JUNE 2012 | PRICE €250
MARKET INTELLIGENCE REPORT
ANTIGUA, WEST INDIES
Themis Trakas, MBA Associate Director
www.hvs.com
HVS ATHENS | 7 Patriarchou Ioakim Street, 2nd Floor, 10675 Athens, GREECE
Overview Situated in the Lesser Antilles of the Eastern Caribbean, Antigua is an island of 108 square miles (14 miles long and 11 miles wide) and consists mainly of flatlands and rich vegetation. Antigua pairs with the less‐ inhabited, neighbouring island of Barbuda to form the country of Antigua and Barbuda. Original inhabitants to Antigua were Indians, who were the first natives to cultivate the ever popular black pineapple and various other crops such as tobacco and corn. Christopher Columbus discovered Antigua in 1493, but permanent European settlement did not occur until the 1630’s when Sir Christopher Codrington established the first European settlement; at which time, Antigua became Britain’s gateway to the Caribbean. Nearly 100 years later, Lord Horatio Nelson started a dockyard in the southern portion of Antigua so that Britain’s navy had a discernable base from which they patrolled the West Indies. Nelson’s Dockyard continues to be a popular destination on the island, now an internationally‐renowned sailing port.
Sugar was Antigua’s main cash crop for hundreds of years and Betty’s Hope became the island’s first full‐scale sugar plantation in 1674. Today, nearly 30 years after Antigua’s independence from Britain, the island’s economy focuses mainly on tourism, with approximately 85% of the nation’s workforce either directly or indirectly associated with the travel and tourism industry. Tourists are attracted to Antigua because of the island’s 365 beaches and year‐round tropical climate. Temperatures range between 78°F (25°C) and 90°F (32°C) throughout the year and the water temperature ranges from 68°F (20°C) in the winter to 82°F (28°C) in the summer.
National Economic Review The economy is primarily service‐based. Tourism, financial services, and government services are the nation’s major employers. Gross tourism receipts have averaged at about 30% of the nation’s GDP from 2005 to 2010 and is projected to average at about 26% of GDP from 2011 to 2015. Tourism helped stimulate the construction industry in recent years. Having achieved an average growth rate of 6.5% for a 20‐year stretch during the 1970s and 1980s, fuelled by a tourism boom and strong inward investment, the country was crippled by a series of hurricanes in the 1990s. This was further exacerbated by a fall in tourism following the September 2001 terrorist attacks in the United States, one of the primary source market for visitation to the nation. In 2004, a new administration came to power with a fresh sense of purpose and the nation experienced solid
MARKET INTELLIGENCE REPORT – ANTIGUA, WEST INDIES | PAGE 2
growth since 2005. The following table summarizes the country’s basic economic indicators, as reported by the International Monetary Fund (IMF). TABLE 1: BASIC ECONOMIC INDICATORS, 2005‐13
GDP growth (%) Consumer price inflation (av. %) Budget balance (% of GDP) Current-account balance (% of GDP)
2005
2006
Actual 2007 2008
2009
2010
2011*
5.0 2.1 -1.5 -18.9
12.9 1.8 -4.3 -30.7
6.5 1.4 -2.9 -32.9
-7.0 1.0 -11.5 -24.7
-2.0 3.0 3.0 -16.8
0.8 1.6 3.4 -16.7
1.8 5.3 -3.0 -29.4
Forecast 2012 1.0 4.5 3.3 -16.6
2013 2.5 2.8 3.1 -16.4
* 2011 not finalized yet Source: Article IV Consultation of IMF in September 2010, Current Data as at May 2012
Growth peaked at nearly 13% in 2006 on the back of the Cricket World Cup. The islands’ construction sector, which expanded its output in 2008 by 5.5%, came under pressure as the global economic downturn precipitated a decline in tourism, foreign direct investment, and remittances, leaving the country to grapple with the worst economic crisis in its history. Agricultural production, which is almost entirely for local consumption, has to battle both a limited supply of local water and the fact that agricultural wages are below the rates for both tourism and construction. Beginning in the last quarter of 2008, construction of some tourism accommodation projects was slowed or placed on hold, because of financing difficulties and sluggish sales. Tourism was already under pressure following an incident involving a honeymoon couple from the United Kingdom in 2008. Antigua’s economy and reputation as an offshore financial centre were badly damaged by the 2009 scandal involving alleged swindler Allen Stanford. Economic activity contracted by 7% in 2009 and a further 2% in 2010. This has contributed to further severe pressures on the country’s fiscal and balance of payments positions. Inflation has remained low despite higher fuel prices and consumption taxes, reflecting lower international food prices. The following graph illustrates the economic downturn experienced in recent years and the projected slow economic recovery of the country in terms of GDP growth and gross tourism receipts and net foreign direct investment as a percentage of GDP. GRAPH 2: GDP GROWTH AND SELECT ECONOMIC INDICATOR ANALYSIS, 2005‐15 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0%
2005
2006
2007
2008
2009
2010
2011*
2012*
2013*
2014*
2015*
Gross Tourism Receipts
35.7%
32.3%
29.2%
27.8%
24.5%
25.3%
26.1%
26.6%
26.6%
26.8%
26.7%
Net Foreign Direct Investment
35.5%
29.3%
14.4%
11.3%
10.6%
11.1%
11.6%
12.4%
13.1%
13.9%
14.6%
GDP Growth
5.0%
12.9%
6.5%
1.8%
-7.0%
-2.0%
0.8%
1.0%
2.5%
2.5%
2.5%
* Projections Source: Article IV Consultation of IMF in September 2010, HVS Analysis
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The economy is projected to slowly recover from 2012 onwards as the economies of the main source markets for visitation are expected to show some signs of economic recovery, following the falling tourism and foreign direct investment–related construction activities that triggered the worst recession in decades and contributed to a sharp decline in government revenue. In addition, foreign direct investment is projected to steadily increase to 2007 levels.
Airport and Seaport Traffic Access to Antigua is primarily provided through the V.C. Bird International Airport, located in the northeast corner of the island, about 8 km east of the capital St. John’s. The airport accepts scheduled and charter flights from airlines from the United States, Canada, Europe, and other Caribbean Sea nations. These airlines are American Airlines (from Miami and New York), American Eagle (from San Juan, Puerto Rico), Delta Airlines (from Atlanta and New York), United Continental (from New York), US Airways (from Charlotte, North Carolina), Air Canada (from Toronto and seasonally from Montreal), British Airways and Virgin Atlantic (from London), Condor (seasonally from Frankfurt), Blue Panorama Airlines (seasonally from Milan), LIAT (connecting all Caribbean islands), Caribbean Airlines, FlyMontserrat, and REDjet. Access to the island is also provided by the seaport in St. John’s equipped to host up to 4 large cruise ships at any given time and one ship in the deep water harbour. Table 3 summarizes the volume of passengers that used these two transportation facilities over the past eight years.
TABLE 3: INTERNATIONAL ARRIVALS BY AIR AND SEA, 2004‐11
Share Year
Air
2004 2005 2006 2007 2008 2009 2010 2011
245,797 245,384 253,669 261,802 265,844 234,410 229,943 241,331
Growth 2004-11
Sea
Change — (0.2) % 3.4 3.2 1.5 (11.8) (1.9) 5.0
(1.8) %
Compound Annual Growth Rate 2004-11
Change
522,753 466,851 471,622 672,788 580,853 712,792 557,635 599,235
— (10.7) % 1.0 42.7 (13.7) 22.7 (21.8) 7.5
Air 32.0 % 34.5 35.0 28.0 31.4 24.7 29.2 28.7
Sea 68.0 % 65.5 65.0 72.0 68.6 75.3 70.8 71.3
14.6 % (0.3) %
2.0 %
Source: Antigua and Barbuda Government, Ministry of Tourism, HVS Analysis
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The following comments apply regarding the above table: •
The total 2011 volume of arriving tourists by air recovered by a 5% increase over 2010, after suffering two consecutive decreases in 2009 and 2010 of cumulatively 13.7% as a result of the global economic crisis that affected leisure travel worldwide.
•
The volume of visitor arrivals by cruise ship depicted fluctuating performance over this 8‐year period but overall recorded a compound annual growth rate of 2%.
•
According to information provided by the Antigua and Barbuda Cruise Tourism Authority, about 264 vessels are expected to reach St. John’s in 2012, down from 302 vessels that arrived in 2011. This translates to about 76,000 less cruise ship passengers expected for 2012. This is attributed to a decision by some cruise lines to re‐position their vessels to other parts of the globe such as Southeast Asia, Africa, and South America. Since the cruise industry has now gone global, new and emerging markets are challenging the Caribbean’s traditional hold on this segment of tourism.
•
Although the share of the arrivals to Antigua by seaport are considerably more than those by air, this type of tourists spend only a few hours on the island and primarily at the capital St. John’s, while tourists arriving by plane typically stay on the island between 7 to 14 days. Unless Antigua alters its positioning from transit point to ship turnaround point (a move requiring significant investment), no aggressive growth rate in cruise ship passengers is expected and it is regarded as mostly irrelevant to the lodging industry.
International Feeder Markets Following is a chart illustrating the breakdown of foreign tourist arrivals to Antigua by air for 2011. CHART 4: BREAKDOWN OF FOREIGN TOURIST ARRIVALS VIA AIR BY NATIONALITY, 2011
1.1%
15.7%
35.2% 9.9%
-1
USA Europe Americas-Other Caribbean Other
38.2%
Source: Ministry of Tourism & Civil Aviation of Antigua, HVS Analysis
Europe represents the region with the largest share of tourist arrivals at over 38%, primarily represented by the UK (29% of total) and Italian (4.5% of total) nationals. The United States is the second highest visitation market with about 35%, while visitation from other Caribbean nations constitutes nearly 16%. Under ‘Americas‐Other’ belong Canada (about 9% of 2011 total) and central and south America.
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Seasonality of Visitation Following is a chart illustrating the 2011 air arrivals and hotel occupancy performance at all hotels in Antigua by month. CHART 5: SEASONALITY OF VISITATION AND MONTHLY REPORTED HOTEL ROOM OCCUPANCY, 2011 30,000
90.0% 80.0%
25,000 70.0% 60.0% 50.0%
15,000 40.0%
10,000
Occupancy
Air Arrivals
20,000
30.0% 20.0%
5,000 10.0%
0
2011 Air Arrivals
be r D ec em
be r N ov em
O
ct ob er
be r Se pt em
Au gu st
Ju ly
Ju ne
ay M
Ap ril
M
ar ch
ar y Fe br u
Ja nu ar
y
0.0%
2011 Occupancy
Source: Ministry of Tourism & Civil Aviation of Antigua, Antigua Hotel and Tourism Association, HVS Analysis
The peak visitation season spans from December to April, when nearly 50% of the total tourist volume visits the island nation. The first four months of each year have traditionally recorded the highest hotel room occupancy figures.
Average Length of Stay The primary average length of stay currently in effect on the island is 4‐7 days, with the segment of 8‐14 days being second. The overall average length of stay on the island for 2011 was about 10 days, as depicted in the table below.
TABLE 6: AVERAGE LENGTH OF STAY IN DAYS, ANTIGUA (2011 AIR ARRIVALS ONLY) Days Visitors Share Overall
1-3
4-7
8 - 14
15 +
not stated
38,527 16.0%
109,169 45.2%
69,998 29.0% 10.2 days
23,344 9.7%
292 0.1%
Source: Antigua Hotel and Tourism Association, HVS Analysis
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Age Group The primary age group visiting the island is currently between the ages of 45–55; however, the government is attempting to alter that in the near future and shift the primary visiting age group to the younger 25–34 range. The chart below illustrates the 2011 visitation distribution by age group. CHART 7: VISITATION DISTRIBUTION BY AGE GROUP, ANTIGUA (2011 AIR ARRIVALS ONLY)
7.6%
7.9%
9.2% 13.4%
21.1% 21.8%
18.9%
< 14
15 - 24
25 - 34
35 - 44
45 - 55
56 - 64
65
