Tourism Investment Climate
SECTOR PROFILE
The Tourism Product:
As a tourist destination Trinidad and Tobago has much to offer. Tobago offers the traditional sun, sea and sand holidays, including superb diving, adventure and ecotourism experiences. On the other hand, Trinidad, focusing on its cosmopolitan flavour, offers great nightlife and cultural experiences, sporting events, leisure pursuits, and conventions and meetings as well as ecotourism opportunities.
Contribution to Gross Domestic Product:
Despite not having received adequate attention in the past as the energy economy has taken precedence, the Tourism Sector has contributed significantly to the economy. According to a study by the World Travel and Tourism Council (WTTC) in 2005, the industry accounted for about 13.8% of total gross domestic product (GDP), more than any other single sector. A separate analysis of Tobago shows that tourism plays a greater role in the island’s economy and is estimated to account for almost 46% of GDP in 2005.
While Trinidad’s focus is on culture and business tourism, Tobago’s focus is on culture and leisure tourism. There is no doubt however, that both islands have yet to explore their full tourism potential, especially Trinidad. By 2015 the WTTC forecasts the industry’s share of GDP to rise to 16.5%.
Tourism Performance:
Trinidad and Tobago enjoyed extraordinary growth during the mid-1990s to 2005 when arrivals grew by 40%. In 2001 though, the events of 9/11, the subsequent downturn in travel demand and the weakness of the euro against the US dollar caused a downturn in arrivals. In 2002 arrivals hit a plateau but by 2003 it picked up and was consolidated by an 8.2% increase to 442,555 air arrivals in 2004. In 2005, visitor arivals numbered at 463,191. Going forward, international tourist arrivals are expected to rise as a result of a number of factors. These include a weaker US dollar, the image of the Caribbean as a safe-haven, tourist disfavour of long-haul travel and the cost of long-haul travel in light of high energy prices. Click here for complete visitor arrival statistics.
Purpose of Trip:
The country’s largest share of visitors falls into the leisure/beach/vacation category, primarily visiting Tobago. Visiting friends and relatives or VFR travellers is the next largest category, reflecting the wide diaspora of nationals overseas. However, closely following the VFR traveller are business and MICE (meetings, incentives, conferences and exhibitions) travellers. Traditionally, the majority of visitors to Trinidad fall in the VFR group. However, in Tobago, the leisure/beach/vacation visitor takes dominance.
Major Source Markets:
Most of Trinidad and Tobago’s visitors originate from the USA followed by the Caribbean itself. The third most important market is the UK then Canada, Germany and the rest of the world. Tobago’s largest source market on the other hand is the UK followed by the USA, Germany, Canada, Caribbean and the rest of the world.
Seasonality:
Total arrivals show some fluctuation over any given year (largely for Trinidad) but peak during the winter months with high VFR traffic at carnival time. July and August also record heavy traffic as this is the holiday period in the major source markets. Relatively quiet periods are in May, June, September and October.
Competition:
Notwithstanding competition from other traditional Caribbean destinations, Trinidad and Tobago’s main competitors are Cuba and Jamaica in the Canadian and German source markets and Barbados and Jamaica in the UK source market. Dominican Republic, the Bahamas and Puerto Rico also pose a threat. Our share of arrivals in the Caribbean is approximately 2% but this figure is trending upwards as we become more attractive as a twin-island destination.
Accommodation:
The country currently has an accommodation capacity of approximately 6000 rooms, of which roughly 49% are located in Trinidad. Most of the rooms in Trinidad are concentrated in the Port of Spain area, while most of the rooms in Tobago are found in the southwest region of the island.
Of the more than 100 accommodation properties in Trinidad and Tobago, only seven have more than 100 rooms providing less than 1000 rooms of the total supply on the two islands. More than 70% of accommodation rooms in Tobago feature a beachfront location. In contrast, only two properties in Trinidad offer the same.
Trinidad has four internationally branded hotels: the Hilton Hotel (380 rooms), the Crowne Plaza (245 rooms), the Holiday Inn Express (80 rooms) and the Marriott Courtyard (119 rooms). In addition, a 428-room Hyatt Regency Hotel is under construction as part of the Port of Spain International Waterfront Project 2007-2008.On November 29th 2006, the sod was turned to begin construction of a 150-room Cara Suites Hotel and Conference Hotel to be located opposite the Piarco International Airport. A 120-room Star Hotel has cleared its 2 acre at the Piarco roundabout site and will soon also begin construction and as will the 150 room Carlton Savannah Hotel, to be built in St Anns. Tobago has one internationally branded hotel, the 198-room Tobago Hilton.
Airlift:
Trinidad and Tobago is home to two international airports – Piarco International in Trinidad and Crown Point International in Tobago. Piarco International Airport, located 25 kilometres east of the capital, Port of Spain, is the largest and most modern transport facility in the Caribbean region. At the 2006 World Travel Awards (WTA) Piarco was voted the Caribbean’s Leading Airport for customer satisfaction and operational efficiency. Caribbean Airlines, Continental, Delta Air Lines and the return of British Airways has carried the total number of international airlines to over 11 operating out of Piarco. Crown Point operates scheduled flights for seven international airlines, namely, Caribbean Airlines, Caribbean Star, Condor, Excel Airways, Martin and Virgin Atlantic. Charter flights are offered by eight airlines. Inter island domestic flights are served by three airlines with scheduled flights daily.
Cruise Tourism:
Trinidad and Tobago has seen a decline in its cruise traffic since 2000, largely as a result of repositioning of ships away from the southern Caribbean. The number of cruise visitors in 2004 was almost half what it was in 2000 with Trinidad seeing a particularly sharp decline. Tobago’s cruise business has seen some increases since 2002 after a sharp decline in 2001.
Economic Performance
Gross Domestic Product:
The year 2005 marked the 12th consecutive year of positive economic growth for Trinidad and Tobago. Real GDP grew by 7% in 2005 in large part due to the oil and gas sector (including downstream activities), the mainstay of Trinidad and Tobago’s economy. This sector grew by 10.9% and its contribution to GDP was in excess of 40%. In 2005 the non-oil and gas sector grew by 4%. The impetus for this growth came from the manufacturing and construction sectors which grew by 8.6% and 8.1% respectively. Other significant increases came from the Transport, Storage and Communication, Electricity and Water and Distribution sectors. The outlook for 2006 is that GDP will grow by 10% based on production in the oil and gas sector and public sector construction.
Unemployment:
Over the last two years, the unemployment rate has been on the decline. In 2004 it moved from 10.5% to 8.4% and further to 8% in 2005 as a result of increased activity in the construction and service sectors. At the end of 2006, it is estimated that this figure will be 6%.
Inflation:
The year 2005 recorded a significant increase in the rate of inflation from 3.7% in 2004 to 6.9%.
Upward inflationary pressure has been principally demand-driven. This is not unusual in an economy that has enjoyed 12 consecutive years of real growth in GDP. Moreover, it is commendable that such inflation has remained single-digit while real growth has approached double-digit.
Exchange rate:
Trinidad and Tobago operates under a floating exchange rate regime. However, in practice it is more of a managed float and pegged to the U.S. dollar. Over the last decade the rate has been approximately TT$6 per U.S. dollar and more specifically in the last three years it has been hovering around TT$6.30 per U.S. dollar.
Interest rate:
Over the last year there were sharp increases in the repo, prime lending and 3-month treasury bill rates. These selected rates have moved from being 5.41%, 9% and 4.86% in 2005 to 8%, 11.75% and 6.60% as of October 2006 respectively. The increases were the result of a proactive and prudent Central Bank monetary policy aimed at keeping in check accelerating inflation, excess liquidity and foreign exchange market pressures.
Balance of Payments:
For several years Trinidad and Tobago has recorded balance of payments surpluses. In 2002 the surplus was US$48.9 million. However, this increased phenomenally to US$1.893 billion in 2005. Increasingly high oil prices and higher export volumes were largely responsible for this positive balance of payments trend resulting in gross official reserves of US$4.9 billion.
Credit Rating:
Trinidad and Tobago’s issuer credit rating with respect to local currency is currently A+/Stable/A- and A-/Stable/A-2 for foreign currency as assigned by Standard and Poor’s. This investment grade rating is reflective of the country’s solid economic performance.
| Trinidad and Tobago: Selected Economic Indicators | |||
|
2003
|
2004
|
2005
|
|
| Real Gross Domestic Product at Constant Prices (2000) |
13.4%
|
6.5%
|
7.0%
|
| Unemployment Rate (%) |
10.5%
|
8.4%
|
8.0%
|
| Inflation Rate |
3.8%
|
3.7%
|
6.9%
|
| Exchange Rate (as at December 31st) |
TT$6.2952
|
TT$6.2990
|
TT$6.2996
|
| Interest Rates: Repo Prime Lending 3-month Treasury Bill |
5.17% 11.50% 4.81% |
5.0% 9.50% 4.76% |
5.41% 9% 4.86% |
| Balance of Payments Overall Surplus/Deficit (US$ million) Gross Official Reserves |
334.2
2,257.8 |
735.0
2,993.0 |
1,893.0
4,885.7 |
| Standard and Poor’s Credit Rating |
BBB
|
BBB+
|
A-
|
| W.T.I. (US$/barrel) |
31.70
|
41.47
|
56.53
|
Source: The Central Bank of Trinidad and Tobago
Competitive Advantages
Trinidad and Tobago possesses clear competitive advantages which makes it a preferred tourism investment destination.
These include:
Geographic Location
- Strategically located between North and South America
- Destination situated outside the hurricane belt making it an ideal location for cruise tourism and yachting
Infrastructure
- World-class construction companies and ancillary services
- Reliable utilities
- Regional airline hub
Resources
- Abundant, skilled and highly-educated labour force
- Full range of support services – information technology, telecommunications, training, business and accounting, research and testing
- Economic, Financial & Political
- Investment grade rating by Standard and Poor’s and Moody’s
- No foreign exchange controls
- Stable political environment
- Location of Caribbean Court of Justice; Association of Caribbean States Headquarters; University of Trinidad and Tobago; proposed site of the Free Trade of the Americas Headquarters
Other
- Home to leading multinational companies
- Attractive regional shopping destination
- Strong manufacturing sector
- English is the official language
Government
Legislative
Trinidad and Tobago achieved independence from Britain in 1962 followed by republican status in 1976. The twin-island nation has remained a member of the Commonwealth.
Fully democratic elections are held every five (5) years, since 1956 and there is universal adult suffrage, with a minimum voting age of 18.
A Bicameral legislature exists with the President, His Excellency Professor George Maxwell Richards as Head of State, Executive power lies with Prime Minister, The Honourable Patrick Manning and Cabinet:
- Lower House (elected) - House of Representatives consisting of 41members.
- Upper House (appointed by the president) - Senate consisting of 31 members of which sixteen are appointed on the advice of the Prime Minister, six on the advice of the Leader of the Opposition, and nine independents selected by the President from among outstanding members of the community.
The Tobago House of Assembly is responsible for administrative governance within Tobago. City and regional corporations are responsible for local governance.
The current government, formed by the People’s National Movement (led by The Prime Minister the Honourable, Patrick Manning) took office in early 2003. The next elections are carded for 2007.
Judiciary
The Judiciary of Trinidad and Tobago comprises the Supreme Court of Judicature and the Magistracy. The Chief Justice is responsible for the administration of justice and heads the Judiciary. The Supreme Court consists of the High Court and the Court of Appeal.
The Judges of the Supreme Court are divided into Justices of Appeal who sit in the Court of Appeal and Puisne Judges of which there are 20, who sit in the High Court which deals with indictable criminal matters, family matters where the parties are married, and civil matters involving sums over the petty civil court limit and district courts.
The Magistracy deals with petty civil matters (sums less than TT$15,000) and it exercises summary jurisdiction in criminal matters. It also hears preliminary inquiries in indictable criminal matters. The Magistracy is headed by the Chief Magistrate and is divided into 13 districts
Sources:
www.gov.tt
International Monetary Fund Country Report No. 06/32
www.ttlawcourts.org
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