Central Bank of Barbados : Tourism is our Business

Author(s):

Central Bank Of Barbados

Last September I met the Governor of the Bank of Canada, Mr. Stephen Poloz, when I was on a visit to Ottawa with colleagues from the Central Bank and our Financial Services Commission. He told me that Barbados was high on the list of countries he wanted to visit with his family. That is a sentiment that is familiar to me. Wherever I have travelled in the world, when people hear the name Barbados, they want to come here. Here at home I regularly meet people who visit every year, and have been doing so for ten, fifteen, twenty years or more. What is it that makes Barbados such a desirable place for tourists to spend a vacation?

One reason is that we have been blessed with a climate and geography that is ideal for tourism. We used to say that Barbados has no natural resources; some people still say that. But in fact few countries have a climate that is so enviable, beaches that are so wonderful and accessible, seas so clear and colourful, and a landscape so picturesque. Between 1998 and 2008, my wife Monica and I lived in Maryland in the US, and every year, when we came home for Crop Over, we would stay at a bay house in Bathsheba, just across the road from the Soup Bowl, where many surfing competitions take place. On occasion, a colleague from the International Monetary Fund would call from Washington DC, and they would be green with envy as I described the beautiful scenery stretched out before me. These are natural resources people are prepared to pay a great deal for. Many visit, and some buy property so they can visit whenever they wish.

But there is more: Barbadians have enhanced the appeal of our island by building very good health and education systems. Our public utilities are reliable, our road network is extensive, our hotels are of high quality, everyone has access to the Internet, and visitors and Barbadians alike can go about their business in an atmosphere of safety and security.

The fact that we speak English and that from way back in colonial times we have had strong connections to the US, Canada and the UK also work in our favour when it comes to tourism. As a result, we have good airline connections to London, New York, Miami and Toronto. It is convenient for the English and North Americans to reach us.

On top of all this, we have done many things to enrich the visitor experience. We have exciting places to visit: those of you who have not yet visited St Nicholas Abbey should ask that arrangements be made to take you there. It is among the most fascinating places to visit anywhere in the world. We have other unique attractions such as the Caves, George Washington House, the tunnels at the Garrison, and many more. Everyone knows about our beaches, among the best in the world, and, because our island is small and we're developed, they are all easy to get to. We have the whole range of watersports, we have golf, Polo and yachting, we have an Olympic swimming pool, a Formula 3 racing track at Bushy Park, excellent cricket grounds and good facilities for many other sports.

That is not all. There is the cuisine, both in terms of the foods and flavours from around the world, and also the Bajan food and drink that you cannot get anywhere else in the world. We have Asian, European and American food, fast food and slow food, and then we have flying fish and breadfruit cou cou and pudding and souse. We have Mount Gay rum and falernum. We have the unique Barbadian culture, rum shops, Crop Over, cricket clubs of long standing, churches and choirs. And we're adding new things all the time, like Q in the Community, Leadpipe and Saddis, breadfruit bowls and Oistins Bay garden.

And above everything else, there is the world-renowned Barbadian hospitality. The warmth with which tourists are welcomed into our bosoms is for many the main reason they return, year after year.

Tourism has made all the difference to the quality of life for Barbadians since the 1950s. Tourism has been a part of the Barbadian economy for three hundred years, more or less. George Washington House gets its name from the fact that the very first President of the United States visited Barbados as a young man. He came, with his brother, for health reasons, which is why most people chose to visit in those days.

Tourism has always been of considerable economic benefit; even from those early days. You probably know the name Rachel Pringle. She was Barbados' famous hotelier of the eighteenth century and if you go on one of the Barbados Museum's tours of Bridgetown, you will discover there were several others like her. Our historians tell us of the great performances at Marshall Hall in the 1800's, which attracted audiences from all of the Americas.

Up until the 1960's, however, getting to Barbados involved a long and expensive boat trip, so visitors were very few. It helped that they were also very wealthy. Tourism really started to make a big impact when jet airplanes were introduced for passenger travel. That reduced travel times and brought the cost down to a level that large numbers of ordinary folk could afford. Much larger hotels were built, and the benefits spread much more widely across the society. Hotels employ hundreds of staff themselves, plus they contract entertainers and companies that provide security services. In addition, they buy supplies and services from local firms, from grounds maintenance to electricity, gas and water. That gives the providers reasons to expand their business and employ more people. The employment that the industry creates, both directly, and through the services they buy, is one vital element in tourism's contribution to our economy.

A second important contribution of tourism is the taxes paid by hotels, restaurants, taximen, and everyone employed in the tourist industry. Those taxes contribute to maintaining this school's property, paying teachers' salaries, the free bus fare you benefit from, and funding all the many other services that our Government provides.

The profits of tourism companies are the third element of the sector's contribution to our economy. In calculating the official measure of that contribution to Barbados' Gross Domestic Product, our statisticians add up the wages and taxes paid, and the amount of profits made by local owners.

There is yet another dimension of tourism's contribution to our economy, and that is the fact that our tourists pay in US dollars or other foreign currency, rather than Barbados dollars. This fact is the most important aspect of tourism's contribution. Let me explain why.

We are all very proud of the Barbados dollar, but our dollar has very limited reach, and when you trace things back to source, there is not much you can buy with the Barbados dollar. You can't buy a cell phone with Barbados dollars, not if you trace the phone back to its source. You have to think hard and long to come up with anything that you can buy with a Barbados dollar that doesn't track back to a foreign source, either to obtain the product in the first place, or to get the ingredients to put it together, or to get it to a shop or market where it can be bought. I can't think of a single thing that doesn't require foreign exchange.

It follows that, in order to make our Barbados dollar incomes work for us, we must have US dollars coming into the economy sufficient to buy the products and services we spend our money on. That is what tourism does for us. Our visitors are from countries where the money they earn and spend, including what they spend in Barbados, is in sterling or Canadian dollars or US dollars or Euros. It's all foreign exchange, and it can be used to buy cell phones and anything else we need.

Tourism is Barbados' most important source of foreign exchange; it provides us with about $2,000 million each year, all in foreign exchange. Our second most important source of foreign exchange is our business and financial services sector, which pulls in half that amount, $1,000 million. Our exports of rum, chemicals and other products bring in $500 million dollars.

These three foreign exchange sectors are the engines that power the growth of our economy, and their strength is the reason we are confident that growth prospects are good. Our tourism is the most competitive in the Caribbean, and the seventh in all of the Americas, after the US, Canada, Brazil, Mexico, Panama and Costa Rica. There are only six countries in the Americas that are more competitive in tourism than Barbados and they are all much bigger than Barbados. Our international business services are highly regarded internationally. Our rum is world famous and our exports are successful in highly competitive markets.

In contrast to tourism and other foreign exchange earners, we cannot grow our economy by creating jobs in the Government service. That is because Government does not earn any foreign exchange. So any time one of your teachers buys a cell phone, they are using 'surplus' foreign exchange provided by someone working in tourism, international business services or an export industry. If too many Government employees are buying stuff, and there is not enough foreign exchange coming in, the commercial banks will come to Central Bank for US dollars when shops need to restock to replace the cell phones they've sold. That depletes the Central Bank's reserves of foreign currency, at a time when we need to build up foreign reserves.

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