New technology and the Caribbean
Willinnovative or new technologies become a threat to vested interests in theCaribbean?
In manyparts the world innovative technologies are helping create new markets and add valueby disrupting existing business networks in a manner that the existing marketmay not expect. The effect usually is to increasecompetition, reduce prices and restructure a market to find new consumers; but inways that also alter the behaviour patterns of an existing market, threateningentrenched interests.
Typical examples of this are the electronictaxi hailing services of which Uber is the best known, and Airbnb which enablesindividuals to rent out their usually privately owned properties to visitors.
Both developments are led by the high penetration of mobile usageand broadband access; both demonstrate cross-border assetsharing, a new aspect of economic globalisation; and both are already proving disruptiveto existing business models,
This is because in nations wherethese services are available, they are causing significant numbers of consumersto abandon the often ultra-conservative vested interests that operate nearcartels on high cost taxi services or, in Airbnb’s case, are enabling visitorsto stay at locations other than hotels in order to have a more authenticexperience of being in a destination.
Some newertechnologies have already touched the region and are now taken for granted.They include externally owned and run booking engines for hotels, flights and car hire, and sometimes locally-based sites offeringthe discounting or the selling-up of vacation add-ons. In addition, Amazon and eBay andinternational courier services have made goods available in many countries inthe region, obviating some travel for shopping to the US; and online direct andindirect marketing using social media, is displacing traditional models ofselling vacations and destinations.
In aquite different way another innovative and potentially disruptive technology thatis developing rapidly and is of particular relevance to small islands anddiscrete locations is the all-electric vehicle. EVs, as they are known, have already begun tobe imported into the region in the form of cars and vans for general use.
In Barbadosfor example, a young company, Megapower Ltd, is selling and operating EVs. It importsthe all-Electric Nissan LEAF, builds and manages solar carports, and is in theprocess of establishing with some difficulty a growing network of strategicallylocated charging stations across the island. Its owners observe that Barbados,with its relatively short driving distances, flat terrain and sunshine make the island, and some othersin the Caribbean, outstanding locations for EVs.
In a tourismrelated example, Cayman Automotive is shipping electric cars to Cuba foruse on Cayo Largo, a tourist island about 50 miles south of Havana that isbeing developed as a fully eco-friendly tourist destination. The vehicles will servicethe destination’s seven hotels which are linked by a single paved road; and on Cayman itself, EVs are now availablefor rental alongside hybrids and standard vehicles from Budget-Rent-A-Carwhich has been promoting anemissions-free choice to visitors as helping to protect the islandsnatural environment.
Moreover, in the near future the related batterytechnology that makes this possible will become hugely disruptive. As the range and power of such vehiclesincrease and demand grows Caribbean Governments will find themselves caughtbetween their professed desire to be greener and the very high import duties theynow charge on EVs and related equipment. At that point they may find any priorreluctance to show leadership or vision and to become first movers will see mediaattention and visitor imagination rapidly overtaken by other more flexiblecompetitor destinations.
These commonplace examples arehowever, just the start of other forms of disruptive innovation that the regionmay have to accommodate.
They include bitcoin, which seesitself as a transmittable global digital currency beyond the control ofindividual states, but which has also been associated with criminality; threedimensional printing which, when scaled up, is capable of constructing buildings and even producing insitu replacement body parts or battlefield weapons; and big data that in futurewill be brought together from multiple global sources to enable marketing tothe individual of almost anything on a personally tailored basis. There is alsoa real possibility of passenger-carrying electric aircraft that in theory coulddo away with pilots, and driverless vehicles.
While each poses a challenge and all arealready exist or are being trialled, the present focus remains on Airbnb andUber type taxi services.
This is not just because taxi drivershave political clout and can find willing politicians prepared to defend thestatus quo, or because hoteliers may place pressure on government to imposeequivalent levels of taxation on those who rent out their properties.
Rather it is because they challenge vestedinterests of just the kind that are present in most countries in the Caribbean.In the region they are in politics, in government, in much of the privatesector and in the unions, and in many respects when it comes to competition andlighter regulation remain unreconstructed, despite much of the rest of the worldincluding some socialist countries having accepted a more liberal economicenvironment.
The rise of disruptive technologyalso raises questions about the type of tourism destination some parts of theCaribbean might become, and about the extent in the medium term small nations canmeld new technologies that visitors come to expect, in ways that provide localadvantage. They also cast doubt on Governments’ ability to compromise betweenlocal political pressures, the possible erosion of their tax base, and changingtrends in visitor demand.
To understand how challenging afailure to embrace disruptive innovation may be to tourism, one only has tolook at the critical on-line comments in relation to the non-appearance of an Ubertaxi service in Puerto Rico, or the decision by the city of Paris to tax Airbnbrentals. They and other examples in India, the United Kingdom and elsewheredemonstrate how vocal consumers can become when they are seeking to attract an on-lineaudience to place economic and political pressure on a destination to change itsapproach.
This suggests also that in theCaribbean the tourism industry or governments may wish to consider pre-emptivelythe effects of the disruptive, as the global prevalence of these technologiesincreases.
These are all matters to beconsidered now, rather than to be left to the future and chance. It is about knowinghow and when to respond when new technology becomes the normal in the minds ofconsumers, whether local or overseas.
DavidJessop is a consultant to the Caribbean Council and can be contacted at
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