Diverse offerings: Industry growth projections remain strong, despite challenges

The Caribbean region has been a hotspot for global tourism since the 1920s, with over 100,000 people visiting the region in the year before the start of the Second World War. Throughout the 20th century Trinidad and Tobago has traditionally relied on hydrocarbons revenues as the primary source of economic growth; however, declining oil prices in the mid-1990s and mid2010s prompted authorities to only recently begin promoting tourism as a means of economic diversification. Therefore, unlike other destinations in the Caribbean, T&T has not yet fully developed its tourism potential. Building on the country’s rich history and culture, sandy beaches, diverse flora and fauna, as well as its strategic location outside the hurricane belt, tourism has the potential to not only reduce the country’s dependency on oil and gas, but also to bring in desired foreign exchange. However, in order for tourism to help develop the economy of T&T, there needs to be a cohesive, sector-wide government strategy driving growth.

Sector Performance

The Caribbean region as a whole welcomed 30.1m visitors in 2017, of which T&T accounted for 384,650 arrivals, or 1.3% of the total. This marked the first time international tourism arrivals fell below the 400,000 mark since 2010, with 408,782 and 439,749 visitors recorded in 2016 and 2015, respectively, according to the Caribbean Tourism Organisation. In line with these figures, the Ministry of Tourism (MoT) reported declining numbers during the 2017/18 tourist season, which lasts from September to March, with a 3% decline in air passenger traffic to T&T, from 408,782 in the same period in 2016/17 to 394,650.

However, industry growth projections remain strong, despite the decline in visitor numbers, with direct revenue, employment and investment in the sector forecast to increase in the next decade as the government continues encouraging development. According to the “Travel and Tourism Economic Impact 2018 T&T” report, published by the World Travel & Tourism Council (WTTC), the direct contribution of travel and tourism in 2017 was TT$5bn ($741.6m), or 2.8% of GDP. This figure is expected to rise by 2.9% in 2018 to TT$5.1bn ($763.1m), and by an average of 2.1% per year until 2028 to TT$6.3bn ($934.4m), or 3% to GDP.

Employment is also expected to receive a boost, according to the WTTC. The sector directly supported 23,500 jobs in 2017, comprising 3.7% of total employment. Growth projections see this rising by 1.6% in 2018 and by 1.9% per annum to 29,000 jobs, or 4.3% of total employment by 2028. Meanwhile, investment levels totalled TT$2.7bn ($400.5m) in 2017, with the WTTC forecasting sector funds increasing by 3.8% in 2018 and by 2.8% per year to TT$3.3bn ($489.5m) by 2028.

Visitor Profile

The majority of tourism arrivals come from the US, which accounted for 42.6% of the total in 2016, followed by the Caribbean region (19.3%), Canada (12.2%), the UK (8%), Venezuela (4.8%), and South and Central America (2.6%). The average length of stay for visitors is 14 days, with average daily expenditure of TT$580 ($86) per person. “North America remained the largest source market for T&T in 2017, with over 40% of all tourists coming from the US,” Brian D Frontin, CEO of the Trinidad Hotels, Restaurants and Tourism Association, told OBG. “For this reason, T&T has well-connected gateways with the south-east US, including to and from Orlando, Fort Lauderdale, Miami and Houston, as well as New York in the north-east.”

Although there is potential within the current source markets to grow the number of tourists, new markets will need to be targeted, especially if the government is to realise its goal of 500,000 air passenger and 100,000 cruise passenger arrivals per year by 2020. In May 2018 a delegation led by Prime Minister Keith Rowley met with HNA Group, China’s largest tour operator, and Air China to establish code-sharing and interline arrangements with Caribbean Airlines in an effort to tap into the growing Chinese tourism market.

International Marketing

If T&T is to attract more international tourists, it will need to invest more in global advertising campaigns. Until October 2016 the government had promoted the country through overseas marketing representation.

The programme’s cancellation has been broadly criticised by industry stakeholders and is partly blamed for the decline in arrivals. Charles Carvalho, CEO of local tourism operator Carvalho Agencies, told OBG, “T&T has not been promoting tourism to the islands as it should. Since marketing is not done systematically, each stakeholder has to do it separately.”

Increasing the global visibility of the country could also help counteract negative media representation of T&T as a dangerous destination, another factor contributing to the decline in visitor numbers. At the June 2018 meeting of the T&T Group of Professional Associations, environmentalist and tour operator Stephen Broadbridge pointed out the need to boost the number of positive stories and better shape the media narrative surrounding the country. “We are in the top-10 places in the world for bird watching, but no visitors will come if they don’t know about it,” Broadbridge told the group. “There are no positive images being put out to counter the negative stories,” he added.

Sector Administration

Until recently, the Tourism Development Company (TDC) served as the executive arm of the MoT. However, in August 2017 it was dissolved and replaced by two separate agencies: the Tourism Trinidad Destination Management Company (Tourism Trinidad) and the Tobago Tourism Agency (TTA). The separation of these two agencies was part of a government effort to better develop the distinct offerings on each of the islands.

The TTA was launched at the end of 2017 and is responsible for the promotion, development and management of the island’s sites, attractions and visitor experience. The agency is also tasked with conducting research that feeds into product development. “Tourism arrivals to Tobago have declined over the years due to insufficient attention paid to the unique characteristics of the island,” Louis Lewis, CEO of the TTA, told OBG. “We now recognise these deficiencies and have renewed our focus on marketing and social media to move the volume of business,” he added.

Tourism Trinidad is not yet operational, though it already selected a board and is expected to come on-line by the end of 2018.

Regulatory Oversight

Beyond creating separate tourism administrations for both islands, plans are under way to create a regulatory and licensing authority to manage and monitor standards for the industry. This will be a first for the largely unregulated tourism industry in T&T, as conformance to national standards has been largely voluntary, with some degree of industry self-regulation through the efforts of private sector business associations. The incoming formal regime will oversee compulsory licensing, as well as enforce already established national quality standards created by the T&T Bureau of Standards.

“In the past, there were increased efforts by the government to encourage compliance with these quality standards, with the TDC offsetting some of the auditing costs for hotels and guest houses to encourage conformance,” according to Frontin. “However, with the closure of the TDC in 2017 and the non-operational status of the replacement tourism board, there is evidence of increased trading activity – particularly through online travel agency platforms – by properties and operators that do not conform to even the minimum national standards. This poses a serious risk to the reputation of T&T and must be promptly addressed.”

This process has not been without its challenges. In December 2017 the government released a T&T Tourism Regulatory and Licensing Authority (TTTRLA) draft bill to move the establishment of the entity forward. However, the preliminary release was not met with much excitement from the private sector. According to Frontin, the main concern was the lack of proper consultation with industry businesses by the MoT’s appointed consultant team prior to the completion and circulation of the draft bill. Additionally, the contemplated governance arrangements for the TTTRLA did not allow for sufficient private sector representation on the board of the regulatory authority, with just one or two seats reserved for businesses on a 12-member board. Another key concern was the apparent contravention of the constitutional rights of hoteliers and guest house owners with respect to privacy and intellectual property protection, as the draft bill does not place any limits on the type of information that could be demanded from a proprietor by officials of the TTTRLA. In fact, the preamble of the draft bill highlighted that it would be inconsistent with the country’s constitution. “Because the government failed to properly consult with the private sector prior to drafting the bill, and although we support regulation of the overall industry, at present, hotels and guest houses have little to no confidence in the bill in its current form, unless it is amended significantly following direct and meaningful consultation,” Frontin told OBG. As of September 2018 the status of the TTTRLA body remains unknown.

Carnival

T&T is home to the largest Carnival celebration in the Caribbean, an event which marks the biggest attraction for tourists throughout the year. Carnival originated during the colonial period when slaves, banned from attending formal balls and parties, would stage their own costumed events in their quarters. In the days since emancipation, Carnival has evolved into a nationwide parade and street party, that is a multimillion-dollar revenue earner for T&T, attracting tourists from around the world. Following sector trends, however, the Carnival season recorded 33,873 arrivals in 2018, representing a 9.5% drop on 2017 and the lowest recorded visitor numbers since 2014, according to data collected by the Central Statistics Office. Total visitor expenditure also fell by 5%, from TT$334.9m ($49.7m) in 2017 to TT$318.9m ($47.3m) in 2018.

Developing Niche Segments

In light of these figures, efforts are under way to promote T&T’s offerings outside of the Carnival season. T&T can benefit from its status as a latecomer to tourism development by focusing on attracting niche markets, in conjunction with a more traditional resort, sun and sea approach in Tobago. In Trinidad, the MoT is working on a new Tourism Road Map to guide development of the sector to 2020. The document focuses on expanding 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 with infrastructure upgrades, increased training and industry certification strategies to improve services. Beyond MICE and ecotourism, cruise and sports tourism offerings in T&T are also on the rise (see analyses).

MICE

Trinidad is especially well positioned to be developed 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, 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

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 around 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.

According to the UN’s World Tourism Organisation, ecotourism could grow to comprise 25% of the global travel market within six years and account for $470bn per year in revenues. In 2015 only 600 people travelled to T&T specifically to engage in ecotourism, according to MoT data, indicating significant room for development. The government has set a target of attracting 1800 ecotourists per year by 2020. This would represent an average annual growth rate of 25% over the 2015-20 period, when the goal was first set out. In order to reach this, however, careful planning and monitoring is necessary taking into account the environmental impact and ecological footprint on visitors.

Tobago

A distinct tourism offering from Trinidad, the island of Tobago is best-known for its beaches, coral reefs with vibrant marine species and protected forest reserves. The popularity of the smaller island means that it has managed to avoid the declining visitor numbers affecting the rest of the sector, according to local media reports. The island also differs from Trinidad in that around half of its tourists come from the UK, according to Lewis. “There are plans expand into the US and Canadian markets, while the German and Scandinavian region also offers potential,” he told OBG.

However, despite Tobago’s potential, the island lacks the financial means to provide tourism services, relying on Trinidad for support. In its 2018/19 budget, Tobago was allocated TT$381.1m ($56.6m) for tourism-related expenditures, including TT$141.4m ($21m) for the TTA, TT$15m ($2.2m) for the Tobago Hospitality Tourism Institute to train industry professionals, TT$2.5m ($370,800) in assistance to cultural groups and TT$2m ($296,600) for the Sport Tourism Organisation. However, the island is only expected to generate $211.1m ($31.3m) in revenue, meaning that the island is spending more on tourism infrastructure than it is bringing in.

To help address the spending gap, signature projects such as the Sandals resort could bring in significant tourist revenue. As the luxury brand’s first foray in the country, the Sandals project in Tobago was announced in November 2017, when Sandals Resorts International signed a memorandum of understanding to build properties for its all-inclusive Sandals and Beaches brands. However, for the Sandals hotels, as well as tourism in general, to grow sustainably, the island is in need of key infrastructure upgrades, including to the island’s ANR Robinson International Airport and the bridge connecting the two islands, which is often closed, leaving travellers stranded. For Tobago to become economically independent from Trinidad, it will also need to establish a clear economic plan to revamp tourism.

Outlook

T&T remains one of the least developed destinations in the Caribbean. Although tourism has not historically been a priority for the government, increased pressure to diversify away from oil and gas has made tourism a viable development alternative. Higher oil prices in 2018 could provide the country with much-needed revenues to amplify diversification efforts. Meanwhile, ongoing efforts to expand source markets and establish a policy framework and regulatory authority bode well for the sector, especially as global tourism is set to continue rising over the next decade. With a unique and diverse cultural heritage and strategic setting outside of the hurricane belt, T&T has the opportunity to move its tourism offerings forward.