Is Puerto Rico’s travel and tourism industry under threat?

Puerto Rico’s splendid weather, pristine beaches and attractive palm groves are failing to hold the tourists’ attention as the island is battered by one misery after another. The tourism industry in Puerto Rico seems to be losing out to its competitor Caribbean Islands as immediate solutions to the inherent problems are far beyond the sight.

Amidst the miserable economy of this US territory, it is the travel and tourism sector that has been showing some promise. This sector grew from 7.3% of GDP in 2014 to an estimated 8.4% of GDP in 2017 and is projected to grow by 10.7% by 2027 according to the World Travel and Tourism Council. Sadly enough, these bright projections are losing their sheen as the island is struggling to fight out a number of bad events, which is bound to effect its tourism sector.

Pre existing problems in the tourism sector:

increased-costA lot of internal issues are affecting the visitor numbers and hotel occupancies of this island since quite some time. The high cost of hotel construction and electricity, mandatory perks to staffs and a lot of red tape are big pullback factors.

The looming debt crisis and high labor costs in Puerto Rico are compounding the problem even when the sector enjoys tax breaks and credit support from the government. Top real estate investors are shunning this land due to its weak potential in returns on investment.

The cost to develop a resort in Puerto Rico is almost 30% higher or more than in other parts of the Caribbean where the latter presents a much better scenario in terms of returns. Moreover, a high labor charge guided by the US Federal minimum wage system eats up a substantial portion of the revenue earnings which is further discouraging fresh investments.

The Zika scare:

Zika

The spread of the Zika virus is another severe threat to the struggling tourism sector that reports of about 40,000 confirmed Zika cases. The US territory already bogged down by a fragile economy has very limited budgetary allocation to health programs to drive out this dreadful scare.

Zika virus can cause serious birth defects in babies termed as Microcephaly, if the pregnant mothers get infected through aedes aegypti mosquitoes thriving under favorable climatic conditions prevailing in Puerto Rico. Microcephaly causes developmental disabilities in babies and most of them are born with smaller heads than the standard measure.

Though Puerto Rico has officially confirmed only 16 defective child births (an incredibly low number) caused due to Zika virus, the reality may be different if tallied with the confirmed 3200 Zika infected pregnant women. It is quite likely that the island is trying to underreport the figures so that the tourist season isn’t spoilt. The strategy may not work out well as travelers would naturally avoid this destination out of safety concern.

The aftermath of Maria:

Hurricane MariaPerhaps the harshest blow the island ever faced is the Hurricane Maria that had brought life to a standstill. The tourism sector is likely to be badly hit as this major category storm has uprooted the entire power and communication system, which may take months to get back to normalcy.

The damage estimate announced by the disaster modeler Enki Research is $30 billion of which $20 billion can be attributed to the immediate physical damage and $10 billion to the future economy.

It is not an easy bounce-back scenario for the island going through one of the worst phases of recession. The havoc caused by the recent natural disaster unsettling the basic services followed by a serious cash crunch and energy shortage has led to the temporary closure of many businesses, which is estimated to have a long lasting effect on the future economy.

Amidst this scenario, the hotels and resorts are struggling to run the business due to severe supply shortage and energy crisis. The threat of a complete shutdown of many hotels is eminent.  Even it is not sure if many of the hotels would be able to resume their business in a full swing due to the looming financial insecurity which has been compounded after the Maria landfall.

But Puerto Rico tourism is not giving up hopes amidst this gloomy scenario. The land famous for the only subtropical rainforest in the US, great nightlife and the original Pina Colada bar is working hard to restore power and basic services. The tourism ministry is sending out highly optimistic messages regarding the island’s strong tourism infrastructure which may not take too long a time to get back on its feet.

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