The Industry without a Chimney in the Dominican Republic: “A Patient in a Critical Condition”

The Dominican Republic, known for the warmth of its climate, the hospitality of its people and popular dances such as merengue and bachata, offers a wide range of natural, historical and culturally rich places. The industry without chimney (i.e., tourism industry) of the Dominican Republic is the economic activity that generates more currencies in the country and contributes to more than 10 percent of the national GDP. However, in the year 2020, this sector was impacted by the COVID-19 pandemic, generating a paralysis of its economy. According to the World Tourism Organization (UNWTO) in its analysis of the impact of the pandemic, it indicated that the crisis affected tourism causing an economic loss that exceeds three times the loss of the global crisis of 2009. Given these characteristics of the crisis that still does not cease, the following question arises: what is the future of the industry without a chimney of the Dominican Republic?

Historical Milestones

Formerly, the Dominican Republic was inhabited by indigenous people called Tainos who called their island Quisqueya (mother of all lands). The Tainos were conquered by Christopher Columbus during his first trip to America in 1492. Columbus established the first colony there, naming it La Española. During this period, the colonizers requested the importation of African slaves, which began to arrive on the island in 1503 to grow sugar cane. This demand led to an exponential increase in the importation of slaves. Later, Spanish colonists were attracted to the silver mines of Mexico and Peru, which resulted in the decline of agriculture in this region.

La Española, or what is now known as the Dominican Republic, was not only a Spanish colony but also a French colony. Later, the country officially gained its independence on February 27, 1844. However, the history of this country since then was characterized by great political instability and foreign intervention, particularly from the United States who occupied the territory from 1916 to 1924. After this period, the Dominican Republic democratically elected a new president, Horacio Vasquez.

Another milestone that marks the history of the Dominicans, is the Great Depression of the 1930s, which generated a great negative impact on the economy of that country, radically reducing the price of sugar, which was one of the main products of this country. Likewise, the extension of Vasquez’s presidential mandate caused great uncertainty that led to the revolution. Subsequently, Rafael Leónidas Trujillo, who was then chief of the National Police, entered the political scenario in an irregular and non-transparent manner. Trujillo’s presidency known as the “Trujillo Era” covered the period 1930-1961. His mandate was characterized by absolute political control with severe repression of human rights through military forces. In August 1961, Trujillo was dismissed by the Organization of American States (OAS) and opposition dissidents, thus ending the “Trujillo Era.” Later, a new president was elected, Joaquín Balaguer, who marked the return to democracy of this country.

Tourism in Dominican Republic

Tourism is one of the most important sectors of the Dominican economy. This sector has become the primary industry of income. Dominican tourism is a topic that has been part of the daily life of its citizens, since their economic sustenance, as well as their way of living, depends in great part on it. The industry without chimney of the Caribbean country began in the 1930s, where one sees the arrival of the first tourists. The 1940s and 1950s were characterized by the promotion of tourism, reflected in the establishment of the Malecon of Santo Domingo and the Hotel Jaragua. In the 1960s and subsequent years tourist activity steadily rose until the year 2020, when an abrupt fall was evident.

Besides being a large-scale generator of foreign exchange, the Dominican Republic has an immense variety of sites to visit. Among them are the famous beaches of Bávaro-Punta Cana and Playa Dorada in Puerto Plata, which present a great flow of national and international visitors. In addition, there are other sites that are popular such as Santo Domingo, Boca Chica, Juan Dolio, Las Terrenas and La Romana-Bayahibe.

Furthermore, the Dominican richness is reflected in its culture, which has a history nourished mainly by the mixture of Spanish, African and Taino roots. Within the Dominican cultural wealth is merengue which was originally played with string instruments and later replaced by the accordion, the güira and the tambora. This represents the union of three cultures; the European influence with the accordion, the African with the tambora and the Taino with the güira. Another of the typical musical genres of the Dominican culture is the bachata, influenced by the bolero, the merengue and the Cuban son. Among the best-known performers are Juan Luis Guerra, Eddy Herrera, Manny Cruz and Fetita la Grande.

Another tourist attraction of the Dominican Republic is its food, which is characterized by a mixture of flavors from Europe, Africa and the Taino. The most typical dishes are Bandera – white rice, beans and stewed meat – and Sancocho – stewed meat, vegetables, plantain and yucca. In addition to the food, there are some classic Dominican beverages such as rum which is the emblem of the island. With it, one of the most well-known drinks is made: the Mamajuana, which is said to have aphrodisiac properties. Another classic drink is the Coco Loco, especially on the beaches, which contains vodka, tequila, rum, lemon juice and coconut cream.

A patient in critical condition

The tourism sector in the Dominican Republic, the most important in the country’s economy, collapsed due to the crisis caused by the COVID-19. The pandemic stripped the country of approximately 60 percent of its tourism revenue according to the Dominican Republic’s Central Bank. In one year, the amount of foreign exchange that entered the country increased from USD 4,086 million in the first half of 2019 to about USD 1,638 million between January and June 2020. This is about 2,448 million dollars less because of the pandemic. The fall in the tourism sector was 43.3 percent in the first half of 2020, which resulted in a significant decline in foreign exchange receipts and thousands of layoffs.

The Minister of Tourism compared the situation the sector is going through to that of a patient « in critical condition. » In this context, the Minister of the Dominican Republic, David Collado, presented an incentive program aimed at tourism and the boosting of this activity. The Government offered Dominicans soft credits and discounts in hotels. Similarly, Collado announced a Tourism Recovery Plan, with health provisions and protocols. Among the main measures of the Plan are free medical insurance for foreign tourists, random tests, security protocols, a travel assistance plan and more. Collado assured that the Plan includes measures that at the moment no country in the region has. The plan also includes an investment in promotion and financing of approximately 28 million USD, as well as some 420 million pesos in programs to guarantee air routes. Likewise, fiscal incentives are planned for the promotion of the sector.

Beyond the Pandemic

The crisis in the tourism industry is unparalleled. It has been the worst since 1950, when the evolution of the sector began to be statistically recorded. The tourist activity is one of the most affected by this crisis, according to experts in the area, it will take three or four years to return to previous tourism levels. Ed Crouch, partner of Boston Consulting Group (BCG), remembers that in previous recessions tourism recovered its previous levels within the first two years. But the current battle is different. It is loaded with minefields, from which it is not easy to predict escape times.

To face the current crisis of the pandemic, Crouch indicates that all the agents of tourism, from hotels, wholesalers of trips, airlines or agencies, must calibrate with extreme precision their indicators, to rebalance the demand, to prepare to conquer again the internal markets, to impel offers of loyalty, to reconfigure their positions and competitive advantages and differentials to maintain or to gain market shares. Additionally, they must modify their management tactics to streamline revenue, secure their workforces, reorganize their digital and environmental development protocols and not lose out on the possibility of leading mergers, acquisitions or diversification of their businesses.

In the same way, the Secretary General of the UNWTO, Zurab Pololikashvili, explains that: « the restart of tourism can be undertaken in a responsible manner and at the same time safeguard public health, companies and employment. » Oliver Wyman adds that a study found that 60 percent of people surveyed are willing to take a trip after the pandemic. This indicator is encouraging for the tourism sector because it shows the light at the end of the tunnel for the industry without a chimney, not only for the Dominican Republic but also for the entire world.