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Reuters English News Service

Caribbean Islands Building Up Despite Weak Tourism, Puerto Rico Most Aggressive

By Kristin Roberts

November 1, 2002
Copyright © 2002 Reuters Limited 2002. All rights reserved. 

FREEPORT, Bahamas - Caribbean officials plan to unveil dozens of multimillion-dollar tourism projects over the next year despite unabated weakness in travel spending.

From more than $2.2 billion investment in new hotels in Puerto Rico to a $65 million airport expansion in the British Virgin Islands, regional authorities say they are trying to position themselves to capitalize on an eventual rebound in tourism.

U.S. and European corporations are investing in the region as well, according to officials from Aruba, Puerto Rico and the Virgin Islands attending this week's Caribbean Tourism Conference in the Bahamas.

"The winter travel bookings look softer than we anticipated," said Jose Suarez, deputy executive director of the Puerto Rico Tourism Co., the government's tourism authority. "But the hotel business is cyclical so once it moves out of this stage, we will be very well placed."

Among all the Caribbean islands, Puerto Rico has pursued the most aggressive and expensive development agenda.

The Commonwealth has 56 projects at varying stages of planning, including blueprints for building up the island's west coast with hotels and nature tours, dubbed eco-tourism. Officials expect the number of available hotel rooms to jump by 56 percent once construction is complete, Suarez said.

Some of the funding for development in Puerto Rico comes from the tourism authority, which is largely self-funded thanks to fees and room taxes. But top international hotel chains are also pouring money into the island as well, Suarez said.

The Inter-Continental Cayo Largo Resort on the eastern side of Puerto Rico is scheduled to open in December. Marriott International Corp. also plans to open the Marriott Courtyard Isla Verde that month as well.

Marriott is expanding in Aruba too by adding 400 rooms to the 7,000 it already has, said Marcial Ibarra, North America director for the Aruba Tourism Authority.

Officials for Anguilla, the northernmost Leeward island, said a new $200 million golf course and surrounding development built by New York-based Flag Luxury Properties LLC should be ready to open within 18 to 24 months, and that three luxury hotel brands are vying for the management contract - Four Seasons Hotels Inc. , Marriott's Ritz-Carlton unit and the St. Regis, owned by Starwood Hotels & Resorts Worldwide Inc.

The island's tourism director, Amelia Vanterpool-Kubisch, declined to offer further details on the management agreement.

"We now believe we have stepped up a notch," she said.

But all this comes as the Caribbean tourism industry shows little sign of improvement from a severe drop-off in U.S. travel that followed the Sept. 11, 2001 attacks. The number of visitors from Latin America has dwindled as well, with Brazil, Argentina and Venezuela struggling economically and politically.

Even the historically most popular destinations in the Caribbean have posted dramatic declines in overnight hotel stays and arrivals. So far this year, overnight stays are down 13.5 percent for Puerto Rico, 7.6 percent for the Bahamas and 9.1 percent for the Dominican Republic.

While many government officials say they expect some uptick in the numbers in 2003, early data simply do not support that assumption, analysts and travel agents say.

"It's very spotty," said Richard Kahn, owner of Kahn Travel in Rockville Center, New York, at the Bahamas conference. "We're very confused by what's happening and there are not a lot of simple answers."

Hotel reservations have not picked up ahead of the winter travel season and holiday air reservations are weak, officials at the conference said. Some travel agents said people may be playing a waiting game in anticipation of cheap fares.

Wall Street credit analysts have maintained an outlook on the region's travel industry that ranges from cautious to outright pessimistic. Last week, ratings agency Moody's Investors Service downgraded $80.8 million in the Aruba Airport Authority's debt due in part to reduced flights.

The hopes of Caribbean tourism officials for a strong new year also almost invariably are expressed with a caveat - recovery barring any natural disasters or global political events, including a U.S. war in Iraq.

"One of our concerns about international destination airports is the potential for military conflict," said Adam Whiteman, Moody's analyst. "It took six to 10 months for that traffic to come back after the Gulf War."

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