2019 market reports showed tourism providing only 7% of Puerto Rico’s economic base, one of the lowest proportions in the region. This is an increase since 2013, when tourism provided just 6%. The government of Puerto Rico was working to increase tourism before the pandemic, and is planning to leverage the care with which they handled the virus to bring tourists back after coronavirus.
Would statehood threaten that important part of Puerto Rico’s economy?
First, how much is tourism doing for the economy? A report from the Federal Reserve Bank of New York describes the economy as “stagnant” and points to the laborforce participation rate, which is one of the lowest in the world. The top employer in Puerto Rico is the government, and the second largest employer is Walmart. Not only is the economy as a whole stagnant, but, according to Caribbean Business, tourism in particular has remained frustratingly stagnant while other Caribbean destinations grow.
A 2019 report from Tourism Economics is more specific. Tourism accounts for just 1.8% of Puerto Rico’s jobs and directly contributes only 2.5% of the total Gross Domestic Product. Visitor spending fell by 15% after Hurricane Maria in 2017 and a further 9% in 2018. However, 2019 and 2020 saw increases before the pandemic, leaving the tourism industry just slightly better off than in 2013.
Puerto Rico shut down for three months in response to the coronavirus pandemic. The territory is welcoming tourists back, but will still require some restrictions. On the other hand, the new Gold Star program is designed to focus on the safety of post-COVID-19 travel to Puerto Rico compared with other Caribbean destinations which have been less rigorous.
Changes from statehood?
Tourism provides 12% of Florida’s economic activity and 21% of Hawaii’s, so being a state clearly is not bad for tourism.
U.S. citizens from the mainland don’t have to carry a passport or visa to go to Puerto Rico, but traveling from one state to another is equally simple. While many on the mainland are unaware that Puerto Rico uses the U.S. dollar for currency, all would assume that another state would do so.
When Hawaii became a state, the amount of press coverage it received was staggering, and it made an equally staggering difference to the role of tourism in Hawaii. Economist James Mak says baldly, “The big increase in tourist numbers came after Statehood in 1959” in his book Creating “Paradise of the Pacific”: How Tourism Began in Hawaii.
Puerto Rico could expect the same boost from statehood. In addition, the perception of increased safety and stability that would go along with statehood would encourage tourism from the mainland. “Everybody wants to visit and meet the new baby in the family,” said Kenneth McClintock, former Secretary of State for Puerto Rico, on how statehood could affect tourism to Puerto Rico.
Both history and logic suggest that statehood would in fact be good for tourism in Puerto Rico.