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Tourism Figures Worse Amid Pandemic Than After Hurricanes

A senior economist with the Bureau of Economic Research Donnie Dorsett presents a graph depicting cruise passenger arrivals in the territory. (Screenshot)

The COVID-19 pandemic has caused tourism revenue to plummet in the U.S. Virgin Islands, hitting the territory’s tourism economy worse than hurricanes Irma and Maria did, according to a top government economist.

Donnie Dorsett, a senior economist with the Bureau of Economic Research, provided alarming figures during last week’s Revenue Estimating Conference, an annual event at which revenue-generating government instrumentalities estimate the revenue they expect to generate for the upcoming fiscal year.

Dorsett said the bureau estimates a 55 percent decline in annual tourism expenditures from the $1.2 billion typically spent in the territory each year – a loss of $660 million.

“Prior to COVID-19, the USVI could have reasonably received 470,814 cruise ship passengers for the fourth quarter of each calendar year,” but Dorsett said because cruise lines are not operating, there will zero passengers in the fourth quarter of the 2020 calendar year. The projected direct economic loss from the decline of cruise passenger arrivals is $118 million, Dorsett said, in addition to the $660 million loss in annual tourism spending.

In 2018, the territory welcomed about 1.2 million cruise ship passengers to its shores, while in 2020 the territory saw only 898,832 passengers – almost 300,000 fewer.

The territory’s tourism product is not exclusive to cruise ship passengers, but Dorsett said air travel, hotel room revenues and Airbnb room tax collections have been impacted by the pandemic as well.

A senior economist with the Bureau of Economic Research Donnie Dorsett presents a graph depicting air arrivals in the territory. (Screenshot)

Air arrivals were just starting to rebound after the hurricanes, with a total of 637,876 people flying into the territory in 2019. In 2020, the year of the novel coronavirus, 443,409 passengers have flown into the territory – only 40,000 more air arrivals than seen in 2018, the post-hurricane year.

Dorsett said the 2020 fiscal year has shown nearly an 11 percent decrease in hotel room revenue and just over an 8 percent decrease in Airbnb tax collections.

While lodging revenue seems to not have taken as big a hit, Dorsett said two things are taking place that makes these numbers a misrepresentation of what is occurring.

“One, for the pandemic some of them [hotels] have given discounted prices or people bought reservations through Priceline or Expedia and got discounted rates. The other thing we were looking at is that because it was done by fiscal year, you are picking up some of the numbers from the last winter season with respect to guest registration.”

The territory has perhaps never needed to diversify its economy more than it does now, and Dorsett said that is the focus of the government – creating diversity and resilience.

“There are studies being conducted, Office of Management and Budget is currently doing a comprehensive development strategy. And Tourism a master plan. You have the university doing a mitigation plan. There are other studies being done to try to diversify and look into other areas where we are improving or creating new industries for the territory,” Dorsett said.

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