What Is the Economic Impact of Cruise Tourism in Belize?

Are you curious about the economic effects of cruise tourism in Belize? This booming sector significantly impacts the country’s economy. SIXT.VN offers insights and services to help you explore Belize and understand its tourism landscape. Learn about the cruise industry’s influence on local businesses, employment, and overall economic growth, and consider our convenient travel solutions for an enriching experience. Discover the advantages of Belize tourism, Belize travel guide, and Belize vacation packages.

1. Understanding the Growth of Tourism in Belize

Belize has experienced substantial growth in its tourism sector, particularly with overnight tourist arrivals showing double-digit annual growth rates since 2016. Several factors contribute to this growth, including investments from major international hotels and plans to construct a multi-million dollar cruise port near Belize City. These developments significantly boost economic activity, especially considering Belize’s small economy. The government’s National Sustainable Tourism Master Plan (NSTMP), initiated in 2011, guides tourism development with specific initiatives and targets through 2030.

This rapid growth underscores the importance of tourism to Belize’s economic well-being, prompting questions about its evolution, comparative advantages, and the potential for reforms to sustain tourism and economic growth. As the industry matures, understanding these factors is crucial for maximizing its benefits.

2. The Rapid Expansion of Belize’s Tourism Sector

Belize’s tourism sector has grown rapidly, significantly contributing to the country’s economic recovery. Tourist arrivals have surged at an annual rate of 8.6% from 2010 to 2018, with an impressive 15% increase in 2018 alone. This growth rate is significantly higher than the average of 3.5% for other Caribbean economies during the same period.

According to the World Travel and Tourism Council (WTTC), tourism’s direct contribution to Belize’s GDP was 15% in 2017, which is three times higher than the Caribbean average of 4.8%. Including indirect and induced effects, the total contribution was estimated at about 41.3% of GDP, compared to the Caribbean average of 15.2%. The sector directly employs 13.4% of the labor force, rising to 37.3% when including jobs indirectly supported by tourism activities. In 2018, travel earnings accounted for about 40% of total exports, up from 32% in 2008, making tourism the largest earner of foreign exchange.

Figure 1. Belize: Tourism Sector

This data demonstrates the pivotal role of tourism in Belize’s economy.

3. Successes Beyond Targets: Belize’s Tourism Masterplan

The actual results in the tourism sector have significantly surpassed the targets set in the authorities’ National Sustainable Tourism Masterplan (NSTMP). Since the launch of the NSTMP in 2011, overnight tourist arrivals grew at 10.1% per year, nearly three times higher than the set target, leading to a 10.7% annual growth in tourism expenditure, which also exceeded the target. Cruise visitors grew by an average of 7.5% per year (compounded annual rate).

Although cruise tourism has exceeded visitor number targets, expenditure seems to be falling short. This suggests that either cruise tourists are not disembarking to visit onshore sites, or the capacity to capture these expenditures is lacking. Therefore, efforts to maximize the economic benefits from cruise tourism are still needed.

4. How NSTMP Reforms Fuel Tourism Expansion in Belize

The expansion of the tourism sector is supported by the implementation of the NSTMP reforms. The NSTMP 2011 outlines reforms and targets aimed at establishing Belize as an internationally recognized tourist destination by 2030. The plan focuses on five key areas: tourism governance, sustainability and quality assurance, infrastructure, marketing, and product development.

By the end of 2018, approximately 80% of the 54 subprograms supporting these focus areas were either completed or in progress. The most significant progress has been made in tourism marketing, governance, and product development, demonstrating a strong commitment to enhancing Belize’s tourism offerings.

Table 1. NSTMP Targets from 2011 to 2030

Source: NSTMP 2011

5. Belize’s Comparative Advantages in Tourism

Belize’s rich biodiversity, multicultural heritage, and unique location in both Central America and the Caribbean Sea provide excellent opportunities for further tourism development. The country’s natural advantages position it favorably for ecotourism, adventure, and cultural tourism.

These advantages include:

• Excellent Natural Resources: Belize is home to four internationally recognized “unique tourism assets”: the Barrier Reef Reserve System, the Blue Hole Marine Reserve, the Caracol Mayan site, and the Chiquibul Caves System, which includes a network of caves and a national park.
• Strong Cultural Heritage: Belize’s rich historical background is reflected in its numerous heritage sites, primarily of Mayan origin. Many Mayan sites remain unexcavated and are difficult to access, presenting an opportunity for further development. The diverse mix of ethnic backgrounds—Kriol, Garifuna, Mestizo, Maya, and Mennonite—provides a unique cultural experience.
• Unique Location and Rich Biodiversity: Belize’s geography in Central America and on the Caribbean Sea allows for easy access and tourist movement. Despite its small size (less than 23,000 km2), Belize has significant biodiversity. The Maya Golden Landscape in the Toledo District in southern Belize is one of Central America’s last unbroken stretches of broadleaf forest.

6. How Cost Competitiveness Drives Tourism Demand in Belize

Cost competitiveness has been a key factor in driving the rise in tourism demand in Belize. Belize’s share of the Caribbean tourism market has been steadily increasing, thanks to its relatively competitive prices. The IMF’s “Week at the Beach” Index shows that the cost of a one-week vacation in Belize is lower compared to the Caribbean average.

Furthermore, the cost of electricity in Belize, at US$16/kWh, is among the lowest in the region. A recent IMF study found that persistently high electricity costs in the Caribbean, due to inefficiencies and dependence on expensive imported petroleum, have eroded competitiveness and contributed to the region’s high cost of doing business. Belize’s lower electricity costs provide a competitive advantage.

Tourism Arrivals and Prices

7. What Challenges Does Belize Face in Tourism Development?

Despite its advantages, Belize faces several supply-side bottlenecks and challenges that need to be addressed to sustain and enhance its tourism sector:

• Concentration of Hotspots and Tourists: Tourism is heavily focused on a few attractions, especially those near the reef, and North America accounts for 75% of arrivals, indicating saturation and concentration risks.
• Infrastructure Gaps: Belize’s water and sanitation infrastructure and coastal facilities are stretched. Poor accessibility by land, due to limited paved roads to tourism destinations, and by air results in uneven distribution of tourism flow.
• Institutional Gaps: Lack of an enabling institutional and legal environment is a bottleneck. Overcrowding in peak tourism periods, such as in San Pedro on Ambergris Caye, strains infrastructure, water supply, and sanitation.
• Skill Shortages: There is a scarcity of skilled labor in the tourism industry, making it difficult to find replacement staff.
• Natural Hazards: Belize is highly susceptible to hurricanes and weather-induced damage, deterring tourist arrivals.
• Crime: Violent crime remains high, with a homicide rate of 38 per 100,000 people, compared to an average of 12 in EMDEs.
• Governance Concerns: There is room for improvement in governance perceptions, particularly regarding the rule of law and corruption.

8. The Rise of the Shared Economy: Opportunities and Challenges

The emergence of the “shared economy” business model presents both opportunities and challenges for Belize’s tourism sector. Peer-to-peer (P2P) accommodations available on digital platforms expand tourism product and service offerings, improve market access, and provide income generation opportunities.

However, recent studies suggest that the increasing presence of rent-share and P2P accommodations could lead to reduced expenditure per visitor, adversely affecting the job-intensive hotel sector and contributing to overcrowding. P2P accommodations can reduce demand for hotels from budget-conscious tourists while providing alternative options for upscale tourists, significantly impacting hotels in the same price range.

9. Can Infrastructure Investment Boost Tourism in Belize?

Empirical studies highlight the positive impact of infrastructure investment on tourism. Infrastructure is an important determinant of tourism development, as shown in a study of Southeast Europe (SEE) by Ilić and Jovanović (2016). The correlation between tourism competitiveness and the level of tourism infrastructure is high and significant.

In the Caribbean, Bolaky (2011) found that policy measures, including better infrastructure, increased investment, private sector development, a more flexible labor market, reduced vulnerability to natural disasters, higher human development, and slow rises in oil prices, can enhance tourism competitiveness.

10. How Structural and Institutional Reforms Can Benefit Belize’s Economy

To analyze the impact of structural and institutional reforms on tourist arrivals, a panel regression analysis was conducted on a sample of 12 Caribbean countries. The analysis examined the contributions of primary school enrollment, regulatory quality, internet access, crime rate, and damage from natural disasters to tourist arrivals. US real GDP growth and real effective exchange rate (REER) were included as proxies for external factors and price competitiveness.

The model is represented by the following equation:

ARRIVALS*i,t* = β1 Primary School Enrollment*i, t* + β2 Regulatory Quality*i, t* + β3 InternetAccess(-1)*i, t* + β4 Crime*i, t* + β5 Damage/GDP(-1)*i, t* + β6 US real GDP growth*i, t* + β6 REER(-1)*i, t* + μ*t* + ε*i, t*

Where:

• ARRIVALSi, t = Tourist Arrivals, in percent of population in each country.
• Primary School Enrollmenti, t = Enrollment at primary level, in percent of total enrollment, regardless of age in each country.
• Regulatory Qualityi, t = A governance indicator, ranging from -2.5 (weak) to 2.5 (strong), in each country.
• Internet Access(-1)i, t = Individuals using the internet, in percent of population in each country, lagged one period.
• Crimei, t = Homicides (per 100,000 people) in each country.
• Damage/GDP(-1)i, t = Damage from natural disasters, in percent of GDP in each country, lagged one period.
• US real GDP growthi, t = Annual Real GDP growth in the United States
• REER(-1)i, t = Real effective exchange rate in each country, lagged one period.
• μ t = Country specific effect

11. Results of the Analysis: Driving Tourism Growth

The results suggest that structural-institutional indicators are important drivers of tourism growth. Tourist arrivals increase with measures of educational quality, governance, security, and ICT infrastructure. The arrivals-to-population ratio is positively associated with Primary School Enrollment, Regulatory Quality, and Internet Access, and negatively associated with crime.

Increasing enrollment at the primary level by 1% and raising regulatory quality by 1 point is associated with “Arrivals” being higher by 0.56% and 41.7%, respectively. Enhancing public access to the internet by 1% is associated with a 0.28% rise in “Arrivals.”

12. What is the Impact of Natural Disasters on Tourism in Belize?

Damages from natural disasters adversely affect tourism. The impact of natural disaster damages-to-GDP on “Arrivals” is significant and negative. “Arrivals” decline by 0.14% for every 1% of GDP increase in estimated economic damage. This result is consistent with existing work on the effects of natural disasters on tourism.

For example, a study by the Bank for International Settlements found that a 1% of GDP increase in economic damage from natural disasters could lead to a 0.28% decline in economic growth.

Panel Regression Analysis with Tourist Arrivals-to-Population as Dependent Variable

Note: Standard errors (in brackets) are clustered by country.

13. The Role of External Factors in Belize Tourism

External factors, including growth in the US economy, significantly influence tourist arrivals. The impact of the US economy is highly significant, as a 1% increase in US real GDP growth is associated with an increase in “Arrivals” by 2.4%. For Belize, about 40% of the rise in tourist arrivals in 2018 is explained by US growth. This reflects the large share of US tourists, who accounted for 70% of stay-over tourist arrivals in 2018.

Price competitiveness, proxied by the REER, remains economically meaningful, although the statistical significance of its coefficient is marginal. A 1% reduction in price competitiveness (a 1% appreciation of the REER) is associated with “Arrivals” declining by 0.2 percentage points.

Composition of Stay-Over Tourist Arrival

14. Enhancing Growth in Tourism Through Reform

Belize appears to be underperforming in some structural and institutional indicators relative to the Caribbean. The country is also highly susceptible to natural disasters, and damages could be costly. For example, damages from the 2016 Hurricane Earl were estimated at around 4% of GDP by the National Emergency Management Organization.

Reducing these structural-institutional gaps and potential losses associated with climate change could boost tourist arrivals and enhance economic growth. An illustrative simulation suggests that narrowing the gaps of regulatory quality, homicides rate, internet access, and natural disaster damage by ¼ to ¾ compared to the best-performing Caribbean economy could potentially increase tourist arrivals by 22% to 66%.

15. Sustaining Tourism Growth Through Continuous Efforts

Reforms implemented based on the NSTMP over the past decade have supported the development of Belize’s tourism sector. Sustaining efforts to address various bottlenecks and challenges will help ensure continuous progress and development in tourism that will enhance economic growth.

Reforms in the near term should focus on addressing the impact of recurring natural hazards, infrastructure bottlenecks, fortifying the institutional and governance framework, reducing crime, and mitigating concerns relating to the “shared economy.”

16. Addressing Key Challenges

• Climate Change: Belize faces natural perils such as hurricanes, flooding, sea-level rise, coastal erosion, coral bleaching, and droughts, with impacts likely to intensify. Reform priorities will include mobilizing substantial private investment, with official sector financial involvement playing a useful supporting role, to meet the adaptation and mitigation plans.
• Infrastructure Bottlenecks: Belize’s water and sanitation infrastructure and coastal facilities are currently stretched. Enhancements to the way visitation centers and valuable tourism resources are presented to tourists and to transportation to national tourism sites are needed. Expanding ICT infrastructure would cater to the shifts in tourism demand and changing tourist demographics.
• Institutional and Governance Framework: Addressing regulatory bottlenecks and governance concerns, including in customs and public procurement, will help enhance the business environment and promote private sector capital in developing and diversifying the tourism sector. Establishing a land use policy and planning framework in Belize would allow jurisdictions faced with overcrowding during peak tourism periods to properly plan, implement, and manage their developments.
• Reducing Crime: Confronting safety and security risks to tourism will underpin perception even if tourists in Belize are rarely the victims of violent crime. Policies that could help address the rise in crime rates include improving the quality of education, keeping children at school, promoting job training programs, and more direct approaches such as investing in safe neighborhood programs.
• Shared Economy: Formal integration of rent-share and P2P accommodation through proper regulations, standards, registration, data sharing and taxation, in addition to “high-end” branding, and offering higher quality services and adequate physical tourism infrastructure, could alleviate its less desirable effects on income, employment, and overcrowding.

17. Enhancing Sustainable Tourism Through Training and Diversification

Medium-term priorities should focus on ensuring continuous and sustainable development of the tourism sector through vocational training and diversification of source markets and attractions. Programs that connect local industries to tourism, as well as local communities to the tourism value chain, should be developed to ensure equitable and sustainable growth in the tourism sector.

Promoting formal tourism degrees and tourism graduate programs would mitigate shortages in skillsets and skilled labor. Strategic and more diversified marketing, including leveraging on ICT platforms, could reduce saturation and concentration risks, particularly as North America comprises 75% of arrivals at present and tourists still focus on a small number of attractions.

18. FAQs About Cruise Tourism in Belize

1. How significant is cruise tourism to Belize’s economy?

Cruise tourism is a vital component of Belize’s economy, contributing significantly to its GDP through visitor spending and job creation.

2. What are the main attractions for cruise tourists in Belize?

Key attractions include the Barrier Reef Reserve System, the Blue Hole Marine Reserve, Mayan archaeological sites like Caracol, and ecotourism adventures in the Chiquibul Caves System.

3. How does cruise tourism compare to overnight tourism in Belize?

While cruise tourism brings a large number of visitors, overnight tourism tends to generate higher revenues due to longer stays and greater spending on local services and accommodations.

4. What are the environmental impacts of cruise tourism in Belize?

Environmental concerns include potential damage to coral reefs from cruise ship anchors and pollution, as well as the impact of increased tourist activity on local ecosystems.

5. How is Belize managing the growth of cruise tourism sustainably?

Belize is implementing sustainable tourism practices through the National Sustainable Tourism Master Plan, focusing on environmental protection, community involvement, and responsible tourism management.

6. What are the economic benefits for local communities from cruise tourism?

Local communities benefit from cruise tourism through employment opportunities, increased sales for local businesses, and the development of tourism-related infrastructure.

7. What challenges does Belize face in maximizing the economic benefits of cruise tourism?

Challenges include ensuring that cruise tourists spend money onshore, improving infrastructure to support tourism, and mitigating the negative impacts of the shared economy on traditional hotels.

8. How does Belize compare to other Caribbean nations in terms of cruise tourism?

Belize is competitive in terms of pricing and unique attractions but faces challenges in infrastructure and institutional frameworks compared to some other Caribbean destinations.

9. What role does the government play in regulating cruise tourism in Belize?

The government plays a key role in regulating cruise tourism through policies, standards, and enforcement to ensure sustainable practices and maximize economic benefits.

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References

• Bolaky (2011)
• Ilić and Jovanović (2016)
• Peter, Dahlen and Saxena (2012)
• Thacker, Acevedo, and Perrelli (2012)
• Ghazanchyan, Li and Brito (2019)
• Plotnikov (2019, forthcoming)

Appendix 1. National Sustainable Tourism Master Plan 2012–2030

In 2011, the government endorsed a National Sustainable Tourism Master Plan (NSTMP) for ensuring a dynamic, competitive, and sustainable tourism industry, with specifics reform to support its development. The NSTMP is a strategic framework with the objective of propelling Belize into an internationally recognized tourist destination by 2030. The NSTMP’s “Vision 2030” envisages Belize to be “an exclusive multicultural sustainable destination in the Central American Caribbean”, and “a destination where the authenticity and friendliness of its people, coupled with the uniqueness of an exotic natural environment can be actively experienced within a conserved world.” The strategic goals outlined in the NSTMP are:

• Leadership: Support Belizean stakeholders in taking leadership over sustainable tourism development
• Optimization: Optimize socioeconomic benefits from tourism
• Sustainability: Undertake sustainable and planned tourism development
• Competitiveness: Achieve competitiveness as a world-class destination

2. Market growth will be driven by the high value foreign tourists and domestic travels. The NSTMP aims to achieve the following:

• Few but strong source markets: The European main source markets (such as German, French and English) will have been tapped and a growing stream of high value European tourist will be visiting Belize. Belizean traditional markets (USA and Canada) will be enhanced and consolidated in mid-high end segments. The main source markets for Belize are expected to be few but to generate high value.
• Specialized in niche market segments: Additional market growth will come from consolidated highly specialized market drivers such as cavers, divers, pocket cruisers, honeymooners, yachties and sailors, adventure seekers, among others. These segments will be attracting a more diversified target source market.
• Dynamic cross-border movement: Increasingly, intraregional travelers will be crossing border points to reach Belize as more and better connectivity is reached, with cross-product synergies to neighboring countries through such products as the Mayan Heritage Trail, nautical routes as well as a highly attractive shopping and entertainment offering. Intraregional travelers will be from both the international and regional markets.
• Domestic travels: domestic travels will increase, making the Belizean residents feel and experience the country as it is one of the tourism World Class destinations of their own.