Vacation Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism
IMF Working Papers, July 1, 2008
Source details
- Canonical URL
- Vacation Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism
Other formats
Bibliographic details
- Authors: Rafael Romeu
- Published: July 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451870206.001
Summary
- An opening of Cuba to U.S. tourism would represent a seismic shift in the Caribbean's tourism industry.
- The study models the impact of such a potential opening by estimating a counterfactual that captures the current bilateral restriction on tourism between the two countries.
- After controlling for natural disasters, trade agreements, and other factors, the results show that a hypothetical liberalization of Cuba-U.S. tourism would increase long-term regional arrivals.
- Neighboring destinations would lose the implicit protection the current restriction affords them, and Cuba would gain market share, but this would be partially offset in the short-run by the redistribution of non-U.S. tourists currently in Cuba.
- The results also suggest that Caribbean countries have in general not lowered their dependency on U.S. tourists, leaving them vulnerable to this potential change.
Major findings
- A hypothetical liberalization of Cuba-U.S. tourism would increase long-term regional arrivals.
- Neighboring destinations would lose implicit protection afforded by the current U.S.-Cuba tourism restriction.
- Cuba would gain market share following liberalization.
- Short-run effects would be partially offset by redistribution of non-U.S. tourists currently in Cuba.
- Caribbean countries remain generally dependent on U.S. tourists and are therefore vulnerable to changes in U.S.-Cuba tourism policy.
Methodology and controls
- The study estimates a counterfactual capturing the bilateral restriction on tourism between the United States and Cuba.
- Controls used in the analysis include natural disasters, trade agreements, and other factors.
Policy implications and considerations
- Destinations in the Caribbean should assess their dependence on U.S. tourists given the potential for increased competition from Cuba after liberalization.
- Policymakers may need to consider diversification strategies for tourism markets to reduce vulnerability to changes in U.S.-Cuba travel policy.
- Short-run redistribution effects imply transition considerations for countries currently receiving non-U.S. tourists redistributed by Cuba.
Content in this bundle
- _wp08162 — Descriptive Statistics of Caribbean Tourism