One of the world's largest hotel chains, Accor, surprised many people this week when it announced it would pull out of the French overseas territories of Guadeloupe and Martinique. The decision underscores the serious economic problems facing the two Caribbean islands.

There is trouble in paradise, or at least in the French Caribbean islands of Guadeloupe and Martinique.

During the past year, the overseas territories, known as the French Antilles, have witnessed a 20 percent drop in tourism, one of the major engines of their economies. Other key sectors, including banana production and construction, are also ailing.

Now Guadeloupe and Martinique are grappling with more bad news. In a letter to the French government, the world's third-largest hotel chain, Accor, announced it was no longer profitable for the chain to remain in the French Antilles.

"The crisis that is happening in the tourism industry is something terrible...," said Monique Barbut, program director for overseas territories at the French agency for development. "(For) a few years things (have not been so good.) There is huge (competition) from the other islands in the Caribbean."

Today, tourists are flocking to the beaches of nearby Cuba or the Dominican Republic, where prices are much lower. The cost of doing business is also higher in the French Antilles for groups like Accor.

Guadeloupe and Martinique have also been hurt by strikes and rising crime. The hotel chain also cited what it called the "aggressive" attitude of hotel staff toward tourists, compared the friendlier welcome offered on other Caribbean islands.

Ms. Barbut says tourism is key to the future of both islands, where educated youth are leaving in droves for France. Ms. Barbut believes Guadeloupe and Martinique should target rich tourists and focus on new markets, like the nearby United States, instead of Europe.

"Very few Americans are coming to the French Antilles," she said. "At the same time, with all that is happening in the world, people get scared to go to vacation anywhere. But when you come to the French Antilles, you come to France."

Unlike some other Caribbean islands, Ms. Barbut says, the French territories offer secure airports, and top-quality health care. But Ms. Barbut also believes the French islands must try to develop tourism packages with their Caribbean neighbors.

The French government is also trying to develop new business opportunities, including film and cartoon production, for its Caribbean islands.