assets (59 and 50 percent, respectively), weather (55 percent), and diverse range of activities (45 percent), similar to global adventure travelers. This aligns with engagement in popular activities by Caribbean adventure travelers including hiking and walking (57 percent), swimming (33 percent), snorkeling (31 percent), mountain and rock climbing (20 percent), and ziplining (20 percent). However, Caribbean adventure traveler destination selection is also driven by entertainment options (36 percent versus 20 percent for global adventure travelers) and a focus on sustainability (22 percent versus 16 percent). Caribbean adventure travelers mainly travel to The Bahamas (45 percent), Jamaica (25 percent) and Dominican Republic (20 percent), aligning with overall dominance of these destinations in international arrivals. However, when comparing Caribbean adventure travelers with the wider US leisure travelers, Caribbean adventure travelers heavily over-index on travel to countries like Dominica (15 times), St. Vincent and Grenadines (7 times), and St. Kitts and Nevis (5.8 times) and slightly over-index on travel to Barbados (3 times) and Antigua and Barbuda (2 times). Awareness of destinations and future travel consideration varies greatly across the region for both market segments. Caribbean adventure travelers are likely to be repeat visitors for adventure tourism (77 percent of respondents consider future visitation). There is also potential to attract global adventure travelers to the region, with 45 percent considering adventure tourism visitation. However, this varies greatly by destination. As seen in Figure 58, dominant destinations in the region – The Bahamas, Dominica Republic and Jamaica – have Rethinking Caribbean Tourism 76 high destination awareness and high future travel intention for both market segments. Barbados, Belize, and St. Lucia all have strong awareness with both adventure tourism market segments, but lower travel intention. This means they need to strengthen the perception of the destination to convert potential tourists into actual visitors. Many OECS countries have low overall awareness with both market segments and need to improve their market presence before converting interest into visitation (see supplementary annexes for individual country scorecards that provide detailed information on awareness, consideration, and other factors). Figure 58. Destination awareness compared to consideration for future travel intention (in the next 3 years), Caribbean Adventure Travelers and Global Adventure Travelers Note: Size of bubble = share of respondents who have visited in the past five years. Source: Authors based on World Bank consumer market research World Bank, 2024b. Abundant assets contrast with limited product development Around half of TripAdvisor activity and attraction listings in the Caribbean are adventure and culture-based, though is varies widely across countries. Based on web scraping in TripAdvisor,44 38 percent of tourism listings are for hard or soft adventure experiences, 13 percent are cultural, 14 percent are wellness, and the remainder are non-adventure related leisure experiences. In four of the 12 countries, adventure and cultural tourism activities comprise more than 60 percent of offerings: The Bahamas (61 percent), Belize (65 percent), Dominica (67 percent), St. Vincent and the Grenadines (73 percent) (Figure 59) (see Annex 3 for a methodology of web scraping and categorization of listings). 44 Tripadvisor is a user generated content and online travel agent website. It has good representation of attractions, activities and tours on ground, but is not holistic. TripAdvisor listings can be added by businesses or users and represents a specific site, business or area that a tourist can visit in a destination. Rethinking Caribbean Tourism 77 Figure 59. Share of TripAdvisor listings by tourism segment and country Adventure Cultural Wellness Non-Adventure 100% 90% 80% Share of TripAdvisor Listings 70% 60% 50% 40% 30% 20% 10% 0% Antigua and Barbados Belize Dominica Dominican Grenada Jamaica Sint St. Kitts and St. Lucia St. Vincent The Barbuda n=237 n=306 n=110 Republic n=165 n=351 Maarten Nevis n=72 n=223 and the Bahamas n=133 n=1036 n=207 Grenadines n=512 n=142 Source: Authors based on web scraping research. The Caribbean has a robust set of adventure tourism assets but limited formally developed adventure tours and activities. By categorizing the listings into assets, attractions, and activities and tours, more nuance on the availability of formally developed adventure tourism can be seen.45 Of 846 tourism assets identified through a web scraping of TripAdvisor in the 12 countries, 49 percent are adventure tourism-related. However, of the Caribbean attractions, only 34 percent are adventure tourism-related with the remainder non- adventure (33 percent), cultural (32 percent), and wellness (1 percent) attractions. This trend continues at the activity and tour level, with only 36 percent of formally developed tours offering adventure tourism (6 and 30 percent hard and soft adventure tourism, respectively), wellness activities (35 percent), non-adventure (25 percent), and cultural tours (4 percent). Formally developed adventure activities and tours – those designed, packaged and sold as defined experiences – are an essential element in stimulating adventure demand and in destination selection (World Bank, 2021). Soft adventure tourism and non-adventure activities are the most popular across the region based on the number of TripAdvisor reviews. As a measure of popularity, Figure 60 shows the average number of reviews per listings by tourism segment indexed against the average number of reviews per listing for all listings in the country. This process normalizes popularity to avoid bias caused by the number of adventure sites in the country and illustrates how many more reviews each activity category has compared to the average.46 Overall, the analysis shows that soft adventure tourism and non-adventure tourism assets, attractions and tours have the most reviews on average across all countries and hard adventure, wellness 45 Assets are nature or culture-based tourism resources that are not specifically developed into an offering, for example a beach, river, or forest. Attractions are assets that have been developed into a formally managed and development experience, for example a national park. Activities and tours are products and experiences formally offered by a business for a price. 46 Normalization was achieved by analyzing the average number of TripAdvisor reviews per tourism segment (soft adventure, hard adventure, cultural, wellness and non-adventure) indexed by the average number of reviews for all listings in each country. Rethinking Caribbean Tourism 78 and cultural assets, attractions, and tours are the least reviewed across most countries. Notable variances are for Barbados and Belize were hard adventure activities have more reviews, and Grenada and St. Lucia, the only countries where cultural and wellness listings, respectively, have the most reviews on average. Figure 60. Average number of TripAdvisor reviews per segment indexed by average number of reviews for all listings in the country Soft Adventure Hard Adventure Cultural Wellness Non-Adventure Percent Difference Compared to Average Number of 100% 50% Reviews 0% -50% -100% Antigua Barbados Belize Dominica Dominican Grenada Jamaica Sint St. Kitts St. Lucia St. Vincent The Grand Total and Republic Maarten and Nevis and the Bahamas Barbuda Grenadines Note: Illustrates how many more reviews each adventure segment has compared to the average number of reviews for listings presented by segment. The number of reviews is a proxy for activity popularity. Source: Authors based on web scraping research. Despite the Caribbean’s strong set of adventure assets and popular soft adventure tourism experiences, the diversity of formalized adventure tourism products is weak and misaligned with global demand. Analysis on formalized adventure tourism assets and tours show that low infrastructure activities such as hiking, walking, snorkeling, and marine wildlife viewing are the most common across the region (Figure 61). Yachting and sailing, classified a chartered yacht or sailboat experiences and separate from standard boat tours, is also common with good representation in most countries. Two formalized activities with more than 50 listings are highly concentrated, with 40 percent of Cavern & Cave listings in Belize and 47 percent of agrotourism listings in the Dominican Republic and Jamaica. Globally popular and trending activities, such as cycling and kayaking (ATTA, 2024), are not well developed or represented in any country. Rethinking Caribbean Tourism 79 Figure 61. Number of adventure activity TripAdvisor listings in 12 Caribbean countries 200 193 Number o f TripAdvisor Listings 160 130 120 105 75 84 72 80 55 56 32 27 23 40 22 19 13 14 16 3 12 6 4 11 0 Cycling Fresh water swimming Submarine Parasailing Zipline Marine Wildlife Fishing Caverns & Caves Horseback riding Garden (unspecified) Snorkeling Wildlife & Birding Yachting & Sailing Scuba (Dive sites not Hiking/Walking Paddleboarding Motorized Sports (land Surfing & Kite Surfing Multi-activity Agrotourism Tubing, Rafting, Canyoning Kayak & included) and water) Source: Authors based on web scraping research. Note: Multi-activity tours with explicit inclusion of activities could be counted multiple times. Untapped opportunities abound to develop community-based tourism, camping, and kayaking products to better meet market demand. Using data from the World Bank consumer market research carried out under this study, when comparing activities of interest and participation by Caribbean adventure travelers, two important categories emerge (Figure 62). One includes products that already exist in the Caribbean that could be enhanced and expanded such as hiking and walking, swimming and snorkeling (top right), while another is those potentially lacking but with high market demand such as community-based tourism, camping, and kayaking and canoeing (top left) (World Bank, 2024b). Figure 62. Activities undertaken during last adventure trip to the Caribbean compared to activities respondents wanted to be offered more, Caribbean adventure travelers Source: Authors based on World Bank consumer market research World Bank, 2024b. Rethinking Caribbean Tourism 80 Similarly, satisfaction levels with adventure experiences indicate that the most popular activities have the lowest quality ratings. Hiking, walking, snorkeling, agrotourism, caverns and caves, and gardens have high engagement rates, but also the lowest TripAdvisor Bubble scores (review rating score or proxy for satisfaction)47 (Figure 63). Conversely, the least commonly available experiences – such as kayaking, paddleboarding, surfing, kite surfing, and parasailing that together comprise only 2.6 percent of stand-alone adventure attractions and tour listings – have the highest average ratings. Snorkeling and marine wildlife viewing are both commonly available and highly rated. Figure 63. Average TripAdvisor bubble review scores for adventure activity listings 4.8 4.6 (1-5, with 5 being the highest score) 4.4 4.2 4.71 4.71 4.67 4.64 4.56 Average Bubble Score 4.43 4.43 4.41 4.34 4.33 4 4.17 4.11 4.02 4.00 4.00 4.00 4.00 4.00 3.8 3.6 Scuba (Dive sites Cycling Marine Wildlife Yachting & Sailing Fresh water Motorized Sports Parasailing Fishing Wildlife & Birding Caverns & Caves Horseback riding (unspecified) Garden Snorkeling Hiking/Walking Paddleboarding Surfing & Kite Surfing Multi-activity (land and water) Agrotourism swimming not included) Kayak & Source: Authors based on web scraping research. Poor coordination and weak regulatory environment Limited product development, poor quality offerings, and low safety standards for adventure tourism activities are commonly a result of fragmented coordination across the multiple government agencies overseeing regulations. Typically, the agency that oversees and enforces activity and safety regulations depends on the location (land, water or air-based), transportation used (boat, off-road vehicle), service(s) provided (accommodation, food, transportation), and levels of risk. These multiple and often missing regulations can create information asymmetries for potential investors or halt investment, for example an inability to invest in a specific activity due to the absence of a regulation or higher costs related to insurance. In Dominica, for example, existing standards are not holistic and in many cases activity-specific standards are lacking, which may drive-up insurance costs. In the Dominican Republic, domestic companies providing canyoning excursions operate under a no-objection letter instead of a license from the Ministry of Tourism, since rappelling and climbing are not recognized as licensable activities in the national tourism registry. Destinations without such regulations face safety and quality standard issues that can erode market competitiveness. While peer-to-peer platforms such as Airbnb and Viator have lowered entry barriers for micro-operators, they have also facilitated sidestepping important 47 Bubble scores represent the average user ratings of experiences on a scale of one to five. Rethinking Caribbean Tourism 81 regulatory compliance for adventure tourism safety standards (see Chapter 3 on accommodation for more information on short-term rental regulations). This is especially important for short-term rentals that may offer adventure experiences or provide access to adventure equipment such as kayaks, boats and jet skis, but do not have appropriate licenses to offer these activities or safety systems in place. This can result in accidents that can seriously impact a destination’s reputation in both the adventure and mainstream markets. Limited product development in the Caribbean is also driven by weak or uncoordinated regulatory environments around protected area management. Developing adventure tourism businesses requires special consideration around policies allowing access to protected areas. Adventure tourism in the Caribbean relies on the ability to build reliable itineraries in and around marine, terrestrial, and cultural protected areas. Poor resource management policies can inhibit access, and missing or limited concessions frameworks can dilute contestability of commercial use and investment in protected areas. For example, in Dominica, investments have been allowed in protected areas but are mostly unregulated due to a lack of a formalized concessions framework, outdated policies, weak enforcement of environmental standards, and limited participation of local communities in planning and management. 4.3. Policy guidance While Caribbean countries have an opportunity to capitalize on the adventure tourism industry, there is a critical need to address policy areas to increase market-oriented products, drive demand, and facilitate investment. With strong underlying adventure assets and access to the US, one of the largest adventure tourism markets globally, the Caribbean is poised to tap into the growing adventure tourism market, increase the value of tourism to local economies, and generate income to enhance protected areas. To achieve this, there are six critical policy areas that need to be addressed: (i) creating a culture of exploration and accessing adventure skills, (ii) boosting protected area management and conservation, (iii) investing in good public tourism infrastructure, (iv) developing and aligning adventure tourism regulations, (v) addressing information asymmetries, and (vi) enhancing sector and industry coordination, especially to support destination marketing. Together, these policy reforms, investments, and programs will help stimulate new adventure tourism product development, address underlying market and government failures, and enhance the image of adventure tourism. The following section provides policy guidance based on in-depth research on the drivers of success from benchmark adventure tourism destinations and adapted to the Caribbean context. Costa Rica and New Zealand were selected as best practice destinations that offer relevant lessons for the Caribbean based on criteria that included geography, land ownership structures, data availability, policy environment, and the importance of adventure tourism, among others. Both countries have a significant share of their tourism markets driven by adventure tourism arrivals, who tend to stay longer and spent more (Box 27). The benchmarking analysis examines good practices on policies and regulations as well as drivers Rethinking Caribbean Tourism 82 of success, especially assessing how these destinations cultivated adventure tourism in the early stages and developed the segment over time. This was gleaned from reviewing previous and existing tourism policies, laws, regulations and strategies, analyzing academic literature, and conducting interviews with key stakeholders. Box 27. Benchmark insight New Zealand and Costa Rica: snapshot of adventure tourism Top-tier adventure tourism destinations have generated strong economic impacts from tourism. Both New Zealand and Costa Rica rely on tourism to drive their economies and exports, with tourism contributing more than 19 percent of total exports in 2019 (UN Tourism, 2024). In 2023, 2.53 million international arrivals contributed US$5 billion to the New Zealand economy, while about half of tourists from its top six source markets arrive for some type of adventure tourism activity (Tourism New Zealand, 2023a). Tourism is an important source of jobs in New Zealand (14 percent), with one job created for every 42 international visitors. Adventure tourists to New Zealand also stay 77 percent longer in country than non-adventure tourists (20.2 versus 11.4 days) and spend 17 percent more than non-adventure visitors (NZ$4,061) (New Zealand Trade and Enterprise, 2019). Additionally, New Zealand receives significant fiscal revenues from tourism amounting to US$4.8 billion in direct crown income from tourism (US$2.5 billion in Goods and Services Tax) and US$2.3 billion in other revenues in 2019. It leverages this income to reinvest in the industry to make an 18:1 return on investments in all markets on partnership campaigns and spending around US$164.8 million on tourism-related initiatives (Tourism New Zealand, 2019). In Costa Rica, 2.75 million international visitors brought US$4.7 billion into the Costa Rican economy and supported nearly 163,000 jobs (Instituto Costarricense de Turismo, 2023). Costa Rica has focused on attracting more valuable tourist segments with visitors now spending an average of US$1,892 per trip and staying an average of 12.9 days (up from 12.3 days in 2017–19). In 2020, 62 percent of visitors travelled to Costa Rica to experience adventure (Instituto Costarricense de Turismo, 2020). Both destinations take a whole-of-government and coordinated approach to destination and industry management. Tourism in New Zealand is holistically managed with policy and strategy set by the Minister of Tourism and implemented by the Ministry of Business, Innovation and Employment (MBIE). MBIE’s tourism department oversees destination management, product development and tourism funding. Tourism New Zealand (TNZ) is a crown entity that sits under and is funded through MBIE, with a core mandate for marketing. TNZ is governed by a board of directors that include public and private sector members. Tourism in Costa Rica is overseen by the Instituto Costarricense de Turismo (ICT), a governmental organization chaired by the Minister of Tourism. The ICT is responsible for managing facilities, infrastructure, marketing tourism, and overseeing conservation efforts, visitor protection, and development support. The ICT board of directors consists of seven members, including the Minister of Tourism as chair, and six additional representatives from the public and private sectors. Culture of exploration and access to skills Governments can foster a culture of exploration and promote adventure tourism product development through investing in outdoor education and exploration clubs. Adventure tourism product development requires a deep knowledge of the landscape and natural Rethinking Caribbean Tourism 83 features of a destination, usually derived from local knowledge. This was essential to successful adventure tourism development in New Zealand and Costa Rica (Box 28). This knowledge is developed over time through a cultural of exploration and a desire to spend time in nature, to conquer challenges, and visit difficult-to-reach places. Particularly in early-stage adventure destinations, local businesses or individuals require a strong entrepreneurial spirit and culture of exploration to push the boundaries of traditional tourism products in a location not already open to tourism (national parks, rural areas, areas without transport access). To navigate to these remote locations, adventure tourism has also benefitted from creative and technological innovations (jetboats, heli-skiing, bungee jumping). In order to foster this type of exploration within local populations, governments can invest in outdoor education and exploration clubs for students and residents. This can stimulate interest in nature and adventure tourism, generate local demand for products, and encourage entrepreneurship. Once initial investments are made, adventure tourism businesses require access to technical adventure skills to expand, professionalize, and commercialize products. Destinations with strong adventure tourism assets, but limited adventure tourism knowledge or prior investment may require support in product development and adventure-specific skills training. These skills can be accessed by working with international experts to build capacity on adventure-specific skills. Dominica, for example, has a well-established culture of exploration within the local population, but requires support in translating this into marketable and professional adventure tourism products. In order to address this skills gaps, governments need to invest in sustainable product development and adventure-specific skills upgrading through training courses, on-the-job training programs, and overseas learning placements. Taking regional approaches to this can support economies of scale. This can be paired with revisions in immigration policies to facilitate access to adventure tourism skills on a short-term basis and linked to conditions for local capacity building. Box 28. Benchmark insight New Zealand and Costa Rica: examples of programs to stimulate a culture of exploration and access to skills A culture of exploration in the local population was explicitly fostered in New Zealand and Costa Rica through government initiatives. In New Zealand, exploration of nature was supported through outdoor recreation clubs and educational programs launched in the early 20 th century. This was paired with the presence of national outdoor enthusiasts such as Sir Edmund Hillary, along with Tenzing Norgay the first climber to summit Mount Everest, who raised the profile of exploration (Mackenzie, 2015) (Brown, 1997). Similarly, the Costa Rican Government sponsored public awareness campaigns and programs to increase knowledge of the country’s national park system when launched in the 1960s. This included domestic tourism marketing, educational services and interpretations within parks, a national environmental education program, and school programs to promote outdoor activities and an appreciation of conservation (Eagles & Higgins, 1998). Together, these initiatives created domestic demand for adventure tourism experiences and a culture of exploration among local populations. Access to skills proved to be more important in New Zealand ’s adventure tourism development than access to capital. Domestic investors for river rafting relied on technical Rethinking Caribbean Tourism 84 assistance from American rafting companies and experts to establish safe and interesting products and to commercialize their businesses (Brown, 1997). Operators benefited from flexible immigration policies that allowed them to source skills and expertise in areas like river guiding, rafting, and rock climbing to professionalize and grow their businesses. These policies continue to be important in New Zealand as the industry looks to expand into Asian markets and needs staff with both language and technical skills (Wilson, 2017). Conservation and access to protected areas Policies that support the coordinated protection and management of terrestrial and marine natural resources underpin adventure tourism. Countries require policies that balance conservation of critical natural resources and biodiversity with access for private sector investment and sustainable use of protected areas. This includes enhancing and investing in management of protected areas, along with setting, collecting, and appropriately using revenues and fees and creating market-driven concessions processes. These policies are needed to ensure the underlying natural assets on which adventure tourism is built are protected. Within the context of the Caribbean this includes moving towards a blue tourism and blue economy model of protected area management, especially given the importance of marine assets such as coral reefs, mangroves, and biodiversity to adventure tourism. Successful adventure tourism destinations continue to improve management of and access to protected areas to realize local benefits and strengthen conservation such as in New Zealand (Box 29) and the US. The US National Parks systems has long been a champion of working with the private sector through a strong concession framework to invest in park infrastructure, activities, and promote visitation. Regionally, the Dominican Republic also provides a good example of asset co-management between government and the local private sector industry association (Box 30). To leverage natural assets for adventure tourism, governments need to put in place a series of policies and investment programs around protected area management and concessions. Agencies with the mandate to manage protected areas need to be equipped with effective protected area management policies that support and fund development of protected area management plans. The polices also need to provide the regulatory groundwork for protected area management agencies to establish, collect, and manage revenues and fees from the sustainable use of protected areas. This should also encompass a clear revenue flow that provides transparency on how funds are used. These management policies also need to consider how to facilitate private sector access to and investment in protected areas. This should be done through appropriate and well managed concessions frameworks that integrate local land use planning and empower local stakeholders in destination planning and development. Concession frameworks should use fair market pricing practices through a competitive tender process to avoid economic rents gained by first movers. Rethinking Caribbean Tourism 85 Box 29. Benchmark insight New Zealand and Costa Rica: examples of policies to increase sustainable use and development of protected areas for adventure tourism Adventure tourism development in New Zealand was driven by establishment of a protected area management system, a concession framework for private investment, and strong local engagement in land use planning (Mackenzie, 2015) (Brown, 1997) (Margaret McClure, n.d.). The government was actively involved in acquisition of land for expansion of protected areas and pointedly built capacity in protected area management over time. The Department of Conservation (DOC), restructured in the late 1980s to promote private engagement in protected areas, now partners local governments to implement the Re-source Management Act (1991) (Cloke & Perkins, 1998). The act facilitates private investment concessions in protected areas based on a comprehensive framework for land use planning at regional and local levels (Ministry for the Environment, 2023). Regional land use planning provides a guiding framework and is used by local councils to prepare district plans that set zones and guide developers on appropriate concessions (Connell, Page, & Bentley, 2009). Stakeholders in New Zealand have continued to push for improvements in the concessional process, including revision of the fee structure, which varies by economic activity and is allocated on a ‘first-come, first-serve’ model, and an increase in DOC’s ability to restrict visitor numbers in protected areas (Parliamentary Commissioner for the Environment, 2021). This current fee structure creates economic rents for first movers and limits value capture for DOC that could be obtained through a fair market practice using competitive tenders. The Costa Rica National System of Conservation Areas (SINAC) established the Sustainable Tourism Program to promote sustainable use of national parks and increase local engagements. SINAC was created in 1998 under the Ministry of the Environment and Energy to consolidate separate organizations overseeing laws for national parks, wildlife, and forestry. It manages protected areas under the Áreas Silvestres Protegidas, established through the Regulation Biodiversity Law (SINAC, 2024). SINAC uses a participatory approach that relies on decentralized coordination and engagement of local communities (SINAC, 2014) (SINAC, 2017). Concessions in protected areas must be based on strategies and plans approved by the Regional Councils and the National Council of Conservation Areas to ensure appropriate development aligned with community interests (Government of Costa Rica, 1998). Additionally, recent revisions to the Law on Biodiversity (No. 7788) limit concessions in protected areas to community development associations, local cooperatives and microenterprises, or national non-profit social organizations integrated and con-trolled directly by local communities. Box 30. Deep dive Dominican Republic: waterfalls co-management success case The 27 Charcos de Damajagua (27 Waterfalls of Damajagua) provide a good example of successful co-management of a natural asset. (Convention on Biological Diversity, 2018). The waterfalls are located in a canyon with tunnels and natural pools in Puerto Plata, a northern province in the Dominican Republic, and were declared a protected area in 2002. The government, through the Ministry of Environment, made initial investments with donor support (United Nations Development Programme) on infrastructure and other works enabling safe access for visitors. A co- management agreement was established in 2005 and fully implemented in 2010, with clear lines of Rethinking Caribbean Tourism 86 authority and organization for the management of visits, which previously happened informally without supervision or security standards. Currently, it is jointly managed by the Ministry of Environment and the Association of Lifesaving Guides of the Damajagua River. This collaboration defines roles, establishes access fees and allocations of revenues for expenses related to maintaining the trails, and determines distribution of benefits for the public sector and community members who serve as guides. Visitors can explore the area, under strict safety measures put in place after the co-management agreement. Trained guides earn income from service fees and additional ventures like restaurants and gift shops. This initiative has positively impacted 10 neighboring communities, generating more than 125 direct and 650 indirect jobs, facilitating microloans and infrastructure improvements, ensuring sustainability and community empowerment within a formalized tourism framework (Diario Libre, 2016). Investment in public lands and protected areas Paired with policies that facilitate creation of protected areas, public investment in adventure tourism infrastructure is a fundamental driver of adventure tourism success. Small and undercapitalized adventure tourism operators are unable to provide sufficient investments required for major infrastructure development and maintenance, such as hiking or cycling trail development. Thus, they rely on basic infrastructure usually provided by agencies managing protected areas for product development. For example, in New Zealand, operators benefit from significant investments in hiking and cycling trails (Box 31). This access to and investment in protected areas and nature-based tourism assets facilitates creation of formalized tourism products and services, which research has found to be a major factor in destination selection (World Bank, 2021). In Dominica, investments in visitor centers, trails and other infrastructure have been variable across protected areas. Tourism revenues generated from protected areas are not adequately channeled back into maintenance, management and expansion (Box 32). Public investments in protected areas need to be market-oriented, underpinned by financial sustainability, and provide access to private sector for formal adventure tourism product development. To achieve this, governments can leverage tourism revenues and financing from bi-lateral and multi-lateral partners to invest in foundational infrastructure in protected areas. For example, investments in protected areas can include cycling and biking trails, huts/accommodation, viewing platforms, jetties, bridges, ziplines, via ferratas, and rock climbing routes. Some protected area agencies have sought commercial or social impact financing for these types of investments, for example the Turneffe Atoll Sustainability Association in Belize that invested in tourism infrastructure in Turneffe Island Marine Reserve (Turneffe Atoll Sustainability Association, 2025). Regardless of funding sources, all public investments in protected areas should be market oriented and underpinned by demand assessments, financial feasibility studies, and management plans. There should be a clear revenue generation plan, whether through use fees or concession fees, to provide ongoing financing for maintenance, depreciation, and future expansion. Investments should align with private sector needs to facilitate creation of formalized adventure tourism products and Rethinking Caribbean Tourism 87 services. Governments may choose to partner with the private sector in financing upfront and ongoing costs of investments. Box 31. Benchmark insight New Zealand: investment into protected areas and tourism infrastructure Adventure operators in New Zealand have benefited from foundational adventure infrastructure. This began in the early 1900s with government investing in transportation and basic essential services infrastructure to support early tourism development in towns, such as Queenstown, that were transitioning out of mining (Brown, 1997). Investments within protected areas also grew with government actively investing in the supply of trails and rustic accommodation for outdoor recreation (Cloke & Perkins, 1998). This supported the building of a collection of formalized tourism products and experiences around natural and cultural assets. As such tours, activities, and adventure experiences were formally packaged, marketed, sold, and delivered by local businesses. The largest and most significant investments for adventure tourism in New Zealand are the establishment of the Great Walks infrastructure and the Ngā Haerenga New Zealand Cycle Trails (NZCT). The Great Walks were originally created in 1992 and generated NZ$12.5 million (US$8.2 million) in revenue from more than 58,500 visitors in 2019 (Department of Conservation, 2024). By 2006, the Abel Tasman National Park, with a 51km coastal walk, had created 370 jobs, NZ$45 million (US$29.2 million) in annual output, and NZ$118 million (US$76.6 million) per year in value added income compared to NZ$1.2 million (US$0.8 million) in DOC spending for maintenance and operations (Department of Conservation, 2006). Overall, DOC remains committed to maintaining and improving infrastructure in protected areas for tourism development and to improve conservation. Recently, it invested NZ$72 million (US$47.5 million) to address tourism pressures in public conservation lands (New Zealand Trade and Enterprise, 2019). The NZCT is a newer initiative launched in 2009 by the National Cycleway Fund with NZ$50 million (US$31.8 million) of investment from the government and NZ$30 million (US$19.1 million) in co-funding from local stakeholders. NZCT now has 23 trails across the country, established strict design specifications, and brought in an estimated NZ$950 million (US$650 million) in direct economic contributions to regions where the trails exist from 2.19 million trips (July 2020 and June 2021). It continues to receive NZ$8 million (US$5.1 million) per year for maintenance, development and promotion (Ministry of Business, Innovation & Employment, 2022) (Angus & Associates, 2022). Rethinking Caribbean Tourism 88 Box 32. Deep dive Dominica: adventure product development Unlike neighboring Caribbean islands that have a strong ‘sun, sea and sand’ drawcards, Dominica’s appeal is in its natural landscapes and rich cultural heritage. The island’s uniqueness is emphasized through its UNESCO World Heritage Site―Morne Trois Pitons National Park and the Boiling Lake―along with the presence of nine active volcanoes and the largest species of Amazon parrot. As the only Caribbean Island home to the last remaining Kalinago people, Dominica also offers a distinct cultural experience. In order to utilize these assets, Dominica developed the Waitukubuli National Trail in 2013, the longest hiking trail in the Caribbean at 115 miles long, divided into 14 day-long sections. Originally developed with funding from the EU, the Dominican Government, and the Regional Council of Martinique, the trail successfully attracted hundreds of hikers each year, until suffering damage from Hurricane Maria in 2017. A current World Bank project is supporting trail updates and maintenance, 48 as well as interpretation and signage, to capture the historical and cultural significance of this trail. It has the capacity to support community tourism, with homestays being developed in rural areas along the way. Regulating adventure tourism activities Given the inherent risk in many adventure tourism activities, consistent and holistic regulations are required to promote investment and lessen operational costs, especially related to insurance. Creating a culture of safety and quality through a suite of adventure tourism regulations, standards, and certifications has been shown to facilitate investment, reduce operational costs, and improve the destination ’s image. Costa Rica and New Zealand have safety standards in place, requiring adventure operators to adhere to regulations and pass audits for certification on an ongoing basis (Box 33). These have been essential in the development and expansion of adventure tourism in New Zealand. Adventure quality and safety regulations can be addressed at the regional level to support harmonization and reduce development costs. Caribbean governments are encouraged to create regional working groups to develop adventure tourism regulations, comprised of tourism ministries and authorities, private sector, and other relevant regulatory, safety, and quality assistance agencies. These regional adventure tourism regulations should include activity-specific regulations, and safety and quality regulations created in partnership with the private sector to ensure they are appropriate and manageable (Box 34). Taking a regional approach to developing adventure tourism regulations also presents opportunities for harmonization of quality, particularly for smaller markets and multi-national operators, and allows for the creation of a regional market for safety auditors to reduce corruption. Mutual recognition agreements for guide certifications, for example, are increasingly common within economic blocs such as the EU. Safety and quality standards also need to be paired with programs to support sustainability, which can start with voluntary standards and then 48 See the supplementary annexes for a list of all World Bank projects in the Caribbean. Rethinking Caribbean Tourism 89 transition into mandatory minimum standards. Sustainability is increasingly important as consumers demand more transparency in this area. Regulatory impacts on insurance are critical as limited, absent, or poorly enforced regulations can increase operational costs through increased insurance premiums. In Dominica, for example, the cost of insurance is severely restricting entrepreneurs with many choosing to remain unlicensed, creating risks for tourists and the destination. In the Dominican Republic, insurance compliance is one of the highest barriers to entry for small adventure operators that obtain insurance and standards certifications internally to meet market expectation and demands. This also impacts consumers with adventure travelers to the Caribbean (76 percent) more likely to purchase insurance for trips than global adventure travelers (62 percent), driven mainly to cover stolen or damaged personal effects or for medical and hospital expenses World Bank, 2024b). Governments should explore regional insurance schemes to reduce operational costs related to insurance, limit the threat of expensive lawsuits, and facilitate investment in innovative adventure products. Options should focus on facilitating private sector solutions with potential to look at de-risking mechanisms from the public sector. New Zealand implemented an innovative form of liability coverage, covering visitors with no-fault liability insurance and reducing the burden on adventure operators (Box 34). Box 33. Benchmark insight New Zealand and Costa Rica: adventure safety standards and regulations Initial safety standards for adventure activities in New Zealand were originally driven and managed by private sector. This was to maintain quality and safety, particularly as new entrants joined the industry with the voluntary Standards Assurances Programme launched in the 1990s (Brown, 1997) (Callander & Page, 2003). Over time, this translated into mandatory standards managed by a range of agencies depending on the type of product (marine, land, or air-based). Safety specific regulations were then improved through the launch of the Health and Safety in Employment (Adventure Activities) Regulations (2011) based on a recognition of the large and growing adventure tourism industry in the country. Safety for adventure tourism activities is now overseen by WorkSafe, the primary regulatory and policy implementor for the new Health and Safety at Work (Adventure Activities)49 and the New Zealand Adventure Activities Certification Scheme (New Zealand Government, 2016). Adventure Activities regulations were developed in partnership with expert reference groups that include auditors, adventure industry, and tourism sector representatives. Further, the WorkSafe scheme created a market for safety auditors facilitating multiple safety companies that created competition and ensured the availability of auditing services. Adventure operators must pass a safety systems audit every three years. In Costa Rica, a package of comprehensive regulations defines adventure activities and manages quality, health, and safety to clearly outline requirements for investment and operation. The Reglamento para la Operación de Actividades de Turismo Aventura 50 (2016) 49 Health and Safety in Employment (Adventure Activities) 2011, replaced by Health and Safety at Work (Adventure Activities) Regulations 2016 and an amendment in 2023. 50 “Regulation for the Operation of Adventure Tourism Activities.” Rethinking Caribbean Tourism 90 outlines specific requirements for operating a range of adventure activities. 51 Legally-defining activities and operational requirements provide clarity to investors looking to launch a new business. Adventure tourism safety is strengthened by requiring businesses to maintain liability and occupational risk insurance policies, while a set of manuals cover operations, safety, maintenance, and emergency planning. This is paired with sanitary operation permits and an adventure tourism inspection guide overseen by the Health Minister. The Technical Standards Institute of Costa Rica oversees quality standards through requirements, good practices, and a safety management system. Standards vary based on primary activities and environment (García Araujo, Huezo Zelada, & Reyes Sánchez, 2023). Finally, adventure tourism guides must meet specific requirements to obtain their license, including certification in first aid, CPR, and specialization courses with valid and up-to-date rescue training specific to the activity (Instituto Costarricense de Turismo, 2018). Box 34. Benchmark insight New Zealand and Costa Rica: examples of quality and sustainability standards Within the tourism sector, leading adventure tourism destinations have robust tourism standards and certification systems. Given the inherent risks involved with some types of adventure tourism, setting and enforcing high quality standards for the tourism industry is essential. For example, New Zealand’s Qualmark system (owned by TNZ) is a world -class tourism quality standards organization that provides independent verification of standards of operations, quality of service delivery, safety, customer service, and sustainability (Tourism New Zealand, 2021). The original goal of the system was to build visitors’ confidence in the quality of tourism services and improve customer support, safety, social, and environmental practices within the industry. It is a fee-based system that awards gold, silver, and bronze status based on a set of criteria that measure health and safety, economic, environmental, social, and people attributes, with separate criteria for different types of businesses. Qualmark provides operators with pathways for improvements, including matching them with business development support programs. As adventure tourism leaders, both New Zealand and Costa Rica are continuing to strengthen industry sustainability standards. Over time, Qualmark has become increasingly focused on sustainability in tourism, assessing tourism operations on holistic sustainability criteria aligned with the GSTC. The movement has also promoted industry coordination as operators see this as an opportunity to collaborate to garner community interest and positive media coverage for tourism. Similarly, Costa Rica’s current tourism strategy integrates sustainability certification schemes to differentiate and position the country as a leader in environmentally responsible and socially conscious tourism (Instituto Costarricense de Turismo, 2022). This strategy is implemented in part by the Certification for Sustainable Tourism program, originally launched by Costa Rica Tourism Board in 1997 as a guideline for tourism businesses. In 2020, it enhanced its credibility through GSTC recognition (GSTC, 2020). With more than 400 companies certified, the scheme evaluates business, social, cultural, economic, and environmental indicators. 51 Designated activities include canopy tours, sky walks/sky treks, bungee jumping, white water rafting, scuba-diving, climbing, mountain biking, kayaking, horseback riding, hiking, alpinism, canyoneering, caving, and others. Rethinking Caribbean Tourism 91 Box 35. Benchmark insight New Zealand: example of innovative liability coverage New Zealand stakeholders cite the Accident Compensation Act as a foundational factor in adventure tourism development. That is because it significantly reduced operational costs and risks of litigation and allowed operators to innovate with riskier products and experiences (Mackenzie, 2015), (Callander & Page, 2003). The act, established in 1972, provides residents and visitors with no-fault insurance to cover medical bills for injuries resulting from accidents 52 and is implemented by the Accident Corporate Corporation (ACC) (New Zealand Government, 2023a), (New Zealand Government, 2001). The ACC is funded through earmarked taxes and levies with tourist-related claims comprising a small share of overall costs (0.07 percent between 2015 –19) (Wade, 2020).53 The ACC is currently funded from a range of sources, including business and payroll taxes, and petrol revenues. Funds from each source are earmarked for related claims (vehicle registration and petrol levies cover motor vehicle accidents and workplace accidents are covered by taxes on businesses, for example) (New Zealand Government, 2023a). The Accident Compensation Act 2001 sought to contain costs, improve flexibility, improve information and data sharing, and increase cooperation across government (New Zealand Government, 2023a). Addressing information asymmetries Adventure operators face information asymmetries in understanding and navigating the complex regulatory environment for registration, auditing, compliance, and quality standards. The comprehensive set of regulations explained above increases safety and quality but is also challenging for new investors, especially if regulations are implemented by a number of agencies across the government. New Zealand addresses information asymmetries through a comprehensive website with information and guidance for adventure tourism. The website is created and managed by their private sector industry association but vetted by the government to build confidence in the information (Box 36). In the Caribbean, governments should match adventure tourism quality, safety, and activity regulation regimes with coordination programs to support companies in navigating complexities and address information asymmetries, especially for small businesses. If regulations are developed at a regional level, these coordination mechanisms can also be regional to create efficiencies and promote knowledge sharing. Information asymmetries also exist for consumers that can impact safety and destination reputation. While some level of risk is inherent to adventure tourism, risk can deviate into danger if tourists overestimate their abilities or have insufficient information. For example, in the Dominican Republic, there is a reputational risk when tourists arrange tours with unregulated domestic operators or guides that are not certified in specific activities and do not have insurance coverage. Consumers over- or under-estimating the actual versus perceived risks of adventure tourism experiences is a persistent market failure that lingers 52 The current act continues to provide comprehensive, no-fault insurance if a visitor is injured, but does not cover illness, property loss, or disrupted air travel nor injuries that occur while on an international cruise ship or international flight. 53 Between 2015–19, New Zealand paid about NZ$15 million in total on tourist claims in the country, which represented 0.07 percent of total annual claims (NZ$4.3 billion per year). Rethinking Caribbean Tourism 92 despite attempts by government and industry to educate visitors (Brown, 1997). Caribbean Ministries of Tourism and Tourism Authorities needs to work with private sector to build awareness in the market with consumers on the actual and perceived risks of adventure tourism to improve safety and increase satisfaction. Box 36. Benchmark insight New Zealand: example of addressing information asymmetries New Zealand’s Tourism Industry Aotearoa (TIA)54 and Recreation Aotearoa have played important roles in industry coordination and development . Together, these industry associations created a website to house a centralized source of information and guidance (www.supportadventure.co.nz). TIA also provides coordination mechanisms with destination stakeholders on specific safety issues that would be difficult to manage at national or regional levels. It ensures that information is correct by gaining the endorsement of WorkSafe New Zealand. The site was launched to respond to operators seeking a coordinated and reliable source of information on safety and certifications to assist during business start-ups and operations (World Class Tourism, 2012). New Zealand operators have also tackled consumer risk issues by increased tourist education prior to activity participation, including recently introduced requirements for operators to provide clear and accurate information on the risks involved to heighten customers’ awareness (New Zealand Government, 2023b). Sector and industry coordination Finally, given persistent coordination failures in Caribbean adventure tourism, a whole- of-government approach to tourism development and coordinated land use planning is essential. Holistic tourism strategies that align, coordinate, and integrate key tourism-related agencies’ approaches are essential to adventure tourism development. These strategies should also include engagement with destination-level organizations, encompassing local municipalities, village councils, or other community organizations. As Caribbean governments look toward creating the next generation of tourism strategies and action plans, they should engage with the range of ministries, agencies, private sector, and stakeholders involved in tourism management and development to ensure buy-in. Local government and stakeholders (town and village councils, community groups) must be engaged in the strategy creation and implementation. Significant investments in destination branding at national level are also necessary to increase market penetration in adventure and nature-based tourism segments. This requires a coordinated approach to funding and managing marketing. Tourism New Zealand, the country’s destination marketing agency, has received substantial and consistent funding over time with a demonstrated return on investment (Box 37). Similarly, the Dominica Republic has significantly invested in branding and marketing for traditional ‘sun, sea and sand’ markets and could benefit from targeted adventure tourism marketing. To establish adventure tourism 54 TIA, the primary tourism industry association in New Zealand formerly known as the New Zealand Travel and Holiday Association, has been in existence for more than 70 years and currently has 1,400 members. Rethinking Caribbean Tourism 93 destinations, governments need to allocate significant and consistent budget over a number of years and ensure marketing organizations have the capacity and skills to deliver a strong return on investment. Centralized and consistent funding for national tourism organizations, with a focus on coordination and marketing, is critical to build an effective destination brand that resonates with adventure tourists. Box 37. Benchmark insight New Zealand and Costa Rica: example of whole-of-government approach to tourism planning and development New Zealand’s tourism strategy was co-created by the MBIE and DOC with a coordinated approach across government and between markets, communities and businesses. The strategy includes a government investment framework to coordinate activities across the tourism system, regardless of public agency making investments. It aims to provide a cohesive approach to tourism marketing as well through TNZ, the national tourism organization. TNZ was founded in market failure theory as a means to address critical coordination failures across the industry (Simpson, 2003). It is mandated to lead marketing and market research and has been consistently well funded with a current budget of US$68.5 million (Tourism New Zealand, 2023c). New Zealand's destination marketing, exemplified by the "100% Pure New Zealand" campaign, focuses on providing an authentic, nature- and culture-based experience that can only be found in New Zealand. New Zealand’s tourism strategy also specifically supports regions to build their capacity, implement destination management plans, and support collaborative spatial planning (Ministry of Business, Innovation and Employment, Department of Conservation, 2019). TNZ also plays a key coordination role in supporting local governments, including regional tourism organizations, and industry associations to address complex problems in a unified manner and to grow and manage demand (Zahra & Ryan, 2005). Specifically, linkages between TNZ and the organizations helped address coordination failures that were leading to divergent marketing and branding messages that threatened to dilute the national brand. Costa Rica's current tourism strategy adopts a holistic approach that integrates environmental sustainability, cultural preservation, and economic development. At its core, the strategy emphasizes the efficient use of touristic spaces, involving careful territorial planning and enhanced local governance, especially in managing wild and protected areas. The plan specifically aims to strengthen productive linkages, with a focus on developing local SME supply chains, fostering new investments, and building capacity for tourism employment through enhanced coordination, ensuring that tourism growth benefits local communities (Instituto Costarricense de Turismo, 2022). From a marketing perspective, the previous "Costa Rica: It's only natural" campaign highlighted the country's natural attractions, local culture, and comfort (ICT, 1985, as cited in Instituto Costarricense de Turismo, 2022) and the current brand, "Essential Costa Rica," showcases the country’s natural beauty, innovation , high-quality products, and entrepreneurial spirit (Instituto Costarricense de Turismo, 2017). Rethinking Caribbean Tourism 94 Chapter 5. Policy Summary and Forward Look Rethinking Caribbean Tourism 95 Chapter 5. Policy Summary and Forward Look There is much at stake for the future of tourism in the Caribbean. The cruise, accommodation and adventure tourism segments all have experienced significant changes in the post-pandemic era, marked by new and evolving trends and multiple economic and environmental challenges. As the title of this report suggests, it is time to rethink tourism in the Caribbean. Countries that do not adapt risk being left behind. The performance gap between geographically larger and smaller destinations is increasing, environmental concerns are becoming more acute, and the call for greater social inclusion is growing louder. But, as the research in this study indicates, there are also pockets of good news and lessons to be learned from benchmarks on opportunities to capture higher value adventure tourists that can create jobs in rural areas and generate revenue for conservation. The analysis in this report shows there are clear trade-offs to consider between volume over value and quick wins over long-term sustainability. Opportunistic and unplanned tourism development leads to hotels being built in unsuitable locations, overcrowding, and a downward spiral favoring volume over value. Proactive, data-driven policies aligned with new industry trends, and informed by benchmarks can drive competitiveness and sustainability, especially if the challenges of coordination and collaboration across the region are better addressed in line with CARICOM’s vision. This report has identified systemic challenges, new opportunities, and proposed a series of segment-specific policy options to prepare the region for a future built on a more equitable and sustainable tourism sector. This was achieved through the generation and mining of rich data to identify and analyze barriers to sustainable tourism growth and to craft policy recommendations. While the data presented in this report is regional in scope, there is an opportunity for further data analysis at country level to shape and inform national recommendations. Specifically, the data could be used to help address country-level knowledge gaps and mitigate risks in the decision-making process when assessing trade-offs. As the Caribbean is a diverse region, a one-size-fits-all approach will not deliver on tourism’s transformational potential. Not all types of tourism will deliver the same value for residents and government revenues in different locations. Not all types of tourism are compatible with each other. There are trade-offs between volume and value per tourist, while various types of tourism have different impacts on revenue collected, water and land used, environmental degradation, waste generation, and jobs created. For example, high-end, luxury yachts will not want to use the same beach as lower-value cruise visitors. Rethinking Caribbean Tourism 96 This chapter provides a summary of policy options for each segment, outlined in the proceeding chapters, followed by an overview of cross-cutting areas relevant to World Bank interventions. The policies were prioritized based on discussions with policymakers, industry representatives, relevant national and regional entities, as well as agencies from countries with relevant experiences. The policy tables specifically denote where regional approaches could be taken to achieve greater impacts, with reference benchmarks and deep dives in the supplementary annexes where more details are available. The tables are not exhaustive but focus on critical areas for increasing local value capture and boosting sustainability. Cruise The emphasis of cruise recommendations is on extracting greater value per visitor to compensate for high infrastructure and environmental costs (Table 4). Value per visitor can be enhanced through adjusted passenger and environmental fees, optimizing skills for jobs in the cruise sector, and improved local linkages. A greater focus on homeporting opportunities and the attraction of smaller, but more high-end cruises staying for extended periods of time is also an option for some countries. Additionally, innovative solutions for waste and energy need to be prioritized with support from the private sector to mobilize capital and expertise. Table 4. Policy recommendations for cruise Policy Action Cruise Recommendations Regional Priority and Refer to Area Approach Time Urgency Benchmarks and Deep Dives Tourism Governance Reassess passenger and environmental fee Benchmark: setting policies in light of actual costs of Alaska (Box 10) services and environmental impacts to Very High/ Deep Dive: inform negotiations on fee adjustments as ✓ Short-term Barbados, needed, while enhancing transparency in Antigua and publishing: (i) fee setting policies, (ii) Tax/fees Barbuda revenue collection and (iii) utilization. Framework for regional coordination (in line with CARICOM) to support the Very High/ harmonization of fee policies to promote ✓ Short-term sub-regions as one destination and negotiate as one. Environmental Sustainability Strengthen relevant stakeholders’ capacity in environmental risk monitoring and mitigation through better monitoring Moderate/ Environment equipment, better communication on ✓ Long-term environmental rules and impacts, and stricter mechanisms to enforce compliance and impose penalties Facilitate access to greener energy, Benchmark: Energy/water/ Very High/ including OPS and LNG, by improving the European Union waste policy Short-term legal and regulatory framework for PPP and (Box 9) Deep Rethinking Caribbean Tourism 97 Policy Action Cruise Recommendations Regional Priority and Refer to Area Approach Time Urgency Benchmarks and Deep Dives by strengthening the capacity of government Dive: Barbados, to negotiate and manage PPPs, including Antigua and unsolicited bids. Barbuda Regional coordination to develop and share LNG resources, expertise and infrastructure High/ ✓ in collaboration with existing or potential Medium-term investors. Mobilize local investors and private capital through PPP and/or financial incentives to Very High/ Deep Dive: respond to needs for waste management Short-term Barbados facilities, especially in countries with growing homeporting activities. Job Creation TVET programs for local youth and women in onboard or offshore cruise services to seize employment opportunities and grow the country’s skills base to respond to growing Very High/ Benchmark: and expanding needs of the industry ✓ Short-term Vanuatu (Box 8) (subsidized and developed in partnership with cruises with funding from development partners and/or cruise community involvement and philanthropy programs). Labor Specialized training programs required to market/ support provisioning of quality local food Very High/ Deep Dive: social/skills ✓ products, including in food safety risks and Short-term Barbados hazards, packaging and logistics. Specialized training and facilitated access Deep Dive: to equipment, through common service Moderate/ Antigua and centers as needed, to improve the quality Long-term Barbuda and quantity for handicraft products. Explore opportunities for regional training Moderate/ facilities, if more financially viable, to ✓ Long-term provide the above-mentioned trainings. Elaborate local linkages policy, strategy and High/ Deep Dive: identify sources of financing. Medium-term Barbados Develop and promote immersive cultural experiences by curating cultural tours in partnership with local guides who can High/Medium- Benchmark: showcase diverse cultural heritages of term Vanuatu (Box 8) communities, including their traditions, Local daily activities, and cuisine. linkages Support access to market through Very High/ Deep Dive: partnerships with cruises for local Short-term Barbados procurement of food, goods, and services. Develop a strategy focused on attracting smaller boutique luxury cruises including High/ Deep Dive: adequate port facilities, high-end onshore Medium-term Barbados experiences, and targeted marketing. Rethinking Caribbean Tourism 98 Accommodation For accommodation, three areas are emphasized: strategic use of finance to incentivize green hotel developments, facilitating local linkages and skills, and enabling sustainable development of alternative accommodation (Table 5). Table 5. Policy recommendations for accommodation Policy Accommodation Recommendations Regional Priority and Refer to Action Area Approach Time Benchmarks Urgency and Deep Dives Tourism Governance Modernize data collection methodologies to Tourism High/ allow for better measurement and monitoring revenue ✓ Medium- of tourism revenue, tourism markets and and data term tourism multipliers. Business Environment Tie investment incentives, such as reduced corporate tax rates or tax holidays, to Very high/ measurable performance indicators like job Short-term Investment creation, local sourcing, or environmental incentives sustainability. Promote regional collaboration in tax Moderate/ incentives, identifying potential common areas ✓ Long-term such as in the environmental space. Capital markets/ Establish clear, transparent guidelines for Very high/ Deep Dive: St. access to subsidies and grants to tourism developers to Short-term Lucia finance/ ensure fair distribution of capital. payments Enter into regional agreements with booking Very high/ platforms to access information on the growth ✓ Short-term and distribution of short-term rentals. Regional Adapt licensing and permits to incorporate relevance Licensing/ sustainability features, and encourage their Very high/ ✓ Benchmark: registration/ adoption with promotion, access to finance Short-term Japan (Box 19) safety and incentives. Deep Dive: St. Distinguish between private rentals and Lucia commercial operations in policy and Moderate/ regulations and identify zones where these Long-term activities are permitted or prohibited. Environmental Sustainability Design land use plans that balance tourism with environmental sustainability, agricultural use, local residential needs, and encourage High/ Land developments that combine tourism facilities Medium- Benchmark: market with residential, retail, and cultural uses, term Dominican policy ensuring that tourists and locals benefit from Republic (Box shared spaces. 18) High/ Promote dispersal of tourism accommodation Medium- to avoid over-concentration in popular areas, term Rethinking Caribbean Tourism 99 Policy Accommodation Recommendations Regional Priority and Refer to Action Area Approach Time Benchmarks Urgency and Deep Dives encouraging a more balanced development in line with countries’ endowments. Incentivize private investment in eco-friendly tourism infrastructure, including renewable Very high/ Energy/wat energy use, sustainable water management, Short-term er/ waste Benchmark: and waste reduction systems. policy Türkiye (Box 22) Promote inclusive green buildings and energy High/ efficiency standards, and adopt circular ✓ Medium- economy approaches. term Mandate that large tourism accommodation High/ projects undergo environmental impact Medium- Environmen assessments to minimize negative effects on term t policy ecosystems and local communities. High/ Raise sustainability awareness and expand ✓ Medium- education programs. term Job Creation Collaborate with the private sector, directing financial and technical resources for training Very high/ ✓ initiatives and curriculum development, Short-term including digital skills. Labor Create clear career pathways and curriculum High/ Deep Dive: market/soci development to retain talent, with a focus on ✓ Medium- Jamaica a/skills women and youth. term High/ Facilitate host training programs. ✓ Medium- term Promote local ownership and sourcing through High/ Deep Dive: Local linkages initiatives and joint ventures between Medium- Jamaica, St. linkages foreign investors and local entrepreneurs. term Lucia Adventure Adventure tourism offers the largest potential value per tourist, but also requires significant and intentional facilitation in the early stages: encompassing regulations, insurance, skills/culture of outdoor exploration, and effective coordination across the sector (Table 6). Table 6. Policy recommendations for adventure Policy Adventure Recommendations Regional Priority and Reference to Action Area Approach Timeline Benchmarks and Deep Dives Tourism Governance Centralized and consistent funding for Benchmark: New Very High/ Marketing, national tourism organizations with a focus Zealand and Short-term data on coordination and marketing is critical to Costa Rica (Box and ongoing 37) Deep Dive: Rethinking Caribbean Tourism 100 Policy Adventure Recommendations Regional Priority and Reference to Action Area Approach Timeline Benchmarks and Deep Dives build an effective destination brand that Dominican resonates with adventure tourists. Republic Invest in outdoor education and exploration Benchmark: New clubs to stimulate interest in nature and Zealand and High/Medium- adventure tourism in local populations. ✓ Costa Rica (Box term 28) Deep Dive: Dominica Ensure public investments in protected Benchmark: New areas are market-oriented and linked to Zealand (Box 31) private sector demand to create formalized Very High/ Deep Dive: adventure tourism products and services. Short-term Dominica (Box Destination 32) manageme Build market awareness on actual and Benchmark: New nt, R&D perceived risks of adventure tourism to Moderate/ Zealand and ✓ increase safety and satisfaction. Medium-term Costa Rica (Box 33) Tourism strategies should be developed in a Benchmark: New whole-of-government approach with buy-in Zealand and from the range of ministries and agencies Costa Rica (Box Very High/ involved in tourism management and 37) Medium-term development. Local government and stakeholders must be engaged in strategy creation and implementation. Business Environment Competitio Concessions frameworks should use fair Benchmark: New n policy, market pricing practices through a High/Medium- Zealand and market competitive tender process to avoid term Costa Rica (Box power economic rents gained by first movers. 29) Couple adventure tourism quality, safety, Benchmark: New and activity regulation regimes with Zealand and Investment coordination programs to support Costa Rica (Box incentives, companies in navigating complexities and Very High/ 33) Deep Dive: ✓ SME address information asymmetries. This Medium-term Dominica policies could include accessing points-of-sale (POS), digitalizing payments, and bookings technology. Explore regional insurance schemes to Benchmark: New reduce operational costs related to Zealand and Capital insurance, limit the threat of expensive Costa Rica (Box markets, lawsuits, and facilitate investment in 35) Deep Dive: access to High/Medium- innovative adventure products. Options ✓ Dominica finance, term should focus on facilitating private sector digital first solutions with the potential to look at payments de-risking mechanisms from the public sector. Create a regional working group on Benchmark: New adventure tourism regulations, including Zealand and Licensing, tourism ministries and authorities, private Costa Rica (Box sector, and other relevant regulatory, safety, Very High/ 29) (Box 35) Deep regulations, ✓ and quality assistance agencies. Short-term Dive: Dominica, safety Dominican Republic Rethinking Caribbean Tourism 101 Policy Adventure Recommendations Regional Priority and Reference to Action Area Approach Timeline Benchmarks and Deep Dives Create regional adventure tourism Benchmark: New regulations with a focus on safety and Zealand and quality that are appropriate and Costa Rica (Box Very High/ manageable. Ensure regulations are hosted ✓ 31) (Box 34) Deep Short-term by relevant agencies and create a market for Dive: Dominica, safety auditors and inspectors to reduce Dominican corruption. Republic Environmental Sustainability Develop and implement appropriate and Benchmark: New well-managed concessions frameworks that Zealand and integrate local land use planning and Costa Rica (Box Very High/ empower local stakeholders in destination ✓ 29) Deep Dive: Medium-term planning and development. Dominica, Dominican Republic Planning, Leverage tourism revenues and financing Benchmark: New zoning, land from bi-lateral and multi-lateral partners to Zealand and use Very High/ invest in foundational infrastructure in Costa Rica (Box Short-term protected areas. 29) Deep Dive: Dominica Government to partner with private sector Benchmark: New for upfront and/or ongoing investment in Very High/ Zealand (Box 31) maintenance of tourism infrastructure and Short-term Deep Dive: assets in protected areas. Dominica Enhance protected area management Benchmark: New policies. Establish and adequately manage Zealand and Environmen High/ revenues and fees. ✓ Costa Rica (Box t policy Medium-term 29) Deep Dive: Dominica Job Creation Invest in sustainable product development Benchmark: New and adventure-specific skills training Zealand and Very High/ through training courses, on-the-job training ✓ Costa Rica (Box Medium-term Labor programs, and oversees learning 28) Deep Dive: market, placements. Dominica skills Revise immigration policies to facilitate Benchmark: New access to adventure tourism skills linked Moderate/ Zealand and ✓ with conditions for local capacity building. Long-term Costa Rica (Box 28) In addition to segment-specific policies, the matrix in Figure 64 identifies regional policy areas for potential World Bank interventions. The matrix highlights the main policy action areas across the segments and the priority level of each. The report’s recommendations and policy matrix deliver five important and cross-cutting messages: (1) modernize tourism governance to reinvest in underlying tourism assets, (2) optimize the business environment for small operators, (3) incentivize improved environmental sustainability for all, (4) spur job creation through enhanced linkages and (5) Rethinking Caribbean Tourism 102 collaborate across the region to address common challenges. A review of tourism policies across the Caribbean against this matrix reveals some significant gaps.55 While numerous national policies exist and many adopt a holistic approach to sustainable development, environmental sustainability remains a secondary concern, and climate considerations are notably weak. Most tourism policies do not refer to taxes favoring incentives, while local linkages are also largely overlooked. Figure 64. Cross-cutting tourism policy matrix for Caribbean Source: Authors’ elaboration, adapted from World Bank report on Future of Pacific Tourism, World Bank 2023b. 55 See supplementary annexes for more information on the policy review. Rethinking Caribbean Tourism 103 1. Modernize tourism governance to boost government revenues and allow for reinvesting in underlying tourism assets. Across all segments, the region has systematically undermined its competitiveness by lowering fees to an unsustainable level and failing to reinvest in assets on which tourism attraction is based. It is critical to reverse this trend. • In cruise, greater transparency in setting and using passenger disembarkation and/or environmental fees will allow for more public consultation on needed infrastructure improvements in waste and urban planning. Given the industry structure, this is an opportunity for regional cooperation. • In accommodation, more transparent and uniform investment incentives tied to improved environmental performance can give governments more influence over investment choices. Regularizing the short-term rental sector can also contribute more tax revenues, while mitigating risks of uncontrolled and informal growth. • In adventure, it is critical to invest in new models of park management, maintenance, and investment, paired with policies that define how entrance fees are used to enhance product quality and manage environmental impacts. • Finally, across all sectors, data and R&D has been under-resourced and left the industry on the back foot. This report has demonstrated that the use of alternative data sources, regional solutions, and data hubs can be developed to address these gaps and ensure the industry is not left behind. 2. Enhance the business environment to shift the focus toward smaller, local, and more sustainable operators. Throughout the region, governments have systematically prioritized large international investments instead of small locally-run properties. • In accommodation, the report highlights how investment incentives often favor larger, international investors rather than locally-owned and run products. A change is required to use incentives more strategically to encourage sustainable accommodation that provides greatest domestic value capture, local sourcing, and better employment opportunities. This, in turn, will require changes to accommodation standards that are often international quality, but less well adapted to ecolodges or alternative accommodation options. • In adventure, the high cost and limited availability of safety equipment, certifications/standards, and insurance are significant barriers to market entry. Regional engagement on adventure-specific quality and safety standards as well as regulations would support harmonization across the Caribbean, paving the way for regional insurance products. • For small operators in all segments, greater access is needed for point-of-sale density to underpin growth in small adventure tourism operations, homestays, or sell local products at tourism events and markets with smaller local operators. Rethinking Caribbean Tourism 104 3. Improve environmental sustainability across segments. The region has failed to consistently reinvest in environmental assets that sit at the core blue tourism attraction. a. While the cruise sector is under international regulatory scrutiny for air pollution and carbon emissions, there is far less scrutiny at the destination level, where localized impacts can reduce the potential of other forms of marine tourism. Greater environmental monitoring is needed with stricter mechanisms to enforce compliance. Opportunities for public-private investments in waste management facilities, particularly in destinations with growing homeporting activities, should be further explored. b. The region’s accommodation sector has a major water, waste, and energy footprint, with consumer markets demanding change. Future developments need to better consider environmental sustainability in land use plans, while governments must ensure accommodation operators install and operate more efficient water, energy, and waste management equipment and systems. Given limited space and options for recycling, reductions in use of plastics is also of critical importance with the onus on governments to limit single-use plastics or encourage alternatives. Increasing composting can also help dramatically reduce landfill waste. Several accommodation operators in the region have zero-waste- to-landfill policies and these voluntary standards should become the norm. Countries will need to move from voluntary standards to compulsory environmental monitoring of tourism sectors with increased awareness and education programs. c. For adventure tourism, underinvestment in protected areas has limited product quality and competitiveness. Moving forward, it is critical to enhance protected area management, establish reasonable usage fees and develop well-managed concession frameworks that integrate local land use planning and empower local stakeholders. 4. Boost the quality and breadth of job creation in tourism through enhanced local linkages. Numerous opportunities for better quality jobs remain left on the table, despite youth unemployment emerging as a critical concern. • In cruise and accommodation, more can be done to encourage local artistic and food sourcing, content branding, developing and promoting immersive local cultural and gastronomy experiences for visitors. • In accommodation, improving skills is key to boosting job quality, particularly for women and young people. Technology advancements and digitalization provide higher-skilled opportunities in operations, systems design, and environmental sustainability attractive to younger skilled professionals, but in need of further training. • In adventure, specialist skilled-related opportunities require product-specific training, absent across the region. Immigration policies need to allow for the import such specialist skills linked with conditions for local capacity building. Rethinking Caribbean Tourism 105 • Across all segments, broadening jobs impacts require better linked programs, entrepreneurship, and digital skills development. There is much to learn from existing World Bank interventions, such as recent SME projects in Jamaica, Sint Maarten, and the OECS. 5. Collaborate across public and private sectors to address common challenges across all sectors. • In cruise, there are numerous opportunities for regional collaboration to address these common areas, harmonize policies, and leverage collective bargaining power with large industry players. • In accommodation, new standards are needed across the region to encourage sustainability and carbon emissions reductions. • For adventure, regional solutions can help advance safety, insurance, capacity building, and quality assurance challenges. • Across all segments, regional entities such as CARICOM can play a crucial role in facilitating knowledge exchanges, supporting innovative pilot programs, and developing a unified approach to sustainable tourism development along with common environmental standards. Additional considerations This report has identified critical areas for cross cutting and segment-specific policy support. The following next steps are suggested to move from analysis and examples to action. Reflect and build on existing work. The World Bank is already supporting some policy reforms and investment activities in the region as a solid foundation to build on. Examples of current World Bank interventions include support for PPPs for rural enterprise development and infrastructure in Jamaica, access to finance and training for SMEs in Sint Maarten, and skills in the OECS. Experiences and lessons learnt from these projects and others across the world, like the Circular Economy SIDS project in West Africa or private sector development work in Fiji, can inform further dialogue in specific focus areas at country or regional levels.56 Boost coordination to reduce the impact of sargassum and explore opportunities for value creation to turn the crisis into an opportunity. As highlighted in Chapter 1, this report did not focus on sargassum-related issues due to extensive coverage by other research papers.57 To address the challenge, development partners including the United Nations Environment Programme (UNEP) and UNDP are providing support, with the latter addressing sargassum inundation through the Improving National Sargassum Management Capacities project supported by Japan. The project is providing select countries with equipment, expertise, and technical knowledge to collect and dispose of sargassum. The University of the 56 The supplementary annexes present a table highlighting relevant World Bank-financed projects and specific types of impactful interventions. 57 “Sargassum White Paper, Turning the crisis into opportunity”, UNEP 2021 . Rethinking Caribbean Tourism 106 West Indies Center for Resources Management and Environmental Studies, with support from Kreditanstalt für Wiederaufbau,58 is developing a knowledge platform, training and capacity development initiatives, and adaptation plans. The World Bank recently boosted its technical assistance to tackle the issue under the Unleashing the Blue Economy of the Caribbean program in Grenada, St. Lucia and St. Vincent and the Grenadines, to: (i) identify opportunities for extracting value from sargassum and (ii) develop a regional monitoring platform to analyze the economic impacts of sargassum in select countries. However, greater collaboration among development partners and the mobilization of more substantial resources to implement adaptation plans are essential. Leverage Country Climate Development Reports (CCDR) to inform resilience policies. It is important to build greater tourism sector resilience through using insights from CCDRs, including the recently completed OECS CCDR and upcoming Belize CCDR. As such, CCDRs provide key recommendations on how to build sustainable and climate-resilient tourism infrastructure. They can also optimize climate risk assessments and tourism-climate insurance schemes, both important to attract climate finance (Box 38). Box 38. OECS CCDR recommendations The OECS CCDR report highlights the significant vulnerabilities of Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines to climate change impacts, which pose substantial risks to their economies, infrastructure, and livelihoods. To address these challenges, the report emphasizes the importance of developing robust regulations, strengthening institutions, and creating effective coordination mechanisms for climate action. It underscores the need for significant adaptation investments to build physical resilience, including improvements to infrastructure, sustainable water and land management practices, which are critical for long-term sustainability. It includes energy, transport and waste measures as priority areas focusing on transforming solid waste management systems, reducing dependence on fossil fuels for power generation, and accelerating progress in planning for electric mobility. Finally, regional cooperation among OECS countries is deemed essential to enhance knowledge sharing, mobilize resources, and implement collaborative climate initiatives effectively (World Bank, 2024e). See the supplementary annexes for more information. Data and research for improved decision-making. This report adopted a wide range of strategies to collect data, from web scrapping to country interviews, big data purchases, and primary market research. This extensive research is out of the reach of many countries, but much can be achieved through data partnerships as well as the CTO and Global Tourism Resilience & Crisis Management Center (GTRCMC) to improve and standardize new types of data critical to sustainability planning. While this study focuses on just three segments, the principles of analysis can be applied to other segments such as ecotourism, sports, weddings and yachting. The key is to understand the market and trends, assess constraints preventing 58 Germany, stated-owned investment and development bank, known as KfW. Rethinking Caribbean Tourism 107 the sector from optimizing the value it provides to the local economy, not just the volume of opportunity. This can be effectively done through a combination of data collection, trend analysis, benchmarking, and country-level validation.59 Next steps Regional policy dialogue. There are many opportunities for regional collaboration to address these common areas, harmonize policies, and leverage collective bargaining power with large industry players. The policies also include regional aspects that have been challenging to address and remain critical for countries to better negotiate with large industry players and grow as one region. Regional entities – such as CTO, CARICOM, CHTA, OECS and GTRCMC – can play crucial roles in facilitating knowledge exchanges, supporting innovative pilot programs, and developing a unified approach to sustainable tourism development along with common environmental standards. Regional knowledge sharing. There are opportunities for regional knowledge exchanges on common issues facing the futureproofing of each segment. For example, early drafts of this report and discussions informed the World Bank-funded OECS 2025–35 Common Sustainable Tourism Policy Framework. This report can provide an entry point for regional dialogue on specific policy issues such as cruise passenger fees, adventure tourism safety, and short-term rental policies. These are all areas in which the World Bank has a deep pool of knowledge, expertise and experience that Caribbean countries can tap into to realize their tourism ambitions. Innovative pilot programs for sustainability and linkages. Every segment stresses the need for new polices to support decarbonization and sustainability. There are opportunities for innovative pilot programs on circular economy, alternative energy and hotel sustainability standards, along with linkage programs for farm-to-table initiatives.60 Strategy development, geographic targeting, and value addition. Countries looking to transition to higher value segments may require support packages to develop a strategy, model potential economic and environmental trade-offs, and recommend specific enabling policies. In the same vein, countries could prepare strategies to diversify sources of demand to address downturns due to seasonality (off seasons), hence contribute to creating more resilient tourism sectors. Doing more with less heavy investment. Often destinations consider infrastructure the key to upgrading tourism sectors. This report has demonstrated that much can be done to improve the value created by existing infrastructure. Many policies in this report are not characterized large-scale developments. Instead, they are focused on strategic negotiations, careful 59 Methodologies for each aspect of this study are included in summary form in Annex 2. Long-form methodologies for each segment are available on request. 60 The supplementary annexes provide examples of where some of these initiatives have been successfully rolled out in other countries. Rethinking Caribbean Tourism 108 planning, proactive management, and transparent knowledge-based decision-making. Global benchmarks can help policymakers in the Caribbean envision and create the kind of tourism future that is sustainable, inclusive, and resilient. The future of Caribbean tourism hinges on the ability to adapt to new trends and challenges, including environmental concerns and the call for greater social and economic inclusion. This report encourages policymakers to rethink and adapt their approach to tourism and offers key strategies to unlock a more sustainable future. By adopting proactive policies, investing in their implementation, leveraging regional collaboration as well as country-specific strategies, the Caribbean can enhance the quality, impact, and sustainability of its tourism sector, ensuring long-term benefits for local communities and the environment. Rethinking Caribbean Tourism 109 References AirDNA. 2022. “Caribbean Vacation Rental Market Overview.” Alkire, S., & Foster, J. 2011. “Counting and multidimensional poverty measurement.” ELSEVIER. 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Overview of Methodology The report was prepared in three stages: 1) desk research and data collection; 2) primary research and analysis; 3) synthesis and policy guidance (Figure 65). Research began in March 2023 with primary research predominately conducted in 2024. Stage 1 encompassed a literature review, data collection and gap analysis as well as stakeholder mapping and discussions to fill data gaps. These data and consultations provided a baseline understanding of the domestic value added, environmental, and social impacts of tourism, which enabled the identification of specific segments and case study destinations. Based on this research and stakeholder validation, three segments were selected for further research: Cruise, Accommodation, and Adventure Tourism. These segments were identified as having the most potential for gains in tourism’s economic contributions and environmental and social externalities through development of their industry structures and value chains across the Caribbean. Table 7 provides an overview of the analysis undertaken to select these segments. Annex 2 provides details on the segment selection methodology. More than 50 indicators were identified for data availability mapping. Of those, 75 percent were available across most of the 12 studied countries through institution, country-level agency, and private sector data providers. The main data gaps identified were segment- specific both in the supply and demand sides, tourism and poverty, and environmental and social indicators. In order to fill these main data gaps, primary research activities were completed in Stage 2. Rethinking Caribbean Tourism 122 Figure 65. Staged approach to conducting research with key milestones Stage 1. Stage 2. Stage 3. What are the dominant What are the market and How could a more Question models of tourism in the government failures of the competitive, green, Caribbean, and which selected tourism resilient and inclusive have the most potential segments? What is at tourism be fostered in the for sustainable tourism? stake if these failures are Caribbean? not addressed? a.Data mapping and gaps a.Industry trends and best a.Analytical framework for analysis practices policy guidance b.Stakeholder mapping b.Consumer market b.Draft guidance note with c.Tourism Policy Review Activities research policy framework d.Environmental and Social c.Job quality analysis c.Validate with key literature review d.Web scraping on stakeholders e.Initial Consultations segments d.Finalize and disseminate e.Visa card spend data f. Detailed value chain assessment Definition of research Identification of market and Outcome questions and government failures Final report and actionable methodologies Assessment of economic, policy recommendations Market segment & country environmental and social selection risks and opportunities Source: Authors’ elaboration. Stage 2 used new and innovative data approaches to review industry trends and best practices. Analysis at this stage used data from 29 tourism policies, job quality data for six countries, web scraping of consumer ratings and reviews, big data analysis using Visa Card spend data, and consumer market research of the United States outbound market. Annex 3 provides methodologies for these data approaches. At Stage 3, policy guidance for each segment was developed and validated, resulting in a Caribbean tourism policy framework linking policy reforms to specific segments. For each segment, two or more benchmarks were identified, and two regional deep dives were selected based on multi-criteria analysis and consideration of the range of destinations across the region. These selections were discussed and validated with regional organizations and the country governments. The deep dive studies are summarized in the main body of the report but provided in full in the supplementary annexes along with the methodology for their respective selection. Rethinking Caribbean Tourism 123 Annex 2. Segment Approach Methodology To identify market segment research focus areas, a five-step approach was undertaken: Step 1: Understand the importance and value of segments in the Caribbean Fourteen tourism segments with sufficient independence were identified (Table 7). These were sorted into three categories: core existing market segments for Caribbean tourism, emerging markets with high comparative advantage, and emerging markets with low comparative advantages. Gambling and medical were removed given the low comparative advantage in the region. Table 7. Long List of Tourism Market Segments Core Existing Market Segments Emerging Markets with High Emerging Markets with Low for Caribbean Tourism Comparative Advantage Comparative Advantages Cruise Adventure Gambling Accommodation Health & Wellness Medical Yachting Digital Nomad Meetings, Incentives, Conferences, Romance & Celebration Exhibitions (MICE) Scientific, Academic, Volunteer, and Leisure Events Educational (SAVE) Cultural Tourism Luxury Source: Authors’ elaboration. Step 2: Understand how the market segments are reflected in policy priorities From the tourism policy review (see Annex 3), 29 market segments were identified as priorities within country tourism policies and strategies (Figure 66). These were then evaluated by the number of policies and strategies that prioritized the segments. Aligning these with the market identified in Step 1, twelve priority markets were selected: Adventure, cruise, cultural/CBT, digital nomads, health and wellness, leisure events, luxury, MICE, romance, SAVE/education, sun and sand, yachting. Rethinking Caribbean Tourism 124 Figure 66. Share of policies and countries that prioritize market segments 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Share of Policies (n=29) Share of Countries (incl Region) (n=13) Source: World Bank, 2024c Step 3: Understand global trends on value and growth in the segments Opportunities were identified based on global trends in value and growth rates, with the following key findings (Figure 67): • There is an opportunity to enhance value from rapidly growing segments and models, including cruises, all-inclusive accommodation, leisure events, health and wellness tourism. • There is potential for expansion in high-value market segments, particularly in adventure tourism. Figure 67. Evaluation of global market segment growth potential by global average revenue per tourist Note: Color of boxes represents scale of low to high growth potential and revenue per tourist with red being low and green being high. Source: Authors’ elaboration. Rethinking Caribbean Tourism 125 Step 4: Understand the scale of environmental and social externalities Opportunities were identified to improve environmental and social outcomes, with the following findings: • There is an opportunity to mitigate the environmental and social impacts associated with cruises, all-inclusive accommodation, and romance tourism. • Higher-value segments – such as adventure tourism, luxury travel, and digital nomads – present opportunities to adopt improved environmental and social practices. Figure 68. Evaluation of tourism market segments by social and environmental impacts Note: Color of boxes represents scale of highly negative to highly positive environmental and social impact with red being negative and green being positive. Source: Authors’ elaboration. Step 5: Identify the research gaps related to each market segment Consultations were conducted with more than 10 international and regional public and private entities, as well as with representatives from nine countries, including Ministries of Tourism and Tourism Boards. These discussions aimed to explore each country's and institution's perception of key priority segments. Findings from Steps 1-4 were then consolidated into a table together with results of these consultations and information on the comparative size of the global market and the comparative advantage of the Caribbean for each market segment. Figure 69 below illustrates the results of this analysis with a color-coded scale from red to green with red indicating low outcomes or negative impacts and green indicating high outcomes or positive impacts. Based on this analysis, six markets were shortlisted: cruise, accommodation, adventure, cultural tourism/CBT, yachting, and health and wellness. Rethinking Caribbean Tourism 126 Figure 69. Consolidated evaluation and shortlisting of tourism market segments Source: Authors’ elaboration. To further refine the shortlist to the final three tourism market segments, the team assessed the existing research on the segments. This was done to prioritize and focus on segments that required more knowledge. They key findings, outlined below, led to the section of cruise, accommodation, and adventure tourism as the priority segments for research. 1. Further research in cultural tourism may not be essential at this stage, as many countries have already prioritized its development, and extensive studies have been conducted by regional organizations to support its growth. 2. Countries and organizations are increasingly focused on understanding how to capture greater value from cruise tourists and improve coordination in the sector. Yachting is emerging as a promising avenue for boosting revenues from marine tourism. 3. ‘Sun, sea and sand’ tourism, driven primarily by resorts, remains the dominant model in the Caribbean. External investors recognize growth potential, particularly in the expansion of all-inclusive resorts. Trends suggest an increasing demand for high-end, all-inclusive options, which generate higher revenues for local economies. 4. Countries are increasingly focused on ensuring that local communities and MSMEs benefit from tourism, making segments like adventure experiences ever more relevant. External investors view adventure tourism as an untapped opportunity in the Caribbean. Further research is needed to identify necessary conditions for developing this market making the segment a priority for research within this study. Rethinking Caribbean Tourism 127 Cruise Segment Research approach Research was conducted by identifying four specific market failure and government services provision gap hypotheses linked to the cruise ecosystem: industry and operational, coordination failures at destination and regional levels, asymmetry of information and production limitations, and environmental externalities. To enhance cruise industry economic impacts in the Caribbean, while raising awareness on addressing its environmental externalities, research sought to answer the following overarching questions: • What actions (policies, coordination, capacity building, and investments) will increase the cruise industry’s local economic impacts in the region? What is the most efficient combination of these? • Which policy levers and other tools can destinations put in place to reduce the environmental footprint of cruises? This research was conducted in five phases: Phase 1: Stocktaking The objective of this phase was to collect data on cruise industry characteristics, economic impacts, and environmental externalities to identify knowledge gaps and frame research hypotheses. Data sources included UN Tourism, Cruise Market Watch, Cruise Lines International Association (CLIA), Business Research and Economic Advisors (BREA), Visa Card data, national tourism statistics, industry reports, academic research, and interviews with regional organizations and industry stakeholders. The analysis involved a regional examination of Caribbean destinations based on accessibility, port fees, and spending per passenger to select two destinations for deeper investigation (Antigua and Barbuda and Barbados). Phase 2: Benchmarking Destinations This phase aimed to identify best practices in cruise tourism destinations regarding local economic impacts and environmental sustainability. Selection criteria included destinations that had implemented one of the policy areas identified, which had brought or is expected to bring positive results to the destination. Benchmark destinations included Alaska, the European Union, and Vanuatu. Phase 3: Consumer Market Research The objective of this phase was to understand the preferences and behavior of United States outbound travelers, particularly those interested in Caribbean cruise destinations. The target market was 12 core Caribbean countries: Antigua and Barbuda, Barbados, Belize, The Bahamas, Barbados, Dominica, Dominican Republic, Jamaica, St. Kitts and Nevis, St. Lucia, Rethinking Caribbean Tourism 128 Sint Maarten, St. Vincent and the Grenadines. Full methodology for the consumer market research is included in Annex 3. Phase 4: Destination Assessment This phase involved deep dives into two selected Caribbean destinations (Antigua and Barbuda, and Barbados) to understand their strengths, weaknesses, and potential for improvement within the cruise industry. Selection criteria included destinations with existing cruise tourism markets, potential for homeporting, and government interest in optimizing local economic impacts. The analysis compares selected destinations with benchmark destinations, evaluates tourism ecosystems, and assesses policies and programs supporting MSME growth and entry into cruise value chains. Phase 5: Synthesis The objective of this phase was to consolidate findings from all research phases, emphasizing key insights, trends, and developing actionable recommendations for Caribbean governments and tourism stakeholders. The team analyzed the collected data to identify key market and government failures hindering cruise tourism development in the Caribbean. Based on these insights and comparisons with benchmark destinations, targeted policy recommendations were developed to address challenges and seize emerging opportunities. Accommodation Segment Research approach In preliminary discussions with select resort operators, it was confirmed that a country's policy environment strongly influenced their ability to implement a company policy on, for instance, building local supply linkages. Research focused on understanding which instruments governments can deploy to catalyze positive and more inclusive economic outcomes from different types of accommodation investments. For that, the team studied the relationship between accommodation trends, market failures, and development challenges to give rise to subsequent policy opportunities, through the following phases of work: Phase 1: Desk Research This first phase included gathering data on the presence and growth of different accommodation models in the Caribbean, as well as their economic, social, and environmental contributions, to determine which would be complemented with insights gained during consultations with governments and private institution stakeholders. For that, the team leveraged findings from a web scrapping exercise (Annex 3), accessed multiple national sources, and additional data offered by private entities, among other actions. Likewise, this first phase sought to understand how the accommodation market (demand and supply) is evolving in the Caribbean. Rethinking Caribbean Tourism 129 Phase 2: Primary Research The primary research was aimed at corroborating and complementing findings from the desk research. For that, several consultations with regional organizations, national governments, and private institutions were undertaken to unlock a wider range of additional data points and insights. Primary research also consisted of a quantitative online survey of United States outbound travelers with a sample size of n=1,900, segmented into adventure tourists, non- visitor adventure tourists, cruisers, and all-inclusive resort travelers. Full methodology for the consumer market research is included in Annex 3. Phase 3: Best Practice Destination Benchmarking Phase 3 benchmarked best practice destinations that had taken action in one of the policy areas, identified in Chapter 5, to realize current or expected positive results in the destination. Three benchmarks were selected – Dominican Republic, Japan and Türkiye – based on criteria such as the year of action, availability of results, replicability in the Caribbean, and innovative approaches. Phase 4: Caribbean Destination Deep Dives Phase 4 consisted of in-depth assessments of two Caribbean destinations – Jamaica and St. Lucia – to identify specific constraints and solutions for accommodation development. The destinations were selected based on criteria such as government prioritization, economic relevance of the hospitality sector, evolution in past years, data availability, and other characteristics that made this analysis relevant to the destination. Qualitative interviews were conducted with stakeholders in selected destinations. Phase 5: Synthesis The goal of this phase was to consolidate insights from all four phases and formulate practical recommendations for Caribbean governments and tourism stakeholders. The team examined gathered data to pinpoint significant market failures and government services provision gaps that impede development of accommodation in the Caribbean. Policy recommendations were crafted based on these identified failures and best practices noted in benchmark destinations. These recommendations were then prioritized according to potential impacts on the growth, sustainability, and resilience of accommodation. Adventure Segment Research approach To support Caribbean countries in developing sustainable and valuable adventure tourism, the research sought to answer the following questions: • Which government actions (policies and investments) will grow adventure tourism arrivals and revenues? What is the most efficient combination of these? • What are the key drivers of adventure tourism growth in best practice destinations? How do they compare with Caribbean destinations? Rethinking Caribbean Tourism 130 • Which policies can Caribbean countries introduce to increase the safety and quality of adventure tourism products? Research was conducted by identifying the main and common market failures and government service provision gaps that act as barriers to adventure tourism development, as evidenced in global destinations. These market failures and government service gaps were explored through a five-phased research approach: Phase 1: Desk research on existing adventure tourism competitiveness and challenges The objective of this phase was to gather data on global and regional adventure tourism trends, including demand, supply, and historical development. The methodology included analyzing global, regional, and Caribbean country statistics on adventure tourism arrivals and products. It also included reviewing research on key driver factors for adventure tourism development success, analyzing web scraping data on adventure tourism products (see Annex 3), and analyzing data from the 2024 ATDI (ATTA & GWU, 2024) on the 11 Caribbean countries and two non-Caribbean best practice destinations. Phase 2: Best practice destination benchmarking Phase 2 benchmarked best practice destinations in adventure tourism, identifying key policies and practices that contributed to their success. The methodology involved selecting two benchmark destinations – Costa Rica (developing economy) and New Zealand (developed economy) – based on criteria such as economic size, population, land market ownership structures, data availability, and adventure tourism prominence. Additionally, interviews with key informants in benchmark destinations were conducted to understand the historical development of adventure tourism, key drivers of success, and important policy and regulatory decisions. Phase 3: Consumer market research and drivers of adventure tourism demand This phase aimed to understand the preferences, motivations, and decision-making factors of potential adventure tourists from the United States, the primary source market for the Caribbean. A quantitative online survey was conducted for United States outbound travelers with a sample size of n=1,900, segmented into adventure tourists, non-visitor adventure tourists, cruisers, and all-inclusive resort travelers. The analysis involved market sizing, consumer profiles, preferred destination types and activities, destination image and perceptions, and driver analysis using Shapley regression and Bayesian networks. Data was also used to create the US Outbound Adventure Tourism Simulator, an interactive tool that assessed the impact of different investments on adventure tourism growth in the 12 Caribbean countries covered in this study.61 The full methodology for the consumer market research is included in Annex 3. 61 More information on the tool is available upon request. Rethinking Caribbean Tourism 131 Phase 4: Caribbean destination deep dives Phase 4 consisted of in-depth assessments for two Caribbean destinations – Dominica and Dominican Republic – to identify specific constraints and solutions for adventure tourism development. These destinations were selected based on criteria such as current adventure tourism market, natural assets, government interest, data availability, and environmental sustainability protocols. Qualitative interviews were conducted with stakeholders in selected destinations, including government officials and tourism operators. The deep dives assessed the role of large, international adventure tourism companies in selected destinations and the presence of incentives for adventure tourism investment. Additionally, the policies, standards, and programs in place to support quality and safety of adventure tourism experiences were evaluated. Phase 5: Synthesis The objective of this phase was to synthesize the findings from all four phases and develop actionable recommendations for Caribbean governments and tourism stakeholders. The team analyzed collected data to identify key market and government failures hindering adventure tourism development in the Caribbean. Policy recommendations were developed based on the identified failures and best practices observed in benchmark destinations. Recommendations were prioritized based on potential impacts on adventure tourism growth, sustainability, and resilience. Rethinking Caribbean Tourism 132 Annex 3. Data Analysis Methodologies Policy Review The tourism policy review for the Caribbean was conducted through a structured and multi- phased approach that developed an analytical framework tailored to the region's unique context. It incorporated foundational research, a comprehensive review process, and consultations with key stakeholders. 1. Foundational research and framework design: An academic literature survey was conducted to identify theoretical underpinnings, drawing from global best practices in tourism development policy. It also reviewed emerging regional commonalities and established evaluation parameters informed by organizations such as the Caribbean Hotel and Tourism Association, Caribbean Tourism Organization, Global Sustainable Tourism Council, and UN Tourism. This informed the creation of a policy analysis framework. 2. Policy review framework implementation: The framework served as the primary tool for systematically assessing tourism policies across the 12 target Caribbean countries and regional policies. • Tier 1: Policy development fundamentals focused on understanding the rationale behind policy creation, types of policies, functions, and processes, including stakeholder engagement and jurisdictional reach. • Tier 2: Policy content fundamentals assessed the policy content, focusing on policy aims, goals, trends, and issues like sustainability, niche markets, and the integration of cross-cutting themes like climate change. • Tier 3: Policy implementation fundamentals examined institutional arrangements, policy instruments, and monitoring mechanisms to identify how tourism policies were operationalized. 3. Data collection and policy stock take: The team conducted a stock take of tourism policies by collecting, collating, and analyzing existing policies, acts, strategies, and plans. This entailed a detailed review of each country's documents to create a database of policies and their content based on the framework. Data was consolidated in an Excel database were policy inclusions, gaps and commonalities were analyzed. 4. Synthesis and reporting: Insights from the stock take were synthesized into an unpublished Policy Analysis Report in PowerPoint format. This report presented findings on the status of tourism policies, their strategic priorities, implementation structures, and policy effectiveness. Rethinking Caribbean Tourism 133 Job Quality The analysis adopted the methodology proposed by Brummund et al. (2018) and updated by Hovhannisyan et al. (2022). It measures job quality using a multidimensional index comprised of four key dimensions: (i) sufficient income to overcome poverty, (ii) access to employment benefits, (iii) job stability, and (iv) adequate working conditions.62 Each dimension is defined by a set of binary indicators and deprivation cutoffs (Table 8). If individuals are above the deprivation cutoff in any of the indicators for a dimension, the dimension overall is considered a success and is set equal to 1. The different dimensions are aggregated following the Alkire and Foster (2011) method, which counts the number of successes across dimensions and assumes that dimensions are equally weighted with unity weights.63 As a result, the Job Quality Index (JQI) ranges between 0 and 4. Table 8. Dimensions of the Job Quality Index Dimension Indicator Labor income Wage income above a threshold to support a minimum standard of living among workers and their families. The analysis uses, as a reference, the upper middle-income poverty line of US$6.85 per day (2017 PPP). This is a necessary condition for the JQI to be greater than zero. Job benefits The job provides health insurance or retirement benefits. Job stability The worker has a written contract, the job is permanent, or the worker has kept the current job for a sufficient period. If the job satisfies any one of the three indicators, success is achieved in this dimension. Working conditions Work satisfaction is proxied by an indicator of whether the worker does not have a second paid job. Source: Authors’ elaboration. Data used for the analysis came the 2016 Survey of Living Conditions of Barbados, the 2019 Encuesta Continua of Dominican Republic, the 2018–19 Survey of Living Conditions and Household Budget of Grenada, and the 2016 Survey of Living Conditions and Household Budgets of St. Lucia, as well as the harmonized Socio-Economic Database for Latin America and the Caribbean (SEDLAC) database for cross-country benchmarking purposes. For comparator countries, data comes from the 2019 National Household Survey of Costa Rica and the 2019–20 National Sustainable Development Plan Baseline Survey of Vanuatu. 62 The Job Quality Index (JQI) departs from international conventions on the dimensions of decent work given the difficulty of identifying and measuring those dimensions in microdata. Limited data availability on the self-employed and casual workers in most countries limits the analysis to wage employment. Therefore, the proposed measure could be interpreted as a lower bound of job quality, whereby the job quality score for other employment categories is equal to zero. The JQI is calculated for all individuals who are in the labor force, including unemployed individuals actively looking for a job. Since unemployed individuals do not earn labor income, they do not satisfy the necessary condition and thus their JQI will be set to 0. 63 The labor income dimension is unique in that if it is not satisfied, the remainder of dimensions are not considered, and the index is set to 0. Rethinking Caribbean Tourism 134 Visa Data References to Visa data in this report include anonymous and aggregated Visa credit card spend data, made available through the Visa Destination Insights data platform. Web Scrapping With the objective of identifying, validating and quantifying the presence of selected tourism offerings in the Caribbean, a web scraping process64 gathered comprehensive information about the existing supply of activities and accommodation facilities from TripAdvisor. The process went as follows: 1. Tripadvisor.com and Booking.com were identified and studied based on the analysis of the methodologies of two World Bank external web scraping providers and on global market coverage. Due to budget and timeline limitations, no other travel platforms were explored. TripAdvisor was chosen for two reasons. First, the available attractions on the site (which include sites and activities) is larger and better classified than in Booking.com. Attractions are a key indicator of available supply and allow for matching with certain tourism segments in the Caribbean (for instance, scuba diving for marine- based adventure tourism or cave tubing for adventure tourism). Second, TripAdvisor aggregates information from different travel platforms, including Booking.com, which would facilitate the data gathering process by reducing necessary scraping methods while maintaining a larger breadth of sources. 2. The extraction of information focused on two TripAdvisor pages, Hotels and Attractions, which measure the presence of different tourism business models and segments in the Caribbean (Figure 70). Additionally, from the TripAdvisor-listed Hotels, the project team quantified the presence of All-inclusive and Luxury types of accommodations. On the other hand, the presence of Attractions measures different tourism market segments, such as adventure tourism or yachting. 3. The extraction used different methodologies and was analyzed separately for Hotels and Attractions. For Hotels, a one level filtering methodology was used (Table 9). For Attractions, an initial classification of different sites and activities into market segments was drafted, and the project team ended its completion after downloading all information. 64 Web scraping is the process of automatically extracting and organizing data from websites, allowing organizations to gather and analyze large amounts of information from the web. Rethinking Caribbean Tourism 135 4. The data was individually collected for 12 Caribbean countries: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Jamaica, Sint Maarten, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines. 5. The web scraping coding and data gathering took place between July 1, 2023, and September 30, 2023. Selected dates to be used in hotel search were December 1–8, 2023. Therefore, it is possible that future searches would not precisely correspond to the data extracted in that moment in time. 6. Each extraction pulled out selected indicators for each hotel and attraction. For Hotels, these consisted of name, price, bubble scores (i.e. satisfaction score ratings), and review counts. For Attractions, indicators were name, bubble scores, review counts, and category. 7. Once the team had all data downloaded and aggregated in a document, manual quality controls were performed. On the Attractions side, exact duplicates were removed, and similar duplicates were combined. Exact duplicates are those with the exact country, name, tag, starts and number of reviews. Similar duplicates are those inside a country with the same name, but different tags and number of reviews. A total of 82 exact duplicates were removed, and a total of two similar duplicates were combined. No action was needed in case of Hotels. Figure 70. Phases of web scrapping Phase 1: Phase 3: Phase 4: Phase 2: Selection of Filter selection Data Selection of travel for each extraction of sites platform segment listings Adventure Attractions associated tourism with adventure Health & Attractions associated wellness with health & wellness Gambling tourism ... Attractions Cultural tourism ... Events - leisure Yachting TripAdvisor ... All-inclusives All-inclusive hotels Hotels Luxury Luxury hotels Source: Authors’ elaboration. Rethinking Caribbean Tourism 136 Table 9. Filtering criteria for data extraction and categorization of segments (Hotels) Methodology Applying single filters or combined All-inclusive All-inclusive (in ‘property types’) Luxury 5-stars (in ‘hotel class’) AND Luxury (in ‘style’) Source: Authors’ elaboration. Consumer Market Research The World Bank conducted a primary quantitative research module to understand travel motivations and trends in the United States outbound market for Caribbean destinations. The study focused on 12 core Caribbean countries and involved an online survey targeting adults over the age of 18 who have traveled internationally for leisure in the past five years. Quantitative data was collected in June 2024. The survey explored traveler profiles, decision factors, and preferences, covering aspects such as destination awareness, planning, booking, on-ground experiences, and post-trip follow-ups. The research included four distinct target groups, with a total sample size of 1,913 respondents: • Caribbean Adventure Travelers (n=1,000): Individuals who have taken at least one trip primarily for adventure tourism to the Caribbean, defined as travel involving physical activity, engagement with the natural environment, and cultural activities. • Global Adventure Travelers (n=306): Adventure travelers who have not visited the Caribbean for adventure in the past five years but have traveled to other countries for adventure tourism during the same period. • All-Inclusive Resort Visitors (n=305): Travelers who have stayed in an all-inclusive hotel or resort in the Caribbean, where all meals and drinks are paid upfront. • Cruisers (n=302): Individuals who have been on a cruise to the Caribbean, enjoying an all-inclusive holiday with a set itinerary calling at several ports or cities. The findings aim to inform strategic policy recommendations to improve tourism competitiveness and sustainability in the Caribbean. Research was conducted with data partner NielsenIQ. Rethinking Caribbean Tourism 137 Rethinking Caribbean Tourism 138