TOURISM IN HAITI. National Context. Tourism in the International Context

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Business Future of the Americas Haiti Diaspora Investments in Latin America & the Caribbean June 15-17, 2015 Marriott Hotel Presented by AmCham Haiti & AACLA National Context Haiti s per capita Gross Domestic Product (GDP) of $833 in 2014 makes it the poorest country in the Americas and one of the poorest in the world. As of 2014, fifty-eight percent (58%) of its population of 10.5 million live below the generally-accepted poverty threshold of $2 per day. The rural and urban poverty head counts were estimated as 75% and 29%, respectively. Haiti also has the lowest rate of labor force participation in the region, with only 60% of working-age individuals participating in the labor market. Sixty percent of those that do find employment earn less than the minimum wage. Not surprisingly then, Haiti is one of the most unequal countries in the world, with a Gini coefficient of 0.61 meaning that the richest 20% hold more than 64% of Haiti s total income that has held relatively constant since 2001. Haiti faces enormous challenges, but also presents significant opportunity for broad-based economic development. The Haitian economy has begun to recover, however timidly, from the 2010 earthquake: GDP growth of 5.5% in Fiscal Year (FY) 2011, 2.8% in FY 2012, 4.2% in FY 2013, 2.7% in FY 2014. Growth has been driven mainly by accelerated output in agriculture, as well as the construction and manufacturing sectors, particularly textile and garment exports. The years of lesser growth i.e. FYs 2012 and 2014 were the result of stagnation in the agricultural sector due to hurricanes or drought. Sustained increases in nonagricultural income will have to be a key driver if Haiti is to make serious inroads in poverty reduction. Those who engage in the non-farm sector are 10% less likely to be poor, and with more than three out of every four rural inhabitants dependent on Haiti s under-performing and unreliable agricultural sector, income diversification is critical to the creation of new opportunities for broad-based growth. Tourism in the International Context Tourism is the world's largest generator of jobs. In 2014, direct and indirect employment from the tourism sector accounted for 10.7% of the global work force. Given that tourism is labor-intensive, in an economy with an abundant, cheap pool of labor a large amount of This brief was prepared with the assistance of the Local Enterprise and Value Chain Enhancement Project (LEVE) funded by USAID HAITI, and implemented by RTI International.

job creation can be achieved in a short period of time. In addition, given the multitude of skills to which the industry is linked from accountants to plumbers, from artists to chambermaids, from engineers to shuttle bus drivers, from bankers and insurers to short-order cooks tourism is well suited for entrepreneurial opportunities as well as on-the-job training. Tourism is a final good, i.e. the value added in final stages of production is created in Haiti. International/Diaspora tourism is an export item that is exported without leaving the country. Tourism is therefore a foreign exchange generator par excellence. Tourism has a large multiplier effect. The impact of tourism is greater than the initial expenditure by visitors. In the Caribbean, for example, it is estimated that the sum of direct and indirect local value added generated per dollar of tourist expenditure was around 1.6 times the value of the initial input of visitor spending. Tourism in the National Context The Government of Haiti s 2012 Strategic Plan for the Development for Haiti identified tourism as one of the pillars for economic recovery, targeting the sector as a means of generating wealth and creating jobs. Haiti s position in the center of the Caribbean Sea, its proximity to the world s largest market, its young labor force and rich cultural heritage afford the country a wealth of untapped potential for diversification. The Strategic Plan calls for investment in sectors that can contribute to competitiveness and for the channeling of public and private resources in a regionally-based approach to structure, which balances economic and land baseddevelopment. The development of tourism clearly fits those criteria and objectives. Recent Performance and Potential Haiti s diverse natural resources, its 1,771 km of coastline and its rich historic and cultural heritage can spearhead increased tourism and spur new employment and income generation. The direct and indirect contribution of tourism to Haiti s GDP in 2013 was $355.4 million, a lowly 4.2% of GDP in comparison to the rest of the Caribbean. Haitian Tourism supported 139,000 direct and indirect jobs, a mere 3.6% of total employment. Foreign visitor exports generated $184.8 million, or 14.7% of total exports. Only $101.3 million was invested in the sector last year. Official arrival statistics clearly indicate a growing demand for tourism in Haiti in the last few years. Haiti received 1,063,370 visitors in 2013 (the highest since 2007), of which 419,736 were overnight tourists and 643,634 were day-visitors (cruise ships). Between 2007 and 2011, international tourist volumes increased on average by 4.9% per year, despite the financial crisis in 2008 and the disasters that befell Haiti in 2008 and 2010. Excluding cruise passengers (who by definition travel solely for leisure), international visitors come to Haiti for leisure (40%), business (22%) and for other reasons, including visiting family and for voluntary work (37%). 2

Sixty-eight percent (68%) of tourists between 2007 and 2011 were from the United States, only about half of whom from the Haitian Diaspora (making Haiti s nearness to the United States yet another advantage). Europe (10.5%) mainly from France Canada (7.9%) and other countries in the Caribbean (3.9%) accounted for most of the rest. Haiti s Ministry of Tourism updated the 1998 National Tourism Master Plan in 2012. The Master Plan seeks to pursue regionally-based tourism development in three regions: North Coast, Arcadins Coast and Caribbean Coast (i.e. southern coast of the Southern peninsula, from Port-à- Piment to Jacmel). In sum, the three regions targeted stretch through five of the country s ten departments. The recent increase in the number of agreements and/or commitments among the Government of Haiti, international enterprises and potential investors, and the two major projects totaling more than $80 million in the past year from the World Bank (in the North) and the Inter-American Development Bank (in the South) for tourism development are strong indicators of the sector s renewed appeal, of growing momentum and of the determination of the Government to put in place a new Haitian paradigm in tourism. This vision calls for the development and consolidation of new and improved tourism products (nature-based, cultural and scenic) located at either existing destinations (e.g., Aquin, Port-Salut) or at undeveloped sites aimed at catalyzing new investment (e.g., Côte-de-Fer, Ile-à-Vache). THE PROBLEMATIQUE A Missed Opportunity Tourism development in Haiti has largely been a missed opportunity. Had its recent history been different, Haiti would probably have been well ahead of its regional competitors given the country s leading role in Caribbean tourism in the late 1940s/ early 1950s. Competitive advantage is not exclusively a natural phenomenon, but is increasingly a man-made one, driven by science, technology, information and innovation. As such, it is not simply the stock of natural resources of Haiti that will determine her competitiveness in tourism, but rather, how these resources are managed and to what extent they are complemented with man-made innovations. There can be no rebuttal to the contention that Haiti has not been able to realize even a tiny share of its tourism potential over the past half century and more. Today, Haiti accounts for only 0.7% of the total inbound tourism revenue in the Caribbean, evidence of the sector s lack of development despite its similarities to the rest of the Caribbean in terms of natural assets. As a result, the contribution of tourism to employment, small business development, income generation, technological and managerial progress and foreign exchange earnings has remained extremely limited. 3

Key Constraints A number of factors limit the effectiveness of the tourism industry to play a more meaningful role in the national economy. Indeed, tourism was neglected for a period only to resurface from time to time, yet never as an integral part of an economic development plan. Among the key constraints to the development of tourism in Haiti: Limited development scope due to past political policies. The stagnation of the industry could largely be ascribed to the political stalemate over the years. Inadequately resourced and funded tourism industry Government has had a limited view of the potential of the industry and as a result, marginal resources have been devoted to developing and promoting the sector. Tourism has been narrowly viewed as tourists and hotels. Myopic private sector - Signs of a more forward-looking private sector seem to be emerging. Only by taking a broader view of the product offered, and building partnerships with government, local communities and other private sector interests, can the highest levels of customer satisfaction be achieved. Limited integration of local communities into tourism Despite these obvious and available opportunities, however, many factors limit the meaningful involvement of rural and local communities in the tourism industry. These include: I) lack of information and awareness; ii) lack of know-how and training, iii) lack of financing mechanisms, iv) lack of interest on the part of existing establishments to build partnerships with local communities and suppliers, v) lack of incentives to reward private enterprise that build or develop local capacity and create job opportunities, especially for Low-income people. Inadequate tourism education, training and awareness Complete lack of knowledge and understanding of what tourism really is; there is a perception that tourism refers only to people traveling around and staying in hotels. The wider opportunities offered by tourism have not been fully explored and understood. Inadequate protection of the environment such as deforestation and soil erosion lead to a denuded Haiti, stripping it of its natural beauty. Consequently, coastal estuaries get filled with silt, mangroves are imperiled, historical sites chipped away, beaches are sullied all of which negatively affect the country s aesthetics (both natural and cultural) and its potential to attract tourists. Poor service quality There is a general culture of poor service in the tourism industry and related sectors. There is little excitement in delivering service or to go the extra mile to satisfy the customer. If the majority of domestic tourists have long become inured to poor service as the norm, it remains an impediment to attracting international travelers. Lack of infrastructure, particularly in rural areas, and a transportation sector not geared to service tourists. The dual results are the absence of the participation of rural communities in 4

tourism, and the inability of rural areas from playing a greater and more profitable role in the chain for the industry. Training in tourism and hospitality services is offered at a limited number of public and private institutions. Inability to access finance to take advantage of entrepreneurial opportunities provided by the tourism sector. Many countries have succeeded in a creating a model which uses tourism as a catalyst for economic development. Varying from region to region, relatively low tourism spending in Haiti results from: Attractions without adequate visitor facilities: Potential public attractions are either inadequately equipped with visitor facilities or their tourism value has not been appropriately developed for them to serve as primary attractions and draw and accommodate regular flow of visitors. Where prominent sites e.g., the Marie-Jeanne caves in Port-à-Piment, receive some visitors, they usually require major restorative work; access and viewing conditions are precarious, and regional signage and on-site interpretation are limited at best. Environmental degradation can further erode the potential of a site; mangrove deforestation can produce significant losses in terms of ecosystem services and loss of scenic quality. Inadequacy of essential public services and infrastructure: The lack of public services and infrastructure affect the quality and safety of the tourism experience. Maritime access connecting attractions is limited, with unsafe conditions at many of the piers that do exist. Solid waste management services often pose health risks and contribute to the deterioration of beaches, mangroves and historic sites. Weak capacity to capture benefits from the sector: Rules need to be developed to orient private sector investments to ensure product and service quality, including compliance with social interests and both social and environmental safeguards. Limited local capacity for inclusion in the tourism value chain: Studies indicate that when compared to Value Chain Analyses conducted for other tourist destinations, a lower share of the financial flows and tourism expenditures from the four main value chain segments hotel and restaurants, food and beverage supply chain, crafts and shopping, guides/excursions and transport work their way to the level of low-income people. 5

OPPORTUNITIES FOR INVESTMENT Opportunities Among the guiding principles of the revised Tourism Strategy of 2013-14, which seeks to support the development of the tourism industry, are: i) to make Haiti s Investment Code more competitive, and ii) to promote public-private sector partnerships in the hospitality industry and in infrastructure projects. Opportunities abound both on the hospitality side and on the patrimony/monuments side. In the area of hospitality, investment and commercial opportunities will continue to grow in: Hotels (ranging from One-Hibiscus to Five-Hibiscus), bed & breakfast inns Hospitality training centers Restaurants and other food/ refreshment services, especially near targeted tourism sites Agricultural production (e.g., local food crops and fruits, coffee, cocoa, cassava) Beverages (soft drinks, fruit drinks, beer, alcohol) Transport (air, sea, local to site, local within site) Energy provision Studies (e.g., solid waste management for Milot- Dondon area, urban planning for Cap-Haïtien) In the Patrimony/Monuments area, demand will need to be met for: Brochures Post cards Arts and Crafts (statuettes and other knickknacks) Books CDs and DVDs Site management The Diaspora In an increasingly labor-mobile world, the role of Diaspora in the development of countries of origin has increasingly come to the fore. Countries such as China, India, México and Israel, to cite just a few, have significantly capitalized from strong links with their Diaspora. Today, the number of Haitians in the Diaspora is estimated at more than two million and they contribute in excess of $2 billion annually in remittances, accounting for approximately 25% of GDP. Despite this significant contribution, they have played limited role in the development process. For those who wonder whether Haitian immigrants are too poor to invest, consider this fact from the Current Population Survey of the US: nearly one-third (33%) of Haitian immigrants in the US belong to households that earned more than $60,000 in 2009, as contrasted with less than 15% of immigrants 6

from Mexico, Dominican Republic and El Salvador. A quarter of Haitian immigrants, especially women, are in the relatively higher-paying health care and education sectors. A strategic policy which means to harness the Haitian financial and human resources in the development may take into consideration a mix of the measures by the Government of Haiti since they have been proven to attract other Diaspora in the above-listed countries: Offer incentives such as tax holidays, special investment vehicles and inter-governmental tax agreements. Establish a modality for constant communication to investment opportunities in the country. Encourage direct investment vehicles to channel remittances in order to benefit and affect any adverse macro-economic impact of remittance inflows. Modernize the legal and policy framework to allow for full participation in business governance and political process. Build capacities and network institutions to address linkages between providers and consumers. CONCLUSION Haiti s still-nascent tourism push offers the opportunity to transform the Haitian economy. Its success will in large measure depend on the contributions that Haiti s large Diaspora can bring to bear, as consumers of the evolving tourism products, of course; but as importantly, as generators of new capital, jobs, experience and knowhow, and profits in the pursuit of new tourism. Moreover, such a new paradigm going beyond the present one of remittances will be a loud and clear signal that the Diaspora is a genuine partner in general, as well as a key variable in a new approach to sustainable tourism. 7