Crowding-Out Effects of Cruise Tourism on Stay-Over Tourism in the Caribbean: Non-Parametric Panel Data Evidence

Abstract

Based on a non-parametric panel data estimation, this study provides an econometric analysis of the relationship between stay-over and cruise tourism for 15 Caribbean islands over the period 1985–2004. It reveals heterogeneity of tourism flows across different destinations. It also emphasizes the crowding-out effects of cruise tourism on stay-over tourism. Using a static Cournot game framework, the authors show that, for most of the destinations, stay-over tourism and cruise tourism are strategic substitutes. Moreover, a ‘crowding-out trap’ seems to have emerged since the beginning of the 1990s and is tending to spread. Policymakers have a weak negotiating position vis-à-vis an oligopolistic cruise ship tourism industry, resulting in an uncontrolled and increasing share of cruise tourism flows. As the Caribbean authorities have managed their growth process in the belief that there is complementarity between cruise tourism and stay-over tourism, these results suggest that the strategic vision of a growth process based on tourist activity has to be revised.