Tobago's tourism sector to benefit from major investment into Trinidad and Tobago

 

With its beautiful beaches, biodiverse tropical forests and wide range of leisure activities, there is undoubtedly major potential for the further development of tourism in Tobago, which remains relatively unchanged by the industry.

However, the recent performance of the sector has been disappointing. In late 2016 Wendell Mottley, former minister of finance and chairman of the Energy Task Force, said that Tobago was out of step with what was going on in the rest of the Caribbean, where the industry was growing at annual rates of up to 17%, while Tobago was seeing a contraction. He added that average overnight hotel room prices were around $250 in the Caribbean, but stood at just $150 in Tobago.

Mottley called for closer cooperation between local hoteliers and the THA to reverse the trend, and get the sector back onto a recovery path. He also said that boosting tourism was all the more urgent given expectations that T&T would experience another difficult economic year in 2017. He said that Tobago needed to do the hard work on tourism and diversification before 2020, when a new cyclical upturn in oil prices might once more reduce pressure and motivation for change.

Investment Needed 

Other stakeholders raised concerns that the island was not realising its full potential in relation to tourism. Lorraine Pouchet, president of the Trinidad and Tobago Incoming Tour Operators’ Association, said that over the last 15 years a succession of governments had failed to make necessary investments in the sector. Brian Frontin, CEO of the Trinidad Hotels, Restaurants and Tourism Association, said government budgets for tourism promotion had been reduced since 2013, while Demi John Cruickshank, chairman of Trinidad and Tobago Chamber of Industry and Commerce - Tobago Division, told OBG that tourism had not been able to live up to the promise of boom years of 2005, 2008 and 2009. In those years, despite the global slump, international tourist arrivals had peaked at around 88,000, caused in part by a hurricane in Grenada, which resulted in many people changing their plans and travelling to Tobago.

“We are now below the halfway mark in visitor arrivals compared to back then. We are surviving. We don’t have massive unemployment, but we in the business sector are barely keeping our heads above water,” Cruickshank said.

Visitor Data

Official data for the first eight months of 2016 showed total passenger arrivals in Tobago were steady, with an increase of 0.04% to 705,647, according to Tracy Davidson-Celestine, the former THA secretary of tourism and transportation. International arrivals accounted for only a small proportion of that total. Close to half (46%) of international visitors arrived via the air bridge service from Trinidad, while 44% arrived on the inter-island ferry service from Port of Spain.

In terms of direct international arrivals to Tobago, 7% came on cruise ships, while 3% arrived on international flights. Davidson-Celestine said efforts were being made to increase airlift, with additional Condor flights from Manchester, the UK and Munich, Germany starting from the beginning of the European winter season in November 2016.

Vast Potential

Despite the recent fluctuation in tourism numbers to Tobago, the central government has prioritised the industry as part of a push for greater economic diversification. As a result, officials are on the cusp of a major and potentially landmark project: the construction of a new hotel in Tobago from the Sandals International chain.

Almost all stakeholders agreed that if confirmed, the development had the potential to trigger a major step-change in Tobago’s tourism business. It was widely reported that Keith Rowley, T&T’s prime minister, had reached out to the Jamaican-born founder of the Sandals chain, Gordon “Butch” Stewart, before the September 2015 general election and expressed an interest in attracting hotel investment to Tobago. Negotiations between the two sides then began after Rowley was elected and installed as prime minister. While talks are ongoing, there have been a series of reports on the status of the proposed development, with details such as value of the investment, the location and the size of the proposed hotel still unknown.

Early News

However, by early 2017 it was clear that progress had been made in the talks. Although no official announcements had been made, some key points were emerging. The proposal was said to involve the construction of two hotels, a 250-bed Sandals hotel and a 500-bed Sandals beach resort, along with an associated golf course. The number of rooms is significant, given that the island currently has an estimated total capacity of 1000 rooms, while the THA has plans to increase this number to 2500. So, if confirmed, the Sandals project would increase the island’s hotel capacity by 75%, and go halfway to meeting Tobago’s overall target for increasing hotel room stock. The location is expected to be a 182-ha site at Buccoo Estate in Tobago’s south-west. Earlier reports suggested the hotels might be built at No Man’s Land, a nearby area of uninhabited sandy beaches and mangrove swamps, but environmental groups have raised concerns over any proposed large-scale tourist development there, as it is considered a fragile and environmentally valuable ecosystem. Later reports indicated that the hotel chain was looking at the purchase of privately owned land in Buccoo Estate, and not in No Man’s Land. Given that talks are ongoing, the value of the investment has not yet been finalised, but similar projects elsewhere in the Caribbean involved capital expenditure of $80m-100m. The Sandals hotel complex in neighbouring Grenada was built in 12 months, with other similar projects taking up to 18 months or two years to complete. Should an agreement be reached in reasonable time, it has been suggested that the project could be completed before the next T&T general election, due in 2020.

Chris James, president of the Tobago Hotel and Tourism Association, told OBG that he was hopeful the Sandals project would serve to kick-start wider tourism development on the island. He said that such a development would help Tobago in four ways: it would boost essential destination marketing for Tobago; lead to improved airlift to the island; increase demand for accommodation in other hotels in Tobago; and stimulate local economic activity in other sectors, such as agro-processing and food supply. James said these four things could help Tobago achieve its critical long-term objective of hosting year-round sustainable tourism. A key factor in boosting tourist interest in any location is destination marketing. In this regard, Sandals spends an estimated $80m each year on advertising and marketing activity. The hotel group is already a strong tourism brand, so Tobago could use its advertising campaign to gain valuable exposure.

In terms of airlift, James explained that airlines generally consider a route to be commercially viable if they can fill an average of 65% of their seats, while companies operating routes below that passenger load factor often try to negotiate government subsidies or guarantees to make the service viable. On routes to its hotels, Sandals often block-books up to 42% of the seats for its all-inclusive customers. Therefore, the challenge for Tobago is to find a way to fill the remaining seats, ensuring that flights to Tobago have an average booking rate of at least 65%. According to James, this can be achieved by attracting customers to other hotels.

Multiple Benefits

Evidence in international markets suggests that the arrival of a major and relatively upmarket hotel brand like Sandals could actually attract business, rather than taking it away from other local operators. “What we have found is that Sandals’ marketing will drive holidaymakers to its website, where they look at its hotels and resorts in different destinations. A proportion of them may find the cost too high, but many of them are enticed by the destination, and will then search online and book other, less expensive hotels in the same place,” James told OBG. An example of this was seen with Spice Island Beach Resort in Grenada, where occupancy rates and profitability increased after the arrival of Sandals in the area.

There is also reason to believe a Sandals development would have a positive impact on the local economy. Apart from employing local staff, and contracting local service providers such as tour guides and taxi drivers, the chain has a policy in the Caribbean of promoting local cuisine, and of buying locally produced fresh produce to serve to its guests. This has fuelled expectations that the chain’s arrival might also help revive local agriculture and agro-processing. Cruickshank told OBG he believed the Sandals development would create approximately 2000 jobs, which would then have a multiplier effect through the local economy.

Key Aims

ector participants believe a catalyst – like the arrival of Sandals or another major hotel operator – is necessary to achieve the ultimate aim: year-round sustainable tourism. To do this, industry representatives say authorities should target five main international tourism markets, and attempt to secure two direct weekly flights from each.

Some have suggested the UK, Germany, Scandinavia, the US and Canada would be the best markets to target in order to boost tourism in Tobago. Those markets already provide a diverse range of holiday patterns, with US tourists preferring four- to five-day visits, while UK tourists generally opt for a two-week stay. They also have different public holidays and preferred getaway dates. Another key factor in this approach is the need for more non-stop flights to Tobago, with stopovers that add additional hours to an already tiring long-haul flight likely to deter would-be tourists. Cruickshank pointed to the positive airlift experience in Grenada. Before the arrival of the Sandals resort, the island had four shared weekly flights. Three years after Sandals began operating in Grenada, the number of direct weekly flights had increased to 14.

Another important element in year-round sustainability is domestic tourism. Industry players are looking to build on the already-strong appeal to Trinidadians, who often spend weekends in Tobago as part of shorter, close-to-home holidays. The combination of five northern-hemisphere markets and domestic tourism would further increase the sector’s resilience to fluctuations in the exchange rate.

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The Report: Trinidad & Tobago 2017

Tobago Economy chapter from The Report: Trinidad & Tobago 2017

Cover of The Report: Trinidad & Tobago 2017

The Report

This article is from the Tobago Economy chapter of The Report: Trinidad & Tobago 2017. Explore other chapters from this report.

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