Tourists Hold on to their Pennies: What Happened to the BIG Spenders?

by Louise Mitchell

“NO DISCOUNT?” is the cry of many tourists as they browse through different stores on the tourist based streets of St. Thomas. They spot a lovely ray of unique souvenirs, the prices, however, attached to those eye-catching items are not as attractive to their “empty” pockets. Whatever happened to the tourists who would buy tee-shirts from welcoming vendors who sold them, 3 for $10.00? In addition, even a unique sea shell design belt for $15.00, is too much for budgeting tourists. They would rather spend $15.00 in a local restaurant, like Cuzzins on the back road of Main Street. Seems like they come out to eat and enjoy the weather, forget souvenirs!
This limited spending behavior is having a great impact on the Virgin Islands yearly revenue.
Charmaine Thomas who has been working in the tourism industry for the past ten years said, “The way tourists spend nowadays is not quite the same way they use to spend before…everyone is looking for a bargain.”
Mrs. Thomas and many other vendors, who own a tent by the water front on Vendors Plaza, are suffering from the effects of tourists spending less money on tee-shirts, jewelry, and attractive art sculptures. Some tourists tend to compare the currency rate of the other islands that they visited in the Caribbean before the United States Virgin Islands. Then they figure that the prices on those other islands are much cheaper. However, those tourists fail to realize that an island like St. Martin, for example, is a Freeport, which means that some taxes are exempted when products are imported. Unfortunately, taxes must be paid in the USVI.
In addition, tourists this year are walking in the blazing sun with fewer bags in their hands compared to at least two years ago.
Although some restaurants are doing ok with their businesses, Jennifer Berry who is the manager at Jane’s Café and Deli Shop has had a moderate flow of tourists this year. On the other hand, she has also been feeling the effects of the decreasing big spenders. As a result, Mrs. Berry said, she had to let four employees go due to this effect. In addition, this impact has thwarted Mrs. Berry’s ability to keep up with utility expenses, and increasing costs of running a business in the USVI.
“We have no EDC funding… the cost of running a business in the US Virgin Islands has increased, while the flow of income has declined,” calmly expressed by Mrs. Berry.
Tourism is the main source of economic movement in the United States Virgin Islands, especially in St. Thomas. It accounts for 80% of GDP and employment, according to an online Business Opportunity Report. St. Croix’s main source comes from having one of the largest petroleum refineries in the world. However, St. Croix contributes about 12 percent to the GDP. St. John feeds off of the tourists who visit St. Thomas, but it is well known as being a honeymoon sight.
So is the United States deflation having an impact on the USVI economy?
The Department of Tourism commissioner, Beverly Nicholson-Doty says yes, in a luncheon meeting she held last year with Hotel executives and Governor John Dejongh’s financial team. According to St. Thomas source online newspaper, Mrs. Nicholson-Doty said, “the U.S. economic recession has finally hit the Virgin Islands, causing a projected $43.5 million drop in government revenues… forcing the need for "well-timed" economic policies and initiatives, including strong tourism-marketing campaigns.” Mrs. Nicholson-Doty expressed great concern about the decline in tourists traveling via air, which the percentage of travelers dropped by 2.9 percent in September of last year. She is, therefore, targeting flight services in order for there to be more incentives offered to “attract visitors with strapped pocketbooks.”, she states. Other ideas include a travel –agent- training program. People who complete this program will be rewarded after selling the required amount promotions offered in the territory to bring in more tourists. In addition, the source article states that the commissioner also announced the 24- hour answering service for tourists to call regarding information about the United States Virgin Islands.
Nine years in the tourist business, Tony who is the manager of Havensight Royal Caribbean, one of the largest stores specializing in watches, jewelry and cameras, suffers from the economic hardship. Tony said, “The ships are coming in, but there are more onlookers.” Most of the tourists browse through each store and become drawn away from attractive items because of the “unbelievable” prices. Tony disappointedly said, “The economy is weak, therefore, people don’t want to spend the money.”
Hotel occupancy numbers on St. Thomas and St. John also dropped off, with a 48.6 percent occupancy rate - down 11 percent from the October 2007 rate, says the Bureau of Economic Research. In addition, big hotels like the Marriot, and the Wyndham Sugar Bay and Spa Resort are suffering from a decline of tourist bookings. Both hotels have had to lay off hundreds of employees due to the drastic drop in guests booking hotel rooms. An article in the VI Daily Newspaper says that hotel room revenues have dropped in November of 2008. Last November, a total of $580,205 in revenues was collected, which is $104,040 less than in 2007. According to an anonymous Marriot hotel employee, people are being laid off from left to right because of the decreasing flow of guests. Hotel managers are keeping a close eye on employees who are careless on their job, and also employees who disregard company policies. Those employees make themselves an easy target to either getting laid off or even fired. The result, more and more people are looking for other jobs, which is not easy to find in the territory presently. Statistics show in an online Business Opportunity Report, that the estimated rate of people unemployed in St. Thomas was 5.9 percent in 2007. Considering the hundreds of people who have lost their jobs this year so far, that rate has obviously increased.
October and November are the leading months of the year for tourism to increase in the Virgin Islands, however, statistics from an article in the Virgin Islands Daily Newspaper show how much the number of visitors to the territory traveling by cruise ships and by aircrafts, has drastically dropped. Comparisons were made of the leading months from 2007 to 2008.
“October saw 39.4 percent fewer visitors in the territory - the largest tumble in visitor arrivals so far in 2008. November's arrivals also did not meet the 2007 mark but were not quite as lacking as October's figures. The visitors in November were down 14.6 percent from a year before…” according to the VI Daily newspaper.
The VI Daily newspaper also reports that 51,681 fewer visitors were brought to the territory on those 28 cruise ships in contrast to the 48 ships that came a year earlier.
St. Thomas also saw 60 cruise ships in November of 2008, which were 16 less than in 2007. Those cruise ships brought 155,791 people to St. Thomas in November, down 16.2 percent from the 185,857 passengers who arrived by ship in 2007.
Sources from the Daily Newspaper also note that air arrivals have declined. In October 2008, 19,861 people flew to St. Thomas. However, 2007 brought 13,869 more people, which mean in October 2008, 41.1 percent fewer people landed on St. Thomas.
The neighboring island of St. Croix had a huge decline in air arrivals in October. A total of 6,211 people flew to St. Croix in 2008, which is 26.6 percent less than the previous year. St. Croix also had 9,561 visitors arrive in November of 2008, which are 821 fewer than in 2007.
Furthermore, the article states that air arrivals were down about 10 percent at each airport. On St. Thomas, 37,853 visitors landed at the airport in November - 4,358 fewer than in 2007. In turn, hotel occupancy was down 13 percent in St. Thomas and St. John in November - 57.2 percent, as compared to the 70.2 occupancy rate in 2007.
“Robbing Peter to pay Paul,” is how Mrs. Berry describes the hustle of those in the tourism industry. From “back to the ship!” taxi drivers to dazzling diamond co-operations, everyone is trying to scrape pennies together to keep up with the Virgin Islands’ high cost of living. Therefore, the unemployment rate is flooding the labor department because of laid off workers. So what are some other alternatives if tourism in the United States Virgin Islands continues to plunge downhill?
“I’ll go back to the mainland.” said the manager of Royal Caribbean in Havensight. However, working for 20 plus years as a tour guide, Jose said “I hope for better”. In addition, Mrs. Nicholson-Doty hopes to develop an increase in the flow of air arrivals. Therefore, targeting traveling agencies is her main goal to increase the VI’s pertinent source of revenue. The only positive outlook for the Virgin Islands economic growth is to be optimistic that tourists will bring back the revenue there was two years ago.