Caribbean islands slammed with double financial hit

Corporations and business groups also grew leery about lavish events planned for late 2008, as news of mass layoffs became commonplace.

Nassau's five-star Graycliff hotel, known for its wine cellar, lost Christmas parties for as many as 600 people from companies such as Morgan Stanley, says owner Enrico Garzaroli. And at the Atlantis, business groups canceled large meetings or moved them into 2009.

"People didn't want to be seen to be going out and having a five-day Bahamas convention, when in the meantime, you open the newspaper, and another 10,000 people are let go on Wall Street or Detroit," says George Markantonis, president of Atlantis.

With evidence of a downturn mounting for months, some Caribbean governments approved emergency ad blitzes, while others agreed to pay airline subsidies to add or retain service. Large hotels also took action. Strategies include:

•Cutting jobs. All-inclusive chain Sandals in December announced layoffs of 650 workers, or 7% of its payroll, at resorts in the Bahamas, Jamaica and St. Lucia. The Comfort Suites on Paradise Island laid off a fifth of its workers earlier this month following months of reducing hours to avoid layoffs. In December, the Atlantis — the Bahamas' biggest employer after the government — laid off 800 workers.

•Pitching deals. Consumers are finding airfare rebates, cut rates and resort credits at even the toniest getaways. The luxury CuisinArt resort in Anguilla, for instance, is offering a $500 resort credit to those who book a five-night stay through March 13. Ritz-Carlton is pitching resort credits through April ranging from $110 to $200 a day at its Jamaica, Cayman Islands, Puerto Rico and St. Thomas hotels. Through March 1, the Atlantis is selling a four-night package that includes a dolphin activity for as low as $499. The Nassau/Paradise Island Promotion Board is also offering $200 rebates to people who book air and hotel.

•Booking pop acts. The Atlantis is taking a cue from Caesars Palace in Las Vegas, which sold tickets to the popular Celine Dion show only to guests. On otherwise slow weekends, it's booking some Disney Channel acts such as the Jonas Brothers, who played the weekend after Thanksgiving and generated "thousands" of room nights, says Markantonis. Tickets cost $175, on top of the required room cost.

For parents, the trip and concert "turned into early Christmas presents," says Markantonis. The Atlantis booked them again for March, April and May. The concert's success showed that people are less likely to cut trips that revolve around children, he says.

•Tackling air service. The prospect of having fewer flights and soaring airfares scared tourism ministers. "The one thing we identified as the most significant threat was air lift," says Charles Clifford, the Cayman Islands' tourism minister.

The Cayman Islands government pumped $11 million into its tiny national carrier, Cayman Airways, to expand. It added non-stop service to two more U.S. cities, Chicago and Washington, D.C. In February, it plans to launch Panama service to tap Brazilian tourists and serve island residents who shop there. Airline subsidies pay, given the "overall economic contribution," he says.

Jamaica, which earned $2 billion from visitors last year, took another route. It signed a $4.5 million revenue guarantee deal with American in September to add service, such as Dallas-Montego Bay, as its national carrier, Air Jamaica, struggled.

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