A.T.A. studying the impact of the increase in cost of life on the demand for tourism on Aruba

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Aruba always positioned itself as a destination with higher prices, and was able to be successful at this. Aruba Tourism Authority will continue its efforts to direct itself to the type of tourist that is willing to pay this price and see the value in it; however, A.T.A. considers that it is necessary to investigate when the impact of an increase in prices will have on the demand for vacations on Aruba, and will continue monitoring this.

The tourism authority also pointed out, once again, that it is important to focus on providing the adequate level of value for money! And this is under pressure.

For a few months already, A.T.A. has been in dialogue with more than 75 different partners; organizations, government departments and trade unions in Aruba and the kingdom of the Netherlands, focusing on various issues that have an impact on, among other things, tourism and the cost of vacation, something that once again will have a direct impact on the way of life of everyone on Aruba.

Seeing the importance of tourism and economic recovery as a destination and nation, A.T.A focused on three studies in order to give advice on decisions, based on investigations and thus on facts.

In the month of April, the ‘Price Competitive Study’ was completed, in which the cost of a vacation for an American visitor – as our main market – to Aruba was compared to the cost of a vacation to other destinations in the Caribbean. The goal of this study was to see different types of vacations, like family travel, honeymoon and couple’s travel, and what the price per person would be for the different elements of each type of vacation, for example, flight, accommodation, food and drink, transport and activities. In the case of a family trip, the price per person for Aruba is significantly higher compared to the other islands; in case of a honeymoon, the price is also higher for Aruba compared to the other island; and in the case of a couple’s vacation for ‘empty nesters’, the price per person for Aruba is the second highest, behind the U.S. Virgin Islands. This doesn’t come as a surprise but it’s good to reestablish how Aruba is already carrying a higher price tag and thus needs to be very careful regarding decisions that might increase the price of a vacation, and must evaluate how this can impact the demand for Aruba.

A study is being carried out on the impact on demand from the increase of the price for a vacation. For this, the University of Central Florida (UCF) was hired. The first part of the study is focused on the effectiveness of marketing, in order to establish how effective A.T.A.’s strategy is and among other things, what kind of funds A.T.A. needs to have available in order to keep pushing for the desired results. Currently work is being carried out on the second part of the study, in which the focus is on the impact that an increase in price (through the introduction of VAT) will have on the demand for tourism and on the amount of nights that a tourist stays in Aruba. This along with other elements including a high inflation rate. Based on different scenarios, they will evaluate the impact on demand. It is hoped to have the results of this part of the study ready between the end of August and the beginning of September.
The third part of the study will focus on the perception of visitors on a potential increase in prices. With these results, the tourism authority will try to find out what kind of message is needed to communicate with the visitors when there is a tax increase or other aspect that can impact the cost of a vacation to Aruba. For this study, a survey is being carried out among visitors.

Seeing the economic situation worldwide, it’s necessary to take into consideration not only the local aspects that have an impact on the cost of a vacation to Aruba, but also inflation projected on the various markets. The main market for Aruba, the United States is seeing very high inflation currently – going from 8.6% in May to 9.1% in June, a record in 41 years. For 2023, inflation between 2 and 2.5% is expected, but there is a lot of uncertainty and worry continues for a possible recession in 2023 and 2024.

As mentioned, A.T.A. will continue its focus on the above mentioned studies and will share the results with the government of Aruba and other key partners in order to take decisions with the necessary prudence, and obviously all directed to reaching goals in 2023 and continue stimulating the trajectory of strong recovery. Seeing the importance of tourism and how it impacts every other aspect, including government’s projected income, as well as the quality of life for every inhabitant of the island, caution is necessary.