Tourism Challenges Continue
It has been a while since I said anything about the travel and tourism industry in the Caribbean. The reason is relatively simple – not much has changed, and at this juncture, it is unlikely that there will be any radical change in 2013. Despite the importance of the sector to the region’s economy, for the most part, the English speaking region continues to demonstrate a lack of dynamism or innovation with regards to both its product and its destination marketing. Spanish-speaking destinations, on the other hand, continue to demonstrate both and push ahead.
Southern Caribbean destinations tend to depend more on European visitors, while northern Caribbean destinations tend to depend more on North American visitors. In 2012, there was a 6% decline in UK visitors to the Caribbean region. Brits make up most of the European visitor numbers to the southern Caribbean region. Predictably, a December 17th, 2012 press release by the Caribbean Tourism Organisation (CTO) took the standard line of blaming the UK Air Passenger Duty (APD). A view that conveniently ignores the fact that UK numbers were soft before the implementation of the APD and the fact that in many territories, taxes by the island destinations themselves easily match or exceed the APD.
A case in point is the return British Airways ticket we purchased for two of our sons who traveled in December 2012 between London and Trinidad. Total government taxes were US$583.56 or 43% of the total ticket price. Of the US$583.56 in taxes, US$294.42 or about 50% of the government charges were from the UK APD, and the other 50% in taxes were from the Trinidad and Tobago government. It is noteworthy that Trinidad and Tobago’s air travel taxes are not as onerous as the taxes in some of the neighboring islands. So the continued CTO attack on the UK APD with no reference to rising Caribbean government taxes has always seemed like an attempt to detract from the real issues. American Tax Singapore
On an encouraging note, one of the more positive Caribbean tourism movements in 2012 has to be the expansion of the Sandals group in both Grenada and the Turks and Caicos. In late October 2012, Sandals acquired the 100 room La Source in Grenada, closed due to financial difficulties. It is the first Sandals property in Grenada - an island that we know that the Sandals group has been eyeing for quite a while. In late November, Sandals acquired the Veranda Resorts and Residences, which is next door to the Turks and Caicos property that Sandals already owns.
I consider these acquisitions to be good news because the Sandals group has demonstrated a remarkable ability to hold its own in a very tough and competitive marketplace. It is arguably the strongest tourism brand in the region. Most importantly, it has gone from strength to strength without ‘trashing’ its brand as Barbados’ Almond group did before its demise in early 2012. It still puzzles many of us that Neal and Massy stood-by for years while Almond piled on debt and allowed its product to deteriorate the way it did.
Nevertheless, as has been the trend for some years, the visitors to the Caribbean region continue to favor the Spanish speaking destinations over the English speaking ones. Cuba reported some record-breaking months in 2012, and Caribbean Mexico continues to experience a boom in both hotel construction and arrival numbers. Yes, it is not unusual to see police armed with automatic weapons walking along the sandy beaches. Still, the value for money that these destinations offer is even harder to ignore.
This is the context within which I see Virgin Atlantic’s decision to withdraw from Tobago for the 2013 summer season. Everyone saw it coming as Virgin had been warning both the THA and the Tourism Ministry for years. Certainty was increased as 2012 saw the strengthening in Virgin’s ex-UK capacity to Cancun. However, Miraculously, despite declining airlift, Tourism Minister Cadiz has predicted a 15% increase in 2013 arrivals over 2012. Surely those numbers are part of UNC’s campaigning for the upcoming THA elections rather than the result of robust analysis and a credible strategic plan. Hence, there is no sense in commenting on them. More telling are Cadiz’s recent comments on poor quality products in Tobago, which demonstrate that he is not ignorant of the deeper issues. My advice to Cadiz – hand over a property to Sandals to run as they will surely do a better job at promoting the destination and improving the product.
Good luck to the region’s tourism stakeholders in what will be a very difficult 2013. Despite our current challenges, I continue to have the audacity of hope that we will all enjoy a brighter tomorrow.
Read more on derrenjoseph.blogspot.com.
Note: The blog that used to be here is now at https://www.mooresrowland.tax/.