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JULY  2 0 0 8Issue 18
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| $100 BILLION IN TOURISM INVESTMENTS PREDICTED FOR THE CARIBBEAN By L.L. Nazer-Basuil In this report on investment in the Caribbean I looked at tourism investment, as tourism itself is one of the world’s largest industries, and is certainly the industry that provides the most economic impact to the Caribbean region. The recent 12th Annual Caribbean Hotel & Tourism Investment Conference (CHTIC) held in Trinidad, proved to be one of the more significant tourism conferences of this decade, as it featured many positive predictions from the gathered experts about the near future in the Caribbean, a major world tourism hub. A theme throughout the conference was the high confidence projected from the investment community as it looks at the Caribbean favorably for a variety of future development investment. With a record breaking attendance of 522 delegates and addresses provided by esteemed industry leaders, the Conference presented a very positive investment outlook for the Caribbean. Considering the world’s current economic situation, I was expecting to hear of a bleak picture featuring a downturn in tourism figures and investments, but quite the opposite report was presented to the gathering.  This Conference’s theme wasn’t one of just hope, but of a very optimistic outlook for the Caribbean region centering on more than $100 billion being invested in the region (according to the World Travel & Tourism Council), with these funds devoted to improving and expanding tourism facilities and infrastructure. THE CARIBBEAN WILL BE ONE OF THE BRIGHT SPOTS IN THE GLOBAL TOURISM PICTURE IN 2008-2009 Officials at the conference noted that business on the books for the next 12 to 18 months throughout the Caribbean region continues to be healthy and that advance sales for the summer in the vacation market remains strong at this time. Indeed, by all reports, the Caribbean will be one of the bright spots in the global tourism picture in 2008-2009. And, of significant impact to the regional tourism economy, is the continued upswing in interest by corporations and associations in planning future meetings and conferences. This industry segment is at an all time high, all based on discussions and negotiations that took place in late January at the annual Caribbean Hotel Association Marketplace, a major annual event held each annually in the Caribbean between wholesalers, suppliers and retailers in the travel and tourism industry. Despite a general consensus regarding the world’s economic difficulties, a positive outlook was commonplace at CHTIC sessions, which included presentations by a variety of industry experts, including David Laron, PKF Consulting, who noted, “The slowdown in development may not be a bad thing and that there is considerable equity looking for a home.” He suggested the investment opportunities are in commercial lodging, all-inclusive hotels, free-standing full-service hotels, condo title hotels and residential resorts. Laron also predicted a shift in product focus to smaller boutique hotels as well as to more luxury, upper, and upscale resorts. Laron also said that, “Other parts of the world are not offering the same investment opportunities as the Caribbean and other parts of the world are getting oversupplied. The Caribbean is under developed partly because of the difficulty in some places to develop. It’s a new environment where debt/liquidity is the issue and not equity and a higher equity component is now required.” As for the outlook for the region, Laron noted that “Developers are more bullish than lenders” but a positive outlook exists because of “the resiliency of Caribbean tourism.” Jan D. Freitag, vice president of Smith Travel Research, provided an overview of the hotel outlook in the region showing year end 2007 statistics with the room supply increasing slightly (0.8%) while decreases were experienced in room demand (-1.1%) and occupancy (-1.9%). However, the average daily rate (ADR) was $182 up 2.1% and Rev Par was at $121, up 0.1% with overall room revenues at $9.2 billion, an increase of 0.9%. There was also good news with increases in the first quarter of 2008 in both room demand (up 3.5%) and occupancy (up 2%). EMERGING NATIONS (E.G. CENTRAL & SOUTH AMERICA) ARE SHIFTING GLOBAL DEMAND AND BECOMING A SIGNIFICANT SOURCE OF TOURIST DOLLARS  Warren Jestin, chief economist for Scotiabank, told delegates not to expect business as usual as the global economic landscape is changing rapidly and emerging nations (such as Central and South America, among others) are shifting global demand and becoming a significant source of tourist dollars. These nations are also competing for tourist dollars. Alec Sanguinetti, Director General and CEO of the Caribbean Hotel Association (CHA) noted, “The recent downturn in the U.S. economy is not impacting the interest in the Caribbean, and as a matter of fact, our Caribbean Hotel & Tourism Investment Conference drew a record-breaking 522 delegates, up from 404 a year ago,” he said, adding: “This is a clear indication that there is strong interest in the Caribbean from the investment community that is looking at the future. | ||||||||||||||||||||
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Combining the growth of the progressive Greening of the hospitality and tourism industry with the capital investment in the region, Sanguinetti concluded that “CHA sees a high level of confidence and discipline in the marketplace that reaffirms the strength of the region as the leading warm weather vacation destination.” Peter Odle, president of CHA told conference delegates: “Despite the prevailing economic outlook around the world where gas prices are going into stratospheric realms, followed by rising food prices and other commodities, the huge record number of attendees for our 12th Annual Caribbean Hotel & Tourism Investment Conference speaks volumes about the vibrant opportunities here in our region. “We open this conference at a time when there is some concern in the marketplace for the immediate term business. I can assure you that tourism arrivals for 2008 across the region are up and summer advance sales in some countries are looking very good. We are optimistic that the Caribbean will be one of the bright spots in the global tourism picture. AS FOR THE PREDICTED $100 BILLION IN NEAR FUTURE CARIBBEAN INVESTMENTS.. As for the predicted $100 billion in near future Caribbean investments, CHTIC speakers report several areas that are on the upswing due to a surge of interest in the Caribbean region with developers looking to build and operate the following: • marinas to attract yachting enthusiasts • casinos to bring in gamblers • critical infrastructure such as airports - both new and expanded facilities, as many airports have now been expanded to accommodate the larger aircraft that the airlines are flying • cruise lines have been assisting several island nations with expansion of cruise ports to welcome the new larger fleet of ships • time share units, especially those built by reputable hotel companies and brands • and other tourism related facilities and infrastructure Enthusiasm is high as CHTIC has attracted a wide variety of interested parties including new hotel and real estate developers, banks and other lenders, brand hotels, cruise lines, airlines, and tour operators that are now promoting and selling the region to travel agents and consumers worldwide. CHTIC also has spurred development and growth of the timeshare industry, once considered a controversial segment of the hotel sector. As Odle and other officials noted during the Conference, the time share industry, once considered a bane to the hotel industry, is now seen as one of the more stable products in the tourism infrastructure because the timeshare vacationers return to the Caribbean each year to utilize their purchase and spend additional money while in the destination.  The Caribbean Hotel Association is now recognizing the continued growth and importance of this industry segment and will be collaborating with the American Resort Development Association (ARDA), the worldwide timeshare industry association, to strengthen their longstanding Caribbean Committee. The Conference featured speeches by regional leaders, including Prime Ministers and Ministers of Tourism, who offered several pertinent points during their addresses. The Hon. Patrick Manning, Prime Minister of the Republic of Trinidad and Tobago, opened the conference reaffirming the importance of tourism to the region, saying: “The tourism industry is the most important for the continuing development of the Caribbean. It represents over 30% of the Gross Domestic Product of the region and provides nearly three million jobs. He further noted, “This conference has in fact become one of the most important annual events for business persons and companies interested in investing in the Caribbean. It attracts investors from all over the world and presents an ideal forum for leaders of the industry to compare notes, share ideas, explore development and investment opportunities and generally chart a course for taking the sector forward in the Caribbean.” Prime Minister Manning urged the Caribbean community to “rise to the challenge and constantly improve our competitiveness in the Caribbean….We are now developing an increasingly multifaceted product and are adding to the traditional sun, sea and sand formula. We are also focusing on eco-adventure, business tourism, sporting events, health tourism, weddings and honeymoons, and religious and cultural festivals. “We must therefore infuse our tourism industry with as much as possible of the full authentic Caribbean experience….We therefore need to bring the Caribbean history and culture as well as more of our natural environment to the forefront in our tourism development plan.” Prime Minister Manning also held up the torch for Green awareness of tourism and said: “We must deploy resources for their protection, preservation and development, primarily for our own spiritual nourishment, but also as a national and regional resource for economic and social development.” The Hon. Joseph T. Ross, Minister of Tourism for Trinidad and Tobago, told delegates that “Our people and our country have stepped onto the tourism center stage and that we stand ready and able to take our place on the world tourism stage….We are building a tourism industry that is people-centered, sustainability focused and private sector driven….We are open to discussions with regards to local public and private sector partnerships in the development of new tourism projects and sites and attractions.” Senator, The Hon. Allen Chastanet, Minister of Tourism and Civil Aviation, St. Lucia and the Chairman of the Caribbean Tourism Organization (CTO), told the audience, “We come together at a time when all of our organizations are going through fundamental changes in order to maintain relevance in today’s global tourism community. As a result of these changes we are experiencing a strengthening of the public and private sector relationships on both a regional level and within our individual countries.  While we move in this regional direction, we will continue to recognize the individuality of each of our destinations and the vast differences in the region which includes culture, cuisine and languages based on our French, Spanish, Dutch and English heritages. We are currently enjoying a heightened awareness by CARICOM and the Heads of Government have declared that tourism is crucial to the economies of the Caribbean and will be a permanent agenda item for all future meetings of the Heads of Government. In addition, CARICOM Heads of Government will devote one full day for tourism issues at their upcoming meeting in July. We are encouraged by the attention that tourism is getting, and we now need to focus on sustainability to ensure that our tourism product is financially viable, environmentally sustainable and socially acceptable in our respective nations.” | ||||||||||||||||||||
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| THE CARIBBEAN FOCUS ON GREEN In addition to investment opportunities stressed at this Conference, CHTIC focused on the “greening” of the Caribbean hospitality and tourism industry as Lyndall De Marco, executive director of the International Tourism Partnership, presented the keynote address focused on the growing Green movement in the travel and hospitality industry. “Going Green is no longer just a project, it’s finally about the entire world we live in,” she said, adding that: “it’s our entire life and the time has come for a commitment from all parties and it must come from the top down with staff training and motivation.” In addition to De Marco’s presentation, there was an entire track of seminars focused on the green movement within the hospitality industry that was well attended by delegates.  A key issue raised was Greening of the hotel and tourism industry and environmental protection, many quoting the European Market, where both tour operators and consumers are demanding their hotels have green practices in place. The U.S. market is lagging behind Europe, but is expected to follow. This was seen as the major opportunity for many hoteliers - both in terms of cost saving and in maintaining their competitive marketing position. The general consensus from hoteliers, consultants, developers and construction companies is that if you don't address this now - you will be forced to down the line - as the consumer is making a positive choice towards Green or Sustainable Tourism. TUI, Europe's largest tour operator, is now only working with hotels that support its environmental standards. CARIBBEAN DEVELOPMENTS SHOULD BE AT ONE WITH ENVIRONMENTAL ISSUES AS A TOP PRIORITY AND PART OF THE PLANNING MINDSET.. It was also pointed out that in the current planning and development process, Caribbean developments should be at one with environmental issues as a top priority and as part of the planning mindset from the outset of a project, rather than performing later retrofitting which is much more expensive. The most important underlying theme however was a simple one in that Green hospitality and tourism or sustainable tourism needs to be a mindset. If staff understand how being green impacts the cost of their own energy or water bill they are more likely to make cost savings for the hotel. As one speaker noted, sustainable tourism is simply a matter of having a balance of economics, environment and culture. ALONG WITH POSITIVE GROWTH…CHALLENGES Along with the positives of economic growth through high end investment and the continued impact of the greening of the Caribbean, the key challenges which face the Caribbean were again brought to the forefront at the Hotel Leaders Forum. The Hotel Leaders Forum moderated by James E. Burba, president of BHN, provided a cross section of views from a boutique upscale hotelier, Sir Royston Hopkin, Grenada; major worldwide hotel chain Wyndham Hotels and Resorts president Peter Strebel; and Ralph Taylor, chairman and CEO a Caribbean-based resort chain. All panelists cited two key challenges that the industry must deal with during the coming years: • Human resource development, focusing on the ongoing critical shortage of Caribbean nationals available to work in hospitality and tourism. • The rising prices in the areas of food, gas and the general cost of doing business was estimated to be increasing between 10% and 15% for the coming year. Generally all three panelists said their companies had to work harder for business, constantly adjusting and placing a strong focus on looking for new business from emerging markets. Sir Royston stressed sustainability issues and was passionate about having long term education plans for hospitality professionals in place to ensure sustainability of tourism in the region for Caribbean nationals. He also raised concerns about sustainable development because most new hotels were condo-style facilities with limited occupancy year-round which did not provide regular employment in the way that traditional resorts do.  A $100 billion dollars in investment to the Caribbean’s tourism brings with it a positive economic domino effect as it strengthens individual nations through employment, investment in human resources, building of national infrastructure, utilities, and high end property developments. The next decade looks to be a time of time of positive growth for one of the world’s most popular regions to live, work and visit. Author: L.L. Nazer-Basuil is an environmentalist, avid diver, lover of nature, photographer and an educator by vocation. Born in Portugal, she considers herself a global citizen and spends as much time as possible traveling, writing and teaching.
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