Over the past few years, since COVID-19, or longer, depending on which country you use as comparison, there had emerged a view of US exceptionalism based on the outperformance of the US stock market and its relatively strong gross domestic product (GDP) performance. The former was largely based on the artificial intelligence (AI) boom, while the latter was largely due to much higher fiscal stimulus than its developed peers.

As predicted by former Morgan Stanley (now Rockefeller Foundation CEO) Ruchir Sharma and others, this year was always likely to be different despite the initially rosy forecasts of most of Wall Street, now being gradually ratcheted down.

In its just-released annual Caribbean Tourism Industry Performance and 2025 Outlook Report, the Caribbean Hotel and Tourism Association, reviewing 2024, highlighted strong revenue growth, expanding visitor markets, and continued investment despite rising operating costs, labour shortage, and profitability challenges.

The report, based on a survey of tourism businesses across 20 Caribbean destinations, provides a comprehensive look at the industry’s performance in 2024 and expectations for 2025.

At the beginning of 2025 industry sentiment was overwhelmingly positive, with 98 per cent of respondents confident of continued revenue growth, driven by strong visitor demand, and expecting to continue capital expenditures to upgrade their properties and destinations and make further investments in workforce development and destination marketing. Here are some of the results:

• Revenue growth amid rising costs — 65 per cent of businesses raised room rates to offset increasing expenses, while 57 per cent saw higher food and beverage revenue.

• Workforce expansion with hiring challenges — 47 per cent of businesses expanded their workforce in 2024, and 36 per cent plan to hire more in 2025. However, 73 per cent reported difficulty recruiting specialised staff such as chefs and engineers.

• Investment in infrastructure — 62 per cent of businesses increased capital expenditures, with 59 per cent using tax incentives for renovations and 24 per cent for new developments — investments that more than half of recipients said would not have been possible without these incentives.

• Growing source markets — The US remained the top source market for the region with strong growth from the UK, Canada, and intra-Caribbean travel.

• Profitability challenges persist – While the industry showed strong overall performance, one-third of respondents still reported a net loss, largely due to rising operating costs.

• Industry challenges – High taxes and inflation continue to put pressure on businesses, with 87 per cent reporting rising operating costs and 52 per cent seeing increases that outpaced inflation.

In the travel sector we expect 2025 US inbound visits to decline 5.1 per cent and hotel room demand to decline 0.8 per cent, as compared to 8.8 per cent and 1.1 per cent growth in the baseline, respectively. Overall, international visits to the US in 2025 would be 12.7 per cent lower than the baseline.

US inbound travel spending in 2025 would be 10.9 per cent lower than in the baseline outlook, which totals an estimated $18-billion loss in 2025 alone. Total US travel spending, representing domestic and inbound spending combined, would be 3.7 per cent lower than the baseline. This implies a $64-billion loss in total travel spending in 2025 alone.