King, Stewart spar over tourism’s worth to economy
Published:Monday | September 14, 2020 | 12:09 AM
Controversy is brewing over the real value that the tourism sector adds to the overall economy.
Economist Dr Damien King suggested that the second-quarter data on the economy’s performance during the COVID-19 pandemic were proof that tourism did not contribute as much as one-third of the economy, as was previously thought.
The Planning Institute of Jamaica projected last Wednesday that the economy was estimated to have contracted by 18 per cent for the second quarter (April-June) of this year.
The largest decline in the second quarter was recorded on the services side of the ledger, as expected, in the hotels and restaurants industry, which shrank by an estimated 87.5 per cent, reflecting a sharp decline in visitor arrivals and the number of persons using restaurant services.
Total visitor expenditure, at US$16.2 million, was 98.1 per cent lower than that recorded in the corresponding period of 2019.
By King’s arithmetic, published on Twitter, “tourism can’t be more than one-tenth of the total”.
But deputy chairman of the Sandals Group, Adam Stewart, suggested that King’s mathematics was simplistic and did not take into account other realities.
According to Stewart, many workers in the sectors continue to be paid while receivables are still being collected in the sector.
“Downtime [is] used to maintain and refurbish physical plants and expand and not to mention the 3-6 month moratoriums on loans, mortgages, etc.,” Stewart stated in direct response to King.
Stewart contended that King’s sentiment “shows theory over understanding what’s happening on the ground”.
“Our arrivals may be down 80 per cent plus, but our payables and economic activity aren’t down concurrently,” he said.
German statistics portal Statista has published figures showing that since 2011, there has been a steady rise in the total contribution of the travel, tourism, and hospitality sector to gross domestic product (GDP).
According to data, in 2011, the sector contributed 24.98 per cent in total to GDP, while in 2018, it contributed 33.9 per cent.
In direct contribution to GDP, the figures were dramatically lower.
According to Statista, the travel, tourism, and hospitality sector contributed only 7.49 per cent in direct terms to GDP, while in 2018, its worth was measured at 10.56 per cent.