In the last issue of my column, I discussed the evolution of tourism beyond 2020 and the challenges that world tourism will face in this decade as outlined in the Organisation for Economic Co-operation and Development (OECD) Tourism Trends and Policies report 2010 and 2018.
Challenges that will apply to the Caribbean and The Bahamas include: (1) globalization and changing markets; (2) economic-wide impact of tourism; (3) climate change and sustainability; (4) the knowledge economy; (5) human resources; and (6) productivity and competitiveness. In my last article, I discussed the first three issues on globalization and changing markets; economic-wide impact of tourism; and climate change and sustainability. In this second part of the article, allow me to deliberate on the other three issues of knowledge economy; human resources; and productivity and competitiveness, as highlighted in the OECD’s report.
Issue 4: the knowledge economy
Management guru Peter Drucker first introduced the concept of the “knowledge economy” in 1969. Hence, the topic “knowledge economy” and “knowledge-based economy” is not something new in 2020.
According to the World Bank, “Knowledge economies can be defined according to four important pillars: (1) institutional structures that provide incentives for entrepreneurship and the use of knowledge; (2) availability of skilled labour and a good education system; (c) access to information and communication technology (ICT) infrastructures; and (d) a vibrant innovation landscape that includes academia, the private sector and civil society. Further, OECD defined the knowledge-based economy as an expression coined to describe trends in advanced economies towards greater dependence on knowledge, information and high skill levels and the increasing need for ready access to all of these by the business and public sectors.”
For the Caribbean and The Bahamas to continue to exist as a leading destination for tourists to this region, Tourism 2020 and beyond must be based on this fundamental “knowledge-based economy”. Indeed, knowledge can be the main impetus for the productivity and economic growth needed to strengthen The Bahamas’ capability offerings in this era of globalization. The real competitive advantage of one country compared to another resides in the level and availability of information, knowledge and human skills. The Bahamas, as an important tourism destination, needs to recognize and adapt to the global changes to manage the economy more effectively.
Tourism intelligence is critical in knowledge economy and must also conform to the concept of responsible tourism. Tourism intelligence needs to be better organized, coordinated, analyzed and shared among tourism stakeholders at all levels. Using “research-based intelligence” or developing “evidence-based policy” for all interventions is a must for the tourism industry to respond effectively to changes in the economy, environment and social needs of the community and residents at large.
The tourism industry in The Bahamas must collaborate closely with institutions of higher learning, like the University of The Bahamas, to build a world-class capacity to support this knowledge-based economy. We certainly have an opportunity to create a world-class economy, with considerable emphasis on education, promoting the development of technology and innovation which is essential in globalization and knowledge-based economies. The development of skills and talent at all levels is of vital importance to The Bahamas’ current and future development. We cannot continue to suffer from brain drain; instead, we must transform to attract the top talent to want to serve in this region.
Issue 5: human resources
Issue 5 is closely related to issue 4. As mentioned, the human resources capacity of the nation is critical in a knowledge-based economy. Labour market issues are of fundamental importance for tourism development in any country, including The Bahamas. In many developing countries, the tourism industry has to compete for labour with other sectors of the economy that may have a higher productivity growth. Hence, in many countries, the shortage of skilled human resources (do note that I am against the biased use of the terminology “expatriate” versus “foreign workers/migrant”, which is a debate for another issue) in the tourism industry has resulted in increased immigration pressure for access to meet the industry’s capacity. The continuous perception of poor work conditions, long and irregular working hours, non-competitive wages and slow career growth need to be addressed by the industry in close collaboration with education providers like the University of The Bahamas. The provision of appropriate education and training schemes is a key area for the promotion of innovation and the achievement of productivity improvements in the industry.
Research has shown that across the globe, the tourism industry faces a number of challenges which include: “(1) struggling to attract the best employees and retaining and developing them over the longer term; (2) constantly needing new skills to meet changing tourism trends and innovations; and (3) unable to deal effectively with labour or skills shortages that may impede tourism’s growth, because low quality can diminish productivity and damage the industry’s competitiveness”.
Hence, upgrading the human resources capacity in terms of education and training is paramount if we wish to raise The Bahamas tourism industry’s productivity. These human resource upgrades will equip the industry’s employees with the necessary skills to respond to the realities of the knowledge economy. These skills are also needed in the areas of sustainable and responsible tourism. A culture of life-long learning must be part and parcel of the philosophy of the tourism industry’s human resources.
Issue 6: productivity and competitiveness
Productivity is the key source of economic growth and competitiveness. A country’s ability to improve its standard of living depends almost entirely on its ability to raise its output per worker (for example in producing more goods and services for a given number of hours of work). As discussed, issue 5, “human resources”, is an enabler for competitiveness of a destination. Remember that the consumer’s global choices are expanding and that many of the destinations in the Caribbean have similar characteristics (sun, sand, sea) when compared with The Bahamas. Thus, The Bahamas needs to be resilient and competitive in its tourism offerings and services to remain ahead of other competing destinations.
As a destination, we need to be conscious of where tourism in The Bahamas is in the tourism life cycle (introduced by Richard Butler in 1980). Butler’s Tourism Area Life Cycle (TALC) model says that “destinations will follow a life cycle characterised by six stages, namely exploration, involvement, development, consolidation, stagnation and then either decline or rejuvenation”. The industry in The Bahamas can be regarded as in the stagnation phase; hence rejuvenation is critical for the industry to avoid progressing to the decline phase.
As a destination too, The Bahamas can be replaced by another destination that is more competitive with similar tourism offerings if the industry does not innovate in terms of its product offerings, fresh investment (to replace aging tourism infrastructure), service quality and pricing. Being ranked as one of the ten most expensive countries in which to live does not really help The Bahamas stay competitive unless our main aim is to attract high-yield tourists only. Cruise tourists are not regarded as high-yield tourists as quite often they remain on board or limit their spending in the port’s destination.
The Bahamas faces strong price competition from many other developing countries, especially in the face of the labour-intensive nature of tourism and the typically higher wage costs in the Caribbean. Thus, tackling productivity is critical for the tourism industry in The Bahamas to prosper. Remember, poor labour conditions will exacerbate high labour turnover within the industry and weaken its competitiveness in the labor market.
In short, every country, including The Bahamas, needs to deal with the issue of supply and demand to remain productive and competitive. This includes policies on value-based pricing, efficient mechanisms for technology and innovation, promoting entrepreneurship (especially small and medium sized enterprises), increasing high service quality standards and continuously training and preparing the human resources capacity to support the ever-changing tourism industry.
The Bahamas’ overdependency on one major industry, in terms of its economic survival, is risky if that one industry does not overcome all the challenges that can help the country grow. If that industry fails, then the social consequences can be devastating. Hence, the development of a well thought tourism strategy that address all of the challenges – globalization and changing markets; the economic-wide impact of tourism; climate change and sustainability; supporting the knowledge economy; ensuring adequate human resources; and remaining productive and competitive – is needed to take The Bahamas out of the stagnation phase. All of the stakeholders need to identify a clear, long-term sustainable vision and direction for all tourism development. As an archipelagic nation it is critical for us to focus on the environmental sustainability, followed by the socio-economic sustainability that is supported by a stable political and trade union environment. Public-private sector partnerships must be continuously emphasised in all tourism development. As we charge forward in this new decade, we must “think tourism, talk tourism and act tourism”!
• Dr. Vikneswaran Nair is the dean of graduate studies and research and a professor of sustainable tourism at the University of The Bahamas.