While the Premier may be ‘excited’ by the increase in number of tourists visitors, I still remain unconvinced that this year will be a good year for tourism. In the past I have written about the potential for the new US passport regulations to have an impact on our tourism industry. Another issue that may have impact on this years tourism season are Ajustible Rate Mortgages and how they have affected the US housing market causing a reduction in tourism spending this year.
Today, there was an interesting post on one of my favorite economics blogs – http://bigpicture.typepad.com – that was suggesting potential tertiary market impacts caused by the slowdown in the housing sector. One potential slowdown that was listed was airlines, which got me thinking further about travel.
Back in Feburary I wrote about the potential impact rising interest rates may have on the housing market. This being that many Adjustable Rate Mortgages were given out by lenders when interest rates were low and now that interest rates have risen, those attractive low rate adjustable mortgages have turned into high rate ones which have stretched the budgets of many beyond their expectations.
This stretch has caused many to begin to try to put their homes on the market in hopes of selling prior to foreclosure. This also means that the budgets of many individuals who rely on such mortgages are now stretched further then they once were. When an individual’s budget is stretched, they’re more likely to cut out luxuries such as fancy vacations to destinations such as Bermuda (especially when adding the hassle factor of not having a passport) in favor of cheaper vacations.
Will the downturn of the American housing sector have a negative impact on our tourism market? Perhaps. Is it a good idea to get Bermudians all riled up in believing that tourism is going to be great this year? Well I suppose an election is just around the corner.