CHAPTER 4: TOURISM DEVELOPMENT IN BELIZE: ITS ROLE AS A TOOL FOR ECONOMIC DEVELOPMENT

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1 CHAPTER 4: TOURISM DEVELOPMENT IN BELIZE: ITS ROLE AS A TOOL FOR ECONOMIC DEVELOPMENT 4.1 Belize s Tourism Development Belize boasts diverse natural resources as well as rich cultural heritage, which provide a range of interesting attractions for tourists. In the 1960 s some 11,000 foreigners visited Belize every year. (A History of Belize) At this time agriculture was the main focus for Belize s development, as Belize remained virtually unknown to the outside world beyond the Caribbean and Central American regions. The country s underdevelopment nature, especially as it dealt with the lack of infrastructure discouraged travel by tourists. Only ten (10) years later, the number of foreigners visiting Belize jumped to 30,000 and by 1980 it had risen to 64,000. In 1990, this number experienced a significant growth that reached to 190,000 tourists daily, due to an average annual growth rate of percent in the late 1980 s. (CSO Belize) The main reason for the noted boom in the industry was due partly to the promotional efforts of the government, and the important efforts of the foreign owners of privately owned businesses in Belize who wanted to push the country in the international tourism scene. Tourism was not a priority sector in the development of Belize before the 1980s. At this time tourism was perceived as reflections of colonialism life for the country where the foreign influence would dominate the society. The traditional view of international tourism was regarded as an ineffective basis for economic development, creating little employment in the local economy since a large part of the country s goods was imported. It was of major concern that tourism would mostly benefit the foreign investors since at that time there were very few local industries, while the non-locals ruled the investment market. In addition, it was believed that the local Belizeans would be burdened by inflated land and consumer prices, and environmental problems would be created for the country. (Boxill, 2003) 30

2 The tourism industry is often thought to have initiated out of San Pedro, a caye off the northern coast of Belize, and the country s largest island. It was the residence and investment of several early foreign investors in unique resorts and hotels. These investors saw the amazing opportunities for snorkeling, fishing and diving in San Pedro, which they called paradise, and began selling this concept abroad to the tourist in order to gain profit from their business ventures in San Pedro. These foreign investors instigated the interest in tourism working in collaboration with the Government. In 1985, the then government was committed to deregulation and uncontrolled foreign investment, and began considering tourism a bountiful source of foreign investment after seeing the potential gains for the country and people. A promotional campaign was launched under the theme BELIZE The Adventure Coast, Undiscovered and Unspoiled which highlighted Belize as an adventure destination. By 1990 tourism escalated from its ranks of seventh place in Belize s development priority to that of second. By the late 1990 s, Belize was shifting its focus to nature tourism, which according to the WTO is an industry that offers a 20% annual growth rate. Today tourism remains among the top priorities for government officials. Belize s population has grown with the economic development of the country and the growth in income generated from nature tourism. Because the environment has proven to be one of the principal sources of income for the country there is great concern for the environment. Various sectors of the economy, especially tourism, have urged the establishment of a balance between development and conservation. Consequently, Belize is often recognized by the tourism world as a country that continuously redefines tourism as an economic strategy that can preserve and conserve, instead of destroy its resources. In the 1990 s Belize was an example to many third world developing countries as they dealt with tourism in the development of their economy. Belize won praise from several environmentalists worldwide for incorporating its sustainable development strategies, 31

3 which allowed for the protection of the natural and artifactual treasures of the Mayan history, while ensuring that the Belizean people benefit from the lands set aside for any environmental purposes. Today such reputation cannot be 100% celebrated, as mass tourism is seemingly taking over eco-tourism in some tourist spots in the country. The introduction of cruise tourism in Belize has changed the scene and implications of the tourism sector. 4.2 Policies The Government adopted a policy on responsible tourism in its initiation phase of developing tourism in Belize. According to de Kadt (1976) responsible tourism will be the force that will guide tourism development in the future. Rather than attempting to define a "type" of tourism, responsible tourism refers to an ethic and a set of practices that chart a sensible course for all types of tourism, ranging from what may be called "deep eco-tourism" at one end of the scale to more conventional "mass tourism" at the other. It can be defined as a way of carrying out tourism planning, policy and development to ensure that benefits are optimally distributed among stakeholders and that tourism resources are managed to achieve optimum benefits for all Belizeans. In 1998, Belize developed its first national tourism policy on work undertaken by the Blackstone Corporation. This policy aimed at achieving a 4% annual growth in tourism and an increase of 20,000 visitors over a five year period. The vision of this policy was to allow Belize to practice tourism on a small, manageable scale. The policy focused on the industry as national priority and catered to responsible tourism in areas such as marine activities (e.g. diving, snorkeling, and fishing), and the natural history and adventure markets (e.g. archaeology, hiking, birding, caving). Such an approach embraced the ethics of eco-tourism. It also called for a proactive approach by all relevant stakeholders to develop, market and manage the industry with a view to creating a competitive advantage, maintaining environmentally sound tourism, embracing cultural promotion and respect for local cultures, involving local people through community tourism and developing strong linkages with other sectors. (BTB Tourism Policy 2005) 32

4 While this policy was beneficial for the development of tourism in Belize during its implementation, only six years later it was deemed essential to revisit, change and update the policy on Tourism in order to more effectively cater to the changing of external factors and the boom of the cruise tourism over the past years. The realization of international competition in the industry, the importance of the country as a tourist destination and the potential to mould the industry to create a quality product, called for the formulation of a new Tourism Policy in This new policy is characterized by the following, as outlined in the Policy document itself. Today Belize s Tourism still also focuses on the concept of responsibility according to the Vision for Belize Tourism in the New Millennium. The goal remains to assure that the industry benefits all stakeholders. There is a definite challenge in Belize, to upgrade the tourism product, while maintaining the pristine quality of the country s natural environment. Furthermore, a vision and policy for tourism is needed, which is based on how tourism can contribute to Belize s social, economic and cultural needs including specific targets for growth (such as improving occupancy levels); and also to pursue: international standards and best practices; a balance among all sub-sectors; an orientation to sustainable tourism, with meaningful involvement of communities; a focus on generating widespread commitment to the tourism targets identified in the policy; and an emphasis on action. In a tourism conference held in Belize, the Secretary General of the Caribbean Tourism Organization, Mr. Vincent Vanderpool, stated that Tourism is the only business on earth where every single person in the community is involved, period. The customer does not care, the visitor does not care that that person who just treated them badly is not somebody who s working directly in the tourism industry. They don t care. They go back home and say I had a 33

5 bad time, a good time depending on their total encounters. So it s very important to get everybody on board. These sentiments are precisely the focus of the BTB for Director of the B.T.B., Ms. Tracy Panton, has stated that with the implementation of its master plan, BTB will spend 75 percent of its budget on marketing and product development. With the strong support of the Government, as assured by the Prime Minister himself at his budget speech on March 2006, tourism will continue to be treated as a national priority. It is no secret that Belize faces some difficult challenges that affect the economy. For example, the recent decisions by the European Union regarding the importation regime for sugar and bananas, have hit these two local industries hard. Remaining competitive and viable will be a major challenge for them over the next few years, but we are determined to succeed. Tourism as an industry has the potential to compensate for this negative economic impact. One of its singular characteristics is that as an industry it has the potential for growth in each and every district of Belize. (Prime Minister, Said Musa, 2006). In his recent budget speech, PM Musa, stated that the BTB is leading the way towards developing Community Tourism as a mechanism for ensuring that the benefits of the expanding tourism industry are shared more equitably. As a central part of its Master Plan for the development of tourism on a sustainable basis, the BTB will place major emphasis on promoting small and medium tourism enterprises and the transformation of whole communities into tourism destinations, thereby ensuring that local communities are not relegated to menial jobs but become real stakeholders and full partners in the industry. This initiative is in conjunction with the objectives of the new tourism policy of Furthermore, PM Musa reiterated the government s strong support of the work of the BTB and other tourism stakeholders to make tourism a national priority, stating that tourism is the leading economic sector of Belize with great potential for all Belizeans to benefit. The Government has realized that since 1998 times have changed and the vision for small scale tourism development has transformed to one of large-scale. In this regard, today the government is publicly inviting major investments in large, luxury hotels. Although, Belize reflected an eco-tourism destination and succeeded while at it, Belize now has the potential to cater to the different types of tourists coming to Belize, quite as successfully as it has done for the eco-tourist destination seekers. Consequently, the government has started construction in 34

6 the expansion of the international airport to be able to cater to larger aircraft with charters directly from Europe and Canada. In its 2006 Action Plan, the BTB outlines its five priority areas of focus for the year. These include the issues on safety and security (the BTB promises to work in collaboration with both private and public agencies in ensuring the safety of all local and foreign tourists); the revitalization of the Belize National Tourism Council (the B.N.T.C. is an advisory board to the Ministry of Tourism that seeks to improve communications among stakeholders and key players in related industries for the planning and management of the industry); the revision of tourism legislature (the BTB assures to review existing legislation and policies to address new sectors and changes in the industry); the monitoring of the implementation of the General Sales Tax (the BTB will closely address the concerns of the private tourism investors on the effects of the tax and provide feedback to the government on its impact to the industry); and the maximization of opportunities with the CARICOM Single Market and Economy ( the BTB plans to work closely with the private sector in order to proactively embrace the opportunities and challenges that will be brought about by Belize s integration into the CSME). Regarding issues on safety and security, Belize recognizes that crime against the tourists require immediate resolution due to the short length of stay by a tourist in Belize and the potential of such crimes to negatively affect the growth of the industry rather quickly. In this regard, a Belize Tourism Police Unit was formed. This Tourism Police Unit is deployed to key tourist destinations throughout the country. 4.3 Economic Development of Belize Small economies, such as Belize's, tend to be less diverse and more dependent on exports than larger economies, a situation that makes them volatile and highly vulnerable to outside forces. A small work force and limited capital, dependence on foreign markets and investment funds, and high overhead costs are all factors that have hindered Belize's economic growth. Despite these problems, the economy has steadily improved since independence was achieved in

7 In Belize s history, forestry was the only economic activity in Belize until well into the 20 th century. Later when the supply of accessible timber began to decrease, cane sugar then became the principal export of the country, along with the increased production of citrus, bananas, seafood, and apparel. Today, Belize s main domestic export products are citrus, sugar, bananas, and marine products. Total value of the mentioned products totaled some US$187.6 million in 2005, a slight three (3) percent increase from (CSO 2005) While the production in the major exports decreased, products such as papayas, marine products and citrus juices experience significant increases with as much as 13.5% for papayas and 88% for citrus juices. The total value of the Belize s domestic exports for 2005 was some BZ$. The economy has been constrained in its growth possibilities by the small size of the local market, vulnerability to external forces, shortage of qualified manpower and limited energy resources. Today, tourism is the top foreign exchange earner, closely followed by sugar cane. Other major exports include citrus concentrate, bananas, marine products, garments, timber and offshore financial services. In his Budget Speech, the Prime Minister of Belize reported that estimates of the Central Statistical Office [CSO] revealed that real growth in GDP decelerated from 4.6% in 2004 to 3.1% in Prime Minister Musa stated that the reason for the slowdown is due to the impact of tighter fiscal and monetary policies that the government implemented in 2005 to dampen domestic consumption, so as to improve the balance of payments. GDP at current market prices is estimated to have totaled $2.214 billion in Inflations rate was 3.7%, and as a result GDP in real terms for 2005 was BZ$2.148 billion. It has been estimated that for the calendar year 2006, GDP will grow to $2.372 billion in current market prices and $2.201 billion in real terms, revealing a real growth rate of 2.5%. (CSO estimates) Similarly, other projected estimates put real GDP growth at 2.7% in 2006 (IMF estimates). The expansion of economic activity and the implementation of tax measures resulted in an increase in tax collection. There was also a policy of restricting capital spending and reducing the central government deficit, in accordance with the fiscal targets set by the authorities. In 2006 the authorities plan to adopt a restrictive policy, at both the fiscal and monetary levels. This policy, which should bring the fiscal deficit down to 2.8% of GDP, is oriented to curbing 36

8 growth in demand and avoiding a further deterioration of the country s external position. It will include increases in taxes and the legal reserve requirements for commercial banking. According to the authorities, this should not affect the growth target, which is over 3% on an annual basis. Table 1 Major Economic Indicators GDP at market prices (US$) 1,662 1,732 1,849 1,974 2,121 2,214 GDP Annual Change Inflation rate Tourism expenditure (% of GDP) n/a Source: CSO & BTB 4.4 Linking Tourism and the Economic Development of Belize Tourism is a rather complex activity that overlaps several different sectors of the society and economy. Without planning, it may create unexpected and unwanted impacts. Tourism is also still a relatively new type of activity in many countries. Some governments and often the private sector have little or no experience in how to develop tourism properly (WTO publication 1994). For countries that do not yet have much tourism, planning can provide the necessary guidance for its development. For those places that already have tourism, planning is needed to revitalize this sector and maintain its future viability. In a destination country such as Belize, tourism can be broadly defined to include the provision of goods and services necessary to maintain tourists, such as transport, accommodation and restaurants. Belize is blessed with various natural resources both on land and on sea and which form a mainstay of tourist attractions. Statistics show that for the past 37

9 five years, tourism has grown to be an important sector of Belize s economy. Tourism earnings increased from US$120.2 million in 2000 to over US$172.7 million in It now surpasses agriculture as the largest foreign exchange earner for the country. Tourism earnings as a share of GDP increased significantly, from about 14.4% in 2000 to over 16.3% in Tourism has a variety of economic impacts. Tourists contribute to sales, profits, jobs, and tax revenues. The most direct effects occur within the primary tourism sectors, such as lodging, restaurants, transportation, amusements and retail trade. An economic impact analysis of tourism activity normally focuses on changes in sales, income, and employment in a region resulting from tourism activity. (Ian Boxill, 2003) Balance of Payments Tourism s potential to positively contribute to the national balance of payments is perhaps the most important reason why governments support and encourage tourism development. Few countries, especially developing countries, feature a positive trade account and many are in the dire need to improve it. (Opperman and Chon, 1997) In his budget speech of March 2006, Prime Minister announced that even with moderate growth in exports, the trade deficit widened by 35.1% to $471.6 million in 2005 due to a 15.2% increase in imports (...) However, the expanded trade deficit was largely offset by higher inflows from services, particularly tourism (..) Consequently, the current account deficit of the balance of payments rose by only 1.7% to $303.3 million. Statistics from the CSO show that Tourism, with 1,082,268 tourists visiting and spending US$172.7 million in Belize in 2004, directly and indirectly contributed 16.3% of GDP in This figure has moved from 14.4% in 2000 to 15.8% in In addition the government of Belize benefits directly from tourism in the form of airport tax, sales tax, and customs duties, as well as the collection of income taxes from the employees and operators of tourism, and accommodations. 38

10 4.4.2 Job creation Tourism provides many job opportunities in businesses such as hotels and restaurants, tour companies, casinos, souvenir shops and local handicraft businesses. Other areas of the economy that also benefit indirectly are the retail, construction, manufacturing, transportation and telecommunications sector. As is the norm in other countries, these jobs employ a large portion of women, minorities and young people, mainly in small and medium sized companies. According to the WTO (1999), tourism employment in these sectors of the economy offer good training and transferability opportunities, which can eventually lead to the industry being one of the most effective drivers for the development of regional economies. Also, tourism s positive performance can encourage new and young, local and foreign, entrepreneurs to invest in Belize by forming their companies, and continue the growth of the industry. The end result will be reflected in the betterment of livelihood for Belizeans Contributing to sustainable development Tourism is often said to be the industry that can act as the best catalyst for conservation and improvement of the environment and maintenance of local diversity and culture (WTO). This is clearly obvious in Belize. Tourists flock to Belize for its natural and pristine beauty, its rich culture and heritage sites. Thus the government has seen the great importance of protecting such resources in order to continue benefiting from tourism in the future. The relationship between the protection of the environment and the inflow of tourists seem to be positively related. The more the government sets policies to conserve what attracts tourists to Belize, the more the tourists will continue to come and also return for second and third visits to Belize. In Belize, this is precisely the goal of the Department of the Environment, along with the Protected Areas Conservation Trust (PACT) and other private organizations. By protecting Belize s natural and human resources and its national heritage it is securing a future for a good livelihood of Belizeans. 39

11 4.4.4 Providing infrastructure To a greater degree than most activities, the tourism industry depends on a lot of infrastructure services. In Belize, the most apparent are in the construction of roads, hotels, restaurants, stores, airstrips, expansion of the international airport, beautifying or establishment of city parks, provision of utilities like water, electricity and telecommunications. Done with proper planning, as infrastructural benefits are very costly to the government, it also aids in the sustainable management of the industry on a whole, in terms of monitoring visitor inflows to different destinations within the country and ensuring that the increased influx of tourists are aptly and comfortably accommodated for. The increased or enhanced provision of these, do not only benefit the tourist but also provides social benefits to Belizeans Enhancing Educational opportunities The Government of Belize has embarked on the provision of training and education for students interested in pursuing a hospitality, travel and tourism career path. The University of Belize currently offers a hospitality program leading to a Bachelor of Science degree. 4.5 Conclusion The total economic impact of tourism in Belize is more than just the dollars a visitor spends in the community. Tourism in Belize contributes to sales, income, jobs, and tax revenues. Tourists spend money on a variety of things in a community lodging, attractions, food, transport and other services - creating a direct effect on the businesses and economy in the form of income that pays wages and taxes. The tourism businesses in turn are vendors of goods and services required to meet the needs of the visitors, and the direct tourism business receipts are then spent on investments or purchase of goods and services. This spending by tourism businesses as a result of increased tourist visits creates indirect effects by contributing to wages and employment in other local businesses that supply the goods and services to the tourism business, which in the end helps build the economy of Belize. 40