The
Development Planning Unit
Government of the British Virgin Islands

CHALLENGES FACING BVI TOURISM

Situational Analysis - Section II
Tourism Performance - Section III
Problems/Constraints/Issues - Section IV

INTRODUCTION 

Tourism in the British Virgin Islands has come of age over the last decade and as a result has developed the critical mass required for continued growth. The primary challenge now facing the industry is the need for careful and competent management at the national level in order to continue to grow in a sustainable manner. Notwithstanding the concern expressed in some quarters, tourism in the BVI has not reached the stage of maturity in its life cycle as in some other Caribbean destinations and hence does not yet need a magician to fix its ills. In my humble opinion what is required more than anything else is vision, solid management and huge reserves of resolve.

Essentially, we need a strategic plan. I am happy to state that such a plan does exit notwithstanding the same revisionists now find it fashionable to criticize the recommendations of the plan as opposed moving forward with its implement.

In my comments today I was tasked with detailing the challenges and issues facing thee industry. As such, I will address these within the following broad categories of concerns:

• Environmental
• Product
• Marketing
• Human Resources
• Organization and Socio-Economic

SITUATIONAL ANALYSIS:

Tourism Contribution to the Economic Development
The development of tourism has been encouraged in order to improve the overall welfare of the people, to reduce the level of unemployment, to diversify the economy, to increase the level of foreign exchange earning and to increase government revenues. Since the 1960's tourism has emerged to become one of the BVIs largest GDP contributors, the largest source of employment in the territory, and moreover, a major generator of government revenues. Tourism has also improved the performance of other economic activities especially in the financial services , construction, real estate and trade sectors.

Tourism Contribution to the Gross Domestic Product
The Gross Domestic Product (GDP) of the British Virgin Islands was estimated at US $504 Million at the end of 1996, with a per capita income of over US $25,000, one of the highest the Caribbean. At the end of 1996, the tourism sector has contributed some 19.66 percent of the British Virgin Islands GDP. This indicates that the tourism sector continues to show its multiplier and linkages with other sectors and it's major contribution to the economy. The Table 1.1 below shows the percentage contribution by sector in the economy.

Table 1.1
GDP Percentage Contribution by sector, 1991-1996

(a) Direct Income: This type of income is associated with spending in businesses, which are tourism oriented, such as hotels, restaurants, villas, shops, transport etc. This type of income pays directly the salaries of employees in such establishments.

(b) Indirect Income: This type of income is generated through the purchase of supplies by businesses involved in the direct process of service to the visitors e.g. supermarkets, yacht provisioners, etc. 

(c) Induced Income: This type of income is created by the direct and indirect beneficiaries of the tourism sector purchasing goods and service form other service providers in the economy.

Government Revenue Contribution
As mentioned earlier, tourism is a major contributor to the government revenue both direct and indirect. The direct contribution is made through the taxes, licenses and levies, which are placed directly on the sector, while the indirect contribution through taxes, licenses and levies placed on items consumed by the general population. Consumption by tourists and tourism establishments represent a small portion of this revenue. Examples of the indirect contribution include income taxes, taxes on property, import duty paid on beverages, food etc. The following Table 1.2 shows the main taxes and amount through which the tourism sector generates revenue to the government from 1990-1996.

TABLE 1.2
AMOUNT OF REVENUE TO GOVERNMENT
CONTRIBUTED BY TOURISM SECTOR, 1990-1996
(US $000)

Indirect taxes include personal and corporate income taxes and customs-import duties. In 1996, the personal and corporate income taxes at US $14.5 million were collected while import duties value at US $15.9 million were collected by the government from the tourist sector, 3% of government revenue in the particular year.

Employment Contributions
The tourism industry has been the major source of employment opportunities not only in the tourism sector (Hotel and Restaurants) but other sector such as construction, wholesale and retail trade, transport and communications and real estate, renting and business activities. Throughout the sectors a significant proportion of the labour force are non-belongers. This stems form the fact, that the British Virgin Islands has a relatively small population, exacerbated by the absence of many of the skills needed by the sector and lack of an established training programme to fit belongers for managerial positions and upward mobility within the sector.

According to 1994 employment and earning statistics, the tourism sector employed 2,539 people or 23% of the working labour force. The other sectors individually employees less than 10% of the labour force. Table 1.3 below shows the number of employees by sector from 1991 to 1994.

TABLE 1.3

NUMBER OF EMPLOYEES BY SECTORS: 1991 - 1994

Continued>

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