Published: Wednesday October 8, 2008
The US economy is currently reeling from a financial crisis not seen since the depression era of the 1930's.
Recently, financial markets in the United States were gripped by a crisis after two major investment houses- Lehman Bros and Merrill Lynch- failed resulting in billions of dollars in losses due to bad mortgage and real estate deals.
Although the US House of Representatives passed a US$700 billion government plan to rescue the US financial sector last week, economic indicators still show that growth is slow and there will be more job cuts.
Given the US's share of world demand for most consumer and service commodities, this crisis can impact directly on the Caribbean tourism sector.
The UK economy, another source market of Caribbean tourism, is also showing signs of economic decline.
Tourism expert John Bell, the advisor to former Tourism Minister Howard Chin Lee, said Tobago's leisure tourism market will be seriously challenged in light of the US financial collapse. However, Trinidad's business tourism market is less vulnerable.
Bell believes that Tobago may feel the impact of the collapse as soon as the start of the winter season, which runs from November 2008 to April next year.
"We've got a very difficult year coming because of the whole collapse of the US system. It is going to dry up the American travel market," Bell said.
"The collapse has already spread across the Atlantic to a couple European banks. That travel market will be constricted as well, but not as bad as the US.
"The constriction of airlift coming into the Caribbean and a very fragile economy in all of the source markets, (tourism) will definitely have a negative impact on Caribbean tourism."
Pinpointing Tobago, he said: "Tobago has a serious problem because of the fact that there are only one or two hotels that are of substantial quality. What Tobago desperately needs is another 1,500 quality hotel rooms of a branded nature that are of a superior quality.
"Then, there is the problem of the European airlines cutting back flights to the country. Monarch is coming on board but I'm not sure how much that is going to help."
Last week, Tobago House of Assembly (THA) Tourism and Transportation Secretary Neil Wilson confirmed that Monarch Airlines will begin servicing Tobago from December 17.
The airline will replace British-owned Excel Airways which had announced that it was pulling out of Tobago from November in preference to Miami, since the Gatwick-Caribbean route was not lucrative. Excel also had said it would end its services to Antigua, Barbados, Grenada, St Kitts and St Lucia.
Wilson added that the THA had reached an agreement with Condor which operates out of Germany to hold 200 seats exclusively for Tobago passengers. Condor will replace Martin Air which withdrew operations earlier this year. The airline, which operated out of Amsterdam, the Netherlands serviced the Scandinavian countries.
As for Trinidad, the former general director and chief executive director of the Caribbean Hotel Association (CHA) said: "People who are coming down to attend a business meeting or conference will be coming anyway. There will be some reduction but a lot less."
His advice is that the entire region will have to adapt to the reduction of airlift and demand for rooms and find a way to live with the situation.
"It's always the same thing, those that have really done their homework will do quite well, but those who have not won't."
Business tourism niches
In Trinidad and Tobago tourism contributes approximately four per cent of the country's Gross Domestic Product (GDP) and also contributes to national employment and foreign exchange reserves.
US visitors to Trinidad and Tobago stand at 37 per cent of total arrivals whereas North American visitors (USA and Canada) to Trinidad and Tobago are 48 per cent of total overseas arrivals.
Tourism Minister Joseph Ross told the Business Express that business tourism - which is not traditionally affected by the vagaries of the economy - is a strong and growing market increasing at a four per cent rate each year.
"The intention of Government is to position business tourism as one of our lead tourism niches," he said.
"In this regard, we have recently approved the establishment of a Convention and Visitors Bureau to target the meeting and conference market. Our research has shown that even in the post 9/11 period the business tourism market continued to be strong for the travel business.
"In relation to local tourism (domestic tourism), we do not foresee any significant impact on domestic tourism due to the US economic downturn even though we may speculate that citizens will become more cautious in their spending patterns and may increase travel within Trinidad and from Trinidad to Tobago and vice versa."
Ross said it was those Caribbean economies, which depend heavily on tourism, which will tend to feel the impact of the US downturn in a more significant way.
"The tightening of credit availability in the US will affect those intending vacationers who borrow to finance a vacation," explained Ross.
"The general financial climate in the US may also cause people to be more conservative and postpone vacations in order to save.
"The traditional sun, sea and sand visitor, the traditional leisure tourists we expect will curb their international travel over the next year as disposable incomes lessen and people are more cautious about spending money on nonessential travel."
Analysts also have pointed to the fact that the cruise ship passengers coming to the Caribbean do not, for the most part, represent the upper crust of American society. Their business may therefore show a decline.
"It is my understanding that the cruise lines, attuned to the slightest variations in the market, immediately took steps to send some of their ships to parts of the world that had not yet begun feeling the pinch from economic slowdowns," Ross revealed, adding that Government has placed a high priority on the development of tourism in Trinidad and Tobago.
"We recognise that there is an urgent need to increase the value added of our tourism product as well as our service levels. These tourism attributes are especially important whenever there is a crunch in the travel market and travellers are going after value for money vacations."
He explained that the country's resources will be focused to achieve maximum impact in key cities in the US which have the demonstrated the most interest and activity traveling to Trinidad and Tobago such as New York, Toronto, Atlanta, Houston, Miami, New Jersey and Washington.
"For these key markets, our marketing and project implementation agency, the Tourism Development Company, will strengthen and refocus its niche marketing strategy so as to drive increased arrival numbers," Ross added.
"Our niche markets are typically more a high end consumer that will not be directly affected by the US financial situation. The Tourism Development Company will also strengthen our liaison with the Overseas Missions and the Caribbean Diaspora, in the coming months and continue to generate increased travel to Trinidad and Tobago."
Source: Trinidad Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161384854
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment