Tourism is to Tobago what oil is to Trinidad. Or to be more precise, Tourism WAS to Tobago what oil WAS to Trinidad. Tobago’s economy is heavily dependent on what transpires in the tourism industry. According to Invest Trinidad & Tobago, tourism accounts for almost 50% of GDP and in excess of 56% or workforce is engaged in the industry. Local sources have however stated that the workforce percentage has dropped considerably over the years to less than 40% currently.
According to Hugh Riley, the Caribbean Tourism Organization’s secretary general, Caribbean Tourism grew by an estimated 7% in 2015 which was much higher than the projected 4-5% and was in fact above the global rate of growth (4.4%). It marked the second year in a row that the region has done better than the rest of the world and the sixth consecutive year of growth for the Caribbean.
This information is consistent with the Caribbean Lodging Reports of Smith Travel Research (STR), an independent research firm that is recognized by the lodging industry as the standard source of reliable data. Their reports show increases in Occupancy Rates between year-to-date figures from December 2014 to December 2015 (67.8% to 68.8%), Average Daily Room Rate (US$219.44 to US$229.44) and Revenue Per Available Room ($148.77 to US$157.74).
While separate figures are not reported for Tobago, the figures for Trinidad & Tobago also reflected increases in two of the three key areas – 64.7% to 66.0%, US$159.47 to US$159.32 (marginal decrease) and US$103.24 to US$105.16 respectively.
However, according to the Tourism Development Company of Trinidad & Tobago (TDC), while the Trinidad Occupancy Rate was 67% in 2015, Tobago was below 40% for the fourth consecutive year. They also advise that after reaching 87,796 international arrivals in 2005 (an increase of around 67% over 2002), total international arrivals to Tobago in 2015 dropped dramatically to 22,435. As a result of this, “domestic” tourism (i.e. visitors from Trinidad) has become the mainstay of the industry. The cost of the trip from Trinidad to Tobago return (which is subsidized by the government of Trinidad and Tobago) is TT$300 by air and $100 by ferry. These visitors therefore save significantly on travel expenses and in 2013 the TDC estimated there were a total of 626,654 “domestic” tourists which represented an increase of almost 60% from 2009.
Despite this recent increase in the domestic tourist, there are ominous external factors that have affected the tourism industry locally. These include:
- Increased incidence of crime, or the perception of crime, which has resulted on occasion in negative travel advisories by foreign embassies.
- An unacceptable number of tourism-related loans going into default.
- Reluctance on the part of the Banks to lend for Tobago projects.
- Postponement of the promised upgrade of the A.N.R. Robinson International airport.
- Deterioration in supply of most utilities, especially water.
The Government of Trinidad & Tobago, albeit belatedly according to stakeholders, has taken some positive steps. At the end of June this year, the Prime Minister re-activated his Standing Committee on Tourism and as a result of that meeting, commissioned a report from Tobago on the private sector’s proposal to re-start the island’s tourism thrust.
The rescue of the industry will be based on a proper marketing plan for Trinidad & Tobago on the international front as well as domestic. The Tourism Development Fund for revitalizing the tourism sector’s small properties (under 50 rooms) has just been offered in Tobago and that will provide TT$250M over three years of funding for tourism-related businesses covering debt restructuring and/or upgrading/refurbishment of rooms. There will also be a Government Loan Guarantee (GLG) Programme for new projects or for major repair and refurbishment works to existing hotels of over 50 rooms. Despite this, it has been reported that while 30 applications have been received for financing under the two plans, only 8 have been approved and none for the hotel sector.
While this may appear attractive, it must be remembered that when looking at a troubled or failing asset, it is first necessary to determine why – so as to avoid making the same mistakes twice. It is only then, can a proper business and marketing plan be created with the right amount of capital and marketing funds to make it work.
Currently, there is very little new development taking place in the local tourism sector. Some of the developments have either experienced poor results, delays in construction or have been put on hold as a result of the imposition of a land licence on all foreign investment in Tobago. The only positive development has been the reopening of the Hilton/Vanguard Hotel in Tobago, now trading as the Magdalena Grand Beach & Golf Resort. THA’s purchase of the failed Manta Lodge in Speyside and the incomplete Sanctuary Resort hotel site in Grafton is yet to provide any new rooms on the market. The most ambitious new development is the reported preliminary talks between government and Sandals Resorts about an all-inclusive, 750-room Sandals Resort to be build on the Golden Grove Estate.
Based on all of the above, the Government has a definite vested interest in ensuring that their marketing and development plans for Tobago tourism are successful. Not only is it time for some much-needed optimism for the tourist industry, not least of all because of the loss of oil revenue and forex to the country as a whole, but because Tobago is brimming with potential for a sustainable tourism industry that many other islands would envy.
Furthermore, Trinidad is the main supplier of goods and services to its sister-isle. Consequently, because of the low level of foreign imports to support its tourism industry, Tobago succeeds in retaining some 70 cents of every tourist dollar spent on the island, and much of that returns to Trinidad in a country-wide “trickle-down”. No other island in the Region boasts such a high level of retention, so the revitalisation of the Tobago tourism industry will effectively be an economic benefit to T&T as a whole.
In addition to great natural resources, a rich cultural history, and a space that is yet completely under-developed, Tobago is ripe for transformation into a truly modern, green, sustainable destination that protects its natural heritage, develops its human capital, and promises the visitor a genuine and a rewarding holiday experience.
(Author: Mark Farrell with assistance from Dawn Glaisher, Owner Sea Jade Investments and Director of the Association of Real Estate Agents)