Click here to show YOUR banners on this page and only pay for success

Breaking Travel News Caribbean Country | Region Destination Dominican Republic Hospitality Industry News Rebuilding Tourism Trending

Dominican Tourism Recovery False? Simpson’s Paradox Looks at the Truth

Dominican Republic
Written by Galileo Violini

The impact of the pandemic on tourism worldwide and consequently on the world economy has been tremendous. The contribution of tourism to the Global Gross World Product in 2020 – $4.7 trillion – was about half that of 2019. In a recent paper, the director general in charge of the United Nations Conference on Trade and Development (UNCTAD) estimates that in the most optimistic scenario, at the end of the year, we will be 60% below 2019.

  1. With tourism being an important component of the global economy, recovery in all countries is crucial.
  2. Recently the Dominican Ministry of Tourism has presented data indicating the sector is having a remarkable recovery.
  3. While the data is correct, the interpretation may leave one questioning the indication of such recovery.

Recovery is a goal of all countries, since tourism is a crucial component of the global economy, but particularly of those having tourism as an important component of the economy.

In the last few weeks, Dominican Ministry of Tourism has presented data that would prove a frank and remarkable recovery of Dominican incoming tourism. Data are correct, but their interpretation requires an analysis that puts in evidence lights and shadows of this recovery, based on global data that aggregate partial data of different characteristics.

For fifty years, an effect has been studied which in fact had been noticed more than a century ago, the Simpson’s paradox. Fallacious conclusions may be reached when statistics amalgamate non-homogeneous data. Without entering in details of this mathematical theory, we observe that it allows to understand some limits of the data interpretation by the Dominican Ministry of Tourism, data, whose veracity, we reiterate to avoid misunderstandings, is not questioned.

The importance of understanding these limits needs no justification in a country where, in 2019, by way of foreign exchange earnings, tourism contributed 8.4% to GDP, representing 36.4% of exports of goods and services. Moreover, tourism, notwithstanding a 13% bending compared to 2018, contributed in 2019 to almost 30% of Foreign Direct Investment.

For these reasons, a careful verification of the statement that in the Dominican Republic, the tourism sector is leaving behind it the crisis caused by the COVID-19 pandemic is fundamental for the country’s public policies, as well as to guide the microeconomic decisions of the sector’s operators.

Let us recall the main data cited by the Ministry:

– Non-resident arrivals by air, in August this year, represent 96% of those in 2019, a trend more than confirmed by what happened in the first half of September.

– This trend is confirmed by the monthly analysis of the recovery of this indicator since the recovery. compared to 2019, has been growing, from 34% in January-February, to around 50% in March-April, to almost 80% in May-June and 95% in July-August.

– Arrivals of non-Dominican residents have been growing steadily for ten months.

– The percentage of tourists staying in hotels is 73%.

These are all true and documented data. However, Simpson reminds us that they refer to samples that aggregate different groups and different periods.

The overall analysis of the period would be correct if there had been stability in arrivals at the monthly level in the period chosen for the comparison. This was not the case, and the months of 2019 are not equivalent for such a comparison with 2021. That year, tour operators handily touched the effects of the deaths of some tourists between May and June, which reversed the growth in North American tourism recorded in the first half of the year (almost 10%) into a 3% drop during the first ten months (4% if total foreign arrivals are considered).

This requires distinguishing how much of that 96% in August or the more than 110% in the first fortnight of this month is due to the recovery of the numerator (2021 arrivals) and how much to the decline in the denominator (2019 arrivals).

This effect weighs especially if the arrivals are broken down based on another element of inhomogeneity, distinguishing those of Dominican non-residents from those of foreigners.

We do so in the following table where we present this data, for the months January-August, starting in 2013.

Year201320142015201620172018201920202021
 D414598433922498684546051538350616429707570345888811156
 F289187031750333394208361914738617744027620395646612936502081389

These data, without calling into question the Ministry’s comparison for the month of August, resize it, given that over the eight-month period, total arrivals are 60% of those of 2019 and we have to go back to 2013 to find a lower figure. This last comparison refers to the overall data, but if we were to fix the attention on that of foreigners alone, this would give 53%, comparing to 2019, and 72%, comparing to 2013.

The consideration of foreign non-residents is important because Dominican non-resident nationals probably make less use of additional services such as hotels, restaurants, transportation. This not very flattering observation is supported by the hotel occupancy, which, despite being foreigners 86% of those admitted, is less than this amount, while historically the two percentages used to be of the same order.

There is another non-homogeneous data related to inbound tourism that should be of concern. This data, presented in the following table, refers to the breakdown of arrivals by region of origin of non-residents.

YearNorth AmericaEuropeSouth AmericaCentral America
201860.8%22.4%12.6%3.9%
201961.9%21.6%12%4.1%
202061.2%24.7%10.7%3%
202170.6%14.6%9.5%5%

The most relevant data for our reflections are the growth of North American tourism accompanied by the decline of that from Europe. If this data is considered together with that related to nationality, whose indirect effect we have commented on, it seems that the negative impact of the decrease in European tourism can hardly be compensated by the increase in North American tourism.

This forecast is also supported by European data on the recovery of European air traffic. The comparison between this summer and previous years shows that only 40% of the 2019 traffic has been recovered, with an improvement compared to 2020, when the recovery had been 27%. And it should be added that air traffic is not a homogeneous indicator either, since in Europe there has been minimal recovery of the traffic that should interest most Dominican Republic, that of intercontinental flights. In fact, those that mainly recovered were intra-European low-cost flights. Today, they represent 71.4% of the total, while two years ago they represented only 57.1%, and it should not be ignored that the destinations that contribute the most to this result, in some way, represent alternatives to the Caribbean tourist offer.

To this one must add that the European Green Pass measures do not favor tourism to Europe either because the vaccine most used in Dominican Republic, Sinovac does not allow to receive the Green Pass. This may be questionable, but certainly affects the travel agency sector, so that the resulting picture is that there is still a long way to go before Dominican tourism really returns to its pre-pandemic levels.

To count on a recovery of the pre-pandemic situation as a result of the control of the pandemic is perhaps optimistic, and in any case, it does not seem likely to happen in the short term.

This means that, without giving too much importance to the improvement of a few decimal points in these percentages, it is necessary to think about reactivation policies looking at the mid-term of 2023.

A recent report by the World Travel and Tourism Council advocates for proactive actions by governments, such as investing and attracting private sector investment in physical and digital infrastructure and promoting particular travel segments, such as medical tourism or MICE tourism. This implies a global, non-sectoral policy that also involves other sectors of society.

Similar considerations were made two months ago by the director general in charge of UNCTAD, insisting on the need to rethink the tourism development model, promote national and rural tourism, and digitalize.

The existing infrastructure in the country allows these actions, and this requires a strong promotion policy, coordinated with the private sector, without being satisfied with the fact that a certain recovery is taking place. The fact that at the end of this year there were 4.5 million or 5 million arrivals, still little compared to previous years, will not make a big difference, unless conditions are created for a strong reactivation of the sector, which will allow the country to maintain its leading position in Caribbean tourism.

#rebuildingtravel

Related News

About the author

Galileo Violini

Leave a Comment

Share to...