Creating Resort Towns A case study of Montego Bay and Bavaro Punta Cana By Paul-Emile Brice Advisor: Prof. Alberto Fuentes May 2017 SECTION 1 OVERVIEW OF TOURISM DEVELOPMENT AND RESORT-TOWNS IN THE CARIBBEAN I. TOURISM ECONOMY AND RESORTS IN THE CARIBBEAN Countries with a low rate of exports, including the Caribbean ones, heavily rely on tourism to grow their economy, generate tax revenues and create jobs (UNWATO, 2017). In 2015, 29 million international tourists visited the 48 lower and middle-income countries of the world which generated around 21 billion dollars, a higher contribution to their economy than total international aid (World Bank, 2016). The significant impact of tourism on other economic activities such as construction, transportation, small businesses, and agriculture led many researchers to recognize the positive contribution of tourism on the growth of small economies like Caribbean countries (Thacker, Mejia and Perrelli 2012). The Caribbean countries are renowned recreational tourist destinations. In 2017, tourism and travel represented almost 5% of the GDP of the region, generated over 17 billion dollars, and provided over 2 million of jobs (World Travel & Tourism Council 2018). For Caribbean countries, tourism has become a more critical source of capital accumulation and productivity (Jayawardena 2005), as agriculture is no longer the main motor of their economies since the 1960s and 1970s (Thacker, Mejia and Perrelli 2012). Agricultural land progressively disappeared to serve the primary purpose of travel to the Caribbean that is leisure. The UN World Tourism Organization reported that 90% of the travelers to the Caribbean in 2017 visited for recreational purposes especially to enjoy the sea, sun, and sand. The main tourist product marketed in the Caribbean is beach hotels, especially all- inclusive resorts. They offer the visitors a full package of services to maximize their sea, sun, and sand experience without the need of leaving the resorts. Therefore, customers have very limited contact with the local community which receives little economic benefit from the all- inclusive model (Shandanna 2002). This model includes the development of gated resorts along coasts with private access to beaches that are often restricted to the locals. The resorts, in turn, cluster close to an international port to form a town, which the paper identifies as a resort town. The economy of a resort town relies heavily on the number of bedrooms available which is the main resource to capture foreign currency. Resorts are also the primary provider of employment to the community. The jobs provided are often low paid, and temporary because of the seasonality of tourism. Hotel bedrooms of a resort-town often have a higher occupancy rate compared to the ones of the overall country. The economic development of resort-towns impacts the growth not only of the tourism industry but the national GDP. However, the dependency on a core industry does not allow resort towns to have a diverse economy, as in the case of Punta Cana, in the Dominican Republic. In contrast, the government can purposely plan the diversification of the economy of a resort town, like Montego Bay, in Jamaica. Although the economy of Montego Bay continues to rely mainly on tourism, its local government manages to support the emergence of new industries. The next paragraphs present these two resort towns, which are the cases studied in this paper. II. TWO CASES OF RESORT TOWNS One of the oldest tourist destinations in the Caribbean is Montego Bay. Located on the North Coast of Jamaica, Montego Bay emerged in the late eighteenth century as a major plantation economy, exporting sugar, rum, molasses, and bananas. Plantation owners hosted the first tourists on their property in the early 20th century, when they arrived in the same vessels exporting agricultural products (William, 2004). As the number of tourists grew in the mid 20th century, local entrepreneurs built several small scale hotels. In parallel, the local population grew from 11,500 people in 1943 to 23,600 in 1960 and started to experience the exclusion from the tourism industry. The community did not have access to some beaches that local entrepreneurs reserved for wealthy white tourism. That progressively led to local resentment toward the tourism industry. This pattern of exclusivity became even more evident in the late 20th century, as Montego Bay became a mass tourism destination because of the construction of an airport and the development of the all-inclusive resorts. The development of all-inclusive resorts not only competed with agricultural land but also rapidly replaced the agriculture economy because of better-paid jobs. In the 1980s, despite the continuous growth of visitors’ arrival, the local government decided to diversify the Montego Bay economy, which was largely dependent on the tourism sector and unable to fully satisfy all the needs of a growing population. Today, Montego Bay has a population of 122,401 people, continues to be known as a resort town, and is the second financial capital of Jamaica, which was possible through the attraction and retention of new economic activities including light manufacturing, telemarketing, and data processing. Montego Bay was already a well-established destination when Bavaro-Punta Cana, located in the east coast of the Dominican Republic, became a popular tourist destination of the Caribbean in the 90s. Before, Bavaro-Punta Cana was a coastal fisherman village with poor connectivity to the rest of the country and a lack of access to financial capital, basic services, and other resources much needed for development (Sauter 2014). Because of the isolation from the overall regional economy, the local population livelihood heavily relied on fishery, coal production, and subsistence agriculture. These economic activities progressively disappeared as the tourism industry emerged (Sauter 2014). This process initiated in 1971 when a local and an American entrepreneurs partnered to open the first Hotel in Punta Cana, which only had 10 rooms. The number of rooms in Punta Cana grew exponentially in the following decades, mostly because of the investment of multinational corporations to develop all inclusive-hotels. The all- inclusive resort economy also resulted in the growth of the population and the rapid urbanization of the area. By 2010, there were over 30 thousand bedrooms, approximately 85% of them all- inclusive, and a population of 43,000 people (Sauter 2014). Today, Bavaro-Punta Cana receives approximately 60% of total tourist in the Dominican Republic. What was determinant to the rapid transformation of both Bavaro-Punta Cana and Montego Bay consists of the neoliberal system, implementation of tourism industrial policies, and construction of the airport. III. CONSENSUS ON TOURISM DEVELOPMENT POLICIES One of the many forms of urbanization is beach resort towns (Smith, 1992) which is part of the strategy of governments of small economies, such as Caribbean states, to develop tourism. A strong tourist industry can compensate for low rates of exports and limited opportunity for agricultural production (Thacker et al, 2012), which is why Caribbean countries rely heavily on tourism to grow their economy, generate tax revenues, capture foreign exchange, and create jobs (UNWATO, 2017) (BBC, 2012) (Akama, 2002). The achievement of these economic objectives requires the active involvement of Caribbean governments in planning and developing tourism, mainly because the local private sector lacks the financial resources, technical skills and experience to supply the quantity and the quality of products demanded (Knight & Sharpley, 2009; Jenkins & Henry, 1982). The governmental intervention is especially needed for mass tourism that requires important financial investment, needs large-scale infrastructure, and has a greater impact on the economy. The endeavors of these governments are, in turn, supported through the financial and technical assistance of the World Bank or the International Monetary Fund (IMF), and other forms of bilateral and multilateral agreements (Jenkins & Henry, 1982). Instead of building the capacity of local entrepreneurs, the government themselves played an entrepreneurial role in the tourism industry in the past. They owned and operated large scale tourist facilities and air carriers (Jenkins & Henry, 1982) (Akama, 2002). These governmental tourist enterprises were often in debt because of the financial mismanagement of the overall operations, the extensive bureaucracy that negatively impacted the logistics flow, and the decision making guided by politics instead of financial criteria. For instance, governmental hotels did not consider market studies but were based on the political agenda for developing a region often not suitable for tourism for a variety of reasons, such as the difficult accessibility from an airport. Another example of mismanagement is the over-creation of jobs that meet a governmental employment target, but creates a financial burden. The poor financial track record has led many experts to conclude governments themselves should not be performing entrepreneurial activities (Akama, 2002) but should be supporting private sectors initiatives. The consensus agrees that adequate ways for governments to support tourism development include setting national objectives, providing financial incentives, standardizing business practices, and building infrastructure. Their main objective is to attract private sector investment