Strengthening adaptation to climate change for tourism business in the Caribbean

THE BACKGROUND

The Caribbean is among the most tourism-dependent regions in the world and there is no other region whose travel and tourism industry is as vulnerable to disasters as the Caribbean. It is undeniable that climate change presents an existential threat to small island developing states and low-lying coastal areas, which include the countries of the Caribbean. The Caribbean region has been the target for the last two decades of extreme weather events. The 2017 Atlantic hurricane season, one of the most active on record, produced 18 tropical depressions, which intensified into tropical storms. The Hurricane Maria, for instance, caused catastrophic damage and numerous fatalities across the north-eastern Caribbean, compounding recovery efforts in areas of the Leeward Islands that were earlier hit by Hurricane Irma, such as Barbuda where about 90% of homes on the island were destroyed, forcing the evacuation of over 1400 people to Antigua. There is no other region whose travel and tourism industry is as vulnerable to disasters as the Caribbean. Given the competitive nature of the tourism industry, there is often a lag between the speed of the reconstruction of damaged properties and social and economic infrastructure, and the speed of post-disaster recovery of the industry, as business tends to move elsewhere. The recovery of market share often requires already cash-strapped, affected properties and destinations to invest in costly marketing campaigns in source markets. Invariably, properties and destinations that are not directly impacted by the passage of a Hurricane are indirectly affected by a perception within source markets that the entire region is unsafe. Destinations that were not affected during the 2017 Atlantic Hurricane Season were affected by an immediate wave of cancelations of bookings, leaving hotel rooms unoccupied and interrupting inbound revenue. The net effect of this is that the Atlantic Hurricane Season which runs from June to November is undermining the region's strenuous attempts at creating a year-round tourism industry.

THE PROJECT

Recognizing these realities, political and business leaders in the region have determined that building economic, social and environmental resilience is their only option. In the wake of the damage suffered during the 2017 hurricane season, regional policymakers were committed to designing and implementing a resilience-building program. The Organization of American States (OAS) launched a two-year project in 2019 to assist the region’s small and medium tourism enterprises (SMTEs) to build resilience to natural disasters. This project was funded by the United States Department of State and managed by the OAS Secretariat for Integral Development. The project was implemented to reduce the severity, impact and duration of disruptions caused by disasters on the operations of small tourism enterprises in the Caribbean. The objective of the initiative was to provide technical assistance to small tourism enterprises in the participating Caribbean countries to overcome the macro (national) and micro (corporate) level challenges that affect the business continuity during and after catastrophic events in the Caribbean. Participating countries set to benefit from the project included: Antigua and Barbuda, The Bahamas, Belize, Barbados, Dominica, Grenada, Haiti, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago FINANCE FOR IMPACT was commissioned in March 2022 to do an assessment of the project in terms of its relevance, effectiveness, efficiency, and sustainability.

THE RESULTS

FINANCE FOR IMPACT has assessed the performance of the OAS project and also conducted a Cost Benefit Analysis (CBA), thus determining the internal rate of return and net present value of the investment.