Thursday 15th May, 2008

 

Caribbean tourism

facing major challenges

 
 
 
 
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A participant at the Caribbean Hotel and Tourism Investment Conference takes an interest in a project being offered for investment in Tobago on the final day of the conference at the Hyatt Regency Trinidad Hotel, 1 Dock Road, Port-of-Spain. PHOTO:LESTER FORDE

BY ASHA JAVEED

[email protected]

The region’s tourism industry is being challenged.

And it’s not simply a matter of competition.

Consider:

n A slowdown, prompted by recessionary trends in the US, threatens the global economy. The Caribbean’s travel market is mainly in North America and Europe and a recession has implications for visitor arrivals to the region.

n Oil prices continue to rise. It peaked at $125 last Friday. The Caribbean, with the exception of T&T and Barbados, have signed the Chavez-initiated PetroCaribe agreement which allows them to have oil at a low interest rate. High oil prices affect the costs of transport, electricity, hot water in hotels and airlift.

n Food prices have increased throughout the Caribbean and most governments are now looking at incentives to woo people back to agriculture.

n Then there’s climate change. The Caribbean will experience the effects of climate change even if it stops all carbon emissions from countries in the region.

Tourism is the lifeblood of the Caribbean. It represents more than 30 per cent of the gross domestic product (GDP) of the region and provides nearly three million jobs.

John Bell, consultant at the Ministry of Tourism, said the regional tourism product is being challenged as opposed to being threatened.

“It’s amazing how resilient tourism is,” he told the Business Guardian on the floor of the 12th annual Caribbean Hotel and Tourism Investment Conference at the Hyatt last week.

Bell was sceptical of the conference’s emphasis on “Going Green,” although he believes that is important in the long term.

“The bigger issue is the economy, the impact that that is having on air travel, the availability of airlift to market centres. That, to me, is a much more dominant issue on tourism development. The green theme will still be important in the long term:the need for us to preserve what we’ve got, to maximise its benefits within the framework of an environment that’s very sensitive. That’s what we’re selling.”

Glen Beach, Minister of Tourism, Youth and Sports of St Vincent and the Grenadines (SVG), believes the Caribbean is being both challenged and threatened.

“One of the things people tend to forget is that you are up against everyone in the world for that tourism dollar. Early last year, I saw the Federal Government of the US advertised as a tourism destination. I saw it for the first time last year.

“The competition out there is fierce. You’re talking about countries who’s tourism budget is bigger than our national budget. You have to be creative about how you market your destination,” he said.

Beach thinks that the Caribbean has wasted time but is optimistic about One Caribbean, a marketing tool by the Caribbean Tourism Organisation (CTO).

“One Caribbean: a step in the right direction. It’s about time that we have a marketing fund for the Caribbean. And it cannot be small,” he said.

The view was reiterated by Manning who said the Caribbean must strengthen its regional brand.

“We are now developing an increasingly multifaceted product and are adding to the traditional sun, sea and sand formula.

“The concept of the One Caribbean must prevail if we are to capitalise on our common heritage in this part of the world. We have a common history and sustained cultural links and whilst there is peculiarity in each Caribbean nation, the story is deeper and more instructive and the creativity more phenomenal and impactful when the larger regional picture is embraced and presented.

“As in all other areas, the Caribbean is stronger when it comes together,” said Manning during his opening address to the conference.

The common issues are: air travel, intraregional tourism, multidestination marketing, the linkages of tourism to the local and regional economies, the benefits and impact of cruise tourism on the industry as a whole, safety and security, cultural issues and environmental matters including the impact of global warming on the developing island nations.

Bell’s view is that a recession in the US does offer some hope.

“The US recession is in some ways good because what it does is it holds the Americans on this side of the Atlantic. Plus, the weakening of the dollar makes us very, very competitive for Europeans buying their vacation in euros or in pound sterling,” he said.

Is the Caribbean then the obvious middle ground for the US and Europe?

Yes, if it’s well-marketed.

“Americans are accustomed to taking vacation. I think what will happen is that they will take a cheaper vacation which will be the Caribbean. It is closer to get to and therefore less expensive in air travel,” he said.

Bell pointed out that the two emerging markets for tourism are Latin America and Asia “but Asia is the other side of the world for the most part.”

Is the Caribbean properly preparing itself for a US recession?

I don’t they are really taking very much of an active position in it at all. Having said that, this is not a homogenous industry. There are those who know and understand it and those that know and understand how to meet the consumers through the market structures and they are always consistently successful. For the most part, these tend to be Caribbean-bred brands as opposed to international brands,” he explained.

Regional airline?

But Bell’s belief is that more attention needs to be paid to the establishment of a regional airline.

“Without market access, you better fold up your tent and go home. Realistic picture?” he asked.

He said, “If you have a carrier you can control what the prices are going to be. If you don’t have a carrier, the other airlines control what the prices will be. That includes freight and all the things that make up a tourism potential. What I believe is that we ought to be happy that we have a national carrier and we ought not to try to make it necessarily a profit centre.”

While Bell believes a regional carrier is essential to sustainable regional tourism, the idea is not new. He said about ten years ago, regional stakeholders concluded that if they worked together, they could save $60 million. It never happened.

“Each one of these people are going to go home and meet their political reality and the political reality will kill it. And it did,” he said.

He’s opposed to functional co-operation. Instead, Bell believes that there is need to consolidate.

“Liat should be bought over by Caribbean Airlines except Caribbean Airways won’t want it in its current form. To have a real Caribbean carrier allows you to get that functional co-operation and to save a lot of money in the process. But it also gives you control over market access.

Promoting One Caribbean

Tourism photos courtesy TDC by Jim Stephens

“If you leave that to American Airlines or British Airways, they are going to do what’s right for them. They’ve got stockholders that demand that they do what’s right for them. They are not going to do what’s right for T&T, or what’s right for Jamaica or any of the Caribbean islands.’

Bell is critical of Trinidad’s tourism. He said Trinidad desperately needs a strategic plan for tourism.

“What product do we have? There are four basic areas of development opportunity: Tobago, Chaguaramas, Port-of-Spain and the North Coast. There is no plan for the North Coast and there is no way to get there other than through Port-of-Spain which makes it inaccessible in terms of development opportunity. Chaguaramas is constricted by the fact that there is no Western Main Road.”

Bell pointed out that “the Chaguaramas Development Authority reports to Ministry of Planning, Hyatt owned by Udecott, Hilton is owned by eTeck which gives credence that there is no centralised plan for the development of T&T.

“There is a policy in the Ministry of Tourism. That policy is a blank canvas. There is no picture painted on it. The picture will be in the form of a strategic action plan, a land usage plan, rooms to be built,” said Bell.

Beach is more vocal about the airlift situation, as he’s a shareholder.

“Liat has taken a lot of blows from a lot of people throughout the region. Some of them are rightfully deserved. Some are not rightfully deserved. I can criticise Liat. I am a shareholder. We know the importance of Liat to intraregional travel. Without Liat, there is no regional tourism,” he said.

As far as Beach is concerned, the Caribbean has to stop playing the fool.

“It is beyond me how one Caribbean airline hasn’t been formed yet. I know we like to take pride especially that we have our own airlines,” he said.

The oil factor

Manning noted that continuing high energy costs will have negative consequences for world wide tourism and affect all countries with serious implications for those who depend heavily on the industry for economic and social development.

The president of the Caribbean Hotel Association (CHA), Peter Odle, said that high oil prices are forcing businesses to be more proactive. He said business was strong and people will continue to travel even if oil gets to US$150.

“It’s just a question of adapting,” he said.

Beach observed that a gallon of gas was now EC$13 which is being subsidised by the Government.

“PetroCaribe has helped us a great deal but I think there is a misunderstanding about what PetroCaribe is about. PetroCaribe is not a discount but a credit. The interest rate is very low. We are not getting oil very cheaply,” he stated.

In SVG, Beach explained that, “people have been very understanding because they realise it’s not something that the government can control. When you look around, people understand that this is international. Once you are aware of what is going on in the world and every day you look at the international news, barrels of oil continue to go up. I doubt oil is going to go back down anytime soon,” he said.

Beach said that to fight the rising oil price and its implications, consumption practices throughout the region have to change.

“I think we have to become more aware of what we are doing because as much as these prices have gone up and affected us, the consumption really hasn’t changed, which is an amazing thing,” he said.

And the Caribbean remains vulnerable. Beach said that with the exception of St Lucia and Jamaica, the islands are suffering a bit.

“In SVG, overall our figures are up. The problem is that it’s not up in the stayovers which is where we would like to see it up. Where the money really comes in is in the stayovers. Once the gas prices go up, it’s a trickle down effect.

“You put that in context of a recession that’s taking place. It doesn’t help that this recession is taking place in an election year.

“Mind you, there are countries like Canada where the dollar is strong and they will tend to travel a bit more right now but they are still going to be cautious because no matter what everything still revolves around the US economy,” he said.

“It’s something that we’re going to have to look at and it’s not easily fixed. The people are not coming because they are being careful about their economics and their financial situation and waiting to see exactly what’s going to happen,” he believed.

As for climate change and its implications: Beach insists that more needs to be done.

“A lot of times, we in the Caribbean take a long time to get what’s going on in the world. Going green has been spoken about for a long time now. If you go back and see whether they are practising it the answer is no. What I think happens with the smaller, boutique hotels, they are not willing to put in that cash right now to go green even if its going to benefit them in the long run,” he said.

As to how climate change will impact on Caribbean tourism, Beach said the major impact has been in the length of the region’s dry and wet seasons.

“I think what you are going to see happen is more natural disasters. Hurricanes are going to start to come further south. As you can see with US, New Orleans is a perfect example. Climate change is going to affect tourism in the Caribbean, without a doubt and especially in the hurricane season,” he said.

T&T in need of rooms

Increased high-end rooms are what’s needed in T&T.

Manning noted that T&T was upgrading its room stock to international standards and was in the process of establishing a critical mass of new rooms led by the luxury five-star end of the market.

“We will see an addition of at least 796 new hotel rooms in our country by the end of 2008 almost doubling the existing inventory of first-class hotel rooms in Trinidad alone,” he said.

He noted that the Holiday Inn had added 83 rooms and the Hyatt Regency another 428 rooms.

The Carlton Savannah should add 165 rooms and the Star Hotel another 120 rooms when it is completed by the end of the year, according to Manning.

Chief secretary of the Tobago House of Assembly (THA) Orville London also said the THA’s major challenge was the availability of high-end rooms.

“And that of course is going to relate to airlift. It goes together. If the airlift comes and doesn’t find the rooms, well…,” he trailed off.

“When we came into power in 2001, the occupancy rate was 17 per cent. We now have had a situation where it is average 70 to 80 per cent,” he said.

He noted that 400 rooms have been added to the island’s stock but it is based on local investment.

“We do not have enough high-end rooms on the island. One of our major challenges is trying to find investors who want to build high-end rooms. There are two large projects: one of which has started and one which will start at the end of next year. Those will give us close to 1,000 rooms,” he said.

 

 

 

 

 

 

 

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