Traditionally a sector of secondary importance in Trinidad and Tobago (T&T), tourism is emerging as a development priority following a sharp decline in oil and gas revenues, historically the backbone of the economy. Since taking office in September 2015, prime minister Keith Rowley has designated tourism a key pillar of the national diversification strategy aimed at reducing T&T’s reliance on hydrocarbons.
To stimulate growth, the country is looking to strategically reposition its tourism sector, with an emphasis on T&T’s greatest strengths, which include its diverse and unique offer. While the sector continues to face several immediate challenges, including stagnant international arrivals and limited capital funding, increased political emphasis and greater mobilisation in the private sector are expected to lay the foundations for sustained growth.
Modest Contribution
Unlike in a number of tourism-dependent economies in the Caribbean, the sector has not traditionally been T&T’s main economic focus. As the leading producer of oil and gas in the Caribbean, and an important exporter to the Caribbean Community, T&T’s economic focus has historically been on hydrocarbons extraction and its developed manufacturing base.
Tourism contributed a modest 2.9% to the country’s GDP in 2016, directly generating TT$5.4bn ($806.4m), according to the World Travel & Tourism Council (WTTC). Its total contribution is forecast to reach 8.1% of GDP, or TT$15.1bn ($2.3bn), in 2017.
The sector is nonetheless a significant source of jobs, directly employing 28,500 individuals, or 4.4% of the country’s workforce. Tourism also plays a proportionately larger role in Tobago’s economy, where it accounts for 11% of GDP, according to the Tobago House of Assembly (THA).
Emerging Priority
In a recessionary context – in 2016 GDP contracted for a third consecutive year, by an estimated 2.3%, according to the Central Statistical Office (CSO) – tourism is emerging as a natural focus in the diversification thrust. With significant untapped potential, the sector can contribute to the country’s economic recovery, generating foreign currency and curbing job losses.
During the presentation of the 2017 budget, T&T’s minister of finance Colm Imbert said, “while we have had many tourism master plans over the years, it is clear that with abundant oil and gas revenues, we paid insufficient attention to the development of [tourism]. We intend to correct this oversight. Tourism is a sector in which we have a significant comparative advantage and, notwithstanding the looming presence of Cuba over Caribbean tourism, we need to intensify our efforts that make tourism an important driver of diversification.”
Diversified Product
The sector’s greatest strength is the country’s rich and diverse product mix. Tobago embodies the quintessential Caribbean sun, sea and sand destination, complete with beautiful beaches and tropical forests. The 300-sq-km island is also home to a number of attractions, including Tobago Main Ridge Forest Reserve, a candidate for UNESCO World Heritage status, and Pigeon Point Beach, ranked among the world’s best beaches by multiple media outlets.
By contrast, Trinidad has ensured a steady flow of business and convention visitors, though the island’s rich offer extends far beyond its business potential. Known as the cultural capital of the Caribbean, Trinidad is home to the largest Carnival celebration in the region, and its diverse yet harmonious blend of cultures, eclectic cuisine and rich biodiversity leave it ideally positioned to develop its events, cultural, sports and ecotourism segments.
The islands’ attributes were recognised at the Caribbean World Travel & Living Awards 2016, with T&T taking first place in the categories of best honeymoon, golf and carnival islands of the year.
Performance
Perhaps as a result of its historical neglect, the performance of T&T’s tourism sector over the past decade has been mixed, with a degree of fluctuation in international arrivals. According to the Tourism Development Company (TDC), the executive arm of the tourism ministry, they peaked at 461,051 in 2006, but fell to a low of 387,559 in 2010 in the aftermath of the 2008-09 financial crisis.
A recovery began in 2011 and 2012, with arrivals rising by 11.2% and 5.5%, respectively, but this momentum was lost in 2013 and 2014, with declines of 4.5% and 5%. The sector rebounded again in 2015 with a 6.6% increase to 439,749 overseas visitors, only to be followed by a 7% decline in 2016, when the figure fell to 408,782.
“While a portion of this decline was attributed to fewer Venezuelans visiting in 2016 as a result of the instability in the South American country, the remainder is associated with a decrease in airlift, a lack of proper packaging of T&T as a destination and recurrent concern about the safety of travellers,” Akilah Procope, market analyst and economist at the TDC, told OBG. Adequate airlift, effective destination marketing and traveller safety concerns remain the most important challenges facing the sector, and are largely responsible for the historical fluctuation that has characterised international arrivals.
Structural Adjustments
In March 2017 Shamfa Cudjoe, the minister of tourism, announced that the TDC would be replaced by two separate agencies with respective mandates to promote the island of Trinidad and the island of Tobago individually. In addition, Cudjoe revealed plans for creating a regulatory and licensing body for the tourism industry to establish and enforce nationwide standards.
“Right now the standards programme in T&T is voluntary, and if we ought to compete with the rest of the region, we have to ensure that we meet the necessary standards and we could compete neck-to-neck and become more attractive like the rest of our competitors in the region. I think the regulatory authority would go a long way,” Cudjoe told local media. In April 2017 the Ministry of Tourism requested proposals from consultancies for the new regulatory authority. However, a specific time-line for the dissolution of the TDC, creation of its replacement agencies and operationalisation of the regulatory body has yet to be announced.
Following the announcement, president of the Trinidad Hotels, Restaurants and Tourism Association (THRTA), Hassel Thom, told OBG that, following consultation with its members and other private sector tourism associations, there was “unanimous disagreement with the decision” due to the lack of consultation with the private sector.
By The Numbers
Trinidad is the entry point for roughly 95% of international arrivals to the country, receiving 389,404 visitors in 2016, while Tobago welcomed the other 19,378.
Carnival remained the country’s top attraction in 2017, with the month of February registering 37,448 visitors, up from 35,959 in 2016. Highlighting the economic boost that the festival brings to the country, Carnival visitors in T&T spend an average of $1415 per person during their stay, according to the CSO. The 2016 event generated an estimated $340.5m in visitor expenditure, which has an even greater economic impact given its indirect effects.
With considerably distinct visitor profiles, the twin islands experience different flows and peak arrival times. In 2015, 43.2% of Trinidad’s visitors were visiting friends and relatives, with business and leisure accounting for an additional 22% and 19% of arrivals, respectively.
Therefore, the larger sister isle experiences peak arrival periods during Carnival, Christmas and the summer months. By contrast, Tobago’s peak arrival times coincide with the European and North American winter. Leisure accounted for nearly 70% of arrivals to Tobago in 2015, followed by visiting friends and family (13.1%), incentive trips (5.7%), business, convention, work or study (4.6%), and sports and ecotourism (2.6%).
The US remains the largest source market for incoming tourists, accounting for 42.6% of arrivals in 2016, followed by the Caribbean (19.3%), Canada (12.2%), the UK (8%), Venezuela (4.8%), and South and Central America (2.6%). The TDC estimates the average length of stay at 14 days, with average daily expenditure of TT$580 ($87) per person.
The decline in international arrivals contrasted sharply with steady growth in the regional market. After expanding by 7% in 2015, international arrivals to the Caribbean rose by an estimated 4-5% in 2016, reaching nearly 30m, according to the Caribbean Tourism Organisation. T&T’s share of Caribbean tourism is modest, making up about 7% of air arrivals to the region in 2014, the latest data available.
Up & Coming
A rapidly growing cruise segment is nonetheless helping to offset the decline in international arrivals. Cruise ship arrivals in the 2015/16 season rose by 115% on the previous one, with the country receiving a total of 100,791 passengers – surpassing the 100,000 arrival mark for the first time since 2009/10. Tobago remained the most popular cruise destination of the two islands, receiving 70,298 cruise passengers from 60 ship calls. Trinidad welcomed the remaining 30,493 passengers, recording 25 ship calls (see analysis).
An increasingly dynamic domestic tourism market is also helping to sustain growth in the industry. According to a study by the TDC, a total of 278,846 overnight trips were taken in 2015 – a 6% increase from 2013 – with an average stay of 5.25 nights. The industry generated an estimated TT$862m ($129m) in 2015, with 558,574 domestic tourists spending on average TT$294 ($44) per day. Tobago benefits disproportionately from domestic tourism. The smaller sister isle accounted for more than TT$500m ($74m) of domestic tourism expenditure, with an estimated 382,761 Trinidadians visiting Tobago in 2015, a 10% increase from 2013 (see analysis).
Private Push
The disappointing number of international arrivals in 2016, following growth of 6.6% the previous year, saw a stagnant hotel and tourism industry band together to increase pressure on the government to strengthen efforts to stimulate growth, particularly in relation to the government’s role in destination marketing. Brian Frontin, CEO of THRTA, described 2016 as a watershed moment for the private sector. “It is the first time that there has been this increased collaboration among multi-associations in T&T to set a leadership agenda within the private sector on the state and future of the tourism sector, with or without government support.”
In addition, the private sector is pushing for a reversal of the recent downward trend in public tourism expenditure. According to the THRTA, allocations to the function of destination marketing and promotion declined by 69% since 2013, from TT$61.6m ($9.2m) to an estimated total of around TT$19m ($2.8m) in FY 2017.
Meanwhile, capital investment in the sector decreased by 49% from TT$21.8m ($3.3m) in 2013 to an estimated TT$11m (1.6m) earmarked for 2017. Total allocations to the Ministry of Tourism (MoT) saw a 58% reduction in the same period, from $191.5m to an estimated $80.8m.
“The decrease is concerning because we need to ensure the destination has visibility, particularly in key source markets,” Frontin told OBG. “With international arrivals having remained stagnant at an annual average rate of roughly 425,000 visitors for the past decade, it is clear that if we do not keep the destination visible, it is easy to erode all the gains made the previous year, as we saw in 2016.”
Hotels
Strengthening marketing efforts is now seen as critical to stimulating growth in the hotel industry. Hotel occupancy rates in T&T have remained stagnant or declined in recent years, as the country continues to lag its regional peers. According to local media reports, Tobago’s hotel room occupancy rates hovered around 35-40% in 2015, with a daily average rate of TT$1086 ($162) for hotels and TT$344 ($51) for guesthouses.
Trinidad’s hotel room occupancy average declined from 67.5% in 2015 to 61% in the first eight months of 2016, according to STR Global data, with an average daily rate of $161, below the Caribbean region’s averages of 67% and $200, respectively. As of April 2016 the country’s room stock stood at 7768, with Tobago accounting for 51.2% of that total.
Hotels and accommodation properties in Trinidad with six or more rooms are subject to a 10% tax on revenues, in addition to traditional taxes. According to the THRTA’s calculations, this contribution alone has amounted to some $9m in annual collections since 2014. Juxtaposing this to the government’s marketing budget shows a falling reinvestment rate of 80% in 2015, 50% in 2016 and 31% in 2017. “The private sector, led by the THRTA and its Tobago counterpart, is now calling for better accountability on the government’s usage of our tax dollars and a seat at the table for the strategic, national development of the tourism industry,” Frontin said.
Twin-Island Approach
The government is working to stimulate growth across the country, using a two-pronged approach designed to capitalise on each island’s strengths.
Tobago is at the forefront of these efforts following the February 2017 approval of a new tourism authority charged with revitalising the island’s tourism industry. These fresh developments were preceded by the creation of a special committee in May 2016, led by Rowley, to spearhead growth in the smaller island’s tourism sector. The committee members include Shamfa Cudjoe, the minister of tourism, the minister of finance, the minister of state in the Office of the Prime Minister, Ayanna Webster-Roy, as well as representatives from the THA.
Soon after the committee was launched, news of a proposed Sandals International resort for Tobago made headlines regionally, becoming a major talking point in the sector in 2016. In addition to sending a clear signal to investors about Tobago’s untapped potential, the arrival of the international hotel chain, which already has a presence in Jamaica, the Bahamas, St Lucia, Grenada, Antigua and Barbados, is a potential game-changer for T&T’s tourism sector.
The project, the first of its kind in the country, has the potential to be a catalyst for tourism development, and could represent a significant step towards ensuring year-round sustainable tourism in Tobago.
Though official announcements have yet to be made, the project is thought to comprise two hotels: a 250-room Sandals hotel, and a 500-room Sandals Beach Resort, with construction expected to take two-and-a-half years. Although the value of the investment remains unknown, similar projects elsewhere in the Caribbean involved capital expenditure of between $80m and $100m.
Wide Impact
The project will have a wide-reaching impact on the local economy. In addition to increasing the island’s hotel capacity by around 75%, it is expected to directly create an estimated 2000 jobs, and result in the purchase of more than TT$100m ($14.9m) worth of local goods and services per year.
According to Colm Imbert, the minister of finance, initial projections put the project’s combined yearly contribution to the national economy at TT$500m ($75m). “We feel certain that a Sandals Resort will attract other tourism investment in Tobago, will precipitate the upskilling of the workforce, boost agricultural production, and deliver better and more effective marketing of Tobago, as well as Trinidad, as preferred tourism destinations,” he said.
While T&T’s government seems keen to welcome the investment, a number of details remain unknown, including the site of the resort. Sandals’ preferred location – a strip of pristine white-sand beach known as No Man’s Land in south-west Tobago – was met with opposition by environmental groups, which expressed concern over the impact of large-scale tourism development in the area. Accessible only by boat, No Man’s Land forms part of the Bon Accord Lagoon at Golden Grove, Buccoo Estate. The lagoon is fringed by mangrove wetlands and is an important habitat for many species of bird.
Local hoteliers have pointed out difficulty in sourcing the necessary human resources to supply the project. They will also be monitoring the tax structure and any government incentives offered to the hotel chain. At present, the country’s incentive structure offers a seven-year revenue tax exemption to hotels and other tourism projects.
As the deal remains in the working stages, Reuters reported in May 2017 that the Stewart family, who established the company in 1981, is “exploring strategic alternatives” for the business. While the impact of any such decision is unclear, selling its majority stake is one option. The Tobago project may be held up during this internal planning.
Niche Destination
In Trinidad the MoT is working on a new Tourism Road Map to guide development of the sector up to 2020. Draft documents were presented to stakeholders in June and September 2016, with a final version expected in 2017. The focus of the document remains on the development of niche markets, in particular the meetings, incentives, conferences and exhibitions (MICE) segment, as well as ecotourism. To this end, the government is combining a targeted marketing strategy, infrastructure upgrades, increased training and industry certification strategies to improve services.
MICE
Trinidad is especially well positioned to develop as a flourishing MICE destination in the Caribbean. Given its substantial oil and gas sector, the island already attracts a stream of business visitors every year. The country regularly hosts the three-day Caribbean Energy Conference, which attracts more than 2500 visitors annually.
With the MICE segment accounting for 15.4% of international arrivals to Trinidad and 2% of those to Tobago in 2015, there is substantial room for further growth, as well as sufficient capacity to support industry expansion in the near term. Trinidad already has several international hotels, including the Marriott, the Hilton, the Hyatt Regency, the Radisson and Holiday Inn Express.
The waterfront Hyatt Regency Trinidad in Port of Spain is a key venue for the MICE industry. Located a 40-minute drive from Piarco International Airport (PIA), it offers 43,000 sq feet of flexible meeting space, including a 16,000-sq-foot ballroom, seven 3000-sq-foot banquet rooms and four meeting rooms ranging from 1000 to 1500 sq feet.
Ecotourism
With varied landscapes – including tropical forests and large fresh and salt-water swamps – and a rich array of flora and fauna, Trinidad’s ecotourism offer is also robust. Highlights include Caroni Swamp on the west coast, Pitch Lake in the south-west and the world-renowned Asa Wright Nature Centre, a non-profit nature resort covering 607 ha of forested land in the Arima and Aripo Valleys. Meanwhile, Trinidad’s north-eastern coast is home to an estimated 80% of all endangered leatherback turtle nesting in the region, making the island an important turtle-watching destination between March and August.
The most recent push to develop ecotourism in the island began in 2015 with the launch of the Sustainable Ecotourism Trail Development Project, an initiative aimed at rehabilitating a total of 1000 km of nature trails within five years. Implementation of the project began on Trinidad’s northern coast and will result in the opening of a series of hiking and biking trails through lush forest and along coastlines.
Recognising the segment’s potential, the MoT is currently in the process of drafting an ecotourism policy to guide development in the coming years. A draft version of the document was released to the public for comment in 2016, while a final version is scheduled for release in 2017.
Sports
Sports tourism has also been identified as a potentially lucrative niche market in which Trinidad has an advantage. In addition to already regularly hosting an array of sporting activities, including golf, yachting, boating, cricket, horse racing, powerboat racing, tennis, cycling and football, the island features a robust network of sports infrastructure with significant capacity. This was reinforced in 2016 with the launch of three new sporting complexes: the National Cycling Centre velodrome, the National Aquatic Centre and the National Tennis Centre.
Though the segment is still in the early stages of development at present, there are signs that activity could increase in the coming years. In October 2016 the T&T Hospitality and Tourism Institute launched the country’s first sports tourism master’s programme, which is expected to significantly increase skills training in the segment. Moreover, the MoT, in conjunction with the Ministry of Sport and Youth Affairs, and the Sports Company of T&T, is in the last phases of drafting its sports tourism policy.
Infrastructure Pipeline
Planned infrastructure upgrades will be key to ensure the sector’s sustainable growth in the coming years. According to Imbert, T&T’s tourism project pipeline includes plans for the construction of another large hotel in Trinidad, along with upgrades to existing tourism sites and attractions, with a particular focus on beach facilities at Maracas, Las Cuevas, Manzanilla and Vessigny, as well as the La Brea Pitch Lake Visitor Centre. Upgrades to the quayside on Port of Spain’s waterfront are also part of the plans.
In Tobago, expanding and upgrading airport facilities ahead of the arrival of the proposed Sandals resort has become a necessity to ensure adequate airlift to the island. Tobago’s ANR Robinson International Airport (ANRRIA), located on the south-west tip of the island, handles international arrivals, as well as the domestic air bridge service from Trinidad’s PIA operated by domestic carrier Caribbean Airlines. While international arrivals to Tobago declined from approximately 88,000 in 2005 to 19,378 in 2016, partly as a result of inadequate infrastructure, traffic on the domestic air bridge continues to rise rapidly, placing pressure on the existing infrastructure. According to the Airports Authority of T&T, domestic arrivals increased from 316,917 in 2009 to 482,957 in 2015.
ANRRIA has undergone a TT$44m ($6.57m) refurbishment in recent years, which included modifications to the check-in area, international arrival and departure halls, and the addition of a VIP lounge. However, according to Imbert, given the airport’s limited capacity, work is set to begin on a new international terminal in 2017, in preparation for the anticipated rise in international arrivals.
Connectivity
Adequate airlift remains a determining factor in international arrivals. This was highlighted in 2015, when US arrivals increased by 12.7% after JetBlue introduced new direct flights from New York and Fort Lauderdale to PIA.
In 2016 the decline in international arrivals coincided with the loss of two routes, one from Europe and one South America. In early 2016 Caribbean Airlines suspended its flights from PIA to London’s Gatwick Airport after pulling its Boeing 767 fleet, while Brazil-based Gol Airlines suspended its service from São Paulo to Tobago in August 2016, only eight months after it had been launched.
The introduction of three new flights at the end of 2016 should have a positive impact on international arrivals in 2017. In November 2016 Tobago welcomed a new Condor flight from Munich, which ran once a week up to April 22, 2017, while a new Thomas Cook Airlines flight from Manchester, in the UK, remained in service until April 30. T&T is also set to benefit from a new year-round direct flight from Canada, the country’s second-largest single source market. Air Canada Rouge began flying to PIA on December 20, 2016 with its 282-seat Boeing 767-300ER aircraft, offering a twice-weekly service.
Outlook
As efforts to restore macroeconomic stability and diversify T&T’s economy gather pace, the political emphasis on tourism is likely to continue, along with increasing private sector pressure to boost marketing. The mixed performance of recent years could continue in the near term. Hassel Thom, president of the THRTA, told local media that 2017 was expected to be “another challenging year because of inadequate marketing in 2016.”
However, the sector is expected to undergo significant change in the medium term, with private stakeholders leading the way. Examples include Uber launching in Trinidad in January 2017, the presence of homestay network Airbnb and Sandals’ proposed site in Tobago. Long term, a move towards an open skies agreement, coupled with incentives for firms to move into the regional travel niche, presents a vital opportunity to unleash immense potential.
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