Tourism Report Q2 2015 Discover the Opportunity in the Caribbean
Contents
> Country names are clickable for easy navigation
01
Caribbean Overview
79
Guadeloupe
04
Anguilla
83
Guyana
07
Antigua and Barbuda
88
Haiti
14
Aruba
92
Jamaica
20
Bahamas
97
Martinique
28
Barbados
100
Montserrat
33
Belize
103
Puerto Rico
37
Bermuda
108
Saint Kitts and Nevis
42
British Virgin Islands
112
Saint Lucia
46
Cayman Islands
116
Sint Maarten (D)
51
Cuba
121
Saint-Martin (F)
58
Curaçao
124
Saint Vincent and the Grenadines
62
Dominica
127
Suriname
65
Dominican Republic
130
Trinidad and Tobago
71
Dutch Caribbean (BES)
134
Turks and Caicos Islands
75
Grenada
138
US Virgin Islands
Caribbean Overview Robust growth set the tone for tourism in 2014, with several markets posting increases in stay-over arrivals in the double-digits. The region covered in this report welcomed over 21 million stay-over tourists, with six “million-plus” visitor markets, namely ARUBA
BAHAMAS
CUBA
DOM REP
JAMAICA
PUERTO RICO
1,072,082
1,421,799
3,001,958
5,141,377
2,080,181
1,687,605
The Caribbean Tourism Organization reports that the region outperformed other regions worldwide. All of the sub-regions, except the French Caribbean (remained flat), experienced growth, with the Dutch Caribbean exhibiting the largest growth. RevPAR was up +5.7% YoY, airline capacity grew +6%, and cruise visitors grew +8% to reach 24 million passengers. The Caribbean Tourism Organization is projecting +5% growth for 2015.
Destination
YEAR
J
F
M
A
M
J
J
A
S
O
N
D
Anguilla
2014
4.6%
3.9%
0.2%
4.8%
3.8%
2.6%
2.3%
2.0%
2.3%
2.1%
2.2%
2.7%
Anguilla
2015
1.7%
3.5%
6.0%
Antigua and Barbuda
2014
8.2%
9.7%
4.3%
5.8%
7.7%
6.9%
2.4%
3.3%
3.2%
3.4%
2.6%
2.2%
Antigua and Barbuda
2015
-8.8%
-8.2%
-6.4%
Aruba
2014
9.4%
8.1%
2.2%
4.2%
4.8%
5.3%
5.9%
7.3%
8.2%
9.4%
9.5%
9.5%
Aruba
2015
21.7%
17.9%
20.2%
Bahamas
2014
3.7%
5.5%
1.2%
5.0%
5.0%
3.9%
4.3%
3.9%
4.0%
4.5%
4.1%
4.3%
Bahamas
2015
Barbados
2014
3.8%
1.1%
-1.2%
-0.4%
-0.1%
0.0%
-0.2%
-0.7%
-0.8%
-0.6%
0.2%
2.2%
Barbados
2015
7.4%
11.1%
Belize
2014
9.6%
10.6%
9.7%
12.4%
12.7%
11.8%
11.3%
11.0%
11.1%
10.8%
9.7%
9.2%
Belize
2015
-1.0%
-1.0%
Bermuda
2014
-2.3%
-0.3%
-1.1%
4.9%
1.5%
-2.0%
-3.3%
-4.4%
-3.6%
-3.1%
-5.0%
-5.1%
Bermuda
2015
-3.9%
-6.3%
-6.4%
British Virgin Islands
2014
13.6%
11.7%
3.1%
4.5%
4.1%
3.8%
5.4%
5.3%
5.4%
4.6%
3.9%
7.7%
British Virgin Islands
2015
-0.5%
2.8%
Cayman Islands
2014
9.3%
7.4%
5.2%
9.0%
9.9%
9.4%
10.3%
11.7%
12.3%
12.6%
11.8%
10.8%
Cayman Islands
2015
9.5%
7.6%
5.7%
Cuba
2014
9.3%
7.2%
5.0%
5.0%
4.6%
3.9%
3.4%
3.8%
3.7%
4.3%
4.9%
5.3%
Cuba
2015
16.0%
14.9%
14.1%
Curacao
2014
4.1%
-0.6%
-4.3%
-4.0%
-3.8%
-3.1%
-2.0%
-1.2%
-0.2%
1.1%
1.9%
2.5%
Curacao
2015
13.9%
13.7%
13.0%
Dominica
2014
9.4%
2.0%
0.5%
8.8%
5.1%
5.7%
6.6%
3.8%
5.3%
4.0%
4.1%
4.1%
Dominica
2015
0.3%
Dominican Republic
2014
6.0%
5.8%
3.7%
6.1%
7.9%
8.5%
8.6%
9.1%
9.4%
9.7%
9.7%
9.6%
Dominican Republic
2015
7.5%
7.4%
7.4%
Grenada
2014
6.4%
2.9%
2.3%
8.1%
11.8%
13.3%
12.4%
12.0%
13.2%
14.8%
15.9%
14.7%
Grenada
2015
5.9%
3.0%
Guyana
2014
6.5%
-2.3%
-18.7%
-6.8%
-4.2%
-3.7%
-1.4%
-0.3%
0.4%
1.1%
2.0%
2.8%
Guyana
2015
Haiti
2014
15.9%
17.5%
14.9%
24.7%
21.7%
15.0%
18.5%
22.8%
21.1%
15.5%
10.5%
10.8%
Haiti
2015
-1.5%
1.6%
2.1%
01
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
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CARIBBEAN STAY-OVER ARRIVALS YTD GROWTH (%)
caribbean overview CARIBBEAN STAY-OVER ARRIVALS YTD GROWTH (%) Destination
YEAR
J
F
M
A
M
J
J
A
S
O
N
D
Jamaica
2014
4.8%
3.4%
-0.2%
1.2%
1.6%
1.4%
2.4%
2.6%
2.5%
3.1%
3.3%
3.6%
Jamaica
2015
4.3%
4.7%
5.0%
Martinique
2014
5.1%
3.8%
3.7%
4.9%
3.6%
3.8%
3.1%
1.9%
1.1%
1.1%
0.3%
0.0%
Martinique
2015
-5.6%
-3.8%
Montserrat
2014
10.8%
14.3%
24.9%
35.4%
35.3%
30.6%
21.2%
16.4%
12.3%
13.5%
13.3%
22.2%
Montserrat
2015
Puerto Rico
2014
9.4%
7.5%
5.4%
4.9%
4.8%
5.1%
5.8%
5.8%
6.1%
6.8%
6.5%
6.2%
Puerto Rico
2015
4.6%
7.1%
Saint Kitts and Nevis
2014
-7.5%
-3.2%
-4.2%
-0.8%
-0.6%
1.2%
1.1%
3.1%
3.1%
3.2%
3.1%
Saint Kitts and Nevis
2015
Saint Lucia
2014
6.7%
7.5%
5.4%
6.7%
6.1%
6.0%
7.0%
6.6%
6.0%
5.7%
5.8%
6.1%
Saint Lucia
2015
14.1%
10.1%
Sint Maarten (D)
2014
8.8%
6.6%
5.2%
7.9%
9.2%
8.0%
7.7%
7.5%
7.3%
7.4%
7.3%
7.0%
Sint Maarten (D)
2015
SVG
2014
2.4%
3.5%
-1.6%
3.2%
-0.8%
-0.6%
-1.3%
-2.5%
-1.7%
-1.7%
-1.2%
-1.4%
SVG
2015
9.8%
1.9%
5.9%
Suriname
2014
-5.9%
-6.7%
-3.7%
-1.3%
2.9%
4.1%
1.7%
0.8%
2.4%
2.4%
0.8%
1.0%
Suriname
2015
Trinidad and Tobago
2014
Trinidad and Tobago
2015
19.6%
13.3%
Turks and Caicos
2014
27.9%
30.5%
30.2%
27.3%
26.5%
25.3%
24.5%
23.9%
24.1%
31.2%
40.6%
49.8%
Turks and Caicos
2015
US Virgin Islands
2014
-0.8%
-2.7%
-2.2%
-0.9%
-0.6%
1.0%
3.0%
3.2%
3.1%
3.8%
3.9%
3.9%
US Virgin Islands
2015
2.6%
3.9%
Hotel performance in the Caribbean improved in 2014, according to STR Inc. The region registered a +1.5 percentage point increase in the occupancy rate landing at 68%, the average daily rate grew +6.4% to US $194.66, and the revenue per available room was up +8% YoY to US $132.28. In addition, hotel demand in the region increased +2.4%, supply grew +0.8% and revenue grew +8.9%.
Destination
YEAR
J
F
M
A
M
J
J
A
S
O
N
D
Anguilla
2014
6.6
13.7
21.5
29.2
35.1
40.4
46.6
52.3
54.0
56.2
62.4
70.9
Anguilla
2015
6.8
14.2
22.8
Antigua and Barbuda
2014
25.9
52.8
79.6
103.1
121.6
138.3
159.3
176.8
188.1
203.3
223.2
249.3
Antigua and Barbuda
2015
23.6
48.4
74.5
Aruba
2014
82.9
161.9
245.0
329.1
407.2
489.9
585.8
687.9
772.4
865.0
962.2
1,072.1
Aruba
2015
100.9
190.9
294.4
Bahamas
2014
91.9
205.0
363.6
504.5
634.7
776.5
932.4
1,060.9
1,120.0
1,201.4
1,295.9
1,421.8
Bahamas
2015
Barbados
2014
50.1
98.3
148.6
191.8
230.3
264.4
311.7
350.4
376.7
412.5
458.5
519.6
Barbados
2015
53.9
109.2
Belize
2014
31.2
63.3
102.0
131.0
157.3
186.0
216.0
238.7
250.6
266.1
288.6
321.2
Belize
2015
30.9
62.6
Bermuda
2014
7.0
16.0
30.9
50.4
75.3
104.2
136.3
164.0
182.4
198.1
212.5
224.2
Bermuda
2015
6.8
14.9
29.0
British Virgin Islands
2014
38.6
77.1
122.8
162.3
194.0
227.0
266.0
287.2
296.9
312.3
337.8
383.1
British Virgin Islands
2015
38.4
79.2
02
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
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CARIBBEAN STAY-OVER ARRIVALS YTD (IN 000’S)
caribbean overview CARIBBEAN STAY-OVER ARRIVALS YTD (IN 000’S) Destination
YEAR
J
F
M
A
M
J
J
A
S
O
N
D
145.3
176.4
210.5
249.7
280.2
293.7
312.5
342.2
382.8
1,282.6
1,478.4
1,659.7
1,871.1
2,070.9
2,222.8
2,410.1
2,669.8
3,002.0
143.6
176.0
209.1
246.0
286.4
323.8
365.2
407.4
451.0
Cayman Islands
2014
31.4
65.2
109.4
Cayman Islands
2015
34.4
70.2
115.6
Cuba
2014
320.0
636.1
995.5
Cuba
2015
371.2
731.2
1,135.6
Curacao
2014
37.4
72.5
108.0
Curacao
2015
42.6
82.4
122.1
Dominica
2014
6.4
13.8
20.4
27.6
33.8
39.0
48.2
56.2
60.4
69.0
73.6
81.5
Dominica
2015
6.4
Dominican Republic
2014
449.1
895.6
1,396.7
1,841.7
2,227.6
2,669.6
3,184.2
3,609.0
3,891.3
4,214.8
4,607.0
5,141.4
Dominican Republic
2015
483.0
961.8
1,499.4
Grenada
2014
14.1
24.8
36.3
47.2
55.9
65.3
77.8
92.8
100.8
111.4
121.5
133.5
Grenada
2015
14.9
25.5
Guyana
2014
13.5
26.1
40.7
62.1
76.3
90.8
115.9
138.6
152.8
167.7
183.4
205.8
Guyana
2015
Haiti
2014
36.7
71.5
114.5
151.2
184.4
218.0
282.5
334.5
362.8
391.0
418.3
465.2
Haiti
2015
36.1
72.6
116.9
Jamaica
2014
169.3
338.6
539.3
721.0
887.3
1,074.3
1,295.3
1,466.8
1,573.6
1,709.3
1,867.1
2,080.2
Jamaica
2015
176.6
354.4
566.6
Martinique
2014
48.6
100.3
157.3
206.8
241.9
272.0
312.6
363.3
387.9
415.5
442.8
489.6
Martinique
2015
45.9
96.4
Montserrat
2014
0.614
1.278
2.355
3.099
3.734
4.186
4.903
5.475
5.783
6.293
6.946
8.804
Montserrat
2015
Puerto Rico
2014
149.8
297.3
479.9
630.1
766.7
908.2
1,061.2
1,202.3
1,291.7
1,405.4
1,533.2
1,687.6
Puerto Rico
2015
156.7
318.4
Saint Kitts and Nevis
2014
10.2
19.9
30.5
39.3
48.0
57.2
65.9
74.3
79.6
85.2
93.1
Saint Kitts and Nevis
2015
Saint Lucia
2014
27.6
57.8
92.3
123.1
150.7
176.0
208.1
236.8
255.0
277.8
304.7
338.2
Saint Lucia
2015
31.5
63.6
Sint Maarten (D)
2014
52.0
102.2
158.0
206.1
245.6
279.2
318.3
357.0
377.3
406.6
447.2
499.9
Sint Maarten (D)
2015
Saint Vincent and the Grenadines
2014
6.4
12.9
19.5
25.9
30.3
36.4
43.8
49.2
52.7
56.6
61.7
70.7
Saint Vincent and the Grenadines
2015
7.0
13.1
20.7
Suriname
2014
17.7
35.3
55.9
76.8
96.4
114.9
141.2
171.9
188.9
208.2
224.1
251.6
Suriname
2015
Trinidad and Tobago
2014
29.6
73.7
107.5
140.5
170.6
204.0
244.1
279.9
307.6
338.3
369.3
412.5
Trinidad and Tobago
2015
35.4
83.4
Turks and Caicos
2014
31.2
64.1
105.5
139.7
168.5
199.3
233.6
263.7
278.4
314.8
368.2
435.4
Turks and Caicos
2015
US Virgin Islands
2014
70.0
136.4
218.2
285.3
347.6
412.3
481.0
533.5
561.9
601.8
655.5
730.4
US Virgin Islands
2015
71.8
141.7
The region actively pursues new niches
03
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
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The Organization of Eastern Caribbean States (OECS) member states are collaborating in a joint effort to market the region as a premier yachting destination. Collectively to be known as the Eastern Caribbean Village, the uniqueness of each destination will be highlighted as well, as services and attractions that are relevant to the yachting industry. The OECS will present their plan at the Toronto International Boat Show to attract visitors and market each destination.
Anguilla
Overview and Landscape ANGUILLA ECONOMIC INDICATORS AND FORECAST 2014e
2015f
Comment
GDP Growth %
1.9
1.3
Impacted by Hurricane Gonzalo
Inflation %
-0.3
0.5
Falling oil prices will impact
3
Things to Watch
Tourism contributed growth of +2.7% in visitor arrivals YoY in 2014 to 70,927, with strength from the German, Caribbean and Canadian markets. Inflation is mainly imported. The price environment turned deflationary at the end of 2014, registering a (0.9)% drop in prices. Anguilla’s economy will continue to grow driven by private sector construction and tourism. This activity will drive a rise in imports, and tourism revenues are likely to increase with improved arrivals figures projected. Top risks to the economic forecast include the global economic performance, particularly with major source markets for tourism, climate impacts and vulnerabilities.
04
> Progress on plans for the W2E Plant/Energy Costs > Recovery of US/Europe markets
Source: See Note 1 (final page)
Construction and tourism continued to provide strength to economic activity and are likely to drive a favorable impact in other related sectors such as transport, storage & communications, and wholesale & retail. Construction concluded on the Malliouhana Hotel and activity picked up the pace on the Manoah and Zemi Beach boutique hotels and the Reef and Solaire hotel and villa projects.
> Implications of changes of Government
Tourism Performance Stay-over arrivals have continued to show strength in 2015, with accumulated growth in the first quarter at +6.0%. A total of 22,836 visitors reached Anguilla during the Jan-Mar 2015 period. Total visitor arrivals during the quarter reached 58,702, up +12.9% YoY. In Q1 2015, top growth markets for stay-over tourists were the UK, +20.7%, Italy +16.1%, the Dutch Caribbean +10.8%, the Caribbean +9.5% and the US +8.6%. US arrivals accounted for 70.7% of the total. The #2 source market, Canada (6.8% of total arrivals), posted a (1.7)% YoY decline in the number of stay-over visitors to 1,546. Average length of stay in the first quarter was 7.6 days, flat YoY though experiencing a continued decline since reaching 8.2 days in 2009. The largest portion of passenger movement continues to arrive by sea, with over 65% of total visitors (excursionists + stay-overs) served by the Blowing Point Terminal. The Sandy Ground terminal receives close to 27% of passengers and the remaining 8% arrive at the Clayton J Lloyd Airport. For excursionists, 99.5% arrive by sea, while for stay-over tourists 81% arrive by sea.
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
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Indicator
anguilla ANGUILLA STAY-OVER ARRIVALS (IN 000’S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
5.2
5.9
7.0
6.0
5.3
4.4
6.4
4.6
1.8
3.0
5.2
7.3
62.0
2011
5.7
6.5
7.4
7.2
6.1
5.4
6.7
4.0
1.6
2.6
5.7
7.0
65.8
2012
6.3
6.8
7.5
6.3
5.4
4.8
5.9
5.0
1.6
2.9
4.8
7.2
64.7
2013
6.4
6.8
8.3
6.4
6.0
5.6
6.1
5.8
1.4
2.3
5.9
8.1
69.1
7.7
5.9
5.3
6.2
5.7
1.6
2.2
6.1
8.6
2014
6.6
7.0
7.9
2015
6.8
7.4
8.7
2013YTD
6.4
13.2
21.5
27.9
33.8
39.4
45.5
51.3
52.7
55.1
61.0
69.1
69.1
29.2
35.1
40.4
46.6
52.3
54.0
56.2
62.4
70.9
70.9
2014YTD
6.6
13.7
21.5
2015YTD
6.8
14.2
22.8
YTDΔ YoY ‘15
1.7%
3.5%
6.0%
70.9 22.8
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The strength comes on the heels of two consecutive years of growth for the sector, with stay-overs up +6.8% in 2013 and +2.7% in 2014. The winter season proved to be robust, and the island continues to better position itself as a premier destination. Tourism remains a major contributor to the island’s economy, and is estimated by the WTTC to account for 61% of economic activity through direct and indirect means. The WTTC estimates that the sector generates 1,500 jobs on the island and estimates visitor exports at US $132MM annually. Building out key infrastructure, improving airlift and accessing new markets will be the major ways of supporting long-term growth and improving results from the sector going forward. ANGUILLA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
‘15-’25
Total contribution to GDP US $MM
178.1
247.0
3.2%
3.0%
Total contribution to GDP % Share
61.2%
61.8%
n/a
n/a
Visitor exports US $MM
132.0
179.3
2.9%
2.8%
8.1
12.2
3.5%
3.8%
130.6
179.1
2.9%
2.9%
Business spending US $MM
9.5
12.4
2.7%
2.4%
Capital investment US $MM
7.6
11.0
4.1%
3.3%
Domestic spending US $MM Leisure spending US $MM
05
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
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Source: World Travel & Tourism Council Economic Impact Report 2015
anguilla Market Access Boost in airlift from Seaborne Seaborne Airlines commenced flights to Anguilla from San Juan on April 30, with thrice weekly flights on Thursdays, Saturdays and Sundays departing San Juan at 1:00 pm. The 34-passenger Saab 340 aircraft is operated by American Airlines. Seats from the mainland US are expected to increase by +150%.
Tourism Construction Airport development talks continue Talks on a proposed airport expansion are ongoing, with Infrastructure UK, a division of the Treasury, and tourism stakeholders are reviewing recommendations on how to improve the likelihood of airport development. This follows earlier consultations on airport development with tourism stakeholders, with members of the Chamber of Commerce & Industry, AHTA and the Tourist Board, as well as private investors, discussing the need for an international airport and expansion of the present runway. Expansion of the airport would aim to attract larger aircraft and additional passengers from regions including Europe and the US.
Other projects to follow in 2015 • The Frangipani Beach Resort will be expanded, according to an addendum to the MoU signed between Paradise Holdings and the Government. The expansion will increase the number of rooms to 40, up from 19 via the acquisition of the adjacent Seychelles property. The new owners hope to re-launch in November. • AGR will construct the $350MM mega-yacht marina and hotel in the Eastern end of Anguilla. Works are expected to commence in early 2015. The marina will have a capacity of up to 150 yachts. The hotel will consist of 100-150 rooms and 100 villas, as well as a convention center.
Sector Developments Hodge assumes helm of Tourist Board The Anguilla Tourist Board has welcomed Ralph Hodge as its new Chairman. Hodge has worked in both the public and private sector in Anguilla, and has held roles that include President of the Cricket Association and Deputy Chairman of the Financial Services Commission.
Viceroy staff retained Employees of the Viceroy Hotel will be rehired following the sale to the proposed owners, the Carlton Group. This announcement came on the heels of meetings between the stakeholders and government, which raised concerns about the future of the employees following the sale.
Cap Juluca named island’s top hotel
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Cap Juluca has been named the #1 hotel in Anguilla by US News and World Report. The publication touts the hotel’s multitude of offerings, including in-room spa treatments, oceanfront guestrooms and organic restaurants. The ranking is based in part on guest ratings on TripAdvisor. Cap Juluca was also recently recognized by Coastal Living as one of the “Top 10 Beach Hotels in the World.”
Antigua and Barbuda
Overview and Landscape ANTIGUA & BARBUDA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
2.9
3.0
Tourism arrivals down Jan-Feb
Inflation %
1.2
1.8
Falling oil prices will impact
zone, 2 5-star luxury resort and villas, 1,300 residential units, a casino and gaming complex, a golf course, marina and landing facilities. The project also includes a conference center, sports facilities, commercial and retail space and an offshore financial center.
Source: See Note 1 (final page)
Economic activity picked up in 2014, driven by developments in construction and tourism. The benefits trickled down into other sectors such as transport and commerce. With a number of FDI projects announced in recent months, the country’s construction pipeline remains robust. Works are winding down at the Cancer Center of the Eastern Caribbean and the 1,000home government housing program is expected to gain momentum by mid-year. In tourism, private sector investments include a US $300MM resort in Pearns Point, US $200MM Sunny Hill Willoughby Bay resort, and a US $250MM project to restore the K Club Resort in Barbuda. The May 1 ground-breaking of the US $2B Yida International Economic Zone project will provide a boost for activity in Q2. The project entails the construction of A&B’s largest free trade
Consumer prices rose at an annual pace of +1.3% YoY in December. Inflation is likely to remain subdued in the context of lower oil prices. New airlift, the pace of execution of investment projects and the modernization and dredging efforts in St John’s will all be critical to watch in 2015. Further imbalances in merchandise trade accounts are expected in the near-term in light of the strong pipeline of investments, which will produce a lag in generating tourism export revenues. > Infrastructural capacity to deliver on
3
Things to Watch
billions of dollars in announced tourism investment & speed of execution > Gov’t housing construction program > Developments in tourism arrivals
Tourism performance
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Stay-over arrivals have continued to lose momentum in the first quarter of 2015. In November and December 2014, stay-over arrivals fell (4.5)% YoY and (1.4)%, respectively. This came after registering 4 months of double-digit growth earlier in the year. YTD arrivals are down (6.4)% YoY for Q1 2015, with A&B welcoming 74,493 stay-over visitors during the period.
antigua and barbuda In Q1 2015, the top three source markets, #1 US, #2 Europe and #3 Canada all posted declines in arrivals. US arrivals dropped (3)% YoY to 28,398. European arrivals fell (5)% YoY to 28,043 and Canadian arrivals fell (21)% YoY to 10,879. Total stay-over arrivals were up +2.2% YoY in 2014, with strengths heavily weighted towards the first half of the year. The US source market posted +7.6% growth while Canada recorded a drop of (8.4)%. Visitors from the UK also got a boost with the cricket test match between the West Indies and England teams. The cruise and yacht sectors posted a decline. ANTIGUA AND BARBUDA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
22.2
22.4
25.9
20.7
17.7
15.6
22.0
17.0
9.9
14.7
18.5
23.3
229.9
2011
23.8
23.8
24.7
24.8
17.3
17.0
23.5
18.1
10.5
15.0
18.7
24.1
241.3
2012
24.2
25.6
27.5
24.8
17.1
17.2
21.5
17.7
11.0
16.9
19.5
23.9
246.9
2013
23.9
24.1
28.2
21.1
15.5
16.4
26.2
15.5
11.1
14.3
20.8
26.5
243.9
23.5
18.5
16.7
21.0
17.5
11.3
15.2
19.9
26.1
2014
25.9
26.8
26.8
2015
23.6
24.8
26.0
249.3 74.5
2013YTD
23.9
48.1
76.3
97.4
113.0
129.4
155.6
171.2
182.3
196.6
217.5
243.9
243.9
2014YTD
25.9
52.8
79.6
103.1
121.6
138.3
159.3
176.8
188.1
203.3
223.2
249.3
249.3
2015YTD
23.6
48.4
74.5
YTDΔ YoY '15
-8.8%
-8.2%
-6.4%
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The Tourism Authority has launched several campaigns with the expectation of reverting the downward trend, including a promotional video on British Airways flights and a documentary “Tourism in A&B” for the Italian market. Cruise arrivals fell (2.2)% in 2014 to 522,342. While preliminary figures are not yet reported for Q1 2015, A&B received 11,000 tourists on four cruise ships February 26 at Heritage Quay, a strong sign for the sector. Those ships include the Costa Fortuna (2,904 passengers), Adventure of the Seas (3,222 passengers), Costa Magica (3,017 passengers) and Aida Luna (2,089 passengers). Tourism accounts for roughly 53% of the workforce in A&B, according to the World Travel and Tourism Council (WTTC). The WTTC estimates that the sector provides an overall impact to the economy equivalent to 58.3% of GDP, worth some US $740.9MM to the country. The Prime Minister estimates that the contribution of tourism to GDP is as high as 80% and that the sector is responsible for driving ¾ of employment.
ANTIGUA & BARBUDA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
740.9
1,130.5
2.1%
4.1%
Total contribution to GDP % Share
58.3%
64.1%
n/a
n/a
Visitor exports US $MM
395.8
599.9
1.7%
4.1%
Domestic spending US $MM
56.4
79.5
3.3%
3.2%
Leisure spending US $MM
426.5
641.8
1.8%
4.0%
Business spending US $MM
25.6
37.5
3.1%
3.6%
Capital investment US $MM
123.9
202.0
2.7%
4.7%
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Source: World Travel & Tourism Council Economic Impact Report 2015
antigua and barbuda The strong pipeline of investments in tourism fares well for the sector’s long-term growth as long as it is accompanied by improvements in airlift and connections to new markets. The winding down of works at the VC Bird International Airport will provide the infrastructure to support this growth and yet may be insufficient in the long-term with billions of US dollars of construction in the pipeline for the tourism sector.
Market access Barbuda Airways to cut travel costs The establishment of Barbuda Airways is in the plans, offering service between Antigua and Barbuda. The service would significantly reduce the cost of transport between the islands, which currently stands at EC $300 r/t. It is expected that the airline will operate using a 9-seater Islander aircraft.
Caribbean Helicopters boosting airlift Caribbean Helicopters, a locally-based aviation company, is expanding its fleet to increase charter flights between Antigua and Barbuda, as well as to islands such as Nevis. The company has already purchased two 8-seat Piper Navajo Chieftain PA 31-350 airplanes, with two more to be purchased soon.
Tourism Construction Five-star hotel planned Cabinet has approved a 987-acre lease for a development in Barbuda. The project, which had been stalled since 2011, includes a five-star hotel, restaurant, marina and golf course developed by Shepherd Stanhope International Limited.
Club Med could land in A&B The owners of Club Med are looking at A&B to potentially expand operations. It is not known if the land being sought is for a Club Med resort or Annan hotel, but 40 acres would be required. The owner is currently exhibiting a preference toward the Willoughby Bay area. The investor has already met with Cabinet to discuss the details of the investment.
New VC Bird terminal nears completion Works at the VC Bird International Airport’s new terminal are progressing and should conclude shortly. PM Gaston Browne, Minister of Foreign Affairs Charles Fernandez, China’s Ambassador to A&B Ren Gongping, and members of the airport authority, among others toured the new terminal and were impressed by the progress and excellent work. The terminal, once complete, will boast 14 departure gates, CCTV, 46 check-in counters, 15 kiosks, a food court, VIP lounges, a bank, retail stores, restaurants, 12 immigration desks, 5 baggage carousels, a sophisticated baggage control system and 4 jet bridges. The improvements will make the airport one of the best in the Caribbean.
Cedar Tree Point hotel opens for business The Cedar Tree Point hotel in Barbuda prepared for a Q2 2015 opening. The project, undertaken by St Maarten developer Francois Petit, employed some 25-30 Barbudans.
YIDA’s US $2B project under construction
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China-based YIDA Group broke ground May 1 on the US $2B investment project on Guiana Island, slated to become the Yida International Economic Zone project. The full project scope includes A&B’s largest free trade zone, two 5-star luxury resort and villas, 1,300 residential units, a casino and gaming complex, a golf course, marina and landing facilities. The project also includes a conference center, sports facilities, commercial and retail space and an off-shore financial center. The project will be carried out over 10 years and will include properties on Crump Island and other surrounding islands where the company holds 1,600 acres of lands.
antigua and barbuda Phase I will include the development of high-end ocean-front villas with the first internationally branded resort to begin construction by year-end 2015. The first project will be done in conjunction with Hard Rock International, which Yida expects to start in 2016, and will include a hotel casino, waterpark and café.
Other projects to follow in 2015 SunnyHill Group Limited will construct the Sunny Hill Willoughby Bay resort, a 480-unit world-class hotel at a cost of US $200MM, following the inking of an MoU on the investment group’s behalf. The construction will take place in four phases and employ some 1,000 workers. The resort will be constructed on 100 acres of land. Construction with phase one is expected to complete within two years. The former K Club Resort in Barbuda will be revitalized with a new $250MM project. An agreement with James Packer of Australia and famed actor Robert DeNiro for the redevelopment is in place with Government. Construction is slated to commence in 2016 once all approvals are in place. The Resort at Hodges Bay, formerly known as the Hodges Bay Club, is expected to open in July 2015. The luxury resort property is owned by Jeff Wellemeyer and John Goard of JSN Holdings who invested US $100MM into the project. The resort will employ some 200 Antiguans. The resort plans to inaugurate 75 additional villas in early 2015.
Tourism Policy & Initiatives A&B, Montserrat to cooperate in tourism PM Gaston Browne and Montserrat Premier Romeo announced a joint commission on cooperation in tourism, among other areas. Included among cooperative measures is ferry fees between the islands being reduced to EC $50.
Tourism is focus of budget statement In his 2015 Budget Statement, PM Browne noted that the economy derives 80% of GDP from tourism, and thus the government will focus on securing airlift aboard COPA and Avianca to ensure connections to Latin American markets. Cruise tourism will also receive attention with the modernization of St John’s as both a commercial and cruise port as well as upgrades to cruise facilities. The PM projects that cruise arrivals will surge from 551 thousand in 2014 to 700 thousand this year. The PM emphasized that the ECCB has forecasted growth of +4.2% in 2015 and highlighted international relationships in tourism that will benefit the outlook: • China provided concessional funding for the new airport terminal and the college on Five Islands. The Republic also provided funding for a cataract clinic at Mount St John’s Medical Center (MSJMC), solar-powered street lights and most recently, signed an agreement for a $675MM port facility, which includes dredging and the renovation of the port at St John’s. • Tourism investments announced include Sunny Hill Groups $200MM, 400-unit project; Beaches Resort by Sandals US $150MM, 400-room property; Restoration of Half Moon Bay Property by Replay Group; Five-Star, US $120MM Morris Bay Project; Sun Wing Group’s 500-room, US $150MM project; US $2B YIDA Int’l resort; and K-Club’s US $250MM luxury resort in Barbuda.
Tourism Authority VP meets with stakeholders in Toronto
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The Antigua & Barbuda Tourism Authority (ABTA), led by VP Marie Walker, met with various representatives of the hotel industry, tourism companies and luxury travel magazines during a weeklong mission to Toronto to renew commercial ties with the North American country. Walker engaged those responsible for the Canadian marketing of such resorts as Jolly Beach, Sandals and Carlisle Bay, as well as tour operators WestJet, Air Canada Vacations and Travel Brands.
antigua and barbuda Changes to Tourism Authority proposed Minister of Tourism Asot Michael has proposed an amendment to the Tourism Authority Act 2008 to the House of Representatives, which would reduce the number of members on the Board from 13 to 9 and eliminate the 19-member Advisory Council. The amendment calls for a decrease in Board fees as well. The reduction in the number of Board members would result in a more streamlined process of decision-making, improved efficiency and an overall reduction in costs. Michael said this amendment could have a positive impact on the promotion and international exposure of the island. The Antigua Hotels and Tourist Association (AHTA) supports this Bill.
Tourism Authority attends travel show The A&B Tourism Authority attended the New York Times Travel Show January 23-25. The show was an opportunity to promote the new A&B Insider Program (ABIP) app that allows for travel agents to become knowledgeable of the islands. The ABTA booth garnered attention with the help of tropical fruits and a steel pan band.
Tourism Minister meets with CTO over debt Tourism Minister Asot Michael has negotiated a debt reduction with the Caribbean Tourism Organization. Michael met with members of the organization before the Caribbean Marketplace convention and committed to a payment of $55,207 for overdue membership fees from 2010 and 2011, a reduction of (75)% from the original debt. A payment plan was also established for the remaining balance of nearly $400,000.
Tourism marketing budget slashed A&B’s marketing budget for 2015 is EC $9MM, nearly half of the total EC $20MM for the entire Ministry of Tourism. The new marketing manager Marie Walker plans to use creative ways to market the country to the US and Canada, given the minimal budget. Walker plans to use giveaways, social media, advertising and public relations, as well as relationships she has personally built to compensate for the lack of funds.
A&B to tout cricket, sports tourism A&B will be branded as a sports tourism destination, specifically for the Caribbean Premier League Games. The cricketing event could provide for an economic boost and will be assessed to determine the impact. A cricketing academy will be established and marketed internationally, providing a boost to the hospitality sub-sectors and communications sector.
New hotel, restaurant proposed at Pavilion site Cabinet voted to purchase the Stanford-owned Pavilion Restaurant as well as the 7 acres of adjacent land. Government is seeking a private partner to acquire Pavilion and transform it into a hotel. The Chamber of Commerce & Industry is considering the partnership, but not without determining its feasibility. The purchase of the property would allow Stanford workers to be paid the money owed to them from 2009.
Sailing Week a priority Tourism Minister Asot Michael met with the organizers of Antigua Sailing Week (ASW) to develop a strategy to reinstate the once prestigious status of the event. ASW has shown a significant decrease in the number of participants over the last 30 years, dropping to 100 participants last year from 250 in the 1980s. Michael also emphasized the need to engage local tourism stakeholders including shop owners and artists to turn the event into one of national pride and not just a yachting event. The event has potential for a great economic benefit for A&B.
A&B attends Cruise Shipping Miami
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A tourism team, led by Minister of Tourism Asot Michael, attended Cruise Shipping Miami 2015 March 16-19. The team met with each cruise line in attendance, updating them on the dredging of the harbor, the depths at Nevis Street Pier and Heritage Quay Pier and the new harbor lights and navigational aids. Michael was also pleased to announce the plans for the development of the St John’s Harbor and the bunkering services that will be offered after Government acquires WIOC.
antigua and barbuda Direct flights to again link A&B, Milan Following a tourism delegation visit to Germany, Italian tour operator Eden Viaggi has committed to the reestablishment of direct flights from Milan to Antigua in December 2015. This will increase the number of seats to 130 weekly and will be shared with the Dominican Republic to service their Eden Village Club. During the visit, Tourism Minister Asot Michael also attended the CARICOM Energy Conference, which explored Green Energy opportunities in A&B and held a meeting with other Ministers of Tourism at the International Hotel Investment Forum (IHIF). Discussions surrounded strategies for tourism investment promotions and reasons for international investment in the sector.
Ministry of Tourism, Tourism Authority strategize A two-day strategy and planning meeting between the Ministry of Tourism (MoT) and the Antigua & Barbuda Tourism Authority was held at the Antigua & Barbuda Hospitality Training Institute. The workshop was specially oriented to technicians from the product development and marketing bodies to develop more ways to regain the island’s status as a preferred tourism destination. Marketing plans for 2015 were also discussed, with focus on the North American market for brand repositioning and recreating the thrill for the destination. The plan for the UK will be to target tourists with the potential to travel during the off-peak periods of May-June and September-October, and to grow the business from mainland Europe. As for the regional market, the focus will be to attract more business around key events such as Cricket, Carnival and Sailing week.
Sector Developments Declining arrivals behind IMF’s lowered growth projections The IMF has revised downward A&B’s economic growth projection for 2015 to 2.1%. In 2014, the projection was previously set at 2.4%. The revision is due to the decline in tourism arrivals from October 2014 to February 2015. In January and February alone, tourism arrivals declined (8)%. The IMF did note that positive indicators for growth include the new airport terminal and the decrease in oil prices.
Insurance mandated for airport vendors
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Vendors at VC Bird International Airport’s new terminal will be required to take out $20MM in insurance coverage in order to operate. These policies include Products/Liability insurance, Commercial General (public) Liability insurance, Employers Liability insurance, Property insurance, and Fire and Explosion insurance. Vendors are also being asked to pay $10 per square foot for their kiosks, an increase of $6 per square foot from their current rent. The increases in prices to operate in the new terminal could push vendors out of business.
antigua and barbuda LIAT fuel surcharge slashed LIAT will reduce the fuel surcharge by (50)% effective January 15. The decrease will benefit passengers, due to a decrease in the cost of tickets and is aligned with the current falling prices of oil.
Changes for LIAT base and its staff LIAT is shifting its base for the airline with plans to house 4 ATR aircraft in Barbados, 2 in Antigua and 2 in Trinidad. The announcement came despite A&B’s $8.5MM injection to LIAT increasing its membership on the board to 3. LIAT Chairman of the Board SVG PM Ralph Gonsalves announced that the change in base was due to the fact that Barbados is the most trafficked island for LIAT patrons, therefore making it the best option for the base. LIAT also plans to cut its staff by 180 offering a voluntary separation package. Currently, there are 600 staff members for an 8 aircraft fleet.
Hotels accused of exploiting training program Hotels in A&B are being accused of exploiting the government’s hospitality training program by scheduling trainees (paid by the government with a stipend) instead of trained hotel workers. Chester Hughes of the A&B Workers Union supports the government training program but feels workers should be first trained at the A&B Hospitality Training Institute and not sent to the hotels completely untrained. The trainees are supposed to be acting in an apprentice role, but according to Hughes, they are replacing existing workers. The Antigua & Barbuda Hotels & Tourist Association does not condone these practices.
Success through investment at Barbuda Cottages The owner of Barbuda Cottages is encouraging others to invest in the tourism industry based on her success. The developer added three cottages in 2014 and has had full bookings since. The first unit constructed was completely self-sufficient in 2009 with solar panels and well water.
Siboney may be sold The owner of Siboney Beach Club, Tony Johnson, may be selling his hotel, possibly taking it public. Johnson, although a foreigner, would like to see the hotel purchased by Antiguans so as to keep the islands from being disenfranchised.
New ferry facilities at Heritage Quay Montserrat opened a new ferry facility in Heritage Quay, Antigua March 13. The new terminal has a bar, restaurant and lounge. An information desk is also available to tourists. A ferry check-in point and immigration offices are expected to be added to the facility as well. The new facility is a far cry from the congested and poorly accommodated previous facility.
Barbuda Council taps Burton The Barbuda Council now has a Project Development Officer. Veneta Burton was formerly a Tourism Director for A&B. Burton plans to offer training for tourism service providers including taxi drivers. She is also seeking to regularize duties, fees and government procedures related to tourism.
Walker, Flambert new Tourism Authority VPs
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The A&B Tourism Authority has named Marie Walker and Jean-Marc Flambert as the new VPs of Sales and Marketing. Walker, who is responsible for the US and Canada, previously worked for the Anguilla Tourist Board and Jamaica Tourist Board. Flambert, who is responsible for the UK and Europe, has worked in tourism for Sri Lanka, St Lucia and Haiti.
Aruba
Overview and Landscape ARUBA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
1.1
2.4
Drop in public consum/invest
Inflation %
0.4
0.7
Water tariff drop impact wanes
Source: See Note 1 (final page)
The economic recovery in Aruba has slowed. Tourism has performed well, but domestic demand remains weak in the context of low consumer demand and uncertainty regarding fiscal policy. Growth will reach +2.5% in 2015, paced by tourism and a slight recovery of domestic demand. Following the refinery closure, the work force has shifted toward the tourism sector, which has demonstrated its resilience and capacity to continue to expand. Aruba reached a record level of arrivals in 2014 and reported tourism revenues up +7.4% through the third quarter. An estimated 88.4% of GDP is now generated by tourism. Aruba will focus efforts this year on tourists that earn over US $150k per year, and seeks to continue to boost RevPar.
Consumer prices dropped MoM in February, placing 12-month point-to-point inflation at 0.7%. Average inflation for the period was 0.6%. Electricity rates have not felt the impact of the drop in international oil prices, as a result of the utility WEB’s fuel oil hedging strategy. The hedge in place was set at US $85 per barrel, yet breaking the hedge contract would cost the company as much as Afl 100MM, making it unfeasible. Growth will be supported in 2015 by continued improvements in the US economy, which is a major source of tourism. Furthermore, construction in the tourism and real estate sectors will benefit overall economic activity. Exposure to the Venezuelan source market could offset improvements from other tourism markets in 2015, and is a critical theme to watch. Real GDP is expected to expand +2.4% in 2015. > Tourism impacts of Cadivi elimination in
3
Venezuela
Things > Pace of execution of investment projects to Watch > Impacts of budget approval and relations
with the Netherlands on consumer confidence
Tourism Performance
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Aruba welcomed 294,411 visitors in Q1 2015, growth of +20.2% YoY. Q1 2015 saw robust growth from non-traditional source markets such as Venezuela. Venezuelan arrivals more than doubled YoY to 90,528 (up +120.7% YoY), allowing the market to nearly double its share of total tourism to reach 23.4% of total arrivals. This helped Latin America gain a 30.7% share in total arrival to Aruba. The US accounted for 55%, down from 61.6% in Q1 2014. Arrivals from the US were up +7.3% YoY and arrivals from Canada rose +8.2%. European arrivals declined (12.2)% YoY.
aruba Tourism results have been promising in early 2015. Hotel occupancy in February moved up +4.3 points YoY to 86.1%. ADR and RevPAR also grew in February up +11% and +17%, respectively. The average nights stay was down YoY for all three months of Q1 2015 to 7.6 in January, 7.4 in February and 6.9 in March. The number of cruise passenger arrivals continued to decline after falling (3.1)% YoY in 2014 to 667,095. For Q1 2015, cruise passenger arrivals dropped (16.8)% YoY to 214,991. The number of ship calls was down (14.3)% YoY to 114 for the quarter. Cruise arrivals are expected to fall in 2015 to 615,524 and recover in 2016 to 705,544. Tourism arrivals grew at a robust pace of +9.5% YoY in 2014, reaching 1,072,082. Arrivals from the US grew only +3.7%, far outpaced by South American source markets, which grew +26.8% led by Venezuela and Colombia. The total for Latin American visitors reached 336,364 last year, just short of a third of total arrivals. Revenue per available room reached US $185.46 in 2014, up from US $127.02 in 2009 and growing +20% YoY in 2014. Occupancy was up to 79.3%. Tourist receipts increased +4.9% in Q1’14, +4.9% again in Q2 and +7.6% in Q3. ARUBA STAY-OVER ARRIVALS (IN 000'S) YEAR 2010
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
71.2
67.7
77.2
69.2
64.4
60.2
75.2
73.0
58.3
67.0
63.2
77.7
824.3
2011
74.6
68.7
76.9
79.5
65.1
67.9
80.9
79.3
63.6
65.0
66.6
81.1
869.0
2012
71.6
72.4
80.6
78.0
65.8
72.9
80.9
83.5
69.5
65.6
73.2
90.1
904.1
2013
75.8
74.0
89.8
76.0
72.7
77.0
87.7
88.3
72.6
76.7
88.3
100.3
979.3
84.1
78.1
82.7
96.0
102.0
84.5
92.6
97.2
109.9
1,072.1
2014
82.9
79.0
83.1
2015
100.9
90.0
103.5
2013YTD
75.8
149.8
239.6
315.7
388.4
465.4
553.1
641.4
714.0
790.7
879.0
979.3
979.3
329.1
407.2
489.9
585.8
687.9
772.4
865.0
962.2
1,072.1
1,072.1
2014YTD
82.9
161.9
245.0
2015YTD
100.9
190.9
294.4
YTDΔ YoY '15
21.7%
17.9%
20.2%
294.4
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Factors behind the transition in source markets Venezuelans are increasingly using Aruba as a hub to connect to other destinations. In Feb 2015, the number of Venezuelans spending only one night in Aruba grew from 584 to 3,978. The number of Venezuelans staying 7 nights or more in Feb 2014 was 1,300 and in Feb 2015 was 3,847. Those staying 8 days grew from 448 to 1,501. The Tourism Minister indicates that Venezuelan tourists visit Aruba to buy at supermarkets and store goods that they cannot find at home, adding a major boost to consumption. The Minister recently classified Venezuelan tourists into three major categories: regular travelers that stay at condos, apartments or hotels; those that use Aruba as a hub to connect to other global destinations; and those that come to access their government-allowed annual purchase of US dollars. In 2014, a total of 249,500 Venezuelan tourists reached Aruba, with 32,000 staying one night, paying hotel, taxi, airport tax, food and expenses and contributing to the local economy. There have been concerns recently since the level of expenses in US dollars authorized by the Venezuelan government to its citizens travelling to Aruba is insufficient to cover daily expenses.
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A major pull-out of airlines from Venezuela, due in large part to billions of dollars in arrears by the Venezuelan government in settling foreign currency payments, has also been a contributor to the use of Aruba as a hub. Aruba connects to several major cities in Venezuela with regular flights and is one of the few remaining alternatives for Venezuelans to travel internationally.
aruba Aruba received 24,733 Brazilian tourists in 2014, showing growth of +6.2% YoY. The Aruba Tourism Authority cites that Brazil represented the 5th largest source market, after the US, Venezuela, Canada and Holland. Brazilians indicated that pleasure travel was the motive of 65% of their trips, with weddings, shopping and honeymoons cited as other top factors. Connections to Aruba from Brazil include the direct flight from Manaus on InselAir and multiple connections through Colombia, Panama and Venezuela. Strong performance from the UK source market was noted in 2014, as UK arrivals grew +12% YoY to surpass the 10 thousand tourist mark at 10,447. Additionally, arrivals from Ireland were up +34% YoY. Since charters from London Gatwick to Aruba aboard a 291-passenger Boeing 787 Dreamliner will run an additional month in 2015, this figure is expected to further grow. Thompson Holidays and First Choice will operate through November 17. Furthermore, KLM, which services 16 UK airports, also provides 5 flights weekly to Aruba. Aruba’s economy remains highly dependent on tourism. The WTTC estimates that some 88.4% of total economic activity is contributed by the tourism sector. The refinery closure has caused a major shift in employment towards the sector. The WTTC calculates that 90.8% of total employment (including indirect) is supported by tourism. Providing an estimated 46 thousand jobs in 2014, the sector will contribute 1,000 additional jobs to the economy in 2015. The sector is worth an estimated US $2.3B to the country. ARUBA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
2,328.7
3,148.3
3.2%
2.7%
Total contribution to GDP % Share
88.4%
94.0%
n/a
n/a
Visitor exports US $MM
1,599.0
2,163.4
2.9%
2.8%
126.0
164.4
4.7%
2.2%
1,629.1
2,206.7
2.8%
2.8%
Business spending US $MM
95.8
121.1
6.6%
1.7%
Capital investment US $MM
187.0
262.5
4.8%
3.0%
Domestic spending US $MM Leisure spending US $MM
Source: World Travel & Tourism Council Economic Impact Report 2015
Growing reliance on Venezuela as a source market requires close attention. The dire economic situation in Venezuela, which will see its economy contract by over (7)% this year according to projections from the IMF, could mean a drop in tourism to Aruba or a transition in the type of tourist that arrives. The amount of foreign currency that Venezuelans are allowed access to per day of travel to Aruba does not cover the costs of hotel, not to mention transportation, food and entertainment. Many may prefer to use Aruba as a hub and continue on to other markets where they can arrive at a lower cost. The immense pressures on Venezuela’s currency, in light of the drop in oil prices and the continued policy of printing money, will make it more difficult for Venezuelans to finance their travel at the black market rate (which had been devalued 72% YoY at the end of Q1 2015).
Market Access More airlift from Colombia
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A new airlift connection to Bucaramanga from Aruba is expected to be in place by May. The Colombia connection aboard InselAir received permission from Colombian aviation authorities in December. The airline has bolstered its routes to Colombia, which will provide a favorable offset to the risks in the neighboring Venezuelan market that is facing a severe economic crisis and could thus see a drop in tourism to Aruba in 2015.
aruba Aruba Airlines hopes to enter Florida market Aruba Airlines is seeking to service the Florida market. The company has applied for a US Dept of Transportation permit as a Foreign Carrier to service the route. The company operates using A320-200 aircraft.
InselAir connects Aruba, Brazil Airlift to Brazil aboard Insel has begun, connecting the island to the South American city of Manaus. The airline operates the direct flight on Wednesday and Sunday. The route is expected to provide a gateway to the Caribbean from Brazil, as it does a gateway to Brazil from the islands.
Insel expands fleet InselAir has acquired its 17th aircraft (an MD previously owned by American Airlines), which is in line with a growth strategy that will see the carrier expand its fleet by several more planes in 2015. The airline also intends to increase its number of destinations to 26 by the end of this year, with new stops including Havana, Cuba; Cali and Bucaramanga, Colombia; San Juan, Puerto Rico; and Quito, Ecuador.
Flights added from Venezuela Venezuelan carriers announced new airlift options to Aruba amid a political and economic crisis that has greatly reduced number of international flights. Santa Barbara airlines has opened new routes to Aruba, providing travel arrangements through a network of travel agencies. The airline has indicated that Aruba has become its second most demanded destination. Meanwhile, Albatros Airlines will begin servicing Aruba through Las Piedras (Paraguana) from Caracas, Maracay and Porlamar (Margarita Island). The company will service the routes using a Boeing 737-500 aircraft.
Ferry could connect Aruba, Bonaire, Curaçao The possibility is being explored to connect Aruba, Bonaire and Curaçao via ferry. The project would leverage synergies in Customs and immigration and strengthen cooperation in areas such as tourism, culture and sports. Following a feasibility study, Ferry Onderzoek Inter Caribbean Express could be launched within 6 months, if approved by all governments.
Arkefly to connect Eindhoven Airport to Aruba Direct airlift on Arkefly will be made available weekly from Eindhoven Airport in the Netherlands, beginning November 1. The route will be operated using a Boeing 787 Dreamliner with capacity for 288 passengers. The airline hopes to facilitate connections from other markets such as Belgium and Germany.
Southwest connects Houston, Aruba Southwest Airlines has launched flights to Aruba from Houston Hobby. The service will be operated once weekly on Saturdays. This is Southwest’s first international flight out of Hobby, and is possible because of Aruba’s US Customs Pre-clearance at the Queen Beatrix International Airport.
Tiara Air to resume operations Tiara Air has obtained its Air Operator Certificate, which will allow the Aruban airline to resume flights. The company was forced to cease operations temporarily after the Venezuelan government withheld payments to the carrier for an extended period of time. The airline has since restructured to be less dependent on Venezuela, and has reached agreements with its creditors. The new start date for routes will be announced in the coming weeks.
Pre-clearance with the Netherlands in the cards
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Progress on the Happy Flow and Pre-clearance (EU Schengen) project continues at the Queen Beatrix Airport. The first phase of Happy Flow will be launched in May, using biometric check-in, bag drop, border control and boarding. Aruba seeks to attain a
aruba pre-clearance arrangement with the Netherlands, which would allow passengers boarding in Aruba to clear Customs and Immigration before boarding, simplifying connections to their destinations in Europe.
Insel commences pre-clearance flights Insel has begun pre-clearance on its Miami flights from Aruba, which allows passengers to pass through US Immigration and Customs before boarding in Aruba. Insel currently services the route to Miami with daily non-stop flights and pre-clearance is now available Monday-Friday allowing passengers to connect upon arrival to Miami as if on a domestic flight.
Tourism Construction Tourism focus in development project The development project of San Nicolas was recently presented by the Aruba Investment Bank, with a master plan that highlights tourism development and business opportunities. An emphasis was placed on transforming Zone I and Zone II and fostering the creation of MSMEs, and interest has been high from the private sector and investors. Minister de Meza has introduced fiscal incentives to Cabinet for doing business in San Nicolas.
Tourism Minister visits condo project The Swiss Paradise Aruba boutique tourism condominium project was recently reviewed by the Tourism Minister. The Swiss Paradise project includes the refurbishment of 16 villas and the expansion of 6 new villas. The project entails an initial investment of US $6MM and a second-phase investment of US $10MM, and the Ministry hails the project’s focus on incorporating green technology into the tourism offering.
Other projects to follow in 2015 > The Bahia Principe Hotel at the Seroe Colorado coast, San Nicolas is expected to open in the summer of 2016. The 950-room facility will include a leisure complex, theater, casino, restaurants, gym and spa, among other amenities. The hotel, to be built by Grupo Pinero, will operate under the Mallorca-based Don Pablo Collection brand.
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> Investments in the airport will be rolled out to improve efficiency and enhance the traveler experience over the next 2-5 years. The investments are estimated at cost US $100MM to US $150MM. The airport has recently implemented Automatic Passport Control Kiosks, US Customs and Border Patrol pre-clearance on US-bound flights. Other improvements to come include the elimination of baggage claim before passing through US immigration and the need for two security checks. Making Wi-Fi available and installing charging stations for mobile devices is another part of the project. Pre-clearance for countries in the European Union will begin soon as a pilot project.
aruba Tourism Policy & Initiatives Aruba, Curaçao disagree on visa waiver Aruba has expressed its disapproval of Curaçao’s decision to waive the visa requirement for Colombian travelers, as stated by Minister of Justice Nelson Navarro. Though no rationale has yet been offered publicly for the objection, Aruba adds its voice to that of the Netherlands, which disapproves of the action out of concern that it will allow criminals to travel to the island unimpeded.
Colombian goods in support of tourism As part of a cooperation agreement, Colombia will provide agricultural goods for Aruba’s tourism industry. The agreement was reached during a recent trip to Colombia by Minister Mike de Meza and an Aruban trade delegation. Colombia remains one of the top tourism source markets, and roughly 10% of Aruba’s population is of Colombian decent.
ATA seeks airlift in Colombia The Aruba Tourism Authority recently staged a meeting of their Latin American marketing directors in Bogota. The ATA met with representatives of Avianca Airlines, LAN and Copa. Furthermore, the executives mulled through media and public relations plans, and benchmarked the best practices regionally. Aruba’s top target markets are Argentina, Colombia, Chile, Venezuela and Brazil. These markets have performed extremely well for Aruba in recent years. Colombian tourism to Aruba grew at a pace of +22% last year, when Aruba received 23,836 Colombian visitors.
Trade mission prepares to head to Cuba Tourism will be a major component of a trade mission to Cuba, to be led by the Chamber of Commerce (KvK). The delegation will travel from June 8-12, 2015, exploring opportunities in tourism, and a number of other areas. Furthermore, the KvK seeks to foster greater cooperation with its counterpart organization in Cuba.
Sector Developments Bunde to lead Hyatt
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Joel Bunde has been named the new General Manager of the Hyatt Regency Aruba. Bunde’s previous work in the region included a role as Executive Assistant Manager at Hyatt Regency Curaçao Golf Resort Spa & Marina.
Bahamas
Overview and Landscape Indicator
2014e
2015f
Comment
GDP Growth %
1.0
2.3
Baha Mar opening delayed
Inflation %
1.0
1.9
Impacts of fuel surcharge & VAT
Source: See Note 1 (final page)
The economy continued on a path of moderate positive growth into early 2015. Driving growth were ongoing gains in tourism and foreign investment-led construction. The tourism sector makes up roughly half of the economy and generates an equal proportion of the nation’s employment. Five hotels and thousands of rooms are currently under construction in the Bahamas. Stay-over arrivals increased +4.9% YoY in 2014, with air arrivals reaching 1.34 million, largely by the opening of the Memories resort in Grand Bahama. Unemployment in the Bahamas stands at 15.7%. Government is expected to engage more actively in reducing energy costs, which is a crucial step in the development of the Bahamas’ economy. At 40 cents per kWh for residential customers and 44 cents for non-residential customers, the Bahamas has among the highest electricity costs in the region. Annualized consumer price inflation was 0.25% for the 12 months to December. Consumer price inflation is expected to remain low, with the VAT introduction impact to be partially offset by lower energy prices. A change to the Tariff Act is expected to provide an economic boost to East and West Grand Bahama. Under the new
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amendment, duty free concessions are available to businesses in need of equipment, fixtures and supplies. Business owners may also purchase an automobile duty-free, if the vehicle is intended for the sole use of the business, and gas related to business travel will also be duty free. The concession is available to those building a home in East or West GB as well. Foreign investment-driven construction and tourism will continue to be the backbone of the economy in 2015, and continued economic improvement in the United States will be a major contributor as well. Government is actively seeking out new tourism markets, with an emphasis on Latin America and Asia. The opening of Resorts World Bimini, with its superfast ferry connection to South Florida, and Baha Mar will be important determinants of tourism results for the remainder of 2015. Increased airlift will be necessary to ensure the viability of the four hotels that will eventually open at the Baha Mar facility.
3
Things to Watch
> Opening date for Baha Mar remains unclear > High fiscal debt and impacts of VAT > Persistently high NPLs in banking sector
Tourism Performance Stay-over arrivals increased +4.2% YoY in 2014 to 1.42 million. The spike was driven largely by the opening of the Memories resort in Grand Bahama, where stay-over numbers increased to 127,944 from 89,475. Cruise passenger arrivals grew +2.0% YoY to 4.8 million.
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BAHAMAS ECONOMIC INDICATORS AND FORECAST
bahamas The US continued to be the main source market, accounting for 77.5% of arrivals for the year. Canada brought 10.1% of arrivals and Europe supplied 5.8%. Canada proved the most rapid growth market, contributing +16.5% more visitors YoY at 144,087. Arrivals from the US grew +3.4% YoY. The Bahamas had 15,300 hotel rooms available in 2014, adding a net of +164 with respect to the prior year. A total of 434 new rooms became available in Grand Bahama during the year and 98 in Abaco. Meanwhile, Bimini lost 96 rooms YoY. Hotel occupancy improved YoY in 2014 to 56.9%, up +5 points YoY. The number of room nights available dropped (17.7)% YoY to 3.44 million. The number of occupied room nights dropped (9.7)% YoY to 1.95 million. Room revenues contracted (13.2)% YoY to $385MM. The average Daily Rate was US $197.04, down (3.9)% YoY. BAHAMAS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
91.3
104.9
157.9
130.3
127.2
145.6
157.4
120.0
57.3
74.3
93.6
110.4
1,370.1
2011
84.0
106.2
152.8
139.5
117.0
142.2
157.1
105.3
61.8
69.8
95.5
115.0
1,346.4
2012
92.2
114.6
163.5
143.7
122.0
152.9
157.8
127.6
62.6
70.6
98.7
115.3
1,421.3
2013
88.6
105.7
165.0
121.1
123.9
143.2
146.3
126.9
56.6
72.7
95.0
118.4
1,363.5
2014
91.9
113.1
158.6
140.9
130.2
141.8
155.9
128.5
59.1
81.4
94.5
125.9
1,421.8
2013YTD
88.6
194.3
359.4
480.5
604.4
747.6
893.9
1,020.8
1,077.4
1,150.1
1,245.1
1,363.5
1,363.5
2014YTD
91.9
205.0
363.6
504.5
634.7
776.5
932.4
1,060.9
1,120.0
1,201.4
1,295.9
1,421.8
1,421.8
YTDΔ YoY '14 3.7%
5.5%
1.2%
5.0%
5.0%
3.9%
4.3%
3.9%
4.0%
4.5%
4.1%
4.3%
2015
2015YTD Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
For January 2015, air arrivals to New Providence increased +13% to 74,361. Hotel occupancy increased +7% YoY in January, while the average daily room rate jumped +11%. Large hotels saw their room revenues increase +13%. This year’s “Battle 4 Atlantis” basketball tournament resulted in $102MM in free publicity for the resort, a +165.8% YoY improvement, according to Brookfield Managing Director George Markantonis. The figure is the amount the Atlantis would have had to pay for the equivalent marketing and publicity that was provided by the tournament’s television coverage. The tournament generated 4,500 room nights for the Atlantis, and 30,000 ticket sales. The WTTC estimates that the tourism sector contributes 43.6% of economic activity in the Bahamas, and anticipates the contribution of the sector will increase to 51.4% by 2025. The sector accounts for US $3.78B in activity per year. The WTTC estimates that the sector contributed 98,000 direct and indirect jobs in 2014, which the organization expects will reach 103,000 in 2015. BAHAMAS TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
3,783.9
5,655.3
6.3%
3.5%
Total contribution to GDP % Share
43.6%
51.4%
n/a
n/a
Visitor exports US $MM
2,261.0
3,562.5
7.8%
3.9%
598.4
701.0
0.4%
1.6%
Domestic spending US $MM
2,589.7
3,839.9
6.2%
3.4%
Business spending US $MM
269.7
423.6
7.1%
3.9%
Capital investment US $MM
417.9
600.7
4.1%
3.3%
Leisure spending US $MM
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Source: World Travel & Tourism Council Economic Impact Report 2015
bahamas Market Access Highlights from the China-CELAC Forum • China Eastern Airlines is planning to conduct a feasibility study that could result in direct flights between China and the Bahamas. The possibility of a strategic partnership with China and Bahamasair was discussed as well. • Also resulting from the forum was an $8MM commitment from China for public sector projects that will have a social, economic and touristic impact. • Bahamian officials discussed the possibility of a Chinese hotel management company being placed in charge of the Baha Mar resort, and having Chinese investors take over the development in Grand Bahama that Ginn was unable to carry out.
Tropic Ocean conducts maiden flight to Cat Cay Ft Lauderdale-based Tropic Ocean Airway’s maiden voyage from Florida to Cat Cay took place on January 6. The service was conducted aboard a Cessna Grand Caravan EX. The airline announced it intends to expand its services to the Bahamas, including the introduction of land-based services this month.
Charter flights boost economy Charter jet arrivals generated $387.6MM for the economy, as Nassau was the region’s top destination for charter arrivals. The figures were revealed by top private jet magazine Elite Traveler. Nassau alone generated $278MM, from 4,034 arrivals, with Abaco accounting for $64MM from 930 arrivals, good for fifth on the magazine’s list. North Eleuthera also figured prominently, placing eighth with a $45MM impact from 654 arrivals.
Balearia seeks to expand services The Spanish-owned Balearia ferry is seeking to increase its services to Nassau, and is currently in negotiations with Government to provide a ROPAX service that would deliver passengers and cargo to Nassau Container Port’s Arawak Cay facility. Balearia had already met a number of times with the Arawak Port Development Company about bringing a thrice-weekly service from Ft Lauderdale, Florida to Nassau. The size of vessel that Balearia is proposing is currently unknown, as is its passenger capacity, though an agreement would stand to bring thousands of additional visitors to New Providence on an annual basis.
Ferry connects Florida, Grand Bahama Fast ferry service between Fort Lauderdale, Florida and Grand Bahama commenced February 26. The service is provided by Balearia Bahamas Express’ new ferry, the 1,000-passenger Bahama Mama. The $1MM vessel replaces the 463-passenger Pinar de Rio.
Tourism Construction PPP with Bahamas Striping to improve Family Island airports The Bahamas Striping Group of Companies (BSGC) has submitted $50MM in proposals for the works related to the airports and roads on 10 Family Islands. The goal is to bring the airports up to International Civil Aviation Organization (ICAO) and US Federal Aviation Administration (FAA) standards. A public-private partnership (PPP) framework was established between Government and the company in June 2014, and a draft Memorandum of Understanding (MoU) was received in April, indicating that the PPP is advancing.
Stantec tapped for airport redevelopment
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Canadian firm Stantec has been hired to develop a master plan for the redevelopment of four leading (“first tier”) airports in the Family Islands (in Exuma, San Salvador, North Eleuthera and Governor’s Harbour). Government is seeking to overhaul all 28 airports in the Bahamas (an estimated $185MM investment) in order to meet international standards, increase air traffic and boost the economy. The upgrades will include physical improvements as well as introducing new leadership/management talent. Stantec is expected to have developed the master plan within the next three months.
bahamas Boutique resort planned for Deepwater Cay A 40-room boutique resort will be developed at Deepwater Cay, a private island off the SE coast of Grand Bahama, following the finalization of a letter of intent, which is currently in the works. Deepwater Cay also has a number of $400,000 half-acre lots available for private home construction. The island has seen $30MM in investments to date.
Other projects to follow in 2015 • Government will spend $100MM to rehab 28 of the country’s airports. Minister of State for Investments Khaalis Rolle has indicated that though all of the Bahamas’ airports are compliant with International Civil Aviation Organization (ICAO) standards, a number of the facilities are deficient. • A $123MM investment is in store for the 534-acre Abaco Club, which was purchased by the Abaco Club homeowners group, Southworth Development LLC, and the investment group behind Cat Island’s PGA village project. The property was purchased from Marriott Vacations Worldwide. A planned $225MM full build-out will bring the total investment to $348MM. The purchase price has not been disclosed, though Marriott had been seeking $28MM, which it had originally hoped to exact from the homeowners group. • Associated Island Developers will proceed with its Exuma Island resort development. Boutique Macana Resort at Escape Cay appears now to be a reality after a 12-month wait for approval from the Bahamas Investment Authority. The property will include 36 residential vacation home sites with 30 lots for sale, as well as 12 overwater bungalows. Driftwood Hospitality Management Group will oversee management duties.
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• The British Colonial Hilton was purchased by the China State Construction Engineering Corporation (CSCEC), with the deal for the historic Nassau hotel finalized on October 24. CSCEC is undertaking a major $750MM rehabilitation of the downtown area, and government officials believe that the purchase of the Hilton is a watershed moment in the rejuvenation of Nassau. Terms of the deal have not been announced.
bahamas Tourism Policy & Initiatives Government, China ink ASA MoU With Government seeking to increase visitor arrivals from Asia, the Bahamas and China have signed a Memorandum of Understanding (MoU) that will lead to an Aviation Service Agreement (ASA). China is seen as having a major potential impact on the Bahamian tourism industry and the economy in general, and an ASA could be a critical strategic step in boosting tourist arrivals with the Baha Mar resort set to open this year. The signing took place at the first Ministerial Meeting of the China-Community of Latin American and Caribbean States (CELAC) Forum, which was held January 8-9. PM Christie led a Bahamian delegation to Shanghai.
Customs account for large portion of VAT collections Of the $28MM collected by government in value-added tax (VAT) in January, $11MM came from the Customs Department.
Automated passport system in store for LPIA A $1MM investment at Lynden Pindling International Airport (LPIA) will result in the Caribbean’s second automated passport control (APC) system. APC kiosks, which were installed in Aruba in 2014, have been known to cut wait times by as much as half. The cost of the system was underwritten by the Ministry of Tourism, the Nassau Paradise Island Promotion Board and international airlines operating at LPIA.
New Bight to bring international airport to Cat Island Cat Island is in line for a new international airport, according to Minister of State for Investments Khaalis Rolle. Preliminary work on an improved New Bight International Airport is underway, which includes drawing up plans for a terminal building and other facilities. Government will be able to provide a rough estimate on a start and end date once that technical work has been completed. An expansion of New Bight was first promised in 2008, and it is seen as necessary for the development of the island and particularly the new PGA Village, the construction of which hinges on a new airport.
Stem cell therapy to attract tourism dollars Stem cell therapy is a reality in the Bahamas, as PM Christie’s January 14 speech marked the official launch of the stem cell therapy industry in the Bahamas. Government passed the needed legislation in 2013, and Stem Cell Research and Therapy Regulations were ratified in 2014. A stem cell industry could provide a major boost to the economy in the form of medical tourism. Meanwhile, the Okyanos Heart Institute is seeking to leverage the momentum of stem cell therapy by expanding beyond cardiac therapy. Okyanos has received approval to treat autoimmune, orthopedic, and rheumatoid arthritis ailments. Applications for five stem cell projects have been approved by the government, according to Minister of Health Perry Gomez, speaking at the debate of the mid-year budget statement. Gomez emphasized that the projects and government’s backing of stem cell development are indicative that the Bahamas is serious about building an industry that will encompass more than just research and therapy. Additionally, the Stem Cell Secretariat has received a proposal to conduct research on stem cell therapy for people suffering from multiple sclerosis.
Dive operators seek government support
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Dive operators are demanding that Government cease issuing charter permits to foreign vessels, which provide small tax contributions and introduce unfair competition to local companies. Their demands were articulated in a letter from the Bahamas Diving Association (BDA) to the Ministry of Tourism and the Port Department. The BDA is calling on all dive charter operators to pay the same Bahamian taxes to eliminate the risk of being undercut by foreign competition.
bahamas Sector Developments Crime impacts on tourism The US Department of State’s Bahamas 2015 Crime and Safety Report points to armed robbery, property theft and purse snatchings as some of the most common threats to tourists. The report describes New Providence’s crime threat as “critical.” The Bahamas is counting on a surge in tourist arrivals from the US and other markets as the room inventory is set to spike. The Baha Mar resort is expected to attract an additional 400 thousand visitors per year.
Bahamas excluded from Ethical Traveler list Due to ecological concerns, the Bahamas has again been excluded from the Ethical Traveler’s 2015 list of top ethical travel destinations. The non-profit organization cited ongoing issues related to the Blackbeard’s Cay development and new captive dolphin facilities as reasons for the Bahamas’ absence from the list for the second time in three years. The decision by Ethical Traveler could impact arrivals by tourists who place an emphasis on conservation and environmental protection.
Bahamasair pilot action Bahamasair pilots participated in a sickout in December that had Government threatening to do away with the national airline altogether. The industrial action was staged by pilots, as represented by the Bahamas Airline Pilots Association, seeking a +7% pay increase over five years. Deputy PM Philip Davis responded to the action by asserting that Bahamasair was no longer an essential service and that Government may instead choose to withdraw its latest contract proposal. Bahamasair has a long history of being unprofitable, and has depended on subventions amounting to $541MM over its 41-year history.
Optimism surrounds Q1 The Bahamas Hotel and Tourism Association (BHTA) is optimistic about Q1’15, in spite of the uncertainty surrounding the VAT launch. Though BHTA President Stuart Bowe concedes that the Bahamas is unable to offer the low prices of some destinations, and will be facing added competition as Cuba/US relations thaw, projections see Q1’15 outpacing Q1’14, with increases expected in occupancy and room rates.
Baha Mar developments and highlights Marketing agency SK+G has released a two-minute promotional video on the Baha Mar website, which advertises the Bahamas and Baha Mar as “The New Riviera.” The digital ad will be followed this year by a series of TV spots. Baha Mar will seek to negotiate with a Chinese firm to manage the former Wyndham Nassau Resort, which is currently functioning as the Crystal Palace Training Hotel. The hotel ceased being a Wyndham property in 2014. Baha Mar intends to redevelop the property following the opening of the resort. The Crystal Palace Casino closed for business on February 12, with its workforce of 55 preparing for its transition to the Baha Mar Casino and Hotel. The 100 thousand sq-ft Crystal Palace opened in 1983 as the Cable Beach Casino. The property was rebranded Crystal Palace by owner Carnival Cruise Lines in 1988. Baha Mar purchased the property in 2005. National Director for Airlift Tyrone Sawyer is confident that sufficient airlift will be in place for the Baha Mar opening. The Ministry of Tourism continues to pursue new opportunities, with a recent push made at the 2015 Routes Americas conference in Denver, Colorado. According to Sawyer, talks with airlines serving Nassau are ongoing. Baha Mar planned to open its doors in March at the time of Sawyer’s comments.
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Plans to install a deep water cooling system at Baha Mar remain in place. Senior VP Robert Sands has stated that Baha Mar is seeking to have such a cooling system in place sometime in 2016. The resort signed a five-year contract with DTEC Plant Service Ltd in August.
bahamas The planned, but not executed, March Baha Mar opening had the Bahamas Electricity Corporation (BEC) seeking to expand its generation capacity in order to meet the resort’s demand. The upgrade of four engines at the Clifton power plant was expected for completion by May, ahead of summer months when demand will further increase. The engines are expected to add 20 MW, bringing Clifton’s capacity to 100-110 MW. In the long term, Clifton is in line for a new $185MM-$200MM power plant. During the “first night on us” promotion, guests booking multiple-nights at Baha Mar between February 20-April 30 for travel taking place between May 7-September 30 received their first night free. Baha Mar is calling for an overhaul of the taxi industry that would require operators to use a specific make and model of a car that can be no more than five years old. The Baha Mar proposal also requires that all taxis include a credit card terminal. Baha Mar has called for the changes to be 100% Central Bank financed, and for duty-free concessions to be made available to taxi drivers.
Genting contributes to infrastructure Resorts World Genting Group has made a $500MM investment to date in public infrastructure and tourism destinations on Bimini Island. Speaking at the opening of the repaved King’s Highway and the North Bimini Ferry Dock, PM Christie praised Genting for the public-private partnership that has contributed to the development of the island and the Bahamian tourism product. Genting’s activities have created some controversy, particularly among locals and environmentalists who believe that the rapid development is compromising Bimini’s natural integrity and uniqueness.
Resorts World shops local Resorts World Bimini (RWB) spent over $8.6MM in 2014 in procuring local goods and services, including food and beverages, transportation and entertainment. RWB President Edward Farrell states that the spending is indicative of the company’s commitment to the economic development of Bimini and the Bahamas in general.
Resorts World, Hilton reach agreement Resorts World Bimini will operate under the Hilton Hotels & Resorts brand. The luxury marina hotel is scheduled to open in the summer of 2015 and will be the second Hilton hotel location in the Bahamas. The five-story hotel sits on a 750-acre property and includes a 10,000 square-foot casino. The Fisherman’s Village Marina and the Mega-yacht Marina, 136 and 94 slips respectively, are centrally located on the property.
Boutique hotel opens in Abaco The $3.25MM Sandpiper Inn on Abaco opened its doors on December 26. The 100% Bahamian-owned and managed Schooner Bay facility is pursuing 50-60% occupancy in the spring and summer of this year. Management expects the boutique hotel will provide a $2MM-$3MM annual economic benefit for Abaco.
Marathon to contribute to tourism economy Marathon Bahamas will generate 1,900 room nights and inject $2.6MM into the economy, according to the event’s organizers. Marathon Bahamas Director Shelly Wilson indicated recently that registrants for the marathon are up +13% YoY, with the increase fueled by international runners who will arrive from approximately 20 different countries around the world.
ICF tapped for registry
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ICF International has been selected to develop a framework for a Bahamian aircraft registry, as announced by Minister of Transport and Aviation Glenys Hanna Martin. Advocates of an aircraft registry have long asserted that such a registry (as well as a yacht registry) would be an effective way to provide a value-added service that will attract persons of high net worth.
bahamas Xanadu sale imminent The owner of the Xanadu Beach Resort is seeking to close a $30MM sale to US-based entrepreneur Kyle Houts. According to seller Mario Donato, Houts has made a $300k deposit and a contract has been drawn up. The transaction is currently awaiting proof of financing. Donato has been seeking to sell the resort for more than 4 years, with the hope that a new owner will be able to resume operations of the Grand Bahama facility.
Improvements measured at LPIA An Airport Service Quality survey of Lynden Pindling International Airport (LPIA) reveals that improvements have been made at the facility since its redevelopment. Specifically, “Waiting Time in the Check-in Queue” improved from a score of 4.07 (out of 5) in Q3’14 to 4.37 in Q4’14. “Wasting Time at Security Inspection” increased from 4.04 to 4.25. “Passport/ID Inspection” improved from 4.03 to 4.19. In “Cleanliness of the Airport,” LPIA scored 4.56. In “Courtesy/Helpfulness of Check-in Staff,” the score improved from 4.14 to 4.40. “Overall Passenger Satisfaction” improved from 4.35 to 4.40.
Markantonis, Atlantis parting ways Atlantis resort President and Managing Director George Markantonis is resigning his post after nearly a decade. He will be replaced by former Atlantis COO Paul Burke. Markantonis has accepted a position as COO of the Venetian, the Palazzo and the Sands Expo Center in Las Vegas, NV. The outgoing VP opined that the Baha Mar will not siphon off regional conference business from the Atlantis. Markantonis believes that the two mega-resorts are marketed to different travelers and that the Atlantis will be able to retain much of its market share simply by targeting family travel.
High costs stifling industry, says GBTD CEO High energy, fuel and labor costs are obstacles to the growth of Grand Bahama’s tourism industry, says Grand Bahama Tourism Development Corporation (GBTD) CEO David Johnson. Johnson, noting that Cuba’s operating costs are an estimated (60)% less than Grand Bahama’s, is calling on these high costs to be addressed in order to prevent the GB market from being undercut by Cuba as travel restrictions between the US and Cuba are eased. Cuba’s recent investment in tourism infrastructure and amenities poses another challenge to GB, says Johnson, as travelers may be persuaded to take advantage of modern offerings at a much lower cost.
Island House opens doors The 30-room Island House boutique hotel opened open in April in Lyford Cay, New Providence. The luxury resort is designed to incorporate Bahamian culture and includes a spa and a 48-seat cinema.
Ginn sur Mer pushed on market
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The 280 Ginn Sur Mer property is being aggressively marketed by its two owners: Philadelphia-based investment bank Lubert-Adler and a Credit-Suisse lending syndicate. The property is expected to fetch a $75MM-$80MM outlay. The property was going to be the site of a hotel and casino development until the Ginn Development company defaulted on a $276MM loan during the global financial crisis.
Barbados Overview and Landscape BARBADOS ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
0.2
1.3
Tourism/construction; UK APD decrease
Inflation %
1.7
1.8
Falling oil prices will impact
Barbados’ large fiscal deficits are accompanied by a high and rising debt burden. Austerity in the form of thousands of public sector furloughs and tax increases put further constraints on consumers. Unemployment is high and rising, at 12.5% in September.
Source: See Note 1 (final page)
Economic activity improved +0.2% in 2014. Construction activity is projected to have expanded +1% YoY, thanks to $152MM in tourism-related projects. Stay-over arrivals recovered in 2014, up +2.2% YoY, while cruise arrivals declined during the year by (2.2)%. Price inflation has been low in response to weak oil prices and low domestic demand. The unemployment rate stood at 12.9% in Q3 2014 and is estimated to have averaged 12% throughout the year.
Duty-free concessions for hotel upgrades came into effect on February 1, and are expected to provide a boost to private investment. Several other large projects are expected to contribute to growth, including the Hyatt, the reconstruction of Sam Lords Castle hotel, and upgrades on the other Sandals property. The US $240MM investment in the Plasma Gasification Waste-to-Energy Plant will also move forward as confirmed by the Minister of Environment and Drainage, Denis Lowe.
3
Things to Watch
> Achievement of fiscal targets > Further ratings downgrades > Impacts of low growth on Gov’t revenues and austerity on growth
Tourism Performance Stay-over tourism sector is recovering, with arrivals up +2.2% YoY in 2014 to 519,598. Cruise arrivals declined during the year by (2.2)% to 557,898. A total of US $939MM in tourism spending was reported in 2014. For 2015 arrivals are expected to grow at a pace of +4% with airlift capacity forecast to increase +9%. The opening of Sandals is also expected to spur further growth in arrivals. So far in 2015, tourist arrivals led to a 15-year record in January, as Barbados received 56,132 visitors during the month.
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US $939MM in tourism spending was reported in Barbados in 2014. The tourism sector is starting to improve as the country recorded an increase in arrivals from several markets such as United Kingdom (+7.9%) and Europe (+8.3%) by the end of October, and a combined growth of +16.6% in the month of December from the UK, Germany and Brazil. Furthermore, an increase in the average length of stay from 7 days to just under 12 days was recorded in 2014.
barbados Growth has picked up the pace in 2015, and in the first two months of the year, arrivals have grown +11.1% YoY to 109,186. BARBADOS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
48.3
48.6
51.6
41.4
46.8
35.2
51.5
41.9
30.1
39.0
44.8
53.0
532.2
2011
52.2
51.8
53.3
51.4
41.7
38.5
58.2
50.0
29.1
39.4
47.2
54.9
567.7
2012
52.6
54.1
54.2
48.0
37.9
36.7
51.3
43.2
27.2
36.1
43.0
52.2
536.3
2013
48.3
48.9
53.3
42.2
37.9
33.7
47.9
40.7
27.0
34.9
42.7
51.0
508.5
2014
50.1
48.1
50.3
43.3
38.4
34.1
47.3
38.7
26.3
35.8
46.0
61.1
519.6
2015
53.9
55.3
2013YTD
48.3
97.2
150.5
192.7
230.6
264.3
312.2
352.9
379.9
414.8
457.5
508.5
508.5
2014YTD
50.1
98.3
148.6
191.8
230.3
264.4
311.7
350.4
376.7
412.5
458.5
519.6
519.6
2015YTD
53.9
109.2
YTDΔ YoY '15
7.4%
11.1%
109.2
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Arrivals from Canada were up +29.9% YoY for the 2-month period. This more than offset a (25)% decline from the Other Europe category. Arrivals from Trinidad & Tobago rose +6.4% YoY to 3,378 and Other Caricom arrivals were up +11.1% YoY to 7,859. Cruise ship calls were up by +2.5% to 123. However, cruise passenger arrivals fell (9.4)% YoY to 146,520. Recreational visitors have been a major contributed to growth, accounting for 86.6% of visitors at 94,568. The total number of recreational travelers rose +10.2% YoY. The length of stay was lower than in 2014, marking 12.5 days in the Jan-Feb period of this year, versus 13.2 days in the same period of 2014. Business and conference travel was another driver of growth, expanding +26.5% YoY to account for 9,108 travelers, an 8% share of the total. For 2015, government had projected the increase in arrivals to be +4%, which translates into just under 21 thousand additional visitors. Barbados has achieved 10,921 additional visitors in the first two months alone. The WTTC attributes the tourism sector with generating an impact of 36.1% of GDP, worth US $1.68B to the country’s economy. The total contribution of the sector to employment was estimated at 35.7% with 45,000 jobs, expected to reach 46,000 by the end of 2015. BARBADOS TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
1,685.1
2,403.6
1.8%
3.4%
Total contribution to GDP % Share
36.1%
41.6%
n/a
n/a
Visitor exports US $MM
1,038.7
1,488.4
1.9%
3.5%
131.2
146.5
-0.2%
1.1%
1,130.7
1,591.1
1.8%
3.3%
Business spending US $MM
39.3
43.9
-0.8%
1.2%
Capital investment US $MM
156.3
287.7
4.9%
5.8%
Domestic spending US $MM Leisure spending US $MM
Source: World Travel & Tourism Council Economic Impact Report 2015
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Improved air connectivity and the new hotel projects either under construction or soon to be refurbished will contribute positively to growth for the sector. Arrivals from new markets, including Brazil, will drive further strength in the recovery. Arrivals from Brazil were up +20% YoY in January 2015.
barbados Market Access LIAT hub to Barbados Barbados will become the primary hub of the regional airline LIAT, as decided by the shareholder governments of the airline. The airline is projected to lose $29.6MM in 2015 and has been facing rising operational costs. LIAT will also undergo staff cuts, from the current 800 down to about 620 employees. This measure is expected to save the airline about BDS $9.6MM per year. The announcement was made by SVG PM Ralph Gonsalves, chairman of the airline. Barbados was chosen since it is the top-performing destination in terms of revenue and passenger flows among the shareholder countries. Antigua & Barbuda is calling for the decision to be reconsidered, noting that they have made significant concessions to the airline over the years because A&B serves as its hub.
Tourism Construction August start for Sam Lords Castle reconstruction The reconstruction of Sam Lords Castle hotel will begin in August 2015. The project is expected to generate 1,000 jobs once underway. Parliamentary secretary in the Ministry of Tourism Irene Sandiford has disclosed that the project will cost US $200MM and the construction will last 18 months. Project financing will be provided by the China Exim Bank and the construction will be carried out by China-based Complan. Sixty percent of the workers in the construction phase will be Chinese and the remaining 40% will be Barbadians. The hotel will be operated by the hotel chain Wyndham, as disclosed by the Ambassador of China to Barbados, Wang Ke. The Ambassador also revealed that a team from the China Exim Bank will be visiting Barbados shortly in order to inspect the site and talk to the relevant shareholders of the project.
Sizeable investment in Amarylis Beach Resort
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Some $10MM to refurbish the Amarylis Beach Resort will be spent by Calypso Caribbean Resorts Inc. As disclosed by its chairman, Gordon Seale, the hotel will be renamed Sugar Bay Barbados and will be scheduled to re-open in November 2015. Regarding other properties, Seale declared that after improvements were made to the hotels Bougainvillea (for $2MM in 2014) and Sand Acres (for $1MM in 2013), both are reporting 95% occupancy.
barbados Offshore island idea floated A project to construct offshore islands was recently presented at the UWI Cave Hill Big Ideas Forum. One of the proposals includes the construction of 2 offshore islands, one that will serve as a transshipment hub and a second that will serve as a tourism attraction. The UWICH lecturer Troy Lorde points out that the project would create significant employment and economic opportunities, and also named some of the key challenges for the project, such as legislation, permitting and environmental concerns. Businessman Ralph Williams also referenced plans for the development of islands and the construction of a luxury hotel and villas. Williams, however, related the project to an anecdote of the purchase of a crane for the Port years ago that unions impeded from functioning for more than three years, and cited the need to ensure all stakeholders were completely aligned.
Other projects to follow in 2015 Tourism investments in 2015 will include Sandals Casuarina and Beaches at Almond, the Bridgetown Hyatt Hotel, the Sam Lord’s Wyndham family resort. The concessions offered to hoteliers for upgrades and investments in their properties are expected to provide upside for the sector, with several remodeling programs already announced. Hoteliers have been told to move forward with an estimated $40MM in needed renovations, under an interim arrangement with the Minister of Finance.
Tourism Policy & Initiatives Cyprus, Barbados to tap tourism expertise Cyprus and Barbados will exchange expertise in tourism, as noted by the High Commissioner to Barbados, Georgios Chacalli. Discussions with Barbados’ government officials centered on the tourism industry and ways to mutually benefit from sharing best practices for legislation and reaching international standards. Additionally, they conversed about the signing of a Double Taxation Agreement, which the officials stressed could be accomplished by the end of 2015.
S Korea, Barbados seek to boost tourism Tourism initiatives and a double taxation agreement were among the key issues discussed with the Ambassador of the Republic of South Korea, Wonkun Hwang, in a courtesy call paid to the Ministry of Foreign Affairs on Acting Permanent Secretary, Simone Rudder. The Secretary stated the importance for Barbados to increase the inflow of Asian tourists to the country, as well as the possibility of signing a double taxation agreement.
BTMI seeking to increase summer arrivals Younger tourists will be the target of Barbados Tourism Marketing Inc (BTMI) in 2015, as revealed by BTMI CEO, William Griffith. In order to accomplish this, Griffith stated that sports and entertainment events are being planned for 2015 to attract the younger crowd to Barbados. The CEO also anticipated for 2015 that with the culmination of new hotel projects, the country’s top industry should perform better during the summer months. Another focus of the BTMI will be to increase visits in the summer, since the winter season already consistently delivers increased arrivals.
Duty free concessions for hotels
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Hotels can now access the duty free concessions approved last November, effective February 1, 2015. The measure will allow hotels to improve the quality of their product in the hope of raising the number of visitors to Barbados. Furthermore, the concession is expected to generate more cash flow for hoteliers that can be reinvested into their properties. The process for applying for the concessions and the list of requirements has been given to all the members of the Barbados Hotel & Tourism Association (BHTA), and hotels are required to register with the Ministry of Tourism in order to qualify.
barbados Sector Developments BATE to back tourism workers The Barbados Association of Tourism Employees (BATE) has been launched in order to assist tourism workers and give a boost to the sector. Hal Austin, one of the members of the Board of Directors, revealed that the association will be hosting two cultural/heritage conventions in 2015 in order to attract no less than 10,000 visitors and inject some $50MM to the Barbados economy. Austin also stated that the entity has already identified various benefits for the 16,000 tourism employees to receive once they become members including discounts from over 300 businesses, opportunities to get extra earnings from the marketing and sales of tours, hotel bookings and attractions, dinners and free training to improve customer service in the sector.
IDB withdraws support for Four Seasons The Four Seasons project on the west coast of Barbados no longer counts for the $55MM in funding approved in 2012 by the Inter-American Development Bank (IDB). The IDB has withdrawn its support for the project and the multilateral now lists the project status as “cancelled.” The project has been stalled since 2009. The IDB warned, back in 2012, that it needed to see significant outside investment sources committed to putting equity into the resort in order to move forward.
Sandals reopens following large investment Sandals has reopened with 80% occupancy, 280 rooms (an additional of 60 rooms) and 600 employees. The reconstruction took 9 months and required an investment of US $65MM. General Manager, Joseph Zellner, stated that the hotel expects to be fully booked in the coming weeks. Founder and Chairman of Sandals, Gordon Stewart, declared that the hotel will use local products and will try to increase its demand in the near future, as various manufacturers involved in the production of beverages and meat have already brought their supplies to the hotel. Stewart also announced that the Beaches hotel, another Sandals Resort International property in St Peter, will start construction in 2016. That hotel is currently in the design phase.
Natural gas solutions to benefit tourism
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The natural gas shortage, which has plagued the tourism sector in recent months, is expected to be resolved through a series of interventions. Redundant systems will be installed in the mid-term by Q4 2015, and as part of a long-term solution, the National Petroleum Corporation (NPC) is in negotiations with the Government of Trinidad and Tobago to import natural gas, while the Barbados National Oil Company Limited (BNOCL) will begin its drilling program within 12 months to recover natural gas from two wells that were out of production. The situation is being addressed by the BNOCL and the NPC. PM Stuart recently stated that mitigating measures will cost them some $7MM.
barbados
Belize
Overview and Landscape BELIZE ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
3.6
2.3
Strong tourism; Agro recovery
Inflation %
1.0
1.0
Agro commd'ty, health & fuel
Source: See Note 1 (final page)
Economic activity expanded at a pace of +3.6% in 2014. The result came on the back of improved exports for sugarcane, citrus and banana and was accompanied by the uptick in services led by tourism, distribution and government. A record-year for tourism was celebrated in 2014, welcoming a total of 1.2 million tourists, with stay-over arrivals up +9.2% and cruise arrivals growing +43% YoY and closing in on the 1-million mark. The results in agriculture and agro-industry were partially related to cyclical impacts and not necessarily indicators of a long-term trend. The late start to the sugarcane harvest in 2014 caused a jump in YoY comparisons for the Agriculture sector. The banana sector was also impacted by a later-thanusual maturing of plants affected by a cold front in early 2014.
Unemployment dropped to 11.6%. GDP per capita in Belize remains low at an estimated US $5,000. Average inflation was 1.0%, benefitting from lower oil prices in H2 2014. The economy will slow in 2015, with lower oil output and hydroelectricity production, accompanied by slower growth in export crops partially attributed to cyclical factors. Main risks include weather conditions and lower tourism arrivals (current projection +5% growth). Opportunities include a boost to domestic consumption on the back of higher available incomes in a low oil price environment. Government spending could also generate upside. Inflation is expected to remain stable, particularly during H1 2015.
> Exposure to weather, agricultural
3
Things to Watch
disease and pests > Future of Petrocaribe > Continued robust growth in tourism
Tourism Performance The 1.2 million tourists who arrived in Belize in 2014 set a new record. Tourism remains an important source of economic activity, and 2014 rendered superb performance, with stay-over arrivals up +9.2% to 321,217.
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Tourism remains highly reliant on the US economy, which sourced 62% of tourists in 2014. Canada provided 8.2% and Europe 12.1%. Growth from the US source market was robust in 2015 at +8.6%, while Europe posted an expansion of +20.8% YoY. Arrivals from Canada declined (1.2)% YoY.
belize Cruise arrivals rose +43% YoY to 968,131. The slowest month of 2014 was November, which is attributed to a setback by the global Ebola scare of the previous month, and a number of cruise cancellations due to inclement weather. Total arrivals dropped (1)% in the first two months of 2015. The US source market has lost steam in early 2015, with Jan-Feb figures revealing a drop of (1)% YoY. Meanwhile, Canada continued to provide less visitors, as arrivals fell (9.9)% to 7,977 in the first two months of the year. European arrivals were up +3.3% YoY to 8,550. BELIZE STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
22.4
23.8
29.7
19.7
19.5
21.3
23.4
18.4
9.3
11.9
17.5
25.1
241.9
2011
23.6
23.9
28.6
23.6
19.3
21.8
24.0
17.7
9.8
12.1
18.9
26.9
250.3
2012
24.3
25.8
32.2
23.7
22.1
24.6
25.8
19.5
11.7
14.5
21.5
31.3
277.1
2013
28.4
28.8
35.8
23.6
22.9
26.8
27.8
20.9
10.7
14.5
22.9
31.1
294.2
2014
31.2
32.1
38.7
29.0
26.3
28.7
30.0
22.7
11.9
15.5
22.5
32.6
321.2
2015
30.9
31.8
2013YTD
28.4
57.2
93.0
116.5
139.5
166.3
194.1
215.0
225.7
240.2
263.1
294.2
294.2
2014YTD
31.2
63.3
102.0
131.0
157.3
186.0
216.0
238.7
250.6
266.1
288.6
321.2
321.2
2015YTD
30.9
62.6
YTDΔ YoY '15
-1.0%
-1.0%
62.6
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Tourism officials are targeting a +10% increase in stay-over arrivals in 2015, but are currently projecting a slight decline in cruise arrivals. The destination continues to contend with challenges such as heavy winds on the harbor and the need to tender passengers to shore. Several calls on Belize City were diverted to Roatán in late 2014 as a result, costing an estimated 15,000 visitors. The cruise industry is worth $150MM per year, and provides 2,500 jobs in Belize City. BELIZE TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
655.9
972.4
0.6%
4.0%
Total contribution to GDP % Share
39.2%
42.8%
n/a
n/a
Visitor exports US $MM
387.6
558.7
-0.9%
3.8%
Domestic spending US $MM
69.4
96.3
2.8%
3.1%
Leisure spending US $MM
384.5
553.2
-0.7%
3.8%
Business spending US $MM
72.5
101.8
1.8%
3.3%
Capital investment US $MM
83.6
148.1
6.1%
5.3%
Source: World Travel & Tourism Council Economic Impact Report 2015
The Puerto Azul development is not likely to kick off until late 2015, with economic impacts from construction to be felt from early 2016. Meanwhile, the proposed Stake Bank cruise facility remains in the courts as the Fort Street Tourism Village maintains an exclusive contract through 2027.
Market Access Southwest to open travel to/from Belize
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Southwest Airlines will commence service between Houston, Texas and Belize in October of this year. Aside from increasing airlift to Belize, the nonstop service will provide a connection to some 50 US destinations for Belizean travelers.
belize Tourism Construction Projects to follow in 2015 • The Harvest Caye cruise port project is underway and is scheduled for completion by the start of next year’s high season. The Norwegian Cruise Line project has caused a degree of controversy as it is anticipated by some that the new cruise port will cut into stay-over visits, which are considered more profitable. • Luxury Island Caye Chapel was sold to the Mexican group of investors who own the El Secreto resort in San Pedro. The 265acre island was sold for BZ $23MM, and the new ownership group is expected to partner with a global hotel brand in redeveloping and re-launching the resort. • The Puerto Azul project continues to face opposition. The project seeks to build a mega-resort close to the Blue Hole, including the construction of a cruise port and an EPZ (duty-free) shopping zone. The proposed seven-star megaproject is slated to include a super-yacht marina, a golf course, an amusement park, an airport, a hospital, a submarine base, and a Formula 1 racetrack. • Construction of the new Belize City Center carries an estimated investment of US $25MM. Construction on the project will be constructed in 2015-2016. The 3.7-acre multipurpose facility will be equipped to host regional and international sports tournaments, as well as cultural activities and concerts. Total capacity will be for 4,000 people, and financing to build the structure is earmarked under the Petrocaribe fund.
Tourism Policy & Initiatives Petrocaribe funds channeled to tourism
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Using Petrocaribe dollars, the Government of Belize will make a number of investments in 2015, according to Prime Minister Dean Barrow, with the goal of building on the strong economic growth experienced in the previous three quarters (+4.2%). Tourism will continue to be a focal point, as gains in that sector have been a driving force in economic development. Specifically, a cruise port for Belize City and a $15MM investment in three tourism road projects (an additional seven miles for the Northern Highway to Altun Ha, another four miles of highway beyond the San Pedro Bridge, and an 8-mile resurfacing of the Jaguar Paw Access Road) are in store.
belize Sector Developments Agro-tourism is key to growing sector With the goal of boosting agro-tourism, the Organization of American States (OAS) and the Inter-American Institute for Agricultural Cooperation (IICA), along with the Ministry of Natural Resources, held a consultation at the Biltmore on January 22. The representatives discussed ways to leverage Belize’s growing visitor arrivals in order to increase the profile of Belizean agricultural products and services. Tourism and agriculture are two of the country’s leading foreign exchange earners, and creating linkages between the sectors is seen as a way to accelerate the development of both.
Draft geology and petroleum document released Environmental groups are reacting strongly to a document released by the Geology and Petroleum Department entitled “Exploration Zones and Exploration Guidelines.” The document represents a framework that seeks to harmonize petroleum exploration, tourism development and the Belize Barrier Reef system. In response, COLA and OCEANA, two leading watchdog groups, point to wide public objection to offshore drilling in a mock referendum (COLA is calling for a legitimate public referendum to take place) and to the Supreme Court decision in 2013 to strike down drilling contracts issued by the government. Moreover, OCEANA asserts that the document is weak on data and detail and could result in significant damage to the environment, if ratified. Government has countered that the document is simply a draft that has been made available for feedback purposes.
Mexican investors eye Belize
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A Mexican group of investors, led by Luis Carlos Urzua’s Merca Sol Group, has expressed interest in investing in the Belizean tourism sector. Urzua has stated that the investment group is exploring the possibility of eco-friendly, environmental tourism development, which brings in fewer tourists in number but tends to attract persons of high net worth. The group, which met recently with Minister of Foreign Affairs Wilfred Elrington, has also expressed interest in investing in education and the medical sector.
Bermuda
Overview and Landscape BERMUDA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
1.0
1.0
Impacts of back-to-back storms
Inflation %
1.5
2.0
Rising health costs vs lower fuel
Source: See Note 1 (final page)
Continued softness in economic activity was noted in 2014 and is unlikely to change much in 2015. A challenging environment persists, with an aging and declining population, in the context of a fiscal consolidation and high public debt. By 2020, half the population will be over 46, and the population over 65 will account for more than 20%. Bermuda has one of the highest GDP per capital levels in the world at more than US $84,000. The international financial services sector is the main driver of economic activity accounting for over 50% of GDP. The sector contributes roughly 25% of employment.
The October hurricanes impacted tourism arrivals in late 2014, which dropped (5.1)% for the total year. Cruise arrivals, however, increased by +4.7%, and yacht arrivals rose +25% YoY. A turn in consumer confidence was reported early in Q1 2015 with two-thirds of respondents expecting the economy will improve over the coming 12 months, and only 6% anticipating deterioration. Bermuda will benefit from continued economic growth in the United States. The US is the top source market for stay-over tourism, and the neighboring country is a major contributor to activity in the offshore and financial sectors. Improved conditions in the UK market would also be beneficial to a further economic recovery in Bermuda.
3
Things to Watch
> Shrinking and aging population > Tourism performance particularly from US and cruise sector > Impacts of gaming legislation
Tourism Performance Tourism was impacted by a drop in air arrivals in 2014 of (5.1)% YoY to 224,246, largely attributable to the October hurricanes. Cruise arrivals on the other hand showed strong improvements with a notable +4.7% YoY increase to 355,880. Yacht arrivals also benefited activity, growing +25% YoY in 2014 to 4,280 arrivals.
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In Q1 2015, the downward inertia continued, as the sector received (6.4)% less stay-over tourists YoY. The total number of stayover arrivals in Q1 was 28,996. Arrivals from the US were down (7.3)% YoY to 18,283, representing 63% of all visitors. Canada posted a contraction of (15.2)% in the number of visitors, falling to 5,316. Meanwhile the UK and Europe posted increases of +4% and +32.5% YoY. These two markets combined to account for only 14% of overall tourists.
bermuda A major drop in air capacity of (14.5)% was noted in the quarter. The total number of seats available fell to 94,786, as Newark lost (53)% of its seats, New York lost (20)%, Toronto lost (14)% and Philadelphia lost (13)%. Declines in air arrivals were recorded across all categories in Q1, with vacation travelers down (3.6)%, business travelers down (5.6)% and those visiting friends and relatives down (14.3)%. Cruise arrivals amounted to 319 in the Q1 2015 when the Hamburg visited Hamilton. Bermuda had posted 0 cruise arrivals in Q1 2014. Yacht arrivals increased in Q1 by +27% to 324. BERMUDA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
6.3
8.7
13.9
18.1
28.0
31.4
33.8
28.4
16.5
21.0
14.8
11.3
232.3
2011
6.7
8.9
15.2
20.5
26.9
33.1
33.5
28.4
18.0
19.0
14.5
11.3
236.0
2012
6.8
9.3
15.6
20.2
24.5
30.4
32.7
31.0
17.2
19.0
14.4
11.1
232.1
2013
7.2
8.8
15.3
16.8
26.1
32.1
34.6
30.7
17.5
15.2
19.4
12.6
236.3
2014
7.0
8.9
15.0
19.5
24.9
28.8
32.1
27.8
18.3
15.7
14.4
11.7
224.2
2015
6.8
8.2
14.0
2013YTD
7.2
16.0
31.3
48.1
74.2
106.3
140.9
171.6
189.1
204.4
223.7
236.3
236.3
29.0
2014YTD
7.0
16.0
30.9
50.4
75.3
104.2
136.3
164.0
182.4
198.1
212.5
224.2
224.2
2015YTD
6.8
14.9
29.0
YTDΔ YoY '15
-3.9%
-6.3%
-6.4%
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Hotel occupancy dropped in Q1 2015, with an additional hotel property coming online. The occupancy rate was 33%, down (4) points YoY. The average daily rate increased by +6.3% to $241.94. The revenue per available room declined (6.1)% YoY to $79.12. Spending on accommodations rose by +$137 per person, as tourist stayed longer and the average daily rates rose. The average length of stay in Q1 was up +2.6% YoY to 6.72 days, according to official figures. The average per person expenditure, however, increased by +$278 YoY to $1,227, up +29% YoY. Tourists on average spent $623 on accommodations, $330 on meals and beverages, $73 on transportation, $68 on recreation, $63 on groceries and liquor, and $53 on souvenirs as the primary categories of spending. This is estimated by the Bermuda Tourism Authority to have provided a $35.5MM economic impact. Individual room bookings for February 2015-January 2016 are up +17% YoY, according to the Bermuda Tourism Authority, good for an increase in room night bookings of +8,105. The improvement is attributed in part to marketing efforts, such as the Pink Sale promotion. For 2015, Pink Sale promotion bookings increased +45% YoY, which is expected to produce $4.2MM in visitor spend.
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The WTTC estimates that tourism activity contributes 15.3% of GDP in Bermuda, and generates 20.5% of employment. That amounts to 7,000 jobs, which the WTTC forecasts will grow +4.1% this year to 7,500.
bermuda BERMUDA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
887.8
1,315.6
3.3%
3.7%
Total contribution to GDP % Share
15.3%
18.1%
n/a
n/a
Visitor exports US $MM
442.7
697.5
5.3%
4.1%
Domestic spending US $MM
247.6
331.7
0.9%
2.9%
Leisure spending US $MM
513.3
771.8
4.1%
3.7%
Business spending US $MM
177.0
257.4
2.7%
3.5%
Capital investment US $MM
28.2
32.3
0.1%
1.4%
Source: World Travel & Tourism Council Economic Impact Report 2015
Tourism Construction Bermudiana resort set for 2016 season The first phase of the Bermudiana Beach Resort development being built on the site of the Grand Atlantic in Warwick is expected to be complete in time for the 2016 tourist season, according to MacLellan & Associates. The developers recently traveled to Bermuda to offer Government a Memorandum of Understanding (MoU) presentation pack on how the work will progress. The Bermudiana is designed as a mid-market resort property, not meant to compete on the scale of the Ritz-Carlton or St Regis. Government is currently reviewing the MoU ahead of authorizing conversion works. Meanwhile, opposition Parliamentarians are disputing the $9MM price tag for which developers are acquiring the property. Originally designed to serve as low-cost housing, the property is worth $17MM (compared to an original cost of $42MM), according to former Public Works Minister Wayne Scott, and has a loan balance of $36.7MM. The Bermuda Housing Corporation will have to work out an arrangement with the loan holder (Butterfield Bank) to cover the balance of $27.7MM over the long term.
Other projects to follow in 2015 • The Green family will rebrand the Sonesta Beach Hotel at Sinky Beach as the Princess Beach Club. Remodeling is winding down and the six-cabana property will initially be available to guests of the Green-owned Fairmont Hamilton Princess. • The Green Family will invest an additional +$1MM to renovate penthouse suites at the Fairmont Hamilton Princess (FHP). The decision was made following the announcement that Bermuda had submitted the winning bid to host the 2017 America’s Cup. The Green Family has already invested in extensive renovations to the hotel, but with the America’s Cup expected to increase arrivals, the upgrading of two penthouses was deemed warranted. • The $85MM Ariel Sands redevelopment project includes 26 villas, a 20-room hotel, a spa, two restaurants and a gym. The villas will have 2 or 3 bedrooms. • Developer Desarollos Hotelco Group plans to build a $120MM five-star hotel in St Georges at the site of the former Club Med. Construction is expected to commence in Q2 2015, with work lasting an estimated 16 months. The group is seeking to transform the defunct Club Med into a 238-room hotel and golf course, with 16 hotel residences, 16 golf villas, 16 estate residences, a spa, fitness center, and swimming pools, among other amenities. • The Morgan’s Point hotel development received a $5MM contribution from Re/insurer Arch Capital Group Ltd. The development will include a 235-unit hotel (phase I) and another 416-unit hotel.
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• A new airport terminal building at LF Wade International Airport will be constructed by Canadian Commercial Corporation (CCC). The project will result in a new purpose-built terminal facility, as well as other airport redevelopment projects. Under the arrangement, CCC would construct a new terminal building as part of an expected $200MM investment.
bermuda Tourism Policy & Initiatives Bermuda to modernize air traffic control system Bermuda will undertake a 5-10-year modernization of its air traffic management regime, which will include expanding the island’s airspace from a 5 to a 50-mile radius. To achieve that, Bermuda must first become a certified air navigation service provider, according to Transport Minister Shawn Crockwell. To cover the significant cost of such an initiative, Government intends to add a $28 dollar per-passenger surcharge for plane travel to generate some $10MM. Currently, Bermudian airspace falls under the jurisdiction of the US Federal Aviation Administration, though Bermuda will seek to assume control of its own airspace as part of the modernization process.
Bermuda turns to UK market Bermuda is targeting increased arrivals from the UK market, as the Bermuda Tourism Authority (BTA) launches its “Proper Fun” ad campaign. The initiative seeks to appeal to “energetic, busy and ambitious” 36-60-year-olds who are “experience seekers.” The campaign took a phased approach through its January run, first with an island guide that appeared in print and on tablet and online media. The next phase will involve direct appeals to The Telegraph’s 50,000 travel email subscribers. The Bermuda Tourism Authority (BTA) held the first Bermuda Tourism Summit on January 21. The event placed a focus on BTA strategies for the coming year and on finding ways to attract new visitors to the island. The conference gathered a number of tourism professionals from the public and private sectors, and a number of international experts were invited to participate and discuss various issues.
BTA, Orbitz join forces for Bermuda The BTA has partnered with Orbitz to launch an online promotional video campaign entitled “Orbitz Originals: Bermuda—Proper Fun.” The series of seven videos are hosted by travel experts Richard Bangs and Lisa Ellen Niver and are part of a larger campaign that will also make hotel and travel discounts available.
Dunkley, Saudi leader discuss tourism Premier Michael Dunkley met with Saudi Prince Abdullah bin Khaled Sultan bin Abdulaziz Al Saud for the second time within a six-month period on February 27. The meeting surrounded tourism in Bermuda, hotel development, the hosting of the America’s Cup and the Elbow Beach Bermuda Hotel, which is owned by the Saudi royal family. Dunkley called the meeting “fruitful” and he expressed confidence that the royal family would strive to ensure that Elbow Beach is a world-class resort.
Sector Developments Tourism remains focus of fiscal budget Minister of Finance Bob Richard’s 2015/16 Budget Address touched on the tourism industry several times. Notably, Tourism Development and Transport has been budgeted at $97.3MM for the FY. Additionally, over a three-year period, hotel development, airport redevelopment and hosting the America’s Cup are all expected to contribute to a $930MM injection into Bermuda’s economy. Opposition Leader Marc Bean of the Progressive Labor Party (PLP) was critical of the Budget and the One Bermuda Alliance (OBA). Bean believes that Richards overstates the impact the America’s Cup will have, as well as developments such as the Hamilton Princess expansion project.
BTA not fearful of Baha Mar impact
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The Bermuda Tourism Authority (BTA) does not anticipate that the Bahamas’ $3.5B Baha Mar mega resort will siphon tourists from Bermuda. Though Baha Mar will boast four luxury hotels, a golf course, casino gaming and many other amenities, the BTA does not consider Bermuda to be in competition with mega-resorts. Baha Mar opens its doors in March of this year, however, the BTA expects that Bermuda will continue to pursue hotel projects suited to the island’s size, cultural heritage and location in the North Atlantic.
bermuda Highlights of recent BTA developments: • The BTA is seeking public feedback on the future of Bermuda’s vacation rental market. The online form regarding rentals is a way for the public to collaborate in the development of Bermuda’s tourism product. • Answering a question from Shadow Minister of Tourism Zane DeSilva, Tourism Minister Shawn Crockwell disclosed that the BTA spent $178k on furniture to outfit its office space, and it spends over $18k on rent each month. • Crockwell also explained that the BTA recently sought a $180k loan from the Whitfield Group in order to repair damages to the Pier 6 facility caused by Hurricane Fay. The damages were not covered by insurance and the BTA was seeking to assure that events scheduled at the pier would take place. • The BTA has added an “Advocacy” section to its website that contains historical data on the tourism sector, economic impact data and hospitality job listings. • The BTA has partnered with The New Yorker magazine in developing a print, tablet, email and video “90 Minutes to Proper Fun” marketing campaign highlighting New York’s proximity to Bermuda (a 90-minute flight) and the magazine’s 90th anniversary.
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• Golf will pump over $1MM into Bermuda’s economy in 2015, as estimated by the Bermuda Tourism Authority (BTA), which has launched its 2015 Golf Tourism Strategy. The BTA also expects golf to generate 820 visitors and 4,075 room nights. The BTA is calling the Golf Strategy a strategic and integrated collaboration between its product and experience team in Bermuda and its marketing team in New York City. Government has invested some $150k in golf tourism for the FY. Bermuda will host a number of golfing events in 2015, including the Talleton-Bermuda Pairs, Bermuda Collegiate Invitational, the Bermuda Open, the Grey Goose World Par 3, the Bermuda Golf Classic, Gosling’s Invitational and the Goodwill Invitational.
British Virgin Islands
Overview and Landscape BRITISH VIRGIN ISLANDS ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
1.6
2.3
Gov't capex on tourism infrastructure
Inflation %
2.4
2.6
Falling oil prices will impact
Source: See Note 1 (final page)
The economy continued to expand in 2014 after returning to growth the prior year. Tourism and construction provided a boost to activity. To date, $48.3MM has been issued in contracts related to the cruise pier project, which has been the main driver of construction activity. The expansion of the Terrance B Lettsome International Airport in 2015 would also fare well for activity. Inflation has remained stable and is largely imported from the United States. The lower oil price environment is expected to mitigate inflationary pressures.
The tourism sector posted +4.7% growth in stay-over arrivals and +2.9% growth in cruise arrivals for the year. Financial services, which accounts for 16% of GDP, reports steady revenues in spite of the drop in new company incorporations. Air access will be critical to further growth in tourism, and the completion of the new cruise pier in 2015 will also provide a boost for this and related sectors. Efforts underway to strengthen presence in Asia and South America are expected to provide a boost to financial services activity.
“The economy continued to expand in 2014 after returning to growth the prior year. ”
3
Things to Watch
> Impacts on public policy from 2015 election > Cruise port development and airport project > Continued strength from cruise sector
Tourism Performance
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Tourism reported gains in the stay-over and cruise sector in 2014. Stay-over tourist arrivals grew +4.7% YoY in 2014 to 383,148 and cruise passenger arrivals expanded +2.9% YoY to 378,083. Strong growth in the month of December of +18.6% YoY helped to generate the improved result.
british virgin islands BRITISH VIRGIN ISLANDS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
31.4
32.6
42.0
35.7
27.6
31.4
33.5
18.8
7.8
14.5
22.7
32.3
330.3
2011
32.9
35.0
42.3
37.2
28.0
27.4
33.2
17.8
7.9
15.9
25.1
35.0
337.8
2012
33.6
36.4
43.9
38.3
28.3
30.1
32.1
19.2
9.7
15.9
26.8
37.0
351.4
2013
33.9
35.1
50.1
36.2
31.0
32.3
33.8
20.4
9.0
16.8
26.6
30.5
355.7
45.7
39.6
31.7
33.0
39.0
21.2
9.7
15.4
25.5
45.3
383.1
2014
38.6
38.5
2015
38.4
40.8
2013YTD
33.9
69.0
119.1
155.3
186.3
218.7
252.4
272.8
281.8
298.6
325.2
355.7
355.7
122.8
162.3
194.0
227.0
266.0
287.2
296.9
312.3
337.8
383.1
383.1
2014YTD
38.6
77.1
2015YTD
38.4
79.2
YTDΔ YoY '15
-0.5%
2.8%
79.2
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
In the first two months of 2015, the sector has reported accumulated growth of +2.8%, welcoming a total of 79,195 visitors to the islands. Cruise passenger arrivals, however, have dipped significantly this year. For Q1 2015, BVI received 211,543 cruise passengers, a drop of (13.1)% YoY. According to Smith Travel Research, the occupancy rate in BVI was 53.6% in 2014, down (1.1) points with respect to the prior year. The average daily rate reached US $563.87, up +9.9% YoY and RevPAR rose +7.7% to US $302.25. The use of hotels remains low in BVI and is estimated to account for only about 30% of visitors. Meanwhile, over half of visitors are estimated to use charter boats or yachts as an accommodation. The WTTC estimates that the tourism sector’s total contribution to GDP is 85.9%, and expects this will increase to 88.8% by 2025. In terms of employment, the WTTC indicates that 94.5% of jobs are supported by the industry, with a total of 9,500, expected to increase to 10,000 by 2025. BRITISH VIRGIN ISLANDS TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
824.4
1,070.5
1.5%
2.5%
Total contribution to GDP % Share
85.9%
88.8%
n/a
n/a
Visitor exports US $MM
653.1
877.0
1.6%
2.8%
Domestic spending US $MM
27.9
35.7
2.9%
2.2%
Leisure spending US $MM
663.3
889.8
1.6%
2.8%
Business spending US $MM
17.7
22.9
2.9%
2.3%
Capital investment US $MM
40.0
49.2
3.6%
1.7%
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access BVI Airlines temporarily suspends service
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BVI Airways suspended services on a temporary basis. The Tortola-based airline’s website states that it is working with a regulator with the goal of adding flights, and its winter and spring schedule is currently under review. The carrier announced in March that it had been purchased by a New York-based merchant bank, the details of which have yet to be announced. BVI Airways provides Jetstream 32 service from Beef Island to St Maarten and Dominica, two routes available through other airlines.
british virgin islands New cruise pier to receive vessels in Q2 The arrival of the 4,000-passenger Norwegian Getaway on April 29 will usher in a new era for the cruise industry for BVI. The arrival will mark the official opening of the new cruise pier. Government has established special committees that will be charged with commemorating the event. Meanwhile, the Carnival Liberty will be the first ship to berth at the new facility. The northeast side of the pier was to be completed by March 14 and the southwest side by mid-April.
Tourism Construction Havers residents oppose resort, marina development The $70MM project to construct a 5-star resort and marina in Havers has received public backlash, with residents threatening to file an injunction against the project if plans are approved by authorities. Residents’ concerns primarily center on environmental risks and an ongoing land dispute at the site. The project scope includes the construction of a 60-room hotel and 60-condo complex as well as a 55-slip full-service marina.
Projects to follow in 2015 • The $57MM cruise pier expansion project will remain under construction in 2015, particularly the retail buildings portion, which fell behind schedule last year. • The $3MM Sopher’s Hole jetty project was scaled back from its original $43MM scope. The project was originally budgeted by the Virgin Islands Party (VIP), which has since lost control of the government. Tender documents were issued for the two port projects totaling $5MM in cost. The contracts will see the Sopher’s Hole West End ferry terminal replaced at a cost of $3MM and the new protective barrier for the dock structures on Virgin Gorda. • The Premier expects work on the expansion of the Terrance B Lettsome International Airport to begin in late 2015. A first round of bids, which ranged between $377MM and $415.5MM, was deemed too high, after which changes to the overall scope of the project were pursued in order to cut costs. Since this is an election year, the June 8 election could change the course of the project.
Tourism Policy & Initiatives Cruise project causing minimal damage Environmental damage caused by the cruise pier project is being kept to a minimum, the Conservation and Fisheries Department recently told the Standing Finance Committee. Of particular concern is the reef structure in the area near Maria’s by the Sea and Crafts Alive, just east of the Road Town jetty. Environmental Systems, the company hired to conduct a study of the impact of the project on the area, has indicated that some damage may be caused by dredging and other activities, in spite of efforts to preserve the reef. Furthermore, the Auditor General has informed the Standing Finance Committee that a “pure environmental audit,” the first of its kind for the territory, will be conducted this year. The audit will become a regular component of the Auditor General’s office’s regular regime.
No Commission of Inquiry, says Duncan
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No Commission of Inquiry (CoI) will be held for the cruise pier project and other works, Governor John Duncan has determined. The Public Accounts Committee (PAC) had requested a CoI to former Governor Boyd McCleary, a decision that was deferred to Duncan upon his appointment in August 2014. Among the projects that Duncan looked into before making his decision was the Sea Cows Bay Marina Project and the Greenhouse Project at Paraquita Bay. Duncan’s decision was based on reports submitted by the PAC and the Auditor General, as well as studies conducted by the Caribbean Development Bank (CDB) and an independent consultant. Duncan believes that the reports, to be made public, adequately detail the problems associated with the projects, which span two administrations, while offering recommendations that he urges the government to follow.
british virgin islands
Regis heads pier’s landside development Dona Regis is the new CEO of the landside portion of the pier project, after assuming the role in early January. Works on the cruise pier continue to advance, with the Welcome Center nearing completion. Regis arrives at a time that the project has come under controversy as opposition politicians have criticized the Port Authority’s efforts to raise US $16.5MM, which allows belongers to purchase shares in the investment placed by PMI Capital Services.
New customs system online All operations at Her Majesty’s Customs have transitioned to full computerization with the launch of the Web Trader Program and the Customs Automated Processing System (CAPS). The Commissioner of Customs urges all customs brokers and agents to register with the Customs Department, whereupon they will be issued a Trader ID Number that will allow access to an online account. The system will also allow searches for tariff rates, previews of customs declarations and the receipt of email payment summaries. The current manual customs declaration system will be phased out incrementally.
New ad campaign for Tourist Board The BVI Tourist Board (BVITB) has launched the “Keep it to Yourself” ad campaign, which is accompanied by the tagline “Nature’s Little Secrets.” The campaign was developed with the idea that BVI provides a vast range of offerings that convey a sense of discovery to the adventurous traveler. The campaign was rolled out following a thorough vetting period with focus groups, the trade community, tourism stakeholders and several return and potential tourists.
Sector Developments BVI moves to protect Anegada environment, tourism product Four public meeting have been held in regard to proposed protected areas in Anegada, with concerns being raised by fishers and residents. Though no specifics have been offered as to the nature of the concerns, the Minister of Natural Resources Kedrick Pickering has offered assurance that fishing will be legal in a Fisheries Protected Area, provided authorization has been given to a licensed fisher. The area in question includes the Anegada Horseshoe Reef and Anegada Channel Fisheries and is one of five areas across the territory that Government is seeking to designate as protected, which Pickering asserts is critical to protecting BVI’s tourism product. Tourism highlights from the BVI Business Outlook Conference 2015, held at the Scrub Island Resort on Jan 14, 2015: • Private jets brought in $1B in revenues for the Caribbean’s top 10 destinations in the Nov-Apr high season. - Andrew Collins, Sentient Jet • Luxury travelers represent a significant market for BVI to claim: 73% of luxury travelers are interested in off-season travel; 76% seek out one-of-a-kind luxury experiences; 85% rank cultural experiences as their top motivation to travel; and luxury travelers cite the #1 reason to travel is “just because.” - Bill Wackermann, Conde Nast Traveler
Harbor fee changes postponed
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New harbor charges on vessels entering and docking in BVI waters are pending further stakeholder consultation and will be postponed, the BVI Ports Authority (BVIPA) has announced. In the meantime, the $1 per-foot charge on all vessels berthing in a declared harbor or any BVIPA facility will remain in place.
Cayman Islands
Overview and Landscape CAYMAN ISLANDS ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
2.0
2.3
Strength in tourism; US recovery
Inflation %
1.4
1.5
Falling oil prices will impact
Source: See Note 1 (final page)
In 2014, solid performance was noted across several sectors including tourism, wholesale & retail and transport & communications. The economy is highly reliant on the performance of the US economy for both its tourism and financial flows. Economic growth was +2.3% through the first nine months of 2014, with tourism providing an +11.7% boost to the Hotels & Restaurants sector. Unemployment stands at 4.7%, down from 6.3% in 2013 and the first time since 2009 that the rate has fallen below 6%. GDP per capita in Cayman Islands is over US $50,000.
Tourism and financial services are the top drivers of economic activity. The sector posted a strong recovery in cruise passengers and stay-over arrivals, both of which grew into the double-digits. The pace of development of private investment projects will be determinant in economic activity in 2015. The +5.7% YoY increase in tourism arrivals in Q1’15 indicates that the momentum behind record setting tourism numbers continues. The country’s tourism sector will also benefit from the performance of Health City Cayman, as the nation’s premier medical tourism facility. Works on the Cayman Ice Palace, a 6,300-seat sport and convention arena, will provide a boost to the construction sector. The advancement of the planned US $400MM Dart Group construction of the Esterly Tibbetts Highway and development of a five-star hotel at Seven Mile Beach would provide a further boost to job creation.
3
> Economic landscape of US and global markets
Things > Economic diversification through initiatives to Watch such as Health City Cayman and Cayman
Enterprise City > Continued recovery of air and cruise arrivals
Tourism Performance The tourism sector posted a strong recovery in 2014 with 382,816 stay-over arrivals and 1.61 million cruise passengers. This represents a gain of more than +10.8% YoY for the stay-over segment. Strength was posted in arrivals from all major source markets: US up +8.5%, Canada up +5.4%, UK/Ireland up +4.6% and Continental Europe up +58.5% YoY.
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The US remains the primary source market accounting for 75.2% of arrivals.
cayman islands CAYMAN ISLANDS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
25.0
27.2
35.6
27.4
21.8
25.1
29.2
19.1
9.6
13.8
23.2
31.4
288.3
2011
26.4
29.9
37.5
30.8
23.4
27.0
31.4
20.0
10.0
14.4
24.9
33.4
309.1
2012
26.4
31.1
38.8
30.0
25.2
29.7
32.6
21.3
10.7
14.7
25.9
35.4
321.7
2013
28.7
32.0
43.3
29.2
27.3
31.9
33.9
24.5
10.8
16.0
28.6
39.2
345.4
35.9
31.1
34.1
39.2
30.6
13.4
18.9
29.7
40.6
2014
31.4
33.8
44.2
2015
34.4
35.8
45.5
2013YTD
28.7
60.7
104.0
133.2
160.5
192.4
226.3
250.8
261.6
277.6
306.2
345.4
345.4
145.3
176.4
210.5
249.7
280.2
293.7
312.5
342.2
382.8
382.8
2014YTD
31.4
65.2
109.4
2015YTD
34.4
70.2
115.6
YTDΔ YoY '15
9.5%
7.6%
5.7%
382.8 115.6
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Cayman received 1,609,555 cruise passengers on 562 ships in 2014, a +17% YoY increase. That number of cruise passenger arrivals reflects the best since 2007. December alone saw 195,277 passengers arrive on 77 ships, the strongest December performance since 2006. Stay-over arrivals have increased YoY for 25 consecutive months. The increase for 2015 stood at +5.7% at the end of the first quarter, welcoming 115,640 passengers. The 45,476 arrivals in March 2015 represent the most ever recorded in a single month. The US supplied 88,991 travelers in Q1 2015, accounting for over 80% of the total, and posting growth of +5.9% YOY. The Northeast part of the US provided an additional 4,877 travelers YoY, an increase of +16.2% to 35,010. Arrivals from Canada were down (2)% to 10,124 and arrivals from Europe were up +7%.
CAYMAN ISLANDS TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
1,002.5
1,483.6
3.4%
3.7%
Total contribution to GDP % Share
28.1%
33.8%
n/a
n/a
Visitor exports US $MM
492.1
754.8
3.1%
4.1%
Domestic spending US $MM
122.9
151.7
2.8%
1.9%
Leisure spending US $MM
519.6
770.7
2.8%
3.7%
Business spending US $MM
95.4
135.8
4.4%
3.1%
Capital investment US $MM
204.3
303.5
4.7%
3.6%
Source: World Travel & Tourism Council Economic Impact Report 2015
Cruise arrivals has also continued to perform better YoY, though at a weaker pace in Q1. Receiving 544,073 passengers in Q1, the sector posted growth of +0.2%.
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The World Travel & Tourism Council attributes 28.1% of GDP to contributions from the tourism sector, and foresees this will grow to 33.8% by 2025. The WTTC asserts that the sector provides 10,000 jobs directly and indirectly, accounting fro 30% of total employment. The sector currently contributes US $1B to the economy of the Cayman Islands, which will near US $1.5B by 2025.
cayman islands Market Access Kirkconnell Airport upgrades unveiled The ribbon was cut at the newly expanded Charles Kirkconnell Airport in Cayman Brac on February 2. The revamped facility, which includes new baggage equipment and an expanded departure hall, is now suited to receive international flights for the first time since September 11, 2001. Cayman Airways is currently seeking the necessary certification that will allow it to offer service to the United States and Cuba, which is expected to commence in June of this year. The airport can accommodate up to 170 passengers and the runway can receive all aircraft, with the exception of the Boeing 767.
American Airlines set to link Dallas, TX to Grand Cayman American Airlines will commence direct service between Dallas, Texas and Grand Cayman on June 6, 2015. The flights will take place on a weekly basis. The flight will provide a key connection for persons traveling from the US west coast.
BlueSky to launch regional service Newly formed Cayman-based BlueSky Airlines will operate routes to Central and South American and Caribbean destinations, including Colombia, Costa Rica, Panama, Mexico, the Dominican Republic, the British Virgin Islands, Jamaica and the Bahamas. Most routes will operate on a four times weekly basis. BlueSky will conduct flights aboard two 71-passenger Bombardier Dash-8 Q400 turboprop aircraft. The airline is seeking to commence service this summer. There are currently no plans to operate a service to the United States.
Swedish ship commits to Cayman The 170-passenger MS Star Flyer has decided to make Cayman Brac a part of its itinerary through 2016. The Swedish sailing ship began making calls to Cayman Brac on a trial basis in February 2014, and made five such stops up to November, when it commenced weekly visits through March 2015. Ship operators have been impressed by the welcome offered by local stakeholders, thus the decision to make what amounts to a two-year commitment.
Tourism Construction Jacksonville Firm to redevelop Roberts airport The airport redevelopment design and construction contract has been awarded to Jacksonville, Florida-based RS&H Group. The Central Tenders Committee (CTC) selected the firm from a field of four to renovate the terminal buildings at Grand Cayman’s Owen Roberts International Airport. RS&H will partner with local firms AMR Consulting Engineers, LEC Quantity Surveyors and Chalmers Gibbs Architects, which will provide consulting services. The reconstruction of the airport will cost over $55MM. The design submitted by RS&H would accommodate 2.7 million annual passengers compared to the current facility that was built for 500 thousand travelers, but is currently processing over one million. The addition of jetways linking planes with the terminal would add an estimated $20MM to the price tag, a cost that has been deemed too steep. Deputy Premier Moses Kirkconnell has stated that Government is counting on the airport redesign attracting hotel investment.
Dart upgrading Camana Bay Dart Realty will spend $300MM in expanding Camana Bay, including elevating land and using landscaped bridges to link the town center to a 5-star Seven Mile Beach hotel. The plan is to spend $60MM to build two underpasses, West Bay Road and the Esterley Tibbetts Highway, which will be expanded to 4 lanes. Camana Bay will undergo a westward expansion, with new restaurants and retail stores in the works. The new structure will allow pedestrians to walk from Seven Mile Beach to Camana Bay.
Other projects to follow in 2015
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• The Kariba architectural and design firm has submitted plans to the Central Planning Authority (CPA) to rehabilitate the 224room Grand Cayman Hyatt Britannia Resort. The firm will seek to renovate existing buildings that were severely damaged by Hurricane Ivan in 2004 and have been empty for more than 10 years into a modern hotel that hearkens back to the Hyatt’s heyday.
cayman islands • A US $200MM North Sound development Gran Palazzo will consist of $1MM-$2.5MM homes and will be constructed in phases over a five-year period, beginning some time in 2015. The 10-building development will include a gym, clubhouse, tennis court, yoga pavilion, swimming pools, private cabanas and possibly a marina, though that feature requires separate approval. The project is expected to provide 250 jobs and pump $200MM into the economy. • Work on the Kimpton hotel in George Town is progressing, with the frame of the 10-story building expected to reach its full height by July. The Kimpton will feature panoramic views from George Town to West Bay, and the interior will incorporate traditional Caymanian designs. The 263-room facility is expected to open November 2016, and is being developed by Dart. • Developer Ironwood’s proposed resort development in Frank Sound would have an 18-hole golf course. The East-West arterial extension project is necessary in order for the project to be carried out. Ironwood raised $60MM to finance the arterial extension, a public-private-partnership (PPP or P3) with the Cayman Islands Government. • The Owen Roberts International Airport terminal redesign and expansion will involve improved passenger processing, a new departure lounge and new commercial spaces. A temporary $300k, 3,600-square foot extension of the departure lounge at Owen Roberts International Airport was put in place to create room for an additional 229 passengers. The extension was intended as a stopgap solution ahead of a planned permanent expansion of the terminal buildings at the airport, part of an impending $122MM renovation plan for all three of Cayman’s airports. • The Charles Kirkconnell International Airport (CKIA) renovation will be complete by the end of 2015. The project includes a new baggage screening room, an in-transit lounge and an augmented arrival hall. The upgrades are meant to bring CKIA up to global standards for international travel. • The floating cruise ship pier project presented by Dutch engineering firm Witteveen+Bos at the end of 2014 entails a three-pronged floating pier able to accommodate six ships with an estimated investment of $200MM.
Tourism Policy & Initiatives Infrastructure fund to attract local investment An infrastructure fund will soon be launched in Cayman, allowing any CI resident to invest in major capital works. The fund, founded and directed by Bo Miller, will register with the Cayman Islands Monetary Association this month and will be ready to bid on public and private sector projects later this year. Miller believes that such a fund is timely, given the major infrastructure works in Cayman’s pipeline (airport, cruise port, among others). He expects the fund to contribute to job growth and will stimulate the economy. Former Deloitte partner Ian Wight, HSBC executive Samit Ghosh and Arch and Godfrey construction firm executive Heber Arch will also serve as directors of the fund.
Government, Dart strike deal
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In a move meant to create a fair investment environment while appeasing a major investor, Government and Dart Realty have renegotiated the terms of the National Roads Authority (NRA) agreement. The new deal removes the 50% concession on all of Dart’s tourism accommodations. That concession had originally been agreed upon by Dart and the former United Democratic Party (UDP), which the current government considered an unfair advantage. The new deal does not ignore the hundreds of millions of dollars that Dart has committed to Cayman over the next several decades, and other concessions will be extended to Cayman’s largest foreign investor, including a 30-year hotel duty waiver and the sale of the Safe Haven land. Elimination of the 50% concession, however, is believed to create a more level playing field for other investors.
cayman islands Sector Developments Ironwood memberships sell out Golf memberships for the Cayman Golf Club at the Ironwood Development sold out within a week of becoming available in December. An Ironwood spokesperson underscored the sellout as indicative of the confidence behind the development and the high profile of the Arnold Palmer-designed golf course. The 7,100-yard golf course, clubhouse and resort lodging will be constructed with an eye toward sustainability. The number of memberships offered was limited in order to assure the exclusivity of the club.
Ironwood partners with local firm Arch and Godfrey The $260MM Ironwood golf resort development has hired Arch and Godfrey, a Caymanian firm, as lead contractor for the Town Center, which will serve as Ironwood’s retail, entertainment, employment and business hub. The agreement demonstrates Ironwood’s commitment to using local companies, where possible, in the development of the project. Work on the Town Center will commence contemporaneously with the east-west arterial. In regards to the arterial, Ironwood expects that the highway construction project will generate some 200 jobs.
IHG buys out Kimpton, plans Seven Mile hotel Kimpton and Intercontinental Hotel Group (IHG) maintain that the Kimpton Hotel brand will retain its character and independence in spite of the brand’s US $430MM buyout by IHG. Dart Realty opines that the buyout is positive news for Cayman, culminating in a US $200MM Kimpton hotel on Seven Mile Beach. Dart, the hotel’s developer, believes that the association with IHG will give Kimpton, noted for its quirkiness, marketing leverage without compromising the brand’s unique appeal.
Marriott for sale The 295-room Marriott Beach Resort on Seven Mile Beach has hit the market. The newly refurbished resort is expected to fetch some US $100MM. More than $15MM was pumped into the property over the past 2 years in updating guest rooms, the lobby and its restaurants. The hotel will retain the Marriott brand through the sale, as Marriott Hotels has a long-term contract with the property. LA-based CBRE Hotels has been hired by GenCom Group to sell the property, which was purchased in 2006. Florida-based Private Equity Group will also sell its share of the resort.
Treasure Island on market The 280-room Treasure Island resort at Seven Mile Beach is on the market and listed at US $15.45MM. Owner Restoration Cayman Ltd was placed in receivership in November 2014, leading creditor Scotiabank to put the property up for sale. The price was determined following an investigation by two property surveyors. Treasure Island’s state of disrepair, including black mold, is the reason for a relatively low list price, given its prime location.
CITA, NWDA clash CITA recently threatened to terminate its partnership with the National Workforce Development Agency (NWDA) due to the negativity generated from a recent jobs drive, particularly Bodden Town rep Alva Suckoo’s concern that the drive had been manipulated as a way to justify cheap labor. CITA called on the “falsehoods” to be publicly corrected. The partnership has been retained The groups met on March 4 to establish an employment strategy:
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• Ministry of Tourism and National Scholarship awardees connected with an industry insider for an internship or possible job opportunity and job placement for students who completed Hospitality School training; • establishment of an effective communication strategy for the job drive; • the establishment of the NWDA as a clearinghouse for jobs, offering a clear picture of the employment situation in Cayman and the identification of training gaps of NWDA clients
Cuba
Overview and Landscape CUBA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
1.3
3.5
Attraction of FDI; US relations
Inflation %
1.2
2.0
Fuel pricing vulnerable to Vzla
Source: See Note 1 (final page)
Economic growth in 2014 was weak at an estimated +1% and underperforming government targets, which had already been adjusted downward mid-year. The decline in assistance from Venezuela was a likely contributor to the lower-than-expected result. Economic reforms were also rolled out at a much slower pace in 2014, which was part of the reason behind the slow-down. Economic performance below 1% could make it difficult to attract the US $8B+ in foreign investment being sought by Cuba. The government forecasts that the new FDI law will draw between US $2.0-2.5B per year in investment and provide a new engine of growth. The legislation promises greater flexibility to investors, with FDI allowed in all sectors except for health, education and armed forces and stipulating for 100% foreign-owned companies, as well as joint ventures. In the context of improving relations with the US, the government’s +4% GDP growth for 2015 becomes slightly more credible. However, the slow pace of developments in restoring ties
may mean delays in decision-making by investors, with much of the benefit pushed out beyond 2015 and making +3.5% growth a more achievable target. Tourism has already benefitted from eased restrictions on US travelers, and has continued to demonstrate robust growth into 2015 with total arrivals up +16% in January. Cruise sector officials estimate that as many as 2 million US tourists could travel to Cuba by 2017 if restrictions are removed in 2015. Cuba received over 3 million tourists in 2014, a record-figure for the country, marking growth of +5.3% YoY. Improvements in airlift will also provide a boost, with several new connections announced this year and US airlines eager to establish routes as restrictions ease. The government anticipates the economy will grow at a pace of over +4% in 2015, a forecast that could likely be revised downward mid-year. Activity is expected to be driven primarily by heavy investment inflows in sectors including manufacturing, agriculture, tourism and construction.
3
Things to Watch
> Future of favorable fuel pricing from Venezuela > Evolution of relations with the US > Capacity to fulfill on plans to attract FDI
Tourism Performance
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Cuba received over 3 million tourists in 2014, a record-figure for the country. This represents growth of +5.3% YoY with a major pick-up in the second half of 2014. The island received 3,002,745 tourists.
cuba Canada remains the top source market accounting for 39% of arrivals, followed by Germany with 4.6% and England with 4.1%. Venezuela provided a significant boost with arrivals up +71.6% YoY to 78,839. Cruise arrivals for the year registered at only 8,085. CUBA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
255.6
257.5
298.3
242.9
171.4
164.1
206.3
172.8
134.5
164.7
200.3
263.1
2,531.7
2011
296.1
293.1
315.5
275.0
183.8
174.1
209.6
174.4
142.3
161.6
214.6
276.4
2,716.3
2012
293.3
309.5
350.0
288.1
196.9
188.4
215.9
179.4
148.4
169.5
217.8
281.0
2,838.2
2013
292.8
300.5
354.6
273.9
191.1
183.8
212.6
186.3
147.7
168.0
234.3
305.8
2,851.3
2014
320.0
316.1
359.4
287.1
195.8
181.3
211.5
199.8
151.9
187.3
259.7
332.2
3,002.0
2015
371.2
360.0
404.4
2013YTD
292.8
593.3
947.9
1,221.8
1,412.9
1,596.8
1,809.3
1,995.6
2,143.3
2,311.2
2,545.5
2,851.3
2,851.3
2014YTD
320.0
636.1
995.5
1,282.6
1,478.4
1,659.7
1,871.1
2,070.9
2,222.8
2,410.1
2,669.8
3,002.0
3,002.0
2015YTD
371.2
731.2
1,135.6
YTDΔ YoY '15
16.0%
14.9%
14.1%
1,135.6
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Cuba’s high tourist season runs from November to April when it receives 60% of tourists. This has allowed the island to receive over 1 million visitors in Q1 2015. A total of 1,136,948 arrivals were registered for the period, an increase of +14.2% YoY. Canada posted double-digit growth, with arrivals up +12.5% to 551,773, accounting for 48.5% of total arrivals. 12 of Cuba’s top source markets posted double-digit growth in arrivals during the quarter. Only 2 of the main markets, Argentina (10.2)% and Russia (27.5)%, posted declines. Arrivals from the US were tracked by Cuba to have risen +29.5% YoY in Q1, attributed to the recently eased restriction on travelling under the 12 allowed categories. Travel from Canada rose nearly +13%, Germany over +23%, France nearly +23%, the UK +31% and Italy +11%. April is expected to deliver a similar result with Semana Santa (Spring Break/Holy Week) forecast to be a major contributor. For 2015, hundreds of new hotel rooms are expected to come online around the country, including: Camagüey 46 rooms, Cayo Coco 566 rooms, Ciego de Ávila 44 rooms, Holguín 515 rooms, Sancti Spíritus 12 rooms, Santiago 39 rooms and Villa Clara 24 rooms. The WTTC estimates that tourism contributes 10.4% of GDP, a figure that the organization expects will increase to 12% by 2025. The sector is calculated to generate some 494,500 direct and indirect jobs in Cuba, accounting for 9.6% of employment. This figure is expected to reach 502,500 by the end of 2015. CUBA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
8,168.3
12,911.8
3.7%
4.3%
Total contribution to GDP % Share
10.4%
12.0%
n/a
n/a
Visitor exports US $MM
2,723.5
4,733.6
5.0%
5.2%
Domestic spending US $MM
2,423.5
3,383.3
2.4%
3.1%
Leisure spending US $MM
4,908.7
7,767.2
3.7%
4.3%
Business spending US $MM
238.2
349.7
6.1%
3.3%
Capital investment US $MM
1,210.0
2,045.1
2.9%
5.1%
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Source: World Travel & Tourism Council Economic Impact Report 2015
cuba Market Access Airlines seek foray into Cuban market • US-airline JetBlue signals it is positioned to expand airlift to Cuba as soon as it is legally permitted to do so. The airline has offered charter services from Tampa and Ft Lauderdale Florida for the last three years, and indicates its intention to provide service from multiple cities. • United Airlines has also said it would operate regular flights from Newark and Houston (IAH) once the government allows for it. United Airlines attained authority of the Cuba route from Pan Am decades ago. • InselAir Aruba also seeks to begin providing charter flights between Miami and Havana Cuba using MD-82 and MD-83 aircraft, pending approval. • While the two nations work out an air service agreement to allow for permanent commercial routes, charter service will continue to be the main access to Cuba from the US. An air agreement could take over a year to establish, depending on the push-back it may receive from the US Republican Congress, much of which has been voiced-ly opposed to changing the stance on Cuba. • A new charter service has also been announced to connect Puerto Rico with Cuba, which will be available this summer through PR-based tourism operator Turismo Tony Perez. • A direct charter from New York JFK Airport has begun servicing Cuba weekly on Tuesdays. The Sun Country Airlines route is being serviced with a Boeing 737, 140-seat aircraft. • Air Europa revealed plans to provide 3 or 4 daily flights from Miami to Havana. The airline currently carries some 4,000 passengers per week to Cuba from Madrid, and also provides service from Punta Cana and Miami to Europe. The introduction of the new route would require approval of both the US and Cuban government authorities.
Aerolineas service to Cuba an early success Aerolineas Argentinas has begun new airlift to Cuba and reports a strong load factor of 98% for the first month servicing the route from Buenos Aires. The route to Havana is expected to provide a boost from the Argentine market, which saw a (24)% YoY drop in the Jan-Nov 2014 period to under 65 thousand tourists.
Air China to link Beijing, Havana Air China seeks to introduce an air-link between Beijing and Havana, and sent a delegation to Cuba in March to further plans. The company anticipates the service will be in place by September 28. The company plans to route the 16-hour flight with a re-provisioning stop in Montreal. Cuba received a total of 28,239 visitors from China in 2014, up +27% YoY.
Ships seek harbor in Cuban ports The 2,000-passenger Thompson Dreams is one of the 13 ships that have requested permission to enter into Cuban ports. Cienfuegos, Santiago de Cuba, Havana and Punto Francés in Isla de la Juventud are all scheduled to receive cruise visits. The Louis Cristal cruise ship brought some 14,000 passengers to the Island in March. The Canadian Cuba Cruise Company has flights from Toronto to the Havana Airport to transfer passengers to board at the Port of Havana.
Cayo Coco key to Cuba’s success
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Cayo Coco is receiving a record number of inbound flights. The airport services the nearby hotels such as Jardines del Rey resort and those of Cayo Guillermo. Flights are arriving principally from Canada. Argentina, the UK and Milan, Italy have also begun providing service. Last year the Cayo Coco airport transported 400,000 tourists and by May of 2015 this will grow to an estimated number of 50 weekly flights.
cuba Cayo Coco has been a choice destination for the Portuguese source market. The number of tourists arriving to Cuba last year from Portugal increased +55% YoY. Charter flights from Portugal to Cayo Coco have been a contributor. Cuba’s tourism officials attended the Lisbon International Tourism Fair in the last week of February to further boost awareness of the destination.
US Ferry service in the works Mulling ferry service from South Florida to Cuba, several companies have announced plans to begin operating the route once they have US government approval. Key West Express, which currently operates a route between Fort Myers and Key West seeks to include Havana in its destinations. United Americas Shipping Service executives indicate they have already met with officials at Tampa, Miami and Fort Lauderdale’s ports in order to prepare for an overnight service.
CheapAir seeks to leverage US market Online bookings website CheapAir has begun selling flights to Cuba from the US with a single online transaction. The company indicates the move is in response to a surge in inquiries for the destination. This follows the move by KAYAK in early February to begin including the destination, while not selling tickets. US travelers must still book their travel directly with a charter company.
Tourism Construction Brazilian firm hired for airport expansion Works to expand terminal 3 at the José Martí International Airport will be undertaken by Brazil-based Odebrecht. Works will be carried out over a period of 3 years, and will allow for capacity of the facility to be increased by 3-4 million passengers per year. The project is reportedly valued at US $200MM. The airport modernization plan may also include new cargo and passenger aircraft. • A US $200MM airport for Cuba is being mulled by Russia and the full scope could potentially entail the redevelopment of a port and the construction of a railway line. Cuba plans to use a former military base as the site for construction of a new airport hub, intended to service Latin America. • The development of a modern cruise terminal will be carried out at the Cienfuegos port.
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• The JV project to develop new golf courses will move forward between Cuban Palmares Group (CPG) and the Chinese Company Beijing Enterprises Holdings Ltd in Bellomonte. Last year, the government announced a similar operation with British Esencia Hotels & Resorts, planned to invest US $350MM in 2,000 real estate units.
cuba • Spain-based Meliá Hotel chain will open a new 5-star hotel in Cuba, specifically on Cayo Coco Key, at the Flamenco Beach. The project will add +1,176 rooms to the current rooms offered on the island, which will make it Meliá’s largest facility in Cuba
Tourism Policy & Initiatives US, Cuba move to loosen travel restrictions, normalize relations Eased restrictions were announced by the US Treasury and US Dept of Commerce, and took effect on January 16, 2015. Highlights of this communication are summarized below: TRAVEL For the 12 existing categories of authorized travel, individuals meeting the conditions of the regulations will no longer need to apply for a license to travel to Cuba. Authorized expenses will no longer have a daily limit. Travel and air carrier service will be allowed without a specific license from OFAC. The categories of permitted travel include: family visits, US & foreign governments/IGOs, journalism, professional research and meetings, education, religion, public performances, workshops, athletics, competitions, exhibitions, humanitarian projects and trade. FINANCIAL INSTITUTIONS Correspondent accounts for depository institutions can be opened at financial institutions to facilitate the processing of authorized transactions. INSURANCE Coverage (health, life and travel insurance) will be allowed for authorized US travelers and individuals that ordinarily reside in a third country and travel to Cuba. CREDIT CARDS The use of US credit and debit cards will now be allowed in Cuba for authorized travelers. US financial institutions can enroll merchants and process credit and debit card transactions for transactions consistent with legislation CACR 515.560. This is expected to improve the efficiency in processing transactions between the two countries. REMITTANCES Remittances to Cuban nationals other than those prohibited (Gov’t and Communist Party Officials) will be increased to US $2,000 per quarter from US $500. Remittances for humanitarian projects, the development of private businesses, including small farms, will be authorized without limit. Travelers will be allowed to carry US $10,000 in family remittances, and remittances to religious organizations and students. US-registered brokers, securities dealers, money transmitters and banks will be allowed to process authorized remittances to Cuba without the need for a specific license. TRADE US travelers can import up to US $400 in goods purchased in Cuba with up to US $100 in tobacco and alcohol products. Terms of trade will change from “cash in advance” meaning “cash before shipment” to “cash before transfer of title and control.” Goods exported and re-exported in support of the good of the Cuban people supporting individual economic activity, improving communications, and improving living conditions will be permitted including building materials, construction tools and equipment, and agricultural tools and equipment, among others. TELECOMMUNICATIONS OFAC will implement a general license to facilitate commercial telecommunications linking third countries and Cuba. A new commercial license exception will allow for the commercial sale of hardware and software, applications and consumer communication devices. A recent poll carried out by AP-Gfk indicated that 12% of those surveyed would be very or extremely likely to visit Cuba if they could obtain a tourist visa; 17% say they would only be moderately likely to travel there. The potential for growth in tourism will likely see the number of US arrivals increase from 386,367 in 2014.
Cruise industry expects heavy traffic from US
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The cruise industry has been bullish on the possibility of the US easing travel restrictions and regulations with relation to Cuba. The American Society of Travel Agents estimates that as many as 2 million US tourists could travel to Cuba by 2017, if restrictions are removed this year. Roughly 25% would be expected to travel by cruise ship. The Cruise Line Industry Association has
cuba highlighted the need for infrastructure and port facilities as well as policy concerns to be addressed before Cuba can be added to itineraries. Other safety regulations for anchoring and tendering would also be closely considered.
Exit tax applied to fares The exit tax is included in the price of international flight tickets, effective May 1, 2015. Airlines are authorized collection entities for this tax. Passengers in transfer, children under 2, and air crew are exempt of the charge. The tax is US $25 (payable in CUC).
Sector Developments David Morris unveils luxury package A new luxury travel program to Cuba is being offered by David Morris International. The program will offer high-end tours to Cuba, visiting heritage sites, museums and city tours. The tour operator uses the Saratoga hotel facility or exclusive floors of other hotels, and service is provided out of Miami on Havana Air.
Port Canaveral team visits Cuba Officials from Florida’s Port Canaveral visited Cuba in February to evaluate opportunities for the cargo and cruise business. The company officials participated in an educational tour but were not permitted to conduct business activities on the Island. The Port CEO John Walsh has referred to the trip as an opportunity for “building relationships” with Cuba.
New Orleans a potential gateway to Cuba A business delegation from New Orleans recently visited Cuba. The move is aimed to position New Orleans as a gateway to Cuba for US travelers as well as recovery of the State’s trade relations that existed before the embargo, such as in agricultural goods. The week-long delegation also explored opportunities for ownership of property in Cuba for US citizens.
Blue Diamond takes over at Breezes Jibacoa Blue Diamond has added the 240-room Breezes Jibacoa Hotel to its portfolio of 13 tourism facilities it operates in Cuba. The facility was previously managed by Jamaica-based SuperClubs. The Canada-based company now jointly operates over 7,000 rooms in Cuba and is aggressively expanding its presence on the island. In Q1, the company began operating and commercializing the 531-rooom Yuraguanal Beach. Blue Diamond is the second largest foreign hotel chain in Cuba. Flights from Key West were launched on March 13 by Mambi International Group. The company had previously launched the service a year ago, only to eliminate it after 6 weeks. However, the company asserts that the eased rules on travel better position them to service the route. The company is thus offering service to Havana again, and on March 25 added service to Santa Clara.
Cuba benefits from Italian market The Dec 20 opening of the Eden Village in Cayo Guillermo brought 42 new rooms online. Italian tour operator Eden Viaggi also opened facilities in Playa Alameda and will soon bring online the Varadero location, which are all expected to greatly enhance its vacation club offering in 2015 to the Italian market. The tour operator provides Cayo Coco-Milan airlift. Targeting increased arrivals from the Italian source market, Cuba will promote its destination at the International Tourism Exchange in Milan at BIT 2015 in May. Italy supplied a total of 112,076 visitors to Cuba in 2014, showing growth of +17.3% YoY.
European travelers to boost tourism, economy
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Improved airlift to Europe is expected to create an uptick of 25,000-30,000 travelers per year, according to figures presented by the Tourism Minister Manuel Moreno in the Madrid Tourism Fair. Iberia will reinitiate its route on June 1, Mallorca-based Evelop Airlines will expand service and Air Europa and Cubana de Aviacion will continue service bringing the total number of flights to 16 weekly.
cuba Jardines del Rey successfully launched The Jardines del Rey hotel in Cayo Coco began operations in early January, with the first phase bringing 624 rooms online. The Meliá-branded hotel is expected to complete the remainder of the 1,172 new rooms in the first quarter of 2015 and will provide services under an “all-inclusive” scheme. The five star hotel is slated to host the 2015 edition of FITCuba Tourism Fair. The total number of rooms in Ciego de Avila has now reached 6,400 following the recent opening of the Meliá Jardines del Rey. The new hotel will bring a total of 1,722 rooms online this year, with 624 already completed.
Medical tourism from US possible US-based medical tourism company Health Flights Solutions will move forward with an agreement to send US patients to Cuba for medical treatment as soon as law permits. The Orlando-based company indicates they have been in negotiations for months with Cuban health administrators and are posed to provide service as soon as travel restrictions allow for US citizens to visit Cuba for medical purposes.
Capital investment to benefit Las Tuna tourism Tourism investments are expected in Las Tunas, as the Covarrubias area has now been connected to the power grid. The change will improve the stability of service for the Brisas Covarrubias Hotel, which was previously provided by generators. The US $2MM project entailed a 40 km extension of the line from Manatí. The Covarrubias area also awaits promised improvements in telecoms, with wireless base stations to be installed in 2015 to provide Internet access. Water pipelines and a waste treatment system are also in the cards. The area of Covarrubias has an estimated capacity for 14,000 tourism rooms, but currently has only 180.
MasterCard removes Cuba block on cards
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MasterCard followed through on unblocking US-issued credit cards for use in Cuba as planned at the beginning of March. This allows US travelers a new option, as all business was previously conducted in cash or through prepaid travel. While Cuban banks have installed an increasing number of ATMs, the number of point-of-sale POS to conduct transactions remains reduced and will continue to be a challenge for most Cuban retailers and restaurants.
Curaçao
Overview and Landscape CURAÇAO ECONOMIC INDICATORS AND FORECAST Indicator
2014e 2015f
Comment
GDP Growth %
-0.5
0.4
Domestic demand to increase
Inflation %
1.4
1.1
Increasing water rates vs lower fuel
Source: See Note 1 (final page)
The economy is forecast to grow +0.4% in 2015, following a year of weak to no growth in 2014. The performance will mirror, to some degree, a general global trend of projected economic growth, particularly for the islands key trade partners, the United States and the Netherlands. Offsetting will be the expected continued contraction of the Venezuelan economy. The economy grew +0.1% in the third quarter of 2014, according to the Central Bank. Inflation during the quarter rose to 2.7% on the back of higher food, fuel and power prices. Growth in the private sector benefitted from an increase in the number of stay-over arrivals, with particular strength shown from the South American and European markets. The cruise
sector also posted growth. Growth in stay-over visitors was +2.5% YoY and cruise arrivals rose +6.8% YoY in 2014. Curaçao’s free zone was a key driver to activity in the wholesale & retail sectors, yet weak private consumption continued to be offsetting. The economy is expected to recover in 2015, with growth to be achieved through consumer spending and government expenditure. New tourism and transport projects are expected to boost private investment, and the construction of the new hospital and infrastructure spending will also contribute to economic growth.
3
Things to Watch
> Construction of the public hospital; airport works and second mega-pier to benefit activity > Tourism activity exposed to economic crisis in Venezuela > Impact of income tax rate reduction on private consumption
Tourism Performance For the total of 2014, Curaçao received 452,042 stay-over visitors, according to the Tourist Board. This represents an increase of nearly +3% YoY. The rise in international arrivals and departures is attributed to increased airlift, with ArkeFly, KLM, jetBlue and InselAir all expanding their international services.
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South America accounted for 31% of visitors bringing 141,719 stay-over visitors for the year. Venezuela was the main driver of this figure, providing 98,331 tourists to Curaçao in the year, a gain of +6% YoY. Venezuela also contributed 800,384 tourism nights, growing +31% YoY. It is noteworthy that in Q4 2014, flights from Caracas and Valencia, Venezuela decreased by (27)% and (10)%, respectively.
curaçao Brazil and Colombia also posted growth in the double-digits, with arrivals up +11% and +16% respectively. The elimination of the visa requirement for Colombians is expected to fare well for continued growth from this market. Meanwhile, arrivals from the US slowed considerably, down (14)% YoY to 53,185. Canadian arrivals posted gains of 30% YoY to 12,468. The Caribbean region sent fewer passengers to Curaçao YoY, with total arrivals down (14)% to 33,494. Passengers from Aruba fell (10)% to 20,048. Europe provided mixed performance from different markets. The most notable increase came from the Netherlands, which supplied 31.1% of total tourists at 140,702. Europe accounted for 41% of tourist arrivals, but 52% of total nights, for a total of 2,059,493 nights in 2014. Cruise arrivals were up +8% YoY to 629,145. The island received +9 additional cruise calls, bringing the total to 300. CURAÇAO STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
28.1
26.9
29.8
26.0
26.6
23.1
29.8
30.8
26.8
32.1
29.4
32.3
341.7
2011
30.1
31.3
33.1
34.2
28.0
28.9
33.3
36.4
31.1
32.5
33.4
37.9
390.3
2012
34.4
35.1
35.8
34.9
30.6
31.3
35.8
39.1
33.1
34.3
35.4
39.8
419.6
2013
36.0
37.0
39.9
36.7
33.3
33.0
35.2
38.9
34.3
37.0
38.6
40.1
440.0
2014
37.4
35.1
35.6
35.6
32.4
33.1
36.8
40.5
37.4
41.4
42.1
43.6
451.0
2015
42.6
39.8
39.7
2013YTD
36.0
72.9
112.9
149.6
182.9
215.9
251.1
290.0
324.3
361.3
399.9
440.0
440.0
122.1
2014YTD
37.4
72.5
108.0
143.6
176.0
209.1
246.0
286.4
323.8
365.2
407.4
451.0
451.0
2015YTD
42.6
82.4
122.1
YTDΔ YoY '15
13.9%
13.7%
13.0%
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
For the first quarter of 2015, stay-over arrivals have continued to grow at a robust pace, expanding +13% YoY. Cruise arrivals dropped by (10)% YoY in Q1 2015, falling to 219,247. A recovery in arrivals from the US and a major boost in arrivals from Canada saw visitors from these two markets rise +212% YoY. Arrivals from Venezuela were up +49% YoY. Colombia has contributed =40% YoY growth and Brazil +27%. Overnight stays from Venezuela jumped +56% YoY to 185,544 in the first quarter. The US and Canada posted growth of +17% and +23%, respectively. Total nights were up +8% to 1,088,512. The average daily rate was up to US $171 in Q1 2015, from $143 in the same period of the prior year. Revenue per Available Room was up +35% YoY to $134.63. Hotel occupancy was up in all 3 months of the first quarter YoY, averaging 78.7%. The Hotel and Tourism Association CHATA anticipates the island will receive 1.16 million air passengers in 2015. The institution points to 12,870 flights scheduled for the year. Curaçao has 6,000 rooms, with roughly half in hotel stock and the remainder in
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apartments and villas.
curaçao Market Access Jet Center offers exclusivity The new Jet Center Curaçao commenced operations at the Curaçao International Airport the first week of January. The facility is Curaçao’s first dedicated terminal to offer segmented group travel in and out of the island on private and corporate aircraft. The center, set apart from commercial operations, adds convenience and exclusivity to private jet travel. The airport saw 3,300 private planes come and go in 2013, with that number expected to climb in 2015.
Charter service from US sought With US carriers seeking to operate charter flights to and from Curaçao, the Curaçao Civil Aviation Authority (CCAA) will consider applications to do so, as indicated in a correspondence to the US Department of Transportation. That letter also states that the CCAA will grant approval for US-based carriers to operate 7th freedom charter flights (the right to carry passengers or cargo between foreign countries without the requirement of continuing service to one’s own country), provided the US extends the same courtesy to Curaçao.
Tourism Construction More upgrades in store for airport An NAf 1.6MM-2.5MM expansion is in store for the Curaçao International Airport, including construction of a new airport plaza, the renovation of the Hato Handling building and several other improvements. The airport has already undergone nearly NAf 10MM in renovations recently with the goal of becoming a regional hub, including the installation of air conditioning, an upgraded runway, the development of an airport app, and the launch of Jet Center Curaçao, which is meant to enhance to customer experience in arriving and departing the airport.
Hato International Airport works advance The viewing area “mirador” began construction in January. The project carries a second phase which includes a second level, to be concluded in 2016.
Megapier project to include hotel and plaza A Megapier project in Otrabanda is being promoted by government to increase passenger traffic. The project will require changes in customs, and provide a boost to the commercial sector in the area. A hotel and shopping plaza, casino, and residential areas all form part of the complete scope.
Tourism Policy & Initiatives Waaigat area to be redeveloped for tourists, residents The Curaçao Ports Authority has launched the “Tourism Development Waaigat,” which will see the Waaigat area of Willemstad developed for permanent residents and tourists. The project encompasses a marina, commercial real estate and leisure activity areas, and it falls under the auspices of the Curaçao Port Policy and Implementation Plan (2014-2024) meant to augment porting in Curaçao across a range of sectors (yachting, cruise, dry dock, container, liquid bulk, etc).
Sector Developments Immigration services lacking
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Business organizations are united in their opposition to the quality of Immigration Services at Hato International Airport. The Curaçao Chamber of Commerce, the Curaçao Hospitality and Tourism Association (CHATA) and the Curaçao Tourist Board have called attention to a recent situation in which 3 immigration officers were servicing 1,500 passengers. The organizations are seeking an audience with the Minister of Justice and the Minister of Finance in order to spur action to reduce visitor inconvenience.
curaçao CHATA profile growing Curaçao Hospitality and Tourism Association (CHATA) membership has surpassed 200, as the organization continues to add hotels, restaurants and other businesses to its profile. CHATA CEO Lizanne Dindial believes that CHATA is playing an integral role in raising awareness of tourism’s importance to Curaçao’s economy. CHATA initiatives for the coming year include a Restaurant Task Force, which aims to encourage partnership among restaurateurs and other tourism stakeholders, as well as to develop dining programs for tourists. CHATA will also encourage small hotel operations to join the organization as a way to boost the visibility of Curaçao’s small accommodations product.
Diving a key earner According to CHATA’s Dive Task Force, Curaçao’s diving industry is responsible for $21.3MM in annual revenues. That figure is based on 325 daily divers spending $300 per individual, expenditure that takes into account dive costs, accommodations and other tourism expenses. Of the 325 divers per day, an estimated 90% are tourists, with the remainder made up of locals. Divers account for some 200 rooms a day, or 72,800 room nights per year.
Virus takes toll on tourism The rise of the Chikungunya virus caused a hit to Curaçao’s tourism industry. According to CHATA, reporting in the Dutch media (particularly in the newspaper De Telegraaf) on Chikungunya projections for 2015 has caused a number of Dutch travelers to cancel their Caribbean travel plans. The Public Health Service’s chief epidemiologist has offered assurances that the epidemic is waning and that projections reported in the Netherlands were meant to depict a worst-case scenario.
Plaza auction suspended The planned January 26 auction of the Plaza Hotel was postponed due to the interest of potential buyers of the property. The hotel was seized by the Social Insurance Bank and the Tax Collector in November for outstanding debts that amount to NAf 3.6MM. The current owners of the hotel were authorized to purchase the property with the understanding that they would pay off its existing debt. That amount remains unpaid and an auction was planned, but the SVB will allow the owners to negotiate a sale. The Plaza employs 80 persons between the hotel and casino operations.
Industry conference set for October The State of the Industry Conference 2015 (SOTIC) will be hosted in Curaçao. The date of the Caribbean Tourism Organization’s premier event has been set for Oct 21-23 and the event will take place at the Willemstad World Trade Center. The event will bring together some 300 tourism leaders from CTO’s member countries, as well as members of the international public and private sector. Aside from a host of speakers and presentations, SOTIC will afford the opportunity for CTO members to showcase their respective tourism products.
InselAir challenges regional flight tax InselAir has released a communication expressing concern about the impact of taxes that are being charged by various governments, which it contends is causing ticket prices to go up. The carrier is calling for governments to look to jurisdictions, such as Brazil, whose regime serves to promote regional air traffic by drawing a distinction between regional and international flights. Currently, the rate of taxes for a flight from Amsterdam to Aruba is US $34.25, the same as a regional flight that lasts a fraction
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of the time.
Dominica
Overview and Landscape DOMINICA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
2.0
1.8
Agro output/exports key
Inflation %
0.5
1.0
Falling oil prices will impact
Source: See Note 1 (final page)
Agriculture and tourism were the main engines of growth in 2014. Agricultural production advanced in spite of a (23.5)% contraction in banana production,n which reached only 989 tons YTD in September as black sigatoka continues to take its toll. Crop diversification was a major contributor to the advances in the sector. The resounding +24% growth in cruise tourism was accompanied by +3.7% growth in stay-over tourism, noting particular strength from the US and Europe. The economy has struggled in recent years as the result of a decline in construction, transportation, storage & communications and financial intermediation. Private sector construction starts declined in number (5.2)% and value (19.8)% in the first
3 quarters of 2015. Capital spending dropped (56.4)% YoY for the period. For 2015, hotel proposals under the Citizenship by Investment Program, recently disclosed by the PM, would contribute positively to growth. A 200-room development is in plans in Portsmouth at Coconut Beach, a 36-villa project in Soufriere and a chocolate manufacturing facility. The luxury hotel construction project in Cabrits, signed by Range Development Partners last November, could begin construction this year. Public spending is expected to be focused on completing road upgrades on the East Coast and installing LED street lights on main roadways. Plans to construct the international airport at Crompton Point under a BOT model are being reviewed, with the project to be undertaken by China.
3
Things to Watch
> Future of Petrocaribe > Developments in tourism and construction > Exposure to climate and plant disease for agricultural output
Tourism Performance
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The +24% growth in cruise tourism fared well for the sector and related sectors as Dominica welcomed 286,573 cruise passengers. The stay-over tourism sector posted arrivals up +3.7% YoY to 81,159, with additional airlift from St Maarten and Guadeloupe being a major contributor to the result. Arrivals from the US were up +8.4% and arrivals from Europe rose +10.7% YoY.
dominica For 2015, January figures reveal a drop in cruise arrivals, down (13.5)% YoY to 55,412. Stay-over arrivals remained virtually flat YoY at 6,444. Arrivals from the US and Europe both slid, down (12)% and (6)%, respectively. DOMINICA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
6.3
7.3
6.0
5.6
8.1
3.8
8.8
7.2
3.8
7.8
3.9
7.7
76.5
2011
6.0
5.2
7.6
6.5
5.2
4.9
10.0
7.4
3.6
7.9
4.1
7.2
75.5
2012
5.6
8.4
5.6
7.2
6.3
4.6
9.4
8.7
3.4
7.2
4.7
7.0
78.1
2013
5.9
7.7
6.8
5.0
6.8
4.8
8.3
8.9
3.2
9.0
4.4
7.5
78.3
7.4
6.6
7.1
6.2
5.3
9.2
8.0
4.2
8.6
4.6
7.9
81.5
2014
6.4
2015
6.4
2013YTD
5.9
13.5
20.3
25.3
32.1
37.0
45.3
54.2
57.4
66.3
70.7
78.3
78.3
13.8
20.4
27.6
33.8
39.0
48.2
56.2
60.4
69.0
73.6
81.5
81.5
2014YTD
6.4
2015YTD
6.4
YTDΔ YoY '15
0.3%
6.4
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The World Travel & Tourism Council estimates that tourism contributed 26.4% of GDP in 2014, a figure they expect to grow by +5 points over the coming 10 years. The sector’s total contribution to employment was estimated at 24% with 8,500 jobs and is expected to grow the number of jobs by +1.8% this year. DOMINICA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
138.3
195.5
2.6%
3.3%
Total contribution to GDP % Share
26.4%
31.6%
n/a
n/a
Visitor exports US $MM
89.3
131.5
2.7%
3.7%
Domestic spending US $MM
15.5
18.4
2.2%
1.5%
Leisure spending US $MM
88.2
126.1
2.4%
3.4%
Business spending US $MM
16.6
23.8
3.9%
3.2%
Capital investment US $MM
10.0
14.3
4.5%
3.2%
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Dominica welcomes new cruise ships The MV Europa II made its inaugural call into Dominica right before the New Year with a small passenger capacity of 516. This is the seventh passenger cruise line to make an inaugural call into Dominica for the 2014/2015 cruise season. Carnival Cruise Line ship MV Carnival Triumph also recently made its inaugural call to Dominica. The ship has a passenger capacity 2,754 and crew of 1,100. The cruise sector anticipated 191 calls in the 2014/2015 season and over 292 thousand passengers.
Tourism Construction Pier expansion discussed
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Plans to expand the pier at the Roseau Cruise Ship Berth (port) are being discussed by the Dominica Air and Seaport Authority (DASPA). Scope of the project includes expansion of the pier by 150 feet and the construction of new port facilities.
dominica Construction to embellish Roseau Construction projects will be carried out in Dominica’s capital city of Roseau, with plans calling for works to be underway throughout 2015. The construction of housing and administrative buildings, roads and sidewalks, and some tourist attractions are some of the projects to be developed. Upgrades will include improvement of sports, recreation, employment and housing in the Roseau Central Constituency. The Roseau Recreation Facility will include a soccer pitch, two all-purpose courts, lighting, seating and restrooms. Improvements will be made to the Botanical Gardens and an arts and cultural center is in the cards.
100-room hotel construction for Cabrits Range Capital Partners Dominica Ltd plans to construct a 100-room hotel that will be managed by the Switzerland-based Kempinski Group. Funding will be sourced from the Citizenship by Investment Program. The structure will be designed to blend into the natural surroundings. With technical due diligence work complete, construction can begin presently.
Sector Developments Venezuelan funds to boost tourism, other investmentA credit line of at least US $10MM has been granted to Dominica by the Venezuelan Development Bank BANDES. The funds will used by the Agricultural Investment and Development Bank (AID) to offer reduced interest rate loans to investors at a maximum of 6%. The Prime Minister indicates that the government majority-owned AID Bank’s loans will be directed towards the tourism, industrial and agricultural sectors. The government indicates that the credit line may eventually be available for the requested US $16MM. Guadeloupe key to tourism industry Guadeloupe has been recognized as an important contributor to the tourism sector in Dominica, following a recent visit from Dominica’s Tourism Office Director, Colin Piper. During his visit, the director explored collaboration opportunities between Guadeloupe and Dominica and ways to better position Dominica in Guadeloupe towards Guadeloupe’s European tourists.
Tourism industry recognized internationally The tourism sector for Dominica has received much recognition in the previous and current year. The Discover Dominica Authority recently announced the honors that country has received in categories such as eco-tourism and culture. So far the country has received 22 accolades and recognition from international media agencies and news outlets.
Dominica to attend State of the Industry event
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As the Caribbean Tourism Organization (CTO) State of the Industry Conference (SOTIC) is approaching in October, Dominica will have a chance to highlight tourism opportunities to potential investors. SOTIC, which is sponsored by the CTO, will be held in Curaçao at the Willemstad World Trade Center, uniting at least 300 tourism leaders from CTO member countries, as well as members of the international public and private sector.
Dominican Republic Overview and Landscape
Indicator
2014e
2015f
Comment
GDP Growth %
7.3
6.0
CAFTA-DR tariff removal; gold price
Inflation %
1.6
3.5
Expected to re-align to CB target
Robust performance is likely to continue across all economic sectors. There has historically been an increase in public spending ahead of elections, and the reigning in of spending ahead of the 2016 Presidential Election will be key to maintaining fiscal targets.
Economic activity in the Dominican Republic expanded at a pace of +6.5% YoY in the first two months of 2015, according to the Central Bank’s Monthly Index IMAE. This was slightly slower than the growth experienced in January. The robust growth followed vigorous activity in 2014, with GDP expanding +7.3%, topping performance for Latin America and the Caribbean.
The drop in gold prices will mean a US $612MM miss on government revenues estimated to come from the sector. Government has calculated, at a price of US $1,600 per ounce, that it would receive US $2.2B from the agreement with Barrick Gold over the 2013-2016 period. Offsetting, the electricity subsidy has decreased substantially in the context of lower oil prices. All-in, the country has saved nearly a half billion dollars on its oil import bill since last June.
The monetary policy rate has been lowered twice in 2015, according to the Central Bank. The rate was reduced a further (50) base points to 5.25% in April, following the prior month adjustment to the same degree. The monetary policy rate now stands at 5.25% as of May 1. The overnight rate was reduced to 3.75% annual and the report rate dropped to 6.75% annual.
“Economic activity in the Dominican Republic expanded at a pace of +6.5% YoY in the first two months of 2015, according to the Central Bank’s Monthly Index IMAE.”
DOMINICAN REPUBLIC ECONOMIC INDICATORS AND FORECAST
Source: See Note 1 (final page)
65
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> Public spending ahead of 2016 election > Impacts of gold and oil prices on trade and fiscal accounts > Strength of construction pipeline
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Inflation remained below the target range of 4.0% ± 1 point. Annual inflation in March dropped to 0.64%, the lowest level since October 2009. Accumulated inflation in the first quarter of 2015 was 0.16% and the Central Bank anticipates it will remain below the target. Inflation closed 2014 at 1.58%, the lowest on record since 1984, with gas prices down roughly (25)%.
dominican republic Tourism Performance Tourism arrivals beat historic records in 2014 with more than 5.1 million non-resident passengers and 4.45 million foreigners, an overall jump of +9.7% YoY. The reactivation of the US economy has permitted 206 thousand additional guests, while Europe and South America contributed with 58 thousand and 84 thousand, respectively. On the back of these strong figures, tourism revenues shot up +10.6% YoY to US $5.6B. Average hotel occupancy in 2014 was 74.8%, according to ASONAHORES. The performance was led by Romana-Bayahibe with 84.3%, Punta Cana-Bávaro with 82.7% and Samaná with 73.8%. Santo Domingo’s average occupancy was 65.4% and Puerto Plata 59.4%. Airport traffic in 2014 reached 11.5 million passengers, up +9.5% YoY. This figure surpassed the +8.9% forecasted by the International Civil Aviation Organization (ICAO). Punta Cana’s Airport ended up in the 6th position of the ranking of most-visited Latin American Airports, and Las Americas in Santo Domingo was ranked 9th in air flows from North American cities. Total cruise arrivals for 2014 were up +2.7% to 435,494. Cruise arrivals at Sans Soucí Port rose by +48% in 2014. For this year, the Sans Soucí Port expects to expand cruise visitors by +16%. Improved port management and strategies implemented by the Ministry of Tourism to make the port a more appealing facility for cruise lines have made this achievement possible. This performance underscores the wide potential of Santo Domingo in supporting the 10 million tourist goal established by President Medina.
DOMINICAN REPUBLIC STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
404.3
395.8
421.8
331.5
297.0
348.4
417.7
333.1
219.3
247.3
297.0
411.4
4,124.5
2011
409.5
407.6
439.6
378.0
297.8
346.7
433.0
328.3
239.7
265.8
315.8
444.4
4,306.4
2012
430.2
446.2
479.4
399.1
316.4
382.5
453.8
353.6
258.8
268.9
328.8
445.0
4,562.6
2013
423.6
422.7
500.7
388.6
329.4
395.8
470.2
376.5
249.4
283.8
359.0
490.0
4,689.8
2014
449.1
446.5
501.0
445.0
385.9
442.0
514.6
424.7
282.3
323.5
392.3
534.3
5,141.4
2015
483.0
478.8
537.6
2013YTD
423.6
846.3
1,347.1
1,735.6
2,065.1
2,460.9
2,931.1
3,307.6
3,557.0
3,840.8
4,199.8
4,689.8
4,689.8
2014YTD
449.1
895.6
1,396.7
1,841.7
2,227.6
2,669.6
3,184.2
3,609.0
3,891.3
4,214.8
4,607.0
5,141.4
5,141.4
2015YTD
483.0
961.8
1,499.4
YTDΔ YoY '15 7.5%
7.4%
7.4%
1,499.4
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Following the record-setting performance in 2014, the Tourism Ministry anticipates that 2015 will be even better. Considering the strategic agreements put in place in 2014, the expected growth of +10% would bring more than 6 million visitors to DR in 2015. Tourist arrivals in Q1 2015 were up +7.4% YoY to 1.5 million. Non-resident Dominicans accounted for 9.7% of the total tourist arrivals and grew at a pace of +20.8% YoY. Foreign tourists rose by +6.0% to 1.34 million. The US led the growth in arrivals contributing an additional 68,718, followed by Venezuela which added 11,009 visitors. Strong performance from Brazil, Colombia, Argentina and Peru reinforced the strength of the destination from the South American market, which grew +20% YoY overall. Hotel occupancy in Q1 2015 was 86.7%, led by Samaná with an occupancy rate of 93.9%, la Romana with 90.6% and Punta Cana-Bavaro with 90.3%.
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The World Travel & Tourism Council (WTTC) estimates that the tourism sector contributes 16% to GDP, a figure expected to decline over the next decade to 14.6%. The sector currently contributes 14.7% of total employment with 624,000 jobs, which will rise by +1.5% this year, according to WTTC estimates.
dominican republic
DOMINICAN REPUBLIC TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
10,081.5
13,654.5
2.7%
2.8%
Total contribution to GDP % Share
16.0%
14.6%
n/a
n/a
Visitor exports US $MM
5,895.7
7,720.6
1.7%
2.6%
Domestic spending US $MM
1,865.3
2,925.6
4.5%
4.1%
Leisure spending US $MM
7,344.1
10,000.3
2.2%
2.9%
Business spending US $MM
416.9
645.9
5.0%
4.0%
Capital investment US $MM
460.4
700.9
6.7%
3.6%
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Ukrainian airline boosts airlift The Ukrainian carrier Windrose Airlines has begun flying from Boryspil Int’l Airport in Kiev to Casa de Campo Int’l Airport in La Romana. The company provides mainly charter service, using an Airbus A330-200. On its first flight, the airline brought 310 passengers and 24 crew-members.
Radisson opens in March Carlson Rezidor Hotel Group opened Radisson Santo Domingo hotel in March 2015. The hotel has 190 rooms, a restaurant, bar, business center and fitness center.
Air Europa, Seaborne agreement kicks in The codeshare agreement between Air Europa and Seaborne commenced March 29. This is a result of the ongoing Caribbean expansion by Air Europa, which will connect its daily flight between Spain and the Dominican Republic with Puerto Rico. Seaborne, a Puerto Rican airline (recently re-domiciled from USVI), agreed to cover the route Santo Domingo – San Juan, allowing for daily flights to and from the islands and, as a result, the connection of both capitals with Barajas airport. This development will help position Puerto Rico as the main hub of Caribbean air access and increase flight options for visitors.
Visa requirement scrapped for Colombians Colombians no longer require a tourist visa to go to DR. Taking into account that Dominicans do not need any specific travel document for Colombia, the Ministers of Foreign Affairs of both countries decided to sign an agreement in order to harmonize bilateral tourism processes and allow Colombians to visit DR under the same conditions. Because of the measure, tourist inflows are expected to grow.
Tourism Construction Carnival cruise terminal advances
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Works continue to advance on the Carnival Cruise US $65MM cruise ship terminal on the north coast of DR, near Puerto Plata. The Carnival Amber Cove Cruise Port in Maimon is expected to be finished by October 2015 and to receive more than one hundred thousand passengers in the first 6 months. The Carnival Victory, with more than 2,000 passengers aboard, will be the first ship using the new facility.
dominican republic Heavy hotel investment in 2015 More than 4,000 hotel rooms will be built in DR at a cost of US $2B in 2015, as revealed by Tourism Minister Francisco Javier García at FITUR Madrid. The +5.3% recovery experienced by Spain as a source market in 2014 and the important impact Spain has on hotel chains in DR provide a platform for outstanding growth this year. Additionally, the two countries are launching health tourism plans as an innovative strategy to boost traveler flows.
Hotel Secrets planned for October 2016 opening The 470-suite Hotel Secrets Cap Cana is now under construction. The US $160MM investment in Punta Cana is being undertaken by Apple Leisure Group. Construction of the AMResorts hotel will be carried out by Codelpa and will lead to the creation of an estimated 900 direct jobs in the construction phase and 1,000 permanent positions. Construction is expected to conclude by October 2016. Banreservas has financed the project.
Marriott hotel expansion considered The construction of 220 hotel rooms to expand the JW Marriott Santo Domingo is being mulled by Group Velutini. Velutini indicates that a study is currently being conducted and the results will be presented in the coming months. In its first six months of operation, the JW Marriott in Sto Domingo won the top spot among all of the 5,000 JW Marriott hotels worldwide.
New airport considered for Northeast A plan to develop the Northeast Aerodrome is being considered by the Airports Department and the Northeast Regional Development Council (CRD). DR’s 13th airport will be located near the towns of La Vega, Jima Abajo and Ranchito. The facility will aim to boost local output, trade and ecotourism initiatives available in the area.
Other projects to follow in 2015 • Grupo Puntacana will commence a housing project and Resort in the Bani Province in Q2, 3 months after originally planned. The project named Playa Corbanitos will include 25 km of beach, 2 hotels, 35 residential units and 450 apartments. The construction will also entail common areas and an ecological reserve for a variety of outdoor activities. • Several tourism projects are currently being developed around the country, according to the Investment Authority, CEI-RD: 365-room Costa Norte at Playa Grande in Cabrera, 215-room Real Hotel & Resorts, US $30MM Riviera Azul tourism complex and the Playa Nueva Romana colonial-style luxury hotel. • US $594MM for a highway construction project includes US $299MM for the Cibao-Sur highway improvement project that will be executed by Odebrecht and Constructora Rizek y Asociados. The remaining US $295MM will be allotted for construction and design of the Pontezuela Ecological Corridor project in Santiago. • Construction of the Uvero Alto-Miches Highway concluded in 2014. The 40-km Miches-Sabana tranche will be concluded by mid-year 2015.
Tourism Policy & Initiatives New road presents investment, ecotourism opportunities
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A 40.5 km road connecting El Seibo and Miches has been inaugurated by President Medina. The President claimed this is just the first phase of the Eastern Road Grid, which is a RD $694MM project. The route is expected to attract foreign and domestic investors, ecotourism activities and boost the local economies of El Seibo, La Nabajagua, Pedro Sanchez, El Ocho, Los Corazones and Miches, benefitting around 100,000 residents. The roadway construction program had generated 300 direct and more than 1,000 indirect job positions.
dominican republic DR, Panama to trade tourism tips Tourism authorities from Panama and DR will share experiences and knowledge on tourism strategies. The Panamanian Minister Jesus Sierra highlighted the great success accomplished this year by DR, and requested to tour the island to meet investors and learn key technical elements of how to improve and maintain an elevated number of tourists.
Tourism Minister touts DR in Uruguay Promoting DR in Uruguay, Minister of Tourism Francisco García recently travelled to the market, highlighting DR’s current outstanding economic performance, appealing commercial and industrial strengths, as well as outlook regarding the future of the tourism sector.
Sector Developments State of the Nation touches on tourism President Medina gave his State of the Nation address to the National Assembly on February 27. GDP grew +7.3% in 2014, including +7.5% for Hotels, Restaurants and Bars. Tourism revenues grew +11.3%. Tourism revenues reached US $5.6B in 2014, with over 5.1 million tourists. Cruise arrivals were up +25.4%. A total of 34 new tourism projects were approved adding 11,000 rooms and 34 thousand jobs. The South will become the focus of tourism development, with Pedernales, Los Corbanitos, Peravia and other towns to benefit from the creation of a new tourism poll.
Nearly $2B in customs last year An estimated US $1.9B in revenue was collected in 2014 by the Customs Agency DGA, according to institutional estimates. The institution forecasts collections for 2015 will not vary significantly from the 2014 result. In a report issued by the entity, it highlights the progress made on international standards, performance metrics and consolidating competitive exports. Customs collections totaled RD $6.44B in January; 108.5% of the target and a +18.4% increase YoY. This two-digit expansion is the result of a modernization process executed within the institution to reach greater levels of efficiency and fight fiscal evasion. Customs (DGA)’s goal for 2015 is to collect more than RD $85.45B, +7.2% YoY growth.
New trails inaugurated
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The Barahona Tourism Cluster inaugurated 4 trekking/bicycle trails located in La Ciénaga, Polo and Paraíso. The paths and required infrastructure were sponsored by the IDB, seeking to promote Eco-Tourism and nature-related activities for European tourists. The project also involves community volunteers and provides job positions for tour guides.
dominican republic Tourism fair deemed successful The International Tourism Fair 2015 (FITUR) held in Madrid was considered by DR stakeholders a major success for the destination. For next summer, hotel bookings will increase +27%, the Tours operator Barceló Viaje will raise the number of flights to DR to 4. Furthermore, the operator Soltour confirmed its direct charter flight from Portugal to Samaná. Iberia will roll out a marketing campaign plus two additional flights per week from Madrid as part of its strategies to promote Spanish tourism in DR.
Tourism loans up The tourism loan portfolio of Banco Popular in 2014 stood at RD $25.9B, a +3.7% expansion YoY. In the past year the institution earned net profits of RD $4.9B, its total assets went up to RD $276B, a +9.9% YoY increase, similar to its net loan portfolio, which increased by +9%. The remarkable performance was mainly boosted by commercial loans granted to industrial sectors.
BanReservas aggressive in tourism market BanReservas has created a special department to help reach the goal of 10 million tourists per year. The bank is financing the construction of new hotels and shopping malls, as well as the acquisition of additional land for further developments and various maintenance activities and upgrades to existing tourism facilities. These investments are expected to increase the quantity and quality of tourist lodging supply around DR.
BanReservas seeks investment in Berlin State-owned bank BanReservas held a meeting in Berlin with a group of investors to build 3,500 hotel rooms in DR. Currently, the tourism investors are not positioned in DR, but have prioritized the destination in their Caribbean expansion plans. BanReservas will finance and advise with other government agencies in a concerted effort to adhere to the government’s commitment to enable investment to develop the tourism industry, furthering it towards the 10 million annual passengers goal.
Meliá floats first bond in DR
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Spanish company Meliá Hotels International and Popular bank group announced the hospitality industry’s first corporate bond issue in DR. The program could top US $100MM and was approved by the Securities Council on March 3, being rated ‘AAA’ (dom) by Fitch Ratings, and ‘AA’ (dom) by Feller-Rate. The bond is aimed at institutional investors and the general public, placed in 10 segments of US $10MM each, for a period of 365 days. The bond has a 5-year maturity with a fixed interest rate and has an “innovative” warranty due to specific trust law. It is backed by the Fiduciary Popular trust.
Dutch Caribbean
Overview and Landscape DUTCH CARIBBEAN (BES) ECONOMIC INDICATORS AND FORECAST 2015f
Comment
Bonaire Inflation % 1.5
Indicator
2014e
2.0
Food prices major contributor
Saba Inflation %
2.0
1.8
Hotel & Restaurant price rise
Statia Inflation %
2.6
2.5
Easing oil, airlift prices
Source: See Note 1 (final page)
Achieving scale economies in the BES Island economies is a challenge due to their small size, which ultimately puts pressures on consumers and the public purse. Nonetheless, high per capita income in these jurisdictions is also present. Per capita income on Saba was $21,900, compared to $26,400 on Statia and $21,900 on Bonaire. Bonaire is the largest of these economies and activity is mainly driven by consumer spending which totaled US $310MM, with gas and food each making up 21% of that total.
Gross investments were estimated at US $86MM. Total exports of goods and services was US $181MM, compared to imports of US $205MM. These figures reflect similar tendencies perceived in the other islands. Food prices are the main contributor to inflation in the BES Islands, where annualized inflation reached 1.5% for Bonaire, 2.6% on St Eustatius and 2.0% on Saba. Fuel prices have contributed to the easing inflationary pressures. For 2015, projects such as airport renovations, the construction of a prison on Bonaire, upgrades at schools, activity at the NuStar storage terminal in St Eustatius and renewable energy investment will be key to watch to gauge economic progress.
3
Things to Watch
> Airport renovations on all 3 islands > Construction of prison on Bonaire > Developments in airlift from key source markets
Tourism Performance The first 9 months of 2014 welcomed 121,620 tourists to Bonaire, with double digit growth from the US and European markets. US arrivals were up +10.5% YoY and European arrivals grew 13.5%. The second Delta flight on Saturday will continue in 2015, expected to drive a further boost in arrivals.
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Historically, Dutch tourists have accounted for the largest share of stay-over arrivals to Bonaire at around 60%. US tourists accounted for around 20% in 2014, followed by Venezuela 2.8%, Germany 2.7% and Canada 2.6%
dutch caribbean Bonaire reports that cruise passenger arrivals amounted to around 190,000 in the 2014-2015 cruise season, and for the calendar year 2015, a record number of 250,000 are expected to arrive. Saba received around 5,500 passengers in the first half of 2014, up slightly from the 5,400 received in the same period a year prior. The Dutch account for 40.5% or arrivals, followed by US travelers 27.2% and Canadian travelers 10.4%. St Eustatius reported the arrival of around 5,600 tourists in the first 6 months of 2014, increasing from the 5,400 registered in the same period a year prior. Dutch tourists accounted for 54% of the total, followed by US tourists 12.3%, French tourists 4.3% and other European tourists 5.5%. DUTCH CARIBBEAN STAY-OVER ARRIVALS (IN 000’S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2012
10.5
10.9
10.9
11.3
2013
10.6
11.1
12.5
11.8
9.0
9.9
12.3
10.4
8.6
10.7
10.2
11.2
126.1
10.1
10.4
12.0
10.8
8.7
10.8
10.4
11.2
130.5
2014
11.7
10.8
12.1
11.7
10.7
9.5
BONAIRE
66.5
SABA 2012
3.0
2.7
2.6
2.3
10.6
2013
2.8
2.6
2.5
2.4
10.3
2014
2.8
2.7
5.5
ST EUSTATIUS 2012
3.2
3.3
3.3
3.1
12.9
2013
2.7
2.7
2.7
2.7
10.8
2014
2.7
2.9
5.6
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The former Dutch Antilles, which includes the BES Islands, Curaçao and Sint Maarten is estimated by the WTTC to have 49.4% of GDP contributed by the tourism sector. This is expected to continue to firm to over 50% in the next 10 years. Over the 5 islands, the sector is estimated to generate 40.3% of total employment with 24,500 jobs. The indicator is expected to fall in 2015 to 24,000, as other indicators also contract. DUTCH ANTILLES (FMR) TRAVEL & TOURISM DIRECT CONTRIBUTION TO GDP Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
2,004.6
2,402.3
-2.3%
2.1%
Total contribution to GDP % Share
49.4%
50.4%
n/a
n/a
Visitor exports US $MM
1,617.4
1,947.0
-1.9%
2.1%
136.9
149.9
-1.1%
1.0%
1,663.3
1,981.1
-2.0%
2.0%
Domestic spending US $MM Leisure spending US $MM Business spending US $MM
90.9
115.8
1.9%
2.3%
Capital investment US $MM
246.4
281.3
1.2%
1.2%
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Source: World Travel & Tourism Council Economic Impact Report 2015
dutch caribbean Market Access Bonaire’s cruise sector scheduled for new calls Bonaire received its first Carnival Cruise call ever on January 19. The Carnival Liberty brought 2,984 passengers and the vessel will return to the island for 8 more calls in 2015. Other Carnival Cruise line ships including the Carnival Valor, Carnival Triumph, Carnival Pride, and Carnival Sunshine are scheduled to visit the island in 2015. Norwegian Cruise Lines will add calls in November of 2015. Pullmantur will also begin arriving to Bonaire in September.
Tourism Construction Yacht docking area damaged High swells have damaged part of the harbor in St Eustatius, specifically the yacht-docking area. This area has undergone repairs twice before and the Director of Economy and Infrastructure at Fort Oanje plans to determine if any of the contractors can be held responsible.
Renovations to bring BES airports to standard The airports of Bonaire, St Eustatius and Saba will each undergo renovations beginning in 2015. None of the airports currently meet International Civil Aviation Organization (ICAO) standards for safety. A Dutch team of engineers, specialists and project managers toured the airports to meet with local government members and contractors to discuss the scope and strategy of the renovations, which will include runway improvement, lighting upgrades, fire department upgrades and new communication and meteorological equipment, among other general infrastructural improvements. Statia’s FD Roosevelt Airport will be first in line, with work commencing in early 2015. The Dutch Ministry of Infrastructure and Environment is the driving force behind the renovations. The Netherlands Airport Consultants BV and Van Boekel Zeeland BV will team with local contractors and the Department of Rijkswaterstaat (National Water Management) in carrying out the work.
Sector Developments Modernization for Sand Dollar resort Bonaire’s Sand Dollar resort has completed the installation of individual modem connections that will provide guests with free Wi-Fi service. The upgrade from a central Wi-Fi service to individual connections will improve the reliability of connectivity and the speed of the Internet service. Additionally, Sand Dollar is offering special seven-night room/dive packages between May 2-December 18 starting at $637 per diver.
Saba, Statia attend Utrecht fair sans Sint Maarten Saba and St Eustatius attended the annual Vacation Fair in Utrecht without a delegation from Sint Maarten. The delegations from Saba and Statia lamented the absence of Sint Maarten for the second time, as the island serves as a critical gateway to the BES islands. Also potentially undermining Saba and Statia’s tourism industry is the lack of a tourism office in the Netherlands, which closed in July 2014. Saba and Statia had benefitted from Dutch tourism operators driving traffic to the islands through Sint Maarten. Though tourism arrivals have increased in recent years, there has been a decline in Dutch arrivals, particularly day-trippers from Sint Maarten.
Saba to track visitor numbers
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Saba Tourism Director Glenn Holm has stated that the Dutch Central Bureau of Statistics will work with the island governments to generate annual visitor figures. Those numbers have been lacking since the Immigration Department transitioned into the Border Control unit in 2010.
dutch caribbean Upgrades to tourism products Saba’s tourism product will improve in 2015 in the form of a spa at Queen’s Gardens and the establishment of a free diving school. For Statia, a greater emphasis will be placed on community and historical tourism as a way to get the entire community involved in the tourism product. Statia will also continue to market itself as a top diving and hiking destination.
Bonaire top diving destination “Scuba Diving Magazine” has recognized Bonaire as its #1 Shore Diving Destination. The 2015 Readers Choice Awards also recognized Bonaire as the Best Macro Diving, Best Beginner Diving and Best Advanced Diving Destination. Bonaire is the #2 Underwater Photography and Overall Diving Destination, and the #4 Overall Destination.
Buddy Dive certified Buddy Dive Resort Bonaire has received the Professional Association of Diving Instructors (PADI) Career Development Center (CDC) Classification, the highest PADI Classification that can be given to a dive shop. The distinction makes Buddy Dive one of 101 CDCs in the world and one of nine in the region. The classification is given to dive centers that are dedicated to the professional development of dive instructors and meeting the highest PADI standards.
Carib Inn expansion completed
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Popular Bonaire tourist destination the Carib Inn has expanded its operations by adding a four-bedroom house across from its dive shop. The house is customized for divers and snorkelers and is available for groups of 4-8 persons at a rate of $199-$219 per night.
Grenada
Overview and Landscape GRENADA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
2.6
1.7
Sandals provided uptick in 2014
Inflation %
-0.6
1.3
Falling oil prices will impact
Source: See Note 1 (final page)
Strength in Grenada’s agricultural and tourism sectors was a defining driver of growth in 2014. The manufacturing and construction sectors delivered weak performance. Agriculture benefitted from increased demand and greater acreage under cultivation. In the first three quarters of 2014, banana output was the only subsector to report a contraction. Nutmeg production grew by +50.7% YoY and cocoa production rose +14.1%. Fruits, vegetables and other crops are estimated to have increased output threefold. Visitor arrivals grew at a robust pace of +18.4% YoY in 2014 with strength from the US, Canada and Europe. Cruise tourism
also performed strongly with passenger arrivals up +29% YoY. Tourism developments reciprocated in the commercial sector, benefiting wholesalers and retailers as well as transport, storage and communication. Economic growth in 2015 will be moderate, as the economy continues to deal with structural challenges. Real GDP growth is forecast at +1.7% for 2015, and activity will pick up the pace in the subsequent year. Agriculture is also expected to post gains, translating into greater export revenues. The sector is anticipated to reap the benefits of higher yield harvests and expansion to new markets. Tourism will further strengthen, with continued upside from Sandals and intensified efforts by the GTA to secure new airlift.
3
Things to Watch
> Continued developments of restructuring public debt > Future of Petrocaribe > Impacts of Sandals and increased airlift on tourism
Tourism Performance
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Visitor arrivals increased an impressive +18.4% YoY in 2014 to 133,521, with US arrivals up nearly +21%. Arrivals from Canada grew +47% and European arrivals rose +21%. The number of Venezuelans arriving improved by +289% YoY as Venezuelan state airline Conviasa increased its flights to Grenada to twice weekly. The airport is estimated to have received an average of 340 inbound flights per month. The 133,521 overnight stays generated an estimated US $128MM.
grenada Cruise tourism also performed strongly with passenger arrivals up +29% YoY to 254,248. Grenada and Carriacou received 162 cruise calls during the year. The cruise sector brought in over US $10MM. GRENADA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
12.3
10.0
10.8
8.7
6.8
6.5
11.8
12.1
5.5
8.1
7.8
10.2
110.5
2011
12.3
9.9
10.8
10.0
7.8
8.3
12.0
13.6
5.6
8.3
8.5
11.3
118.3
2012
12.9
10.3
9.2
9.3
7.2
7.0
10.9
14.0
5.8
7.1
7.9
10.7
112.3
2013
13.2
10.9
11.4
8.2
6.4
7.7
11.6
13.6
6.2
8.0
7.8
11.6
116.5
2014
14.1
10.7
11.5
10.9
8.7
9.4
12.5
15.0
8.0
10.6
10.1
12.0
133.5
2015
14.9
10.6
2013YTD
13.2
24.1
35.5
43.6
50.0
57.7
69.2
82.9
89.1
97.0
104.8
116.5
116.5
36.3
47.2
55.9
65.3
77.8
92.8
100.8
111.4
121.5
133.5
133.5
2014YTD
14.1
24.8
2015YTD
14.9
25.5
YTDΔ YoY '15
5.9%
3.0%
25.5
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Grenada’s tourism bookings for 2015 are already showing improvements, according a report from the Caribbean Travel Marketplace event by the CHTA. An increase of +23% in arrivals was reported by Travel Impressions of the US and a +12.5% increase was reported by the Virgin Group, with revenue reported up +19% in January 2015. Trailfinders of the UK has reported a +73% increase for bookings to date. Increased bookings are being attributed to Grenada’s authenticity and under-commercialization. The World Travel & Tourism Council (WTTC) estimates that tourism contributes 24.2% to GDP in Grenada, a figure that the organization expects will increase to 28.2% over the next 10 years. The sector is also a major contributor to employment, estimated to have contributed 10,500 jobs in 2014. The WTTC anticipates growth in employment generated by the sector to 11,000 jobs this year. GRENADA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
197.0
297.3
2.4%
4.0%
Total contribution to GDP % Share
24.2%
28.2%
n/a
n/a
Visitor exports US $MM
109.3
172.5
2.2%
4.4%
Domestic spending US $MM
25.2
34.9
4.6%
2.8%
Leisure spending US $MM
97.8
143.9
1.4%
3.8%
Business spending US $MM
36.8
63.4
5.7%
5.0%
Capital investment US $MM
22.4
35.8
2.7%
4.5%
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Source: World Travel & Tourism Council Economic Impact Report 2015
grenada Market Access Delta testing market Delta will offer service on Saturdays from Atlanta June 6 -August 15. The success of that service will determine if a flight will be offered during the winter season.
Grenada seeking direct service from China A direct flight connecting Grenada and China is intended for 2015, according to Grenadian Ambassador to China, Karl Hood. Hood noted that China is highly interested in investment in Grenada and the Ambassador is hoping to garner investments in tourism-related projects, as well as offering visa exemptions. China and Grenada have enjoyed diplomatic relations since 2005.
JetBlue links JFK, Grenada JetBlue is now offering twice weekly non-stop service between New York City’s JFK and Maurice Bishop International Airport, effective June 11. The service will run on Thursday and Sunday aboard a 150-seat Airbus 320.
Caribbean Airlines maintains Toronto service Caribbean Airlines has announced that it will not halt its Sunday flights from Toronto despite their recent announcement to the contrary. The information was confirmed by the Ministry of Civil Aviation.
SeaDream visits Carriacou The SeaDream I docked at Carriacou with 105 passengers. Those disembarking visited historical sites, beaches and the capital of St George. This is the last ship that will dock on the island for the 2014/2015 cruise season.
Tourism Construction Airport expansion pending EXIM Bank approval China is awaiting approval from the EXIM Bank for the expansion of Maurice Bishop International Airport in St George and Lauriston Airport in Carriacou. The China Harbor Engineering Company Ltd is collaborating with Grenada to increase tourism traffic through airport expansion. However, the company has made it clear that renovations to the islands will be necessary to develop the country. Many are optimistic that these projects will bring in more sources for investment as well as tourism opportunities.
Tourism Policy & Initiatives EU funding could boost yachting Grenada has received EC $19MM in budget support from the European Union under the 10th European Development Fund, which has been disbursed to the Treasury. Funds will support the implementation of reforms to public finance management, measures around budgetary transparency, and the development of new economic sectors, including yachting.
Grenada takes part in China event Grenada was represented in China’s Incentive Travel & Convention Meetings (IT&CM) China 2015 event. This was confirmed by United Damei Group, which represents the islands, and signals that the event provided a platform to massively leverage the growing tourism outflows from China. The ICTM event took place in Shanghai April 14-16.
GIDC and GTA ink MoU for tourism
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The Grenada Industrial Development Corporation (GIDC) has signed an MoU with the Grenada Tourism Authority (GTA) for marketing the country for both tourism and investment.
grenada Tourism Authority imposes license requirements, fees Grenada’s Tourism Authority is now requiring more tourism stakeholders to obtain an operating license. This license will be required by tour guides, car rental operators, watersport operators, taxi drivers and tour companies. Annual license fees will be US $300 for watersport operators and car rental companies. As for tour guides, the fee will be at US $100. Other adjustments include an increase in fees for the following: • Vendor licensing fee to be raised to US $35 • Apartment and cottage fee to be raised to US $600 • Villa fee to be raised to US $1k
Grenada delegation to Miami trade show A team from Grenada attended the Cruise Shipping Miami Seatrade Conference & Trade Show led by the Minister of Tourism Yolande Bain-Horsford. The aim of the conference for Grenada’s team was to encourage cruise lines to visit the island during the off-season, which takes place May-September. Grenada has 3 ports of entry and can accommodate both large and small ships.
Sector Developments Yachting industry attends Toronto boat show Stakeholders in the yachting sector attended the 51st Toronto International Boat Show January 10-18. The event featured exhibits, seminars and networking and provided for interaction between the Grenada booth and some 5,000 visitors resulting in bookings and exposure.
Grenada top beach destination KAYAK’s Travel Hacker Guide has named Grenada as the #1 trending beach destination for 2015. Since the 2013-2014 season, searches for round-trip flights from North America have increased +31%. Thirty-three percent of stay-over visitors to Grenada originate from North America and are willing to pay, on average, between US $700-$900 for a round-trip flight.
Sandals refutes beach ownership claim Sandals LaSource has released an official statement refuting the claim that the corporation has been involved in a legal battle relating to ownership of a private beach. Sandals has made it very clear that they have no intention or legal right to own a private beach.
Resort to be first to receive special Wi-Fi service Digicel is providing Wi-Fi service to complex environments in the region through a partnership with ADTRAN INC, which will provide the networking equipment, support and training. ADTRAN Pro Cloud Wi-Fi offers the capability to outsource wireless network maintenance, while unifying all elements of the network onto a single platform. Blue Horizons Garden Resort in Grenada will be the first to receive this service.
Spice Island a top all-inclusive accommodation
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The Huffington Post declared Spice Island Resort as one of the top 12 all-inclusive resorts in the world. The resort is surrounded by numerous tropical gardens, 5-star amenities, and is home to a world-renowned spa. Spice Island Resort is also recognized as the recipient of the American Academy of Hospitality Sciences’ Six Star Diamond Award in 2014.
Guadeloupe
Overview and Landscape
Indicator
2014e
2015f
Comment
GDP Growth %
0.7
1.2
Consumer spend/public invest
Inflation %
0.6
1.2
Increase svcs vs falling fuel price
Source: See Note 1 (final page)
Economic growth remains weak in Guadeloupe, as slow construction activity, a deterioration of the business climate and high unemployment have mitigated the impacts of agro industrial performance. The business climate index dropped (3.9) points YoY in Q4, after 3 consecutive quarters of growth. This downturn was contrary to the behavior of business creations, which fell in the first 3 quarters, before gaining +12% in Q4. Annual consumer price inflation ended 2014 at 0.6% and continued to decline to 0.1% in January. Food prices have been on the rise, but categories such as manufactured products and energy have been offsetting. Over 10% of companies registered in Guadeloupe operate in the tourism sector. The sector is estimated to generate some €505MM in tourism revenues per year. France continues to be the top source market for tourists, supplying nearly 63% of air travelers to the destination in the 17 years to 2013. This makes the tourism market highly reliant on the developments in the French economy. In 2014, Guadeloupe lost 13,000 passengers flying from Paris YoY.
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Household and public consumption will be important elements to watch as they continue to be important drivers of economic activity in Guadeloupe. The evolution of the top trade sectors and tourism will also provide insight into the pace of economic growth. The end of Chikungunya as confirmed by health authorities will also provide welcome relief. Roughly 40% of the population was touched by the virus, which impacted productivity as well as healthcare costs in 2014. The building pipeline of capital investment projects will favor the construction sector in the coming years. The €590MM hospital reconstruction program, if approved, would be a major source of stimulus for the sector. The €220MM tramway project would also contribute, though unlikely to have a major impact in 2015, and Phase I of the port expansion project got underway in Q1 2015.
“Economic growth remains weak in Guadeloupe...”
3
Things to Watch
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> Fiscal performance and public investment > Unemployment dynamics > Developments in diversifying source markets away from high reliance on France
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GUADELOUPE ECONOMIC INDICATORS AND FORECAST
guadeloupe Tourism Performance Guadeloupe’s Port Caraïbes received 300,000 cruise passengers in 2014, bringing the total number of tourists (air and cruise arrivals) to 740,000. For the cruise sector this denotes an increase of nearly +50% YoY, while representing a decline for air arrivals. Average spend per trip in Guadeloupe per cruise tourist is €80, while for stay-over tourists is €1,040, without taking the cost of flights into account. Airport passengers amounted to 1.956 million in 2014, down from 1.97 million the prior year. In 2014, Guadeloupe lost 13,000 passengers flying from Paris YoY. The decrease in tourists is the result of many factors including health outbreaks, water interruptions and a sargassum invasion. This followed a record year in 2013, when Guadeloupe celebrated an unprecedented 500 thousand tourists. It has been observed in recent years that tourists to Guadeloupe are seeking a longer stay at lower-cost hotels. The average spend per day has been thus dropping, down to €76 in 2013. For 2014, the decreased number of tourists caused a drop in the number of hotel rooms occupied. The tourism sector in Guadeloupe showed a major decline in top indicators between 2013 and 2014; around 9,800 room nights were lost. Room rates ticked up in 2014 by +9.8%, equivalent to €9.20, though the drop in nights sold drove revenues down by €2.6MM for the sector. That is further complicated by the ratio of personnel costs to turnover, which was 43.8%, a figure that varies month-to-month based on occupancy. In the month of September, this was 86.3% of turnover. This forces some hotels to close during the low season from May to October since occupancy falls below 55%. The occupancy rate performed as follows, according to the hospitality group GHTG. Results can be distinguished for the lodging category: 2-star hotels- 10 pt decrease; 3-star hotels- 7 pt decrease; 4-star hotels- 4 pt decrease. GUADELOUPE HOTEL OCCUPANCY RATE % YEAR
J
F
M
A
2014
82.7%
89.8%
79.2%
72.0%
M
J
J
A
S
O
N
D
AVE
52.9%
42.2%
39.1%
51.0%
43.0%
55.4%
63.4%
67.7%
61.5%
Source: GHTG, GNM's own calculations.
Tourism expenses are estimated by INSEE to be primarily broken down into Lodging and Restaurants, which account for 35% and 20% of the total, respectively. Transport and Recreation follow, with 19% and 10%, respectively. The WTTC estimates that tourism contributes 16% to GDP, a figure they expect to decrease over the course of the next decade. Employment generated by the sector directly or indirectly accounts for 21,500 or 16.5% of the workforce. This figure is expected to increase +2.4% in 2015 to reach 22,000 jobs. GUADELOUPE TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
2,011.4
2,352.2
0.7%
1.5%
Total contribution to GDP % Share
16.0%
15.7%
n/a
n/a
Visitor exports US $MM
416.6
504.2
9.6%
1.0%
Domestic spending US $MM
412.2
513.3
4.8%
1.7%
Leisure spending US $MM
758.6
927.1
7.0%
1.3%
Business spending US $MM
70.3
90.4
10.1%
1.6%
Capital investment US $MM
190.4
222.6
1.6%
1.4%
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Source: World Travel & Tourism Council Economic Impact Report 2015
guadeloupe Market Access Corsair sale nixed Corsair has ended negotiations for its sale to Air Caraibes. Weeks of discussions have concluded with a non-favorable response by Corsair without much explanation. Major concerns over job security from the employees of Corsair led to a recent protest. The sale of Corsair to Air Caraibes was scheduled to finalize in June 2015. Air Caraibes reported revenues of €353MM in 2013 and employs almost 1000 people. By taking over Corsair Airlines, Air Caraibes hopes to better be able service transportation to the French Antilles as well as the Reunion islands.
Air France, Air Antilles expand partnership The partnership between Air-France and Air Antilles will add six new direct destinations to their list with departures from Guadeloupe and Martinique. These destinations include San-Juan, Santo Domingo, Saint Lucia, Dominica, Saint-Martin and Sint Maarten. Since their partnership commenced in 2012, the two companies have seen an increase in the number of passengers and a decrease in flight prices, a large advantage to consumers.
Tourism Construction Pointe-Noire, Pointe-a-Pitre slated for improvements The city of Pointe-Noire is receiving €12.8MM from the Regional Council to invest in the improvement to the city. Projects to be funded include job creation, reconstruction of Caraibe beach and construction and project building on the site of Petites Plaines. Additionally, Guadeloupe’s economic capital, Pointe-a-Pitre, will soon be undergoing major reconstruction. Sites for reconstruction include the city’s downtown area, the Bergevin ferry station and local attraction Bergevin. Outside work in public areas, as well as building reconstruction, will take place. Renovation plans are expected to begin in late 2015.
Port, hotels to get facelifts
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Port reconstruction and hotel rehabilitation are two of the focuses of the €240MM reserved for investment projects in the Regional Council budget. Of that sum, €100MM of which are government loans. The regional council is confident that the investment will be paid off through the success of the construction projects.
guadeloupe Tourism Policy & Initiatives Port confines to be friendlier, safer To boost the cruise sector, Guadeloupe seeks to ensure a warm welcome and friendly services for cruise ships calling on its ports this season. In Pointe-a-Pitre, cruisers are welcomed by music and animation, as well as police presence to deter any crime. In Deshaies, 16 cruise ships are expected this season and will be welcomed by local association directors.
Sector Developments Tourism a critical economic pillar Over 10% of companies registered in Guadeloupe operate in the tourism sector, according to INSEE estimates. At the end of 2013, 4,591 companies operated with restaurants, hotels, and lodging making up over 2/3 of this category. The sector was estimated to have generated some €505MM in tourism revenues with an average stay of 14 days and a household travel budget of €2,247 plus airfare. At least 64% of tourists are calculated to spend €93 or more per day. France continues to be the top source market for tourists, supplying nearly 63% of air travelers to the destination in the 17 years to 2013. Yet, in 2013, 94% of tourists arriving at Pole Caraibe came from France. The Miami and Montreal routes only account for about 1.6% of air passenger traffic.
Eco-label certification for accommodations
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Eight holiday cottages and one hotel have recently received European Eco-label certification, the first in the French overseas departments. These establishments were part of the Eco 3 Itinerary Program, organized by France and Guadeloupe’s Chambers of Industry and Commerce, in an effort to make tourist accommodations eco-friendly. The establishments were required to make a few modifications to obtain the label that include: installation of a solar water heater, a water cistern, low-energy lamps, and eco-friendly materials and equipment.
Guyana
Overview and Landscape Indicator
2014e
2015f
Comment
GDP Growth %
3.8
3.5
Agro output; gold/bauxite price
Inflation %
1.5
1.3
Drop in food and fuel prices
Source: See Note 1 (final page)
Guyana’s economy remains resilient and the country has experienced eight consecutive years of economic growth. Guyana has also maintained a sustainable balance of payments, kept the debt at manageable levels, maintained low interest rates and kept price increases in the single digits. The economy has been bolstered on the strength of traditional pillars such as bauxite and rice (sugar has experienced setbacks in recent years, by contrast), while tourism and mining have provided a major boost as emerging sectors. Vulnerability to international commodity prices remains a risk to growth, particularly for Guyana’s export sectors. Foreign reserves held by the Bank of Guyana fell from US $862.2MM at the end of 2012 to US $665.6MM at the end of 2014. The agricultural sector performed strongly in 2014, led by rising outpu,t which far surpassed target as the country was successful in reaching new export markets and generating record levels of production. The export target for 2014 was 460,000 tons and the country achieved nearly 500 thousand tons. Sugar production surpassed the target of 216,000 tons in 2014 and is tracking to set another year of growth as Guyana strives toward reaching 400 thousand-ton production by 2020. Guyana’s mining sector was challenged in 2014 as the price of gold fell in international markets. Government introduced a
83
number of interventions meant to reduce the cost of operating for miners including duty-free concessions on equipment and materials, tax waivers and reduced gas prices. However, gold declarations ended the year an estimated (20)% short of 2013, and well below the target of 484 thousand ounces. An uptick in gold prices in 2015 could mean a turnaround for the sector, if the price is able to once again breach the US $1,400 level, where miners generally set the break-even mark. The Guyana Gold Board remains optimistic about the industry in the long-term, believing at least a partial recovery is in store for 2015. Agricultural production is expected to continue to strengthen and gold and bauxite prices will directly impact production in the sector. Continued progress on the Aurora Gold project and works on the Cheddi Jagan International Airport will benefit activity. Other large-scale projects will largely depend on election results. Drilling offshore in the Stabroek block could also provide a boost. However, since the drilling is in an area affected by a territorial dispute with Venezuela, it could also spur tension with its neighbor who claims rights to over half of Guyana’s national territory.
3
Things to Watch
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
> Impacts of change of government > Evolution of commodity prices including gold; bauxite and rice balanced with output > Infrastructure development (airport; mining; energy) and tensions with Venezuela regarding oil drilling in disputed territory
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GUYANA ECONOMIC INDICATORS AND FORECAST
guyana “Guyana’s economy remains resilient and the country has experienced eight consecutive years of economic growth”
Tourism Performance Following the year that the Guyana Tourism Authority (GTA) and the Tourism Ministry are calling the country’s best ever for visitor arrivals, 2015 is expected to again see major growth in the tourism industry. Tourist arrivals were up +13% YoY in November, and July, August, September and October were all record months for Guyana. For the whole of 2014, arrivals increased +2%. Tourism officials anticipate YoY growth to reach as high as +15% in 2015. For the third straight year, Cheddi Jagan International Airport (CJIA) took in over $1B in revenue. The strong performance is attributed to the addition of flights in and out of the airport in 2014. Indeed Copa, CONVIASA, Fly Jamaica, InselAir and Dynamic Airways each added flights to their Guyana itineraries last year. Landings increased to 2,933 in 2014 from 2,523 in 2013. Government spent $366MM on the expansion of the airport in 2014, in spite of the non-approval of funds in the National Assembly. Air Services Limited and Trans Guyana Airways accounted for 89% of domestic market travel in 2014. The airlines split the market share at rates of 50% and 39%, respectively. Domestic passengers totaled 144,842 through November 2014. Ongoing investment in the sector will continue to drive arrivals as Guyana’s international reputation grows. The hospitality sector will play an important role in attracting tourists, as the 197-room five-star Marriott Hotel will open later this year. The 52-room Park Vue Hotel opened in Providence this month. Furthermore, ground has been broken on the 163-room Sun and Sand Hotel in Liliendaal, which will be developed over the course of the year. GUYANA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
9.3
9.5
13.5
14.5
9.7
11.7
21.2
16.8
9.2
10.0
10.7
15.8
151.9
2011
9.6
9.4
10.1
15.5
10.9
12.5
21.9
16.2
9.4
10.9
11.0
19.6
156.9
2012
10.8
11.7
13.8
18.5
10.9
14.4
24.4
21.5
10.9
11.7
12.3
15.7
176.6
2013
12.7
14.0
23.4
16.6
12.9
14.7
23.3
21.5
13.2
13.6
13.9
20.4
200.1
2014
13.5
12.6
14.6
21.4
14.1
14.5
25.1
22.8
14.2
14.9
15.7
22.4
205.8
2013YTD
12.7
26.7
50.1
66.7
79.6
94.3
117.5
139.0
152.2
165.8
179.8
200.1
200.1
2014YTD
13.5
26.1
40.7
62.1
76.3
90.8
115.9
138.6
152.8
167.7
183.4
205.8
205.8
6.5%
-2.3%
-18.7%
-6.8%
-4.2%
-3.7%
-1.4%
-0.3%
0.4%
1.1%
2.0%
2.8%
2015
2015YTD YTDΔ YoY '14
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Tourist arrivals increased +7.1% YoY in the first two months of 2015 to 27,904, according to the Ministry of Tourism. That strong growth is a reflection of aggressive investment in the tourism sector, according to Tourism Minister Irfaan Ali. The US was Guyana’s top source market at 36.4% of all visitors. South American visitors make up 16.2% of the total, with growth in that market the result of added airlift via Copa and CONVIASA. Ali calls tourism the “backbone” of future economic growth in Guyana. The World Travel & Tourism Council estimates that tourism contributes a total of 8% to Guyana’s GDP. The figure is expected to decline over the coming decade. In terms of jobs, the sector generated 8.4% of employment in 2014, roughly 20,000 jobs. This
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figure will decline in 2015, down (2.4)% to 19,500 and continue to reduce through 2025 to 18,000.
guyana GUYANA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
255.6
352.9
0.5%
3.2%
Total contribution to GDP % Share
8.0%
7.1%
n/a
n/a
Visitor exports US $MM
81.0
95.4
-3.6%
2.0%
Domestic spending US $MM
127.0
182.7
1.9%
3.5%
Leisure spending US $MM
156.7
216.7
-0.4%
3.3%
Business spending US $MM
51.3
61.5
0.2%
1.8%
Capital investment US $MM
19.3
27.0
0.1%
3.4%
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Fly Jamaica offers access to JFK Fly Jamaica commenced twice-weekly nonstop service between JFK International Airport in New York to Guyana in February. The flight excludes the usual stop in Kingston, Jamaica, though customers will have to pay more for the direct route.
Open skies agreement with Canada Guyana has reached an open skies agreement with Canada. The agreement gives airline operators in Guyana the right to fly to any location in Canada, whereas their destinations had been limited prior to the signing. The agreement, which further opens one of Guyana’s largest air traffic destinations, was signed at the International Civil Aviation Organization’s Air Services Negotiation meeting, which took place in Bali, Indonesia. The Guyana Civil Aviation Authority was on hand to sign the agreement.
Dynamic committed, despite setbacks Despite a myriad of problems including holiday travel delays that have resulted in a passenger lawsuit, US-based Dynamic Airways is determined to maintain service in Guyana. Roraima Airways (Dynamic’s local handler) CEO Gerry Gouveia insists that Dynamic’s commitment to Guyana is a serious one, and the carrier has no intention of withdrawing.
Tourism Construction Progress at airport Work on the US $130MM Cheddi Jagan International Airport (CJIA) expansion is progressing, according to Presidential Secretariat head Roger Luncheon. Recent developments include the arrival of an Instrument Landing System and Distance Measuring Equipment, which were procured at a cost of $56.3MM. Guyana is seeking to attract larger aircraft by expanding the airport, which includes increasing the size of the runway to 10,800 feet. A new terminal building, eight boarding bridges, elevators, escalators, x-ray scanners and flight monitoring systems are part of the project as well.
Sand and Sun Hotel construction stalled Construction of the US $54MM, 168-room Sand and Sun Hotel was to begin in December, and faced delays throughout Q1. The project broke ground in Q3 2014. BK International was slated to be the contractor on the project and the status of the project remains in question. The facility would include a clubhouse, a commercial block and a number of restaurants.
Lethem regional airport in plans
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Government seeks to build a regional airport in Lethem. Engineers from the Transport Ministry are working with the Guyana Civil Aviation Authority and officials from Cheddi Jagan International Airport to develop a plan of action for the project, including calculating estimated costs, determining what groundwork must be laid, exploring architectural options and determining the level of service required.
guyana Tourism Policy & Initiatives Sustainable city could add to tourism product Housing and Water Minister Irfaan Ali recently discussed plans for Silica City, a new, sustainable city that would be located at the Hilly Sands area on the Soesdyke Highway, some 30 miles outside of Georgetown. The Central Housing and Planning Authority will develop the city and present a plan to potential investors. The multi-billion dollar, 5,000-acre city would include up to 40,000 residential households, with retail, industry, tourism, social and recreational areas. Ali called the project “one of the most important developments in the future,” considering the level of industrialization expected to take place in Guyana in coming years.
Guyana pursues accreditation scheme A concerted effort to accredit tourism operators is ongoing, with the Ministry of Tourism and Guyana Tourism Authority (GTA) working in tandem to bring stakeholders into the fold of official Tourism Regulations. Among the companies to receive accreditation are Bushmater Tours, Roraima Tours and Wilderness Explorers, the Princess Hotel and City Inn, and the Rock View Lodge Eco Tourism Resort. Government and the GTA have devised a licensing regime for a number of tourism categories with the aim of raising standards and increasing competitiveness.
Sector Developments Marriott opens doors
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The 197-room Guyana Marriott opened its doors in April, the first Marriott operation in Guyana’s history. To achieve that goal, National, Industrial and Commercial Investments Limited (NICIL) had to make an additional investment of US $16MM after a court order sought to block a Republic Bank loan for the project. Some controversy surrounded the funding of the project and questions remain about whether it has been built on the back of the taxpayer. NICIL head Winston Brassington asserts, however, that “at no point” has the US $58MM project been funded with taxpayer monies and that NICIL will be fully reimbursed through the financial arrangements in place. Presidential Secretariat Head Luncheon acknowledges that NICIL funds do indeed represent taxpayer dollars, but concurs that the mechanisms are in place for those funds to be reimbursed.
guyana Meanwhile, Marriott Hotel Project Head Winston Brassington dismissed Robert Badal’s US $8MM offer to become the majority shareholder. Brassington stated that the director of Guyana Stockfeeds and owner of the Pegasus Hotel’s offer could not be a serious one, underscoring that no individual local investor has shown interest in the Marriott Project since its inception, and Badal himself had previously objected to the project. Furthermore, AHI received no letter of interest from Badal or other parties regarding a private equity investment. The Marriott Hotel has hired 239 staff workers, out of which 228 are Guyanese. In revealing the breakdown of its workforce, Atlantic Hotel Inc Chairman Winston Brassington refuted the claim that the hotel was actively recruiting foreign workers. Persons of Guyanese nationality make up 20 of 29 management positions. The workforce was selected from a field of 3,500 applicants.
Princess Hotel licensed by GTA The Princess Hotel Guyana at Providence, East Coast Demerara has received its Guyana Tourism Authority (GTA) license, which allows it to function under the Tourism Accommodation Establishment (TAE). The certification assures that the hotel meets certain standards and is the second establishment to be issued the license. US-based Ramada will inject US $7MM into rebranding the hotel the Ramada Georgetown Princess.
UN Development Program hosts eco tourism workshop
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The Tourism Ministry and the UN Development Program (UNDP) presented a workshop on March 12 entitled “Best Practices for Eco Tourism.” The one-day event included UNDP consultant Angelica Kandzior presenting her findings from a series of meetings and interviews with tourism stakeholders in 2014. Kandzior has been contracted to develop a South-South Eco-tourism Compendium for Guyana. She indicated in her presentation that Guyana’s eco-tourism offerings are visible in nature tourism, sustainable tourism and heritage and community-based tourism offerings. Kandzior also emphasized that, while local tour operators are knowledgeable about their local environs, the quality of their product would benefit from a larger overall knowledge of the country and the issues impacting its environment and people, such as the Low Carbon Development Strategy and Amerindian affairs.
Haiti
Overview and Landscape Indicator
2014e
2015f
Comment
GDP Growth %
2.9
3.0
Budget execution; Agro output
Inflation %
6.4
6.6
Climate impacts to agro output
Source: See Note 1 (final page)
Economic activity has slowed in the March quarter, according to preliminary figures. After two quarters of positive growth, the Central Bank’s Industrial Production Index and the Electric Energy Production Index both declined in March, as did the Construction Activity Index and the Commercial Activity Index. Curtailment of spending tied to public investment, and uncertainty in the context of political protests combined to create pressures on economic performance. Annual inflation picked up in January and February to 6.6%, before slowing to 6.4% in March. Monthly inflation slowed as markets were better stocked with food goods. Average annual inflation for the March quarter was 6.5%, which is 3.2 points above where it stood a year prior. Core inflation was 6.3% in March. Depreciation of the Gourde with respect to the US Dollar has slowed. The rate of depreciation during the quarter was 0.9% (to G. 47.17 per USD), slower than the 2.6% posted in the December quarter. The decline in the demand for foreign currency in light of lower oil prices was partially offset by the increased demand for food imports in January, as the agricultural sector faced poor rain conditions.
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The high reliance on Venezuela as a source of investment funding for the government will be a major risk to growth for 2015 as the financier faces severe liquidity issues. The Central Bank has reported a drop in Petrocaribe shipments and funding in its December monetary policy announcement, citing risks of changing terms and securitization of the debt. Haiti’s debt under the program was expected to end 2014 at around US $1.6B, taking into account the US $395MM that financier Venezuela had pardoned. An improved outlook for remittances and import prices for fuel will strengthen the country’s external sector in 2015. The fiscal deficit is expected to return to sustainable levels as fuel subsidies are reduced and billings and collections for electricity are improved. Haiti maintains a strong construction pipeline valued at over US $2.8B, which includes the development of critical infrastructure such as ports, roadways and airports. Agriculture remains highly susceptible to climate impacts. However, irrigation projects underway in Artibonite Valley and the Banana Sector Development Project will favor production upon conclusion.
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Things to Watch
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
> The future of Petrocaribe and Venezuela-funded infrastructure projects > Agricultural production > Political uncertainty in light of coming elections
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HAITI ECONOMIC INDICATORS AND FORECAST
haiti Tourism Performance A double-digit gain for Haiti’s tourism sector was noted in 2014. Haiti received 465,174 tourists during the year, a +10.8% increase from 2013. Furthermore, cruise arrivals were reported to have grown +2.9% reaching 662,403 for the year. The sector has shown consistent growth in recent years, with stay-over and cruise arrivals growing. Positive growth has been registered every year since the earthquake for both the cruise and stay-over tourism sectors. Pre-crisis levels have been far-surpassed, leaving behind the 386,060 stay-over arrivals from 2007. For cruise arrivals, the 2007 level was 482,077, 180,000 less than in 2014. Over half of arrivals to Haiti are for recreational purposes. Over 3/4 of arrivals were from the US. Canada provided roughly 8% of arrivals, Europe around 9% (France accounts for 6% of this), 4.6% from the Caribbean and the remainder from other markets. HAITI STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
7.1
8.1
30.7
29.6
25.0
26.2
35.6
32.9
28.3
12.0
9.1
10.1
254.7
2011
26.1
34.5
36.1
22.5
30.5
37.5
26.1
26.7
30.6
27.9
19.8
30.5
348.8
2012
28.5
22.1
32.2
27.2
29.3
29.7
32.3
24.3
28.3
26.3
27.0
41.8
349.2
2013
31.6
29.2
38.8
21.6
30.3
38.0
48.9
34.1
27.2
38.9
40.0
41.1
419.7
2014
36.7
34.8
43.0
36.7
33.2
33.6
64.5
52.0
28.3
28.2
27.2
46.9
465.2
2015
36.1
36.5
44.3
116.9
2013YTD
31.6
60.8
99.6
121.2
151.5
189.5
238.4
272.5
299.7
338.6
378.6
419.7
419.7
2014YTD
36.7
71.5
114.5
151.2
184.4
218.0
282.5
334.5
362.8
391.0
418.3
465.2
465.2
2015YTD
36.1
72.6
116.9
YTDΔ YoY '15
-1.5%
1.6%
2.1%
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Momentum has continued in 2015, with the first quarter posting an increase of +2.1% as Haiti welcomed 116,905 stay-over tourists. 51.3% of them identified recreation as their main purpose of travel. In Q1, tourists from the US accounted for 78% of the total, Canada 8% and Europe 7%. The hibiscus classification system is expected to improve results in the long-term for the nation’s hospitality sector. This system, comparable to the star-rating system, allows visitors to identify the most adequate level of accommodations for their needs. Furthermore, the recent opening of the 5-hibiscus, 175-room Marriott Hotel further boosts the island’s offering. HAITI TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
856.5
1,432.4
5.1%
4.8%
Total contribution to GDP % Share
9.5%
10.7%
n/a
n/a
Visitor exports US $MM
589.2
998.8
4.8%
4.9%
Domestic spending US $MM
210.2
310.1
5.2%
3.4%
Leisure spending US $MM
623.5
1,012.3
4.2%
4.5%
Business spending US $MM
175.9
296.5
7.4%
4.6%
Capital investment US $MM
111.0
142.3
3.5%
2.2%
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Source: World Travel & Tourism Council Economic Impact Report 2015
haiti Market Access Airline sights Canadian market Air Transat is now offering deals between Montreal and Haiti to encourage Canadian tourism in the country. These deals include different combinations of flights and accommodation in one of three major hotels or four resorts.
Tourism Construction Projects to follow in 201 • The Ile a Vache island development project has progressed on several fronts including roadways and public spaces. The new airport will be completed in November 2015. Two seaports are being constructed at Madame Bernard and Kaykok. The Health Center is under construction and will complete by year-end. • International airport construction works in Jérémie are underway, in the Department of Grand Anse. The airport at Jérémie will be built with a budget of $3MM. • The US $70MM cruise port project in L’île de la Tortue will become the nation’s second largest cruise port, and provide supporting commercial infrastructure. The project is expected to create 1,000 direct and indirect jobs. Infrastructure, sanitation, roadways and entertainment will all need to be developed in order for Haiti to capture the benefits of the second cruise port. • The IDB is pumping US $36MM into Haiti’s tourism sector with a loan approved late last year. Funds will be used to construct and rehabilitate historic, cultural, and natural sites along the country’s southern coast. • Major infrastructure projects form part of the Port-de-Paix Special Plan. La Place des Armes, a sports park in Capois La Mort, the memorial of Capois La Mort, and an entryway into Port-de-Paix are the first to be undertaken. The Port-de-Paix Special Plan, estimated at US $5MM, is one of the 14 Special Plans for Haiti aimed at rebuilding and improving living conditions for locals. • The Cotes-de-Fer tourism master plan’s first stage of construction includes 1,266 rooms in four hotels. Some 1,133 tourism residences would also be constructed, as well as a boulevard, and an 18-hole golf course. The first phase will be completed by 2017, and will include a small airport. The project also stipulates upgrades to residences, three health centers, a school and road works undertaken. The DR-based Punta Cana Group has committed to investing US $200MM to develop the project in Haiti.
Tourism Policy & Initiatives Haiti hosts WTO event
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The UN World Tourism Organization (UNWTO) Commission for the Americas held its 58th meeting in Haiti from May 19- May 22 in Port-au-Prince. The event allowed Haiti to showcase a number of its destinations to the international community and also highlight its latest projects in infrastructure and development.
haiti Jazz festival rocks capital The International Jazz Festival of Port-au-Prince was recently held in the nation’s capital. With more than 30 concerts, jam sessions and artists from 11 countries, the event placed the nation’s tourism and culture on the radar for international events.
Carnival back to capital The National Carnival of Haiti returned to the capital this year after having been relocated in previous years, only to be cancelled after a tragic accident at its outset. Pre-carnival festivities were held beginning mid-January, with principal festivities set to take place February 16-18. The carnival celebrations were expected to cost some G $143MM, with the private sector providing an estimated 80% of the funding and the State contributing the remainder. Security reforms such as establishing safety, and standing and technical committees will be explored to prevent future accidents. The incident occurred when a parade float hit a power line and caused panic in the crowd, resulted in at least 17 deaths and 70 injuries.
Haiti seeks partnerships in growing tourism industry Haiti has been promoting itself as a tourist destination, most recently with the signing of two agreements with international associations. During the International Fair FITUR, which was held in Spain and is the second largest tourism fair in the world, an MoU was signed between Haiti and Spain to increase cooperation efforts between the two countries. Haiti also signed an agreement with the World Tourism Organization (UNWTO) in which Haiti will welcome 32 ministers and senior officials from the UNWTO.
Haiti to Berlin for tourism fair Haiti recently participated in the world’s largest tourism fair, ITB Berlin 2015, which brought 10,096 exhibitors from 186 countries and 155,000 tourism professionals. During the event, Haiti’s Ministry of Tourism and Creative Industries signed an MoU with the Ministry and German Aviareps Group, in which Aviareps would provide courtesy marketing and promotion of Haiti in Germany over the next 12 months. Aviareps is a global leader in tourism and airlines.
Ad campaign targets US market A new television campaign has been launched in the US to promote tourism in Haiti. The campaign puts 30-second videos in rotation on select US television stations and offers viewers the opportunity to plan trips through its own interactive channel
Sector Developments Marriott opens in Turgeau The new 175-room Marriott Hotel opened its doors in February in Turgeau, a neighborhood in Port-au-Prince. The hotel has a 5 hibiscus rating, is 10 stories high, with 175 rooms, 5 suites, and 5 meeting rooms. The property also includes a swimming pool and fitness facility. The staff is composed of 99% Haitians, and 1,000 workers found temporary employment during construction. The hotel is owned by Digicel Group and brings the number of international standard hotel rooms to 4,322.
Investment backs tourism industry Over the past four years, the tourism sector in Haiti has received over US $345MM in investment covering 35 tourist accommodation projects, four tourist transport projects, and over 100 apartments constructed, among others. These projects have created a total of 13,700 direct and indirect jobs. Over 1 million tourists visited Haiti in 2014, a +10.8% increase from 2013.
Update from Tourism Minister
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A recent update on the tourism sector was given by the Minister of Tourism and Creative Industry during a press conference at the Primature. As of late, 14 tour operators are selling Haiti as a destination and visitors to the country grew significantly in 2014. Currently 9,280 hotel rooms exist in Haiti, including 4,681 classified in the 1 to 5 hibiscus international standing.
Jamaica
Overview and Landscape JAMAICA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
0.4
1.7
Climate impacts to agro
Inflation %
6.4
6.0
Crop output recovery; lower fuel
Source: See Note 1 (final page)
Jamaica’s economic expansion is expected to outpace regional growth in 2015 and 2016, with the IMF forecasting +1.7% growth this year and +2.2% in 2016. Increases in reserves, remittances, services and capital inflows have all favored the outlook for Jamaica. Statistics have also shown strong gains in employment and consumer confidence. Tourism has had a positive impact on economic activity, with stay-over arrival up +7% in 2014 and cruise arrivals up +18%. Meanwhile, hotel construction has been a major driver behind the growth in the construction sector, as well as works on the North-South leg of Highway 2000. Works on the US $730MM Caymanas to Ocho Rios highway funded by the China Development Bank will be concluded in early 2016 and contribute positively to growth. The Alpart plant will restart operations following an agreement with UC
RUSAL, with some work commencing in early 2015. Renovations and upgrades will be made to Alpart’s rail and port system during Q2. The Nain plant will be fully reopened by Q2 2017. Power Purchase Agreements have been inked with JPS for 78 MW of renewable energy. Growth for Q1 2015 is expected to be between +0.5 and +1.5, led by tourism and construction. The consumer confidence index was up +4.3 points QoQ in Q1 2015 and +9.6 points YoY. Business Confidence Index rose +9 points QoQ and +14.1 points YoY, reaching the highest level since 2007. Climate risks remain present, and a prolonged period of drought could have a severe impact on crops and agro production for 2015. Any major changes to Petrocaribe would represent a risk for Jamaica.
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Things to Watch
> Agricultural output/import substitution and climate vulnerability > Future of Petrocaribe and debt exposure > Capacity to strengthen Balance of Payments (strength in tourism/ remittances)
Tourism Performance
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Stay-over arrivals crossed the 2 million mark in 2014, with an additional +71,000 visitors to the island. This is equivalent to a +3.6% YoY gain. Final tourism results reveal that arrivals were up +3.6% YoY in the stay-over category for 2014 to reach 2,080,181. The sector generated some US $2.2B in revenues for the year, up +5.8% YoY.
jamaica Increases were noted from Europe, which saw arrivals up +10.7%, Canada up +5.2% and Asia up +9.2%. Performance of the US source market was varied, as the Western region posted +5.4% growth, and the Southern region grew +5.6%. Latin America posted a decrease of (6.5)%. The average length of stay for foreigners dropped to 10 nights, and in hotels it was 7.3 nights. Non-resident Jamaicans accounted for 7.2% of total stay-over arrivals and averaged a longer stay of 18.8 nights. Cruise ship arrivals also increased during this period to 1,423,797, a jump of +12.5% YoY.
JAMAICA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
161.1
167.5
201.4
167.0
149.8
164.2
204.5
159.4
97.0
114.7
134.3
200.8
1,921.7
2011
174.1
175.1
204.0
179.4
146.6
166.5
202.5
155.1
98.3
112.5
139.7
197.7
1,951.8
2012
169.4
180.6
204.7
180.5
157.2
179.8
209.8
157.9
104.4
111.3
138.4
192.2
1,986.1
2013
161.5
166.0
213.1
171.6
160.8
186.5
205.7
164.3
105.4
123.7
148.5
201.3
2,008.4
2014
169.3
169.3
200.7
181.7
166.2
187.1
221.0
171.5
106.8
135.7
157.7
213.1
2,080.2
2015
176.6
177.8
212.1
2013YTD
161.5
327.5
540.6
712.2
873.0
1,059.5 1,265.1
1,429.5
1,534.9
1,658.6
1,807.1
2,008.4
2,008.4
2014YTD
169.3
338.6
539.3
721.0
887.3
1,074.3 1,295.3
1,466.8
1,573.6
1,709.3
1,867.1
2,080.2
2,080.2
2015YTD
176.6
354.4
566.6
YTDΔ YoY '15 4.3%
4.7%
5.0%
566.6
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Stay-over arrivals recorded an accumulated gain in the first quarter of +5.0% YoY to 566,560. The US posted +9.6% YoY growth in arrivals for the period, accounting for 57.4% of total arrivals. Canada was the #2 market with a share of 25.5%, followed by UK 8.1%, Europe 4.9% and Caribbean 2.2%. The Northeast and South regions led growth, up +10.6% and +11.4% respectively, while the Midwest grew +7% and the West +8.2%. Canada posted a decline in arrivals YoY of (5.5)%, bringing 144,669 stay-over visitors to Jamaica. Ontario arrivals were down (1.8)% and Quebec arrivals fell (5.4)%. Europe posted growth of +9.9%, with arrivals reaching 73,580. Asia posted an increase of +10.4% to 2,340 arrivals in the period. Latin America posted an increase of +5% to 7,119 arrivals, with Central American visitors up +57.4%. Stay-overs from South America were reported to have declined by (9.8)% YoY, with Argentina and Chile posting declines of (22)% and (25)%, respectively. Arrivals from the Caribbean were flat YoY. Official figures indicate that the average length of stay for foreign visitors in Q1 was flat at 8.4 nights. 89.5% of foreign arrivals came on vacation and 5.1% for business during the period. Momentum in cruise tourism continued as Q1 passenger arrivals reached 512,268. This represents growth of +15.9% YoY. The island received 170 calls, 51 to Montego Bay, 61 to Falmouth and 58 to Ocho Rios. The World Travel & Tourism Council (WTTC) estimates that tourism contributed 27.2% to GDP in 2014. This figure is expected to grow more than +10 points over the next decade. The WTTC estimates that 24.7% of jobs were related to the sector and expects
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that in 2015 the number of direct and indirect jobs related to tourism will rise +4.2% YoY to 289,000.
jamaica JAMAICA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator Total contribution to GDP US $MM
Growth
Av. annual
2014
2025
2015
'15-'25
3,857.7
6,132.2
4.1%
4.3%
Total contribution to GDP % Share
27.2%
37.5%
n/a
n/a
Visitor exports US $MM
2,213.5
3,931.5
5.2%
5.4%
615.1
717.5
1.7%
1.4%
2,488.3
4,150.9
4.5%
4.8%
Business spending US $MM
340.4
498.0
4.3%
3.4%
Capital investment US $MM
332.5
583.3
1.3%
5.6%
Domestic spending US $MM Leisure spending US $MM
Source: World Travel & Tourism Council Economic Impact Report 2015
Tourism Construction Significant hotel investment planned Hotel construction and refurbishment has continued to increase. Jamaica had added 1,000 rooms in December/January 2015. The growth in accommodation bodes well for the hospitality sector and its supporting industries. Hotel investments are estimated at J $44B for projects currently planned, according to government estimates recently released by the Finance Ministry. Some 4,700 Jamaicans will benefit from employment in the sector and an estimated 2,300 new rooms will come online. Projects underway include: • Fiesta Group will add 800 rooms to the Grand Lady Hamilton Palladium Hotel in Phase II at a cost of J $20B. Approvals remain pending. • Tourism & Leisure Development International will add 520 rooms at the Playa Hotel at a cost of $9B. • Memories White Sands Hotel will add 350 rooms with a $2.8B project. • Sunwing/TUI Group will upgrade 100 rooms and construct 100 new rooms at the Gran Lido in Negril at a cost of J $2.7B. Carib Hospitality of Jamaica will add 130 rooms at the Courtyard by Marriott in Kingston at a cost of J $1.8B. • Harmony Cove will bring 5,000 units online after the 10-year implementation.
VIP invests US $100MM The company VIP Attractions is investing over $100MM in a premium departure lounge at Sangster International Airport. VIP Attractions has received great interest throughout the Region to replicate these premium lounges in 9 international airports, which will contribute to the further expansion of the company.
Norman Manley runway project a step closer
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The runway at the Norman Manley International Airport (NMIA) will undergo a rehabilitation and extension. The estimated cost is US $76MM. This forms part of the US $134MM that investors are required to make to acquire the Norman Manley International Airport. An invitation was published at the end of 2014 by the NMIA Public-Private Partnership to shortlist possible private sector entities to undertake the operation of the airport. The government plans to divest the property by 2015 upon selection of the winning bidder.
jamaica Refurbishments at Moon Palace continue Moon Palace Jamaica Grande is expected to open in early 2015. Several interruptions including a labor dispute delayed progress. The hotel refurbishment is being done at an estimated cost of US $150MM and will provide employment to 1200 persons upon completion.
Tourism Policy & Initiatives Tourism to benefit from IDB climate resilience loan Jamaica has received funding from the Inter-American Development Bank (IDB) to support climate resilience. A total of US $18MM in loans and grants has been approved by the IDB to improve the country’s adaptive capacity. Funding will specifically benefit improvements in the agriculture and tourism sector, as well as for watershed management projects.
Rural tourism through targeted development initiative The Rural Economic Development Initiative targets market access expansion by building capacity. The project consists of two components directed at the Implementation of Rural Sub-Projects in Agriculture and Rural Tourism, and National Technical Assistance and Capacity Building. With an allocation of J $246.7MM in the 2015/16 Estimates of Expenditure, the initiative will be implemented by the Jamaica Social Investment Fund and made possible through funding from the International Bank for Reconstruction and Development. To date, there are 66 sub-projects under the projects’ two components.
Stakeholders apply for casino licenses Government is seeking to develop casino resorts and will soon make an announcement regarding the issuance of casino licenses. To date, five applications have been received, and two have advanced to the evaluation phase. Regulatory details are overseen by the Casino Gaming Commission under the Casino Gaming Act.
Sector Developments Normalization of US-Cuba welcomed, in spite of impact on industry
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The impacts of improved US-Cuba relations on Jamaica will be mixed. Yet, the Government of Jamaica has been vocal in welcoming the advance. Given the longstanding trade and cultural exchange with Cuba, Jamaica has an interest in serving the Cuban market, which has peaked since the announced easing of US travel restrictions. The neighboring state represents a slew of trade opportunities, representing a market of over 11 million consumers. The Jamaica Promotions Corporation (JAMPRO) has launched a program with the “Exporting to Cuba” Workshop with a view to pursue the export market by increasing market presence and identifying commercial opportunities. The State Minister for Industry, Investment and Commerce announced the launch of the market development plan to capitalize on the existing economic prospects.
jamaica Regarding eased relations, cause for concern has been raised by the Caribbean Hotel and Tourism Association, which believes that improved US-Cuba relations can have a negative impact on the Jamaican tourism sector in the short-term until contingency plans are developed.
FDI inflows target tourism Foreign Direct Investment inflows over the 12 months ending September 2014 stood at US $707MM. This was primarily directed to infrastructure and tourism projects. The Bank of Jamaica commented that the inflows of new equity FDI signals an expansion phase for foreign investment projects, as opposed to only re-invested earnings.
Marriott to be LEED certified The Courtyard by Marriott Hotel in Kingston will be the first building to receive certification from the Leadership in Energy and Environmental Design (LEED) in Jamaica. The Hotel is scheduled to open in July.
JAMPRO touts investment in tourism The Jamaica Promotions Corporation JAMPRO’s second Jamaica Investment Forum highlighted tourism investments, among other areas. Specifically, Sandals Resorts International has invested US $156MM to upgrade its 12 properties on the island. Sandals employs over 7,000 persons and spends US $2MM per year on training.
Mexico’s Palace Group to acquire Sunset Jamaica The 730-room Sunset Jamaica Grande in Ocho Rios will be acquired by the Mexico-based Palace Group. Scotia Group Jamaica approved US $51MM in funding for the deal. The deal with the hotel represents an important part of the institution’s overall loan growth. The resort, which was closed for renovations last year, will be open later in 2015, and is expected to employ 1,020 people once fully operational.
Gloustershire Hotel on market
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Gloucestershire Hotel has been put up for sale for US $6.25MM. The property has reportedly received two inquires thus far.
Martinique
Overview and Landscape MARTINIQUE ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
0.5
1.0
Activity in construction & exports
Inflation %
1.1
1.0
Falling oil prices to impact
Source: See Note 1 (final page)
Economic activity remained subdued in 2014, impacted by persistently high unemployment. The business climate deteriorated in the last quarter of 2014, sliding (7.6) points to land more than 10 points below its long-term average. However, a positive increase in the investment forecast was recorded for the first time in three years, a favorable sign looking into 2015. The primary sector posted a recovery following the 2013 one-off impacts of Tropical Storm Chantal. Agro, livestock and aquaculture products exports grew +19.2% YoY. Banana sales were up +20% to 190,770 tons. A +71% rise in cruise passengers was recorded in 2014. Nonetheless, stay-over visitors remained flat. Stay-over tourists are
estimated to contribute roughly 97% of the sector’s total impact on the economy. The tourism industry has been affected in recent years by a drop in hotel nights, resulting in a number of hotel closures and a drop in the number of available rooms since the year 2000. This has left the tourism industry with weak financials, as the sector is heavily burdened by personnel costs. Modernization works at the Aimé Cesaire airport will benefit construction activity and bring more convenience to passengers. Plans include the construction of a nearby hotel and business center, an extension of the runway could also be in the cards, though unlikely to materialize in 2015. Other economic levers that can provide favorability in the coming months include construction activity, particularly in housing and increased movements in the trade sector.
3
Things to Watch
> Performance of French economy > Capacity to build new source market for tourism > Evolution of youth unemployment
Tourism Performance Tourism activity posted a +71.3% YoY gain for cruise passengers in 2014. However, stay-over visitors remained flat at 489,561 and the number of passengers arriving at the airport also remained flat at 1,624,500. The number of hotel nights was down (3.2)%, the average length of stay was down (7.7)%, RevPAR was down (3.4)% and the occupancy rate was down (1.8) points.
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Luxury Yachts are making a positive impact on the local economy in Martinique. Dockwise Yacht Transport group has recently made rotations in Martinique, acting as a yacht taxi service, unloading 13 luxury yachts from Europe. Each yacht contributes approximately €30k in expenses, which is absorbed into the local economy.
martinique MARTINIQUE STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
42.0
46.3
52.6
40.5
34.3
28.7
46.1
54.5
28.5
27.0
30.0
46.1
476.5
2011
44.2
43.9
50.8
47.4
35.0
33.2
49.4
55.6
29.9
28.5
30.6
48.3
496.5
2012
48.1
52.2
51.1
49.2
33.6
28.7
44.9
55.1
28.1
23.7
29.4
43.3
487.4
2013
46.3
50.3
55.0
45.5
36.3
28.6
41.0
53.4
27.1
27.3
30.4
48.4
489.7
2014
48.6
51.6
57.0
49.5
35.1
30.2
40.6
50.7
24.7
27.6
27.3
46.8
489.6
2015
45.9
50.5
2013YTD
46.3
96.6
151.6
197.1
233.5
262.1
303.1
356.6
383.7
410.9
441.3
489.7
489.7
2014YTD
48.6
100.3
157.3
206.8
241.9
272.0
312.6
363.3
387.9
415.5
442.8
489.6
489.6
2015YTD
45.9
96.4
YTDΔ YoY '15
-5.6%
-3.8%
96.4
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The favorable trend in cruise arrivals has continued into 2015, with cruise passenger arrivals up +40.8% YoY for the Nov-March period. Despite the increase in tourists, the number of guests staying in hotels decreased by (9.8)%. Total stay-overs for the first two months of 2015 were down an accumulated (3.8)% YoY to 96,448. The industry has been affected in recent years by a drop in hotel nights, resulting in a number of hotel closures and a drop in the number of available rooms since the year 2000. At the end of 2013, only 64 hotels were operating in Martinique, with 3,388 rooms. Since the turn of the century, 1,900 rooms are no longer operational. This has left the tourism industry with weak financials, as the sector is heavily burdened by personnel costs. The sector directly employed 8,942 salaried workers in 2013, 7.2% of total employment. The number of businesses operating in the sector was 3,244 and accounted for nearly 10% of all business in Martinique. Seasonality is another major factor impacting the sector. The number of tourist arrivals tends to climb from Jan to March and then steadily falls to June, before picking up in vacation season through August. The off-season from September to November typically represents the months of lowest arrivals figures for the year. Stay-over tourists are estimated to contribute €289MM to the economy, roughly 97% of tourism revenues. Cruise passengers contribute a mere €1MM to the economy each year. The World Travel & Tourism Council estimates the total direct and indirect contribution of the sector to GDP is 12%, expected to rise to 13.8% by the end of the next decade. The WTTC calculates the total contribution to employment at 12.3% of the total workforce, or 16,000 jobs. MARTINIQUE TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
1,460.3
2,116.5
1.7%
3.6%
Total contribution to GDP % Share
12.0%
13.8%
n/a
n/a
Visitor exports US $MM
494.5
813.0
3.2%
4.8%
Domestic spending US $MM
368.4
483.2
3.6%
2.4%
Leisure spending US $MM
777.5
1,169.8
3.1%
3.9%
Business spending US $MM
85.4
126.4
5.9%
3.4%
Capital investment US $MM
90.8
155.2
6.3%
4.9%
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Source: World Travel & Tourism Council Economic Impact Report 2015
martinique Market Access Corsair sale nixed Corsair has ended negotiations for its sale to Air Caraibes. Weeks of discussions have concluded with a non-favorable response by Corsair without much explanation. Major concerns over job security from the employees of Corsair led to a recent protest. The sale of Corsair to AirCaraibes was scheduled to finalize in June 2015. Air Caraibes reported revenues of €353MM in 2013 and employs almost 1000 people. By taking over Corsair Airlines, Air Caraibes hoped to better be able service transportation to the French Antilles, as well as the Reunion islands.
Tourism Construction Upgrades coming to airport Martinique’s airport Aimé Cesaire will soon benefit from new infrastructure to modernize the facilities and offer more services and convenience to passengers. Plans include the construction of a nearby hotel and business center, an extension of the runway and more convenient services within airport facilities.
Tourism Policy & Initiatives Sainte Anne grant to target tourism The community of Sainte Anne has received grant funding from the Regional Council for a total of €1.1MM to fund different projects in the area. Funds will be used toward touristic improvements, aquatic equipment and road modifications.
Sector Developments Martinique raising surfing profile
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Martinique may soon be added as a destination for the ASP world tour surfing competition with steps being taken toward qualification. The competition would bring 100-120 accompanied surfers to the region as well as 90 officials, approximately 500 guests in total.
Montserrat Overview and Landscape MONTSERRAT ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
2.8
1.8
Port works would favor growth
Inflation %
-1.0
1.5
Falling oil prices will impact
Source: See Note 1 (final page)
Growth remained weak in 2014, and tourism and public administration were the main engines of economic activity. Improved tourism connectivity was key to increasing arrivals by +22%. Consumer prices trended downwards by (1)% YoY, with food prices falling (1.8)%, and Gas, Electricity & Water prices down (2.6)%. Services prices fell (2.1)%. Alcohol and Tobacco prices were offsetting, rising +3.5% YoY. Tourism is expected to remain strong and redevelopment efforts will provide some air for the construction sector. Budgetary aid will remain a key driver of economic growth, with triggers such as increased airlift and higher visitor numbers to
contribute. Montserrat received a cruise call from the 112-passenger ship Dream 2 in late February, and expects a visit from the 208-passenger Star Legend starting in December 2015. The outlook for 2015 is favored by public sector investments in the hospital, infrastructure and the power station. These include the offshore breakwater and marina wall at Carr’s Bay and the Glendon Hospital, which will open in 2017. Developments in geothermal energy will also be critical for reducing the country’s high energy costs. The geothermal wells at Cork Hill and Weekes are demonstrating early on that they have the capacity to meet the energy needs of Montserrat. Slower than expected implementation of these projects and adverse weather are the two main risks to the forecast. The economy also remains susceptible to economic performance in the UK.
3
Things to Watch
> UK economic recovery and budgetary aid > Public spending-fuelled construction > Future of geothermal energy
Tourism Performance
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Montserrat posted +13.5% growth in tourism in 2014, placing it among the top five in the Caribbean in terms of growth. Bookings from Canada increased +20.1%, while arrivals from the US were up +11.2%.
montserrat Stay-over arrivals rose +22% YoY to 8,804. Arrivals from the two largest source markets, the US and Europe, were up +15% and +10%, respectively. Increased access continues to be the determinant factor in growth for Montserrat. Improved connectivity to the regional and international markets is critical to ensure the sustainability of the growth path. Excursionist and yacht arrivals are also an important component, registering a +14.9% increase and a +13% increase YoY, respectively in the first 3 quarters of 2014. MONTSERRAT STAY-OVER ARRIVALS (IN WHOLE NUMBERS) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
438
425
590
467
367
399
455
386
488
426
429
1,011
5,881
2011
541
425
634
415
342
416
572
399
248
309
375
719
5,395
2012
546
392
583
297
274
387
524
385
348
331
431
2,812
7,310
2013
554
564
767
403
472
445
841
659
446
394
587
1,070
7,202
2014
614
664
1,077
744
635
452
717
572
308
510
653
1,858
8,804
2013YTD
554
1,118
1,885
2,288
2,760
3,205
4,046
4,705
5,151
5,545
6,132
7,202
7,202
2014YTD
614
1,278
2,355
3,099
3,734
4,186
4,903
5,475
5,783
6,293
6,946
8,804
8,804
10.8%
14.3%
24.9%
35.4%
35.3%
30.6%
21.2%
16.4%
12.3%
13.5%
13.3%
22.2%
2015
2015YTD YTDΔ YoY '14
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Montserrat welcomed the cruise ship Dream 2 on February 24 carrying 112 passengers. This ship last visited the island in 2013. Further activity with Windstar Cruises is expected for the latter half of 2015.
Market Access Fly Montserrat Chair denies threat to AOC Fly Montserrat Chairman Nigel Harris has denied claims that the UK’s Civil Aviation Authority (ASSI) threatened to remove Fly Montserrat’s Air Operators Certificate (AOC). Harris expressed that the regulator has been very supportive of Fly Montserrat’s succession program for placement of individuals in new posts and its training program.
New ferry terminal for Heritage Quay Montserrat opened a new ferry facility in Heritage Quay, Antigua March 13. The new terminal has bathrooms, a bar, restaurant and lounge. A tourism information desk is also available for tourists. A ferry check-in point and immigration offices are expected to be added to the facility as well. The new facility is a far cry from the congested and poorly accommodated facility of the past.
Windstar to visit in 2015 Montserrat will receive cruise calls from Windstar Cruises in late 2015. The company revealed that the 208-passenger Star Legend will visit the island as part of a 7-night Caribbean itinerary. Sailings on the new itinerary begin December 8.
Tourism Construction Proponents of airport runway expansion seek funding
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The Committee for Redevelopment of Montserrat (CRM) is seeking to raise $195,000 in funds to conduct feasibility and wind studies for a 1,500 m runway at Old Quaw for the WH Bramble Airport. The current runway, which extends just over 1,000 m, has been deemed unsafe by the CRM, due to its length. The CRM believes that the economic redevelopment of Montserrat is highly dependent on the resumption of air service, including that from regional air carrier LIAT, which would mean the redevelopment of the current runway.
montserrat Tourism Policy & Initiatives Montserrat, A&B to cooperate in tourism, other areas Montserrat and Antigua & Barbuda announced a joint commission on cooperation in tourism, agriculture and social transformation. The two nations have agreed on joint ownership of a barge for sand mining, scholarship opportunities for the University of A&B, and working to publish online both Cabinet documents and visa applications. Ferry fees between the islands are set to be reduced to EC $50 in the upcoming weeks and concessions on tonnage fees have been made for an Antiguan sand importer.
EU EDF budget to benefit tourism, general development Montserrat’s Treasury received millions in budget support from the EU’s 10th EDF General Budget Support Program. More than EC $14MM was distributed in the third tranche of a total EC $51MM in assistance. The funds are to be used to continue Montserrat’s sustainable development, including economic management, human development, environmental management, disaster mitigation and governance in order to attract investment. As part of the program, improvements will be made to the tourism sector, energy sector, transport sector and housing will be prioritized and increased.
Montserrat to be training, education hub Montserrat will be the OECS hub for its Network of Excellence for Tourism and Hospitality Training and Education. The project will take two years to fully implement and will include centers of excellence in each OECS territory. Each center will have a specialization in some area of tourism or hospitality.
Sector Developments New website for Tourism Division
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The Tourism Division launched its new website highlighting the varying exploration and relaxation possibilities in Montserrat. The website can be accessed here.
Puerto Rico
Overview and Landscape
Indicator
2014e
2015f
Comment
GDP Growth %
-0.9
0.2
Fiscal woes burdening economy
Inflation %
0.4
1.4
Potential VAT introduction
Source: See Note 1 (final page)
A declining population, high unemployment and elevated electricity costs continue to weigh on the economy. Puerto Rico is facing a challenging year, with all major credit ratings agencies downgrading its rating in the first quarter. Government liquidity pressures and the urgent need for tax reforms must be addressed in the near-term to avert a default and regain investor confidence. Tourism represents 6% of PR’s GDP, with both the cruise and stay-over segments posting growth in 2014, respectively +15% YoY and+ 6%. Consumer spending showed weak activity as retail sales improved less than 1% to US $37.57B for the year. Unemployment showed improvement in the first quarter, falling from 13.7% in December to 11.8% in March. Non-farm employment gained around 800 thousand jobs in the first quarter. The economy will experience flat to slight growth in 2015, with a best case scenario at +0.2%. A drop in economic activity was reported for January and February 2015, down (2.6)% and (1.6)%, respectively.
103
Puerto Rico must still transform its fundamentals in order to improve its economy and aspire to reach a sustainable growth path. Efforts in sectors such as tourism, communications and pharmaceuticals will remain insufficient to offset the Government Development Bank’s (GDB) liquidity crisis and public corporations’ debt restructuring risks, alongside the necessity to meet expectations of a tax reform. The GDB recently warned that the financial condition and liquidity pressures facing the government could warrant a shutdown and indicates that prospects for hitting bond markets are grim. Several large-scale projects and investments are in the pipeline, which will foster improved economic results. These include the Roosevelt Roads US $3.2B project, Dow AgroScience’s investment of US $60MM, AbbVie’s US $30MM for the expansion of one of its three manufacturing sites, and the aerospace industry awaits over US $120MM in investment.
“Puerto Rico is facing a challenging year.”
3
Things to Watch
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
> Fiscal challenges and ratings downgrades > Tax policy and P3s > Energy prices and competitiveness of manufacturing sector
menu
PUERTO RICO ECONOMIC INDICATORS AND FORECAST
puerto rico Tourism Performance Cruise arrivals posted growth of +15% YoY in 2014, welcoming 1,356,822 passengers. This was the highest level on record since 2008. Homeport passengers accounted for 32% of the total at 436,065. A total of 514 ships called on Puerto Rico during the year, up +10.7% YoY. Homeporting ships dropped (1.9)% while in transit ships increased +19.3%. Stay-over arrivals grew +6% to 1,687,605, highly reliant on the US, which supplied over 91% of total arrivals. Canada and Europe supplied 1.3% and 2.1% of tourists, respectively. Domestic tourism is also an important factor in the Puerto Rico market. Local residents accounted for roughly 1/3 of hotel registrations during the year, at 835,620. Hotel registrations for 2014 added up to 2,523,225 according to the PR Tourism Company. The occupancy rate in 2014 was 69.6%, falling (0.2) points YoY. Average Room Rates were US $151.06, up +5.3%. The total number of rooms occupied during the year was up +1.8% to 3.4 million. The number of rooms available increased +2.1% to 4.9 million. PUERTO RICO STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
125.7
131.7
147.4
127.3
104.1
107.4
116.6
112.0
80.5
93.9
98.8
123.9
1,369.2
2011
129.4
139.1
153.6
142.6
111.4
113.0
129.5
118.5
80.4
90.0
109.1
132.1
1,448.7
2012
136.7
139.3
162.1
150.9
125.4
134.0
137.2
126.2
89.3
106.6
121.8
140.0
1,569.5
2013
136.9
139.6
178.8
145.4
131.0
131.9
139.1
133.3
81.4
98.3
124.2
148.7
1,588.7
2014
149.8
147.4
182.6
150.3
136.6
141.5
152.9
141.2
89.3
113.7
127.8
154.4
2015
156.7
161.6
2013YTD
136.9
276.6
455.4
600.8
731.8
863.8
1,002.9
1,136.1
1,217.5
1,315.8
1,440.0
1,588.7
1,588.7
2014YTD
149.8
297.3
479.9
630.1
766.7
908.2
1,061.2
1,202.3
1,291.7
1,405.4
1,533.2
1,687.6
1,687.6
2015YTD
156.7
318.4
YTDΔ YoY '15
4.6%
7.1%
1,687.6 318.4
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The island rang in the New Year with the arrival of 6 ships on January 8. These cruise liners brought 16,712 passengers to San Juan, generating an estimated US $1.8MM in economic activity for the day. In the first 8 days of the year, 60,000 cruise passengers arrived to Puerto Rico. The month closed with 189,486 cruise passengers visiting, a gain of +28% YoY. Meanwhile, stay-over arrivals are reported to have reached 318,364 in the Jan-Feb period. This represents an increase of +7.1% YoY. Occupancy for January-February improved +2.2 points YoY to 73.8%. The average length of stay was down slightly to 2.6 days. The average room rate increased in both January and February, up +3.5% to $172.94 and +7.1% to $183.98, respectively. An estimated seventy-one groups visited the island to attend conventions and conferences during the months of February and March. These visitors represent around 34,970 room nights and a US $20MM direct impact on the economy. The World Travel & Tourism Council estimates the total impact of tourism to the PR economy at 7.3% of GDP. This is expected to continue to grow over the next decade. Regarding employment, the WTTC calculates that the sector provides a total contribution
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of 6.3% to the workforce, at 67,000 jobs and anticipates the sector will add +2,500 jobs in 2015.
puerto rico PUERTO RICO TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator Total contribution to GDP US $MM
Growth
Av. annual
2014
2025
2015
'15-'25
7,418.2
9,719.4
2.0%
2.5%
7.3%
7.7%
n/a
n/a
Visitor exports US $MM
3,817.6
5,166.4
2.6%
2.8%
Domestic spending US $MM
3,188.4
4,065.6
-0.2%
2.5%
Leisure spending US $MM
6,027.0
7,864.8
1.0%
2.6%
Business spending US $MM
979.0
1,367.1
3.0%
3.1%
Capital investment US $MM
1,476.0
2,030.4
6.0%
2.6%
Total contribution to GDP % Share
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Sun connects San Juan, Naples Sun Country Airlines launched the first route between San Juan and Naples, Florida on May 2. The non-stop service departs from the Southwest Florida International Airport in Fort Myers, and is scheduled to operate on Sundays from May 3, with additional service on Thursdays from June 11. The one-way from Fort Myers starts at US $129.
Charter service to Cuba Charters to Cuba will be made available through tourism operator Turismo Tony Perez. The service will begin this summer and will offer at least 10 direct flights. Puerto Rico and Cuba have both identified potential for industrial and business collaboration, particularly in the pharmaceuticals and agro industry sectors. Puerto Rico has invited a delegation from Cuba to visit to further explore opportunities.
Seaborne links PR, Anguilla Airlift to Anguilla aboard Seaborne Airlines commenced in April. The direct service provides for connections to Anguilla with partner airlines including American Airlines, Air Europa, Delta, jetBlue and United. The service is offered three days weekly, aboard a SAAB 340 aircraft with 34 seats.
Ferry operator targets 130 thousand American Cruise Ferries, a passenger and freight service between the Dominican Republic and San Juan, wishes to reach over 130,000 passengers this year by offering new tourist packages. Around 100,000 Dominicans and Puerto Ricans have used the service during the last four years. The company carries around 25,000 containers annually which, according to the company’s sales manager, account for 80% of exports between the two islands. American Cruise Ferries plans to expand to new markets opening new routes from the Dominican port to other islands in the Caribbean.
Seaborne, Air Europa connects PR to Madrid
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A business alliance between Air Europa and Seaborne has led to a daily route between Madrid – Santo Domingo – San Juan. Seaborne will cover the San Juan – Santo Domingo route which will be added to the two direct flights that Air Europa operates between Spain and Puerto Rico since June 2014. The service commenced March 29th.
puerto rico Tourism Construction Clark Realty Capital hired for Roosevelt Roads project A developer has been named for the Roosevelt Roads US $3.2B project. Clark Realty Capital was assigned by the Local Redevelopment Authority as master developer for Roosevelt Roads, a former naval station in Ceiba, after four entities entered the request of proposals (RFPs) in September. The Virginia-based company has vast experience redeveloping military bases with a portfolio of over 60 projects, 38,000 residential units, 10,000 acres of land, and 50 million square feet of development. Clark Realty’s proposal for Roosevelt Roads includes the development of hotels, housing, offices, shopping center, retail stores, restaurants, a port zone, schools, and golf courses, among others. The final contract is expected to be finalized and signed by the end of FY 2015.
Phase 1 of Embassy Suites project completed Embassy Suites hotels has completed the first phase of their remodeling project. The San Juan Hotel and Casino revamped its 299 suites and the Dorado del Mar Beach Resort completed a refurbishment of its bathrooms.
Other projects to follow in 2015 • The third and final phase of La Ciudadela began in Q3 2014. The US $108MM stage will include 700,000 square feet of new construction. The project began in 2003 and after the original developers declared bankruptcy, Putnam Bridge took over and has invested over US $750MM in PR properties. The company estimates that it will complete the project by 2017. • The US $26.5MM plan to overhaul 9 waterfronts includes Arroyo, Cabo Rojo, Cataño, La Parguera, Patillas, Salinas and Santa Isabel. Each destination will receive between US $2.5MM and $5MM. • The JW Marriott Dorado Beach is under construction to replace the Hyatt Cerromar. The project developers decided to level the hotel rather than renovate since its facilities were outdated and the hotel has small rooms. • The San Juan Hyatt Place hotel will open in 2016. The 149-room facility broke ground in late 2014 and is located in the Convention District, nearby the Hyatt House San Juan. • Aerostar continues to roll out investments aimed at increasing airport capacity and improving infrastructure at the Luis Munoz Marin International Airport (LMMIA). Two new terminals are programmed to open by the end of 2015. The company Aerostar expects to have invested US $205MM by the end of next February to make the airport ready to receive 10 million passengers per year. • Federal Funds were released in 2014 to upgrade airports. Rafael Hernández Airport in Aguadilla was assigned US $11.2MM to upgrade its 11,700-foot runway, improve the airport’s access control system, enhance lighting infrastructure and repave. San Juan’s LMMIA was assigned US $9.5MM to upgrade its 10,400 foot main runway and to propose a plan for a secondary runway. US $4.7MM was allocated to the PR Port Authority (US $3.51MM) and Aerostar Airport Holdings (US $1.19MM).
Tourism Policy & Initiatives Visa program approved
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The EB-5 federal visa program has been approved for Puerto Rico. The Economic Development and Commerce Department (PREDCD) organized a forum in conjunction with the Federal Reserve Bank in order to explain the EB-5 federal visa program for foreign investment seeking to promote its benefits for potential applicants. According to Alberto Bacó Bagué, PREDCD secretary, this visa program “combines two essential elements of economic development: job creation and the availability of capital financing.” The program, particularly in Puerto Rico, will focus on providing financing to large projects of high public interest in strategic economic sectors such as tourism.
puerto rico VAT would impact industry, officials say The VAT proposal for Puerto Rico has sparked debate across several sectors, including the tourism industry. Tourism officials contend that while room rates would not be affected, maintenance services, payroll processing and other services would see a sharp increase in cost as a result of VAT. Puerto Rico Tourism Company representatives assert that a 16% VAT tax could double hotels’ operational expenses, hurting their bottom lines.
Sector Developments Routes Americas to PR in 2016 The PR Tourism Company (PRTC) will host the ninth Routes Americas in February 2016. Puerto Rico was chosen as the next destination for this airline and airport networking forum for the entire Americas. PRTC will partner with Aerostar Airport Holdings and Meet Puerto Rico in order to offer “the perfect backdrop to a very productive Routes Americas,” as stated by PRTC’s executive director Ingrid Rivera Rocafort.
Inaugural tourism expo gathers stakeholders to PR The first international tourism expo took place in Puerto Rico in May. The Expo de Turismo Internacional (ETI) showcased tourism experiences in the Caribbean and from across the world, as announced by the Puerto Rico Tourism Company (PRTC). The four-day event was held at the Puerto Rico Convention Center and included group meetings, social and cultural events, field trips, workshops, and destination trainings promoting the region’s beauty, sports, nature, adventure and gastronomic offerings.
Airport ceases operations Diego Jimenez Torres Airport in Fajardo closed its doors on April 30th. The 94-acre, non-towered airport expired in 2013, therefore, the Federal Aviation Administration recognized that the Puerto Rico Ports Authority is no longer obliged by contract to continue operating the airport.
PR present at Berlin convention Puerto Rico attended the recent ITB Berlin Convention in the German capital. In the event, the delegation showcased the advantages of the island as a Caribbean destination. With over 60,000 visitors, 23,000 members of the tourism industries and over 186 participating countries, the ITB Convention was a major opportunity to reinforce the image of Puerto Rico in the European market. The delegation was led by global sales representatives of the PRTC along with other industry members such as the Intercontinental San Juan Hotel & Casino, Wyndham Palmas del Mar, Howard Johnson, El Conquistador Resort and the Gran Meliá Puerto Rico Golf Resort.
San Juan Beach files for bankruptcy
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The San Juan Beach Hotel, owned by San Juan Resort Owners Inc, filed for Chapter 11 Bankruptcy. The hotel, on Ashford Avenue in the Condado, claimed debts of US $32.9MM and listed assets of US $12.7MM. Banco Popular was named as the main creditor with a debt of US $17MM, the hotel also owes the PRTC over US $1MM and US $0.6MM in taxes to Treasury.
Saint Kitts and Nevis
Overview and Landscape SAINT KITTS AND NEVIS ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
5.4
3.5
Bolstered by tourism investment
Inflation %
1.5
1.4
Falling oil prices will impact
Source: See Note 1 (final page)
The economy of St Kitts and Nevis showed strong activity in 2014, expected to top the OECS. The performance was broad-based with construction, tourism, transport, storage & communications and manufacturing all benefitting. Construction has been key to driving the result, and the opening of the Kittian Hill Resort, as well as the re-opening of the 50-room Ocean Terrace Inn in St Kitts, are expected to drive a further boost in arrivals. Works on the Park Hyatt Hotel and the Imperial Bay Resort continued and site works were performed at the 226-unit Pelican Bay Resort and Pirate’s Nest. Works on the Four Seasons Estate and condos and on villas in Nevis also drove construction activity. Construction in the public sector also rose YoY, with capital outlays increasing on roadworks and drainage networks on both islands. Capital expenditure in the public sector was up +34% in the Jan-Sept period.
Tourism performance was robust, with cruise, stay-over and yacht arrivals all posting gains in 2014. Gross travel receipts were up +8% YoY to US $81.5MM for the Jan-Sept period. The trade deficit is likely to widen in the near-term as imports will increasese, associated with tourism construction projects underway. The construction pipeline remains healthy with the 218-room Paradise Palms Resort in Nevis breaking ground in December and works on the 246-room T-Loft Hotel/condo underway in Q1 2015. Road repairs and resurfacing works will be completed on the Frigate Bay Road and Sir Kennedy Simmonds Highway. Improving economic performance of key trade partners and source markets for tourism will be determinant in the country’s growth in 2015. The Citizenship by Investment program is a major driver behind the country’s investment flows and a changing in the pace of investment would have negative impacts on the outlook.
3
Things to Watch
> Public spending and FDI-fueled construction > Management of Citizenship by Investment program > Future of Petrocaribe and election impact on policy
Tourism Performance
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Stay-over arrivals grew by +3.1% YoY in the first 11 months of 2014, reaching 93,130. Cruise arrivals contributed largely, up +17.7% YoY to 464,431 in the first 3 quarters of the year. The number of cruise ship calls was up +14.5% YoY for the period. The yacht sector tripled to 4,432 passengers.
saint kitts and nevis The US remained the top source market providing 61% of arrivals for the period. The number of tourists visiting from the US, however, declined during the period by (3.4)%. Europe, the #2 market accounted for 10.5% of total arrivals and posted growth of +11.6% YoY. Arrivals from Canada were up +22.8% YoY, bringing 7.6% of total stay-over tourists to St Kitts and Nevis. SAINT KITTS AND NEVIS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2013
11.1
9.4
11.3
7.8
8.7
8.2
8.7
6.9
5.1
5.3
7.8
10.7
101.0
2014
10.2
9.6
10.7
8.8
8.7
9.2
8.7
8.4
5.3
5.6
7.9
2013YTD
11.1
20.5
31.8
39.6
48.3
56.5
65.2
72.1
77.2
82.5
90.3
2014YTD
10.2
19.9
30.5
39.3
48.0
57.2
65.9
74.3
79.6
85.2
93.1
-7.5%
-3.2%
-4.2%
-0.8%
-0.6%
1.2%
1.1%
3.1%
3.1%
3.2%
3.1%
29.2
35.1
40.4
46.6
52.3
54.0
56.2
62.4
93.1
2015 101.0
101.0 93.1
2015YTD YTDΔ YoY '14 2014YTD
6.6
13.7
21.5
2015YTD
6.8
14.2
22.8
YTDΔ YoY ‘15
1.7%
3.5%
6.0%
70.9
70.9
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Nevis tourism numbers are up, according to the Nevis Tourism Authority. The NTA reports occupancy levels are on the rise, though no official figures have been compiled. The NTA has made year-round tourism a priority, with the goal of attracting visitors during the off-season as well. The World Travel & Tourism Council calculates the contribution to GDP of the tourism sector at 25.5%. The WTTC estimates that the sector contributes directly or indirectly to 24.2% of employment, with the number of jobs expected to rise +2.9% in 2015 to over 6,000. ST KITTS & NEVIS TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
203.6
357.5
5.0%
5.3%
Total contribution to GDP % Share
25.5%
31.2%
n/a
n/a
Visitor exports US $MM
110.9
204.8
5.9%
5.7%
Domestic spending US $MM
23.7
33.1
5.2%
2.8%
Leisure spending US $MM
100.6
176.8
5.0%
5.3%
Business spending US $MM
34.0
61.1
7.9%
5.2%
Capital investment US $MM
40.0
68.7
4.6%
5.1%
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Anthem cruise ship books SKN this fall
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Royal Caribbean’s 5,400-passenger Anthem of the Seas will include SKN in its itinerary for the 2015-16 cruise season. The ship, currently under construction, will make its inaugural call to Port Zante on November 10. Subsequent stops will be made January 3, 2016, February 21, 2016, March 27, 2016, April 8, 2016 and April 18, 2016. The Anthem is one of three next generation cruise ships to be introduced by Royal Caribbean. The Quantum of the Seas made its inaugural call to Port Zante on December 8, 2014. A third ship is expected to be unveiled in 2016.
saint kitts and nevis More airlift for Nevis, Antigua The Nevis Island Administration (NIA) signed an agreement with Antigua-based Caribbean Helicopters Limited (CHL) on February 13 to provide added airlift to and from Antigua. The flights create a critical link between Nevis and the UK, a rising market for the island. The NIA and the Nevis Tourism Authority (NTA) have commenced work to raise public awareness of the service. CHL operates a fleet of three Bell 206L long-range helicopters, however the flights will be conducted using the carrier’s fixed-wing airplanes. The flights take place twice on Fridays and Sundays, with two additional flights to be added on Wednesdays. The inaugural flight landed at Vance Amory International Airport on February 20. The Nevis Tourism Authority hosted CEO of the Antigua and Barbuda Tourism Authority Colin James on a sightseeing tour on February 20. James traveled on the inaugural flight of Helicopters Limited from Antigua to Nevis. While there, he noted that added airlift would open the door for expanded collaboration between tourism authorities, including joint marketing campaigns and promotions for “double drop” vacations wherein travelers visit both islands, which are now more easily accessible via 15-minute flights.
Tourism Construction Paradise Palms under construction Ground was broken on the 218-room Paradise Palms Resort in Nevis on December 15. Paradise Palms management has announced it intends to hire locally and across all sectors through the build-out, with foreign trainers and support staff incorporated where needed. The full-service resort will include a restaurant, spa and sports facilities.
Refurbished Ocean Terrace opens doors The 50-room Ocean Terrace Inn (OTI) in St Kitts reopened in March as a four-star boutique hotel. The property underwent an 11-month refurbishment project, which was facilitated through a $5MM Sugar Industry Diversification Foundation loan. Renovations include all rooms and suites, the conference room, dining room and the electrical system. OTI, which first opened in 1969, offered a 30% discount through the first month of operations.
T-Loft hotel/condo project underway Construction of the US $40MM T-Loft hotel/condo property is underway. The 246-room Frigate Bay project will sit on 7.1 acres and include 41 condominium units contained in six buildings. The necessary cutting of roads and debris/vegetation removal took place in December.
Pelican Bay development commences Work on the $125MM, 226-unit Pelican Bay development is progressing. Construction offices are currently on site and the foundations for three buildings have been laid. Work on the sea wall has commenced, as well. The first of the three buildings is set for completion in July 2015, with full construction expected to conclude in 2016. Pelican Bay is fully owned and operated by local and regional companies. A management contract will be sought with a leading international hotel brand.
Other projects to follow in 2015 Construction of the Park Hyatt St Kitts is progressing well. Dubai-based Range Developments expects to complete the 26-building project on December 31, 2015. Operations are scheduled to commence in early 2016. The US $40MM Heldens Estate Condo Resort & Residences began construction in 2014. The resort will include condominium and hotel facilities to accommodate both residents and tourists.
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The US $70MM Prime Hotel and Condominiums project will consist of 10 buildings, each approximately 30,000 square feet, on approximately 7 acres of land.
saint kitts and nevis Tourism Policy & Initiatives Hospitality Assured program pushed in Nevis With an eye to maintaining Nevis’ international reputation for tourism, Minister of Tourism Mark Brantley is calling for Nevis hotel operators to participate in the Hospitality Assured program, the Caribbean Tourism Organization program. Brantley urged hoteliers to pursue the certification while congratulating the Nisbet Plantation Beach Club and the Nelson Spring Resort, both of which successfully completed the program. The program includes a nine-step certification process designed to improve quality standards, management, customer service, training, service delivery and overall customer satisfaction.
Taxi standards implemented The 2012 Taxi and Tour Operators Ordinance was implemented on March 11. The Nevis Island Administration (NIA) legislation requires that taxi and bus drivers maintain a minimum standard (based in part on standards set by regional neighbors) for themselves and their vehicles. Drivers are also expected to work with each other and with industry stakeholders to elevate their services, and the policy requires they increase their level of discipline, transparency and professionalism as a way of improving the image of the tourism industry and its transportation subsector. The Drivers are required to receive certification, and taxi-training seminars took place from March 3- March 30.
Nevis targets UK market A recent promotion in the UK is expected to bring returns for Nevis’ tourism industry. Minister of Tourism Mark Brantley led a Nevis Tourism Authority (NTA) delegation to the UK, during which the NTA hosted a breakfast meeting with 20 media reps and independent writers who are expected to increase Nevis’ visibility as a destination. Also participating was NTA CEO Greg Philip and Marketing Officer for the UK Julie Claxton. Brantley has noted that similar prior efforts to engage with media professionals abroad have yielded positive results.
New government pursues sports tourism
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Sports tourism will be a focus of the Unity government, says Minister of Sports Shawn Richards, who is currently exploring possible collaboration with the Tourism Ministry. Government will seek to leverage events such as the CARIFTA Games, which attracted over 800 athletes to the Federation April 4-6, and the CPL games, which take place July 30-August 11.
Saint Lucia Overview and Landscape SAINT LUCIA ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
-2.7
1.2
Weak construction activity
Inflation %
4.0
2.2
Lower oil prices to provide relief
Source: See Note 1 (final page)
Tourism and agriculture were the top drivers of economic activity in 2014, and improvements are expected to continue. The US economic recovery and increased airlift from Europe will contribute to stronger performance in the hotel and restaurant sector. Stay-over arrivals were up +6% in 2014 and cruse arrivals grew +8%. The four hotel properties that have emerged from receivership also provide optimism for the sector. Agricultural production was tempered by the negative impact of Black Sigatoka disease on banana output and further compounded the challenges posed by the December 2013 trough and effects of Hurricane Thomas. The non-banana sector has progressed in response to diversification efforts, particularly on livestock, egg and poultry production. Construction and manufacturing activity contracted in the first 3 quarters of 2014. Construction projects were mainly related to infrastructure, roadworks, drainage and bridges, and com-
pletion of the Financial Complex and St Jude Hospital. The reduction was also partially owed to the conclusion of recovery and reconstruction projects from Hurricane Thomas. Consumer prices rose +3.7% in 2014, with the Food category posting an increase of +6.3% YoY, Clothing & Footwear up +8.7% and the Recreation & Culture category up +25.6%. Household Furnishings & Supplies prices declined (7.0)% YoY, Communication prices fell (4.0)% and Hotel and Restaurant prices dropped (14.1)%. Activity will likely remain subdued in 2015, as the country continues to struggle with high unemployment, persistent weakness in the financial sector and low levels of private investment. Advances in tourism will be largely dependent on the continued recovery of key source markets. The agricultural sector continues to diversify to new crops, which will remain critical to its recovery.
3
Things to Watch
> Improvements to tourism and impacts of increased airlift from Canada > Results of niche investment strategies on construction activity and employment > Potential for agricultural recovery
Tourism Performance
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2014 was St Lucia’s best year on record for tourism arrivals. Stay-over arrivals increased +6% YoY to 338,158. Cruise arrivals were up +5.7% to 529,127. Cruise ship calls increased +14% to 316. Yacht arrivals increased +17% YoY through November.
saint lucia
Airlift was up +14% YoY in 2014, including +10% from the US, +14% from the UK and +18% from Canada. The St Lucia Tourism Board projects airlift to increase +14% in 2015. The US market increased the number of stay-over tourists +11% YoY in 2014, while the UK and Canada increased by +4% and +15%, respectively. Caribbean arrivals decreased (8)%, while the German and French markets decreased modestly. SAINT LUCIA STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
26.1
27.9
29.6
26.0
30.3
23.0
34.2
29.6
17.4
20.6
14.7
26.5
305.9
2011
27.0
26.1
29.5
29.1
24.8
22.4
32.8
28.4
16.8
22.4
22.5
30.3
312.4
2012
25.6
28.9
30.9
27.4
24.3
21.2
29.4
27.9
16.7
22.2
23.7
28.6
306.8
2013
25.9
27.9
33.8
27.8
26.7
24.1
28.4
27.5
18.4
22.4
25.2
30.6
318.6
34.5
30.8
27.7
25.3
32.1
28.6
18.2
22.8
26.9
33.4
338.2
2014
27.6
30.1
2015
31.5
32.1
2013YTD
25.9
53.8
87.6
115.4
142.0
166.1
194.5
222.1
240.5
262.9
288.0
318.6
318.6
92.3
123.1
150.7
176.0
208.1
236.8
255.0
277.8
304.7
338.2
338.2
2014YTD
27.6
57.8
2015YTD
31.5
63.6
YTDΔ YoY '15
14.1%
10.1%
63.6
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
SL gained a substantial degree of visibility in being featured on the television show The Bachelor (reach of 17 million persons, advertising value of US $41MM), and in the Sports Illustrated Swimsuit Issue (reach of 3.2 million, US $2.6MM ad value). It is expected that 2015 will see a continued benefit from such exposure. The St Lucia Tourism Board will focus on improving St Lucia’s overall tourism product to ensure repeat arrivals and on increasing the exposure and tapping the potential of small- and medium-sized properties. The increase in yacht arrivals in 2014 is being attributed in part to a partnership between the Saint Lucia Tourist Board (SLTB) and Invest Saint Lucia (ISL). The two bodies hosted the Russian Regatta in April, an EC $40,000 event that saw a gathering of Russian millionaires, contribute an estimated €65,000 to the local economy and ample publicity generated for SL through ESPN Russia broadcasts. The SLTB has also invested in training opportunities for tourism stakeholders, including Spanish language classes, with the goal of attracting Spanish-speaking yachters. Tourism numbers continue to climb, with +14% YoY growth in arrivals in January to 31,541. That figure bests the record number of arrivals in 2005 of 28,220. For February, arrivals increased +10.1% YoY to 32,083. Cruise arrivals in the first 2 months of 2015 were up +7.2% YoY, reaching 204,796. Smith Travel Research reports that occupancy has grown in Q1 2015 by +4 points YoY to 86.7%. Average Daily Rate firmed by 2.7% to US $395.83 and Revenue per Available Room was US $343.21, up +7.7% YoY.
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The World Travel & Tourism Council (WTTC) estimates that the tourism sector contributes, directly and indirectly, 39.5% of GDP in St Lucia. This amount is expected to increase to over 50% by the end of the next decade. The WTTC calculates 44.1% of employment is directly or indirectly generated by the sector, contributing 34,000 jobs. This is expected to rise at a rate of +5.1% this year to reach 35,500 at the end of 2015.
saint lucia ST LUCIA TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
539.0
977.4
5.9%
5.5%
Total contribution to GDP % Share
39.5%
50.2%
n/a
n/a
Visitor exports US $MM
382.1
719.2
6.4%
5.9%
Domestic spending US $MM
46.9
61.7
1.1%
2.7%
Leisure spending US $MM
391.6
714.1
5.7%
5.6%
Business spending US $MM
37.5
66.9
7.1%
5.2%
Capital investment US $MM
66.4
101.6
2.5%
4.1%
Source: World Travel & Tourism Council Economic Impact Report 2015
Tourism Construction Jetty construction to boost tourism Taiwan has donated some EC $2MM for the construction of two jetties as a way to boost the fishing and tourism industries and increase economic activity in Praslin in Micoud North and Savannes in Vieux Fort North. Ground was broken on the projects on January 22. Construction that began in February is expected to last four months. Taiwanese ambassador James Chang was on hand for the ceremony.
Projects to follow in 2015 • Government is seeking investors to complete the stalled Le Paradis hotel project. The east-coast project was slated to include a hotel, golf course, marina, tennis center, residential lots, condos and villas. The development came to a halt with the collapse of CLICO, which currently owns the property. • A new hotel could be in the cards for Smugglers Cove in Cap Estate to be undertaken by Sunwing. The government has said that the project should generate 1,200 construction jobs, without providing further details around scope. • The 100-room Harbour Club hotel is under construction at Rodney Bay Marina. • The proposed Trouya Pointe project has received pushback from residents who fear the changes would transform their community from single-family residences to multi-family villas with a hotel, spa and restaurant. The proposed development would include the construction of a 66-room hotel that would put strains on community resources, according to some residents. The developer behind the changes, the Martinique-based JLDP, expects to triple the number of family units per lot.
Tourism Policy & Initiatives Year of investment for St Lucia SL will benefit from a number of investment projects in 2015, according to Invest St Lucia CEO McHale Andrew. Two of the projects are in the medical field, which Andrew anticipates will develop into medical tourism attractions. Three important tourism projects are also expected this year, including the Le Paradis development, which has been stalled but is likely to recommence in 2015.
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Andrew also noted that SL averaged US $113MM in foreign direct investment over the past three years, and that 2014 brought in some US $120MM.
saint lucia Argentinian delegation to St Lucia A joint delegation from Argentina visited St Lucia March 4-6 to discuss ongoing cooperative projects in tourism and civil aviation. The officials from the Argentinian Ministry of Agriculture and the Ministry of Foreign Affairs also met with various Lucian Ministries to discuss potential new projects in international trade, food production, fisheries, cooperatives and rural development, energy and gender relations, among others.
Diaspora help sought The Saint Lucia Tourist Board (SLTB) is reaching out to diaspora populations in North America and the UK with the “Se San Nou” (Ours) initiative. The program is meant to strengthen ties with the diaspora, with the goal of showcasing St Lucia’s tourism offerings to those markets. Diaspora members will be equipped with marketing materials, merchandise and a quarterly newsletter. The SLTB believes the diaspora is uniquely positioned to showcase SL, and “Se San Nou” launch parties were held in New York City, Toronto and Washington DC on March 5, 7 and 14, respectively.
Sector Developments Landings to grow US market
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The Landings resort is seeking to grow its US market via a major marketing initiative in Texas. The property reports that it will target markets in Dallas and Houston as a way to lure Texans to the island. As part of the effort, the Landings has partnered with Dallas Cowboys player Justin Durant for a charitable toy drive, which will give the Landings exposure in Dallas and benefit the Boys & Girls Club of Greater Dallas.
Sint Maarten (D)
Overview and Landscape SINT MAARTEN (D) ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
1.7
1.9
Impacted by Hurricane Gonzalo
Inflation %
2.1
1.8
Falling oil prices will impact
Source: See Note 1 (final page)
Sint Maarten’s economy is estimated to have grown +1.7% in 2014. The cruise sector provided a significant boost to activity, and new airlink with the US favored arrivals from that market. Arrivals from Europe also improved. Domestic demand and tourism spending favored the retail sector. Construction (public and private), financial services and utilities were offsetting. Inflation in St Maarten slowed as food and fuel prices moderated, dropping (0.3)% from October to December, mainly in response to lower energy prices. In the first 9 months of 2014, the harbor posted strong gains in activity, both from cruise and cargo ships. Manufacturing activities continued to contract, ship repair activities were lower and fewer yachts visited the island.
Hurricane Gonzalo caused significant damage in Sint Maarten, particularly to business, boats, and residences. Accompanying rainfall further complicated the damage from the intensity of the storm impact and public services were down in certain parts of the island for extended periods as workers were brought from around the region to support reconnection efforts. The Port came back online quickly, which was critical to ensuring the continuity of business operations and the delivery of supplies to individuals. The Central Bank of Curaçao and Sint Maarten is projecting +1.9% economic growth for 2015. In 2015, activity will be driven by tourism and transport, according to the Central Bank.
“Sint Maarten’s economy is estimated to have grown +1.7% in 2014”
3
Things to Watch
> New Gov’t transitions to power > Performance of cruise industry > Measures laid out to reduce unemployment
Tourism Performance
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A boost in stay-over and cruise tourism was noted in 2014, with growth coming on the back of an improved landscape in the US and Europe. New airlink with the US favored arrivals from that market. Stay-over tourist arrivals for the year were up +7% to 499,920.
sint maarten (d) Cruise arrivals grew +12.1% YoY to 2,001,996. This represents over 488 thousand more passengers than was received in 2010, the year Sint Maarten acquired country status. A study released two years ago by the Business Research & Economic Advisors revealed that cruise passengers on average spend US $185.40 in St Maarten and crewmembers US $135.50. It is, however, necessary to consider that not all cruise passengers disembark. New airlift will be key to driving improved results, while the cruise sector is expected to continue to provide a robust level of activity. Several new flights have already been announced by airport authorities to be added in 2015 and 2016. SINT MAARTEN (D) STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
46.5
45.1
46.4
40.7
34.5
30.4
41.2
33.4
18.2
28.3
35.4
42.9
443.1
2011
46.9
42.9
44.2
38.2
29.4
28.6
37.4
30.7
17.8
25.9
35.0
47.2
424.3
2012
47.9
48.5
50.2
41.8
33.9
32.5
38.6
33.8
20.1
25.2
36.4
47.8
456.7
2013
47.8
48.1
54.4
40.9
33.9
33.5
37.1
36.7
19.6
26.6
38.3
50.6
467.3
2014
52.0
50.2
55.8
48.1
39.5
33.6
39.2
38.7
20.4
29.2
40.6
52.7
499.9
2013YTD
47.8
95.9
150.2
191.1
225.0
258.5
295.5
332.2
351.8
378.4
416.7
467.3
467.3
2014YTD
52.0
102.2
158.0
206.1
245.6
279.2
318.3
357.0
377.3
406.6
447.2
499.9
499.9
8.8%
6.6%
5.2%
7.9%
9.2%
8.0%
7.7%
7.5%
7.3%
7.4%
7.3%
7.0%
2015
2015YTD YTDΔ YoY '14
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
An estimated 70% of the island’s stay-over tourism beds are related to the timeshare segment, making it important for resolution of the Caravanserai debacle as a means to boost confidence in the sector. This issue arose when the new owners of the property unilaterally relinquished ownership rights from timeshare owners. New legislation is in the works to further protect this segment. This segment typically bears an occupancy rate above 80% in Q1, and usually comes in at a minimum of 2-3 points above the hotel segment.
Market Access New airlift developments announced at Routes Americas 2015 • New service and routes from Toronto and Ottawa in response to increased demand • InselAir will increase St Maarten-Sto Domingo service, as well as introducing a St Maarten-Aruba route • Surinam Airways will add service from Amsterdam and explore service from Brazil • Azul, based in Sao Paolo, will consider air service to SXM • United Airlines is considering adding flights from Chicago and Washington in the winter season and Houston in the summer season • Airline Viva Colombia announced that SXM will be considered during its expansion into the Caribbean in 2016 • British Airways is considering SXM for a double stop with St Lucia or Antigua for next winter • Representatives of Gatwick in London are pushing for service to SXM with British Airways and Virgin • Thomson Airways may explore airlift from Manchester, England • JetBlue and Copa are considering reducing their flights to SXM due to low demand
Arke Airline returns to SXM
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Arke Airline, former Arkefly, returns to St Maarten next November after ceasing service six years ago. The airline will offer a direct flight Amsterdam – St Maarten with a Boeing 787 Dreamliner and attractive, competitive prices, nearly 20% cheaper than KLM and Air France. Arke will schedule two flights per week on Wednesdays and Sundays.
sint maarten (d) WinAir flew 993 flights to BVI in 2014 WinAir transported more than 7,000 passengers between St Maarten and Tortola in 2014, its first year flying to the British Virgin Island. The airline conducted 993 flights between the islands. WinAir CEO Michael Cleaver has opined that there is growth potential in the route, currently running twice daily routes, with an overnight route on Mondays, Wednesdays, Saturdays and Sundays.
Tourism Construction Renovations in store for airport The airport is planning a multi-million dollar renovation of the cargo building with the hopes of becoming a cargo hub for the Caribbean. Talisien Construction NV will be the contractor on the project that will include renovations and an extension. The contract for construction works is already in place with contracts for the steel structure and project management & supervision to be announced shortly. The total value of contracts is US $3.5MM. Ground will be broken in January 2015, with works slated to conclude by March 2016. Cargo at the airport increased to 3,010 tons in 2013, up +52% from where it stood 4 years prior. Holland-based steel manufacturer Van Sluisveld will provide the structure. The scope of renovations will include office spaces, upgrades and expansions to restrooms, as well as the construction of a new cafeteria. Plans to build a flagship Blue Water Bar & Grill in St Maarten continue to advance, with the company reporting that architectural and engineering designs and drawings are submitted.
Projects to follow in 2015 • The Company Dock Maarten NV is building a 100-meter yacht pier for ultra- and giga-yachts. An injunction brought fort by the St Maarten Harbor Holding Company NV was overturned by the Courts in December. The construction, which is currently underway, involves the construction of a breakwater, and will provide a calmer environment for ships. The facility, once completed, will provide access to ultra- and giga-yachts. • A residential complex will be constructed in Little Bay, which includes 4 four-story and 3 three-story buildings that represent 63 residential units, private/public parking and open access to the beach. • Building permits for the FBO facility at the Princess Juliana International Airport and for the new fire station have not yet been issued. The two projects were taken to tender and awarded to Taliesin Construction, yet government indicates that the permit requests are incomplete and has requested copies of the bidding process, terms of reference and bids submitted, copies of contracts, and an independent written assessment on estimated costs. The scope of works includes the construction of a 1,000 sq meter building and 5,000 sq meters of aviation parking. The facility will include three retail storefronts, security, immigration and customs. Construction will take place over a period of 14-16 months.
Tourism Policy & Initiatives Joint tourism with Panama being evaluated Seeking further cooperation with Panama, Minister Plenipotentiary Josianne Felming-Artsen met with the Ambassador of Panama at The Hague. The Minister asserts that economic cooperation with Panama will help Sint Maarten develop and expand ties with Latin America. The Minister points to Panama’s low unemployment and diversified economy as areas of opportunity to leverage relations, and indicates that joint tourism would also be beneficial to both economies.
Tourism policy under committee review
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The Permanent Committee of Tourism, Economic Affairs, Transport & Telecommunications met in a closed-door session on March 10. On the agenda was the PricewaterhouseCoopers recommendation on the moratorium policy on taxi, bus and tour licenses, and the beach policy for Sint Maarten, including public access to the island’s beaches.
sint maarten (d) Counterpart policy proposal gets heat from tourism stakeholders The potential introduction of counterpart policy has come under scrutiny of the Hotel & Tourism Association (SHTA), which qualifies the policy as a detractor for investment and a threat to competitiveness. A counterpart policy would require a local apprentice counterpart to be hired for each foreign employee that would be able to learn the job within a three-year period. The PM pointed to the intention to implement the policy in his New Year’s Address. The policy was rejected by the Social Economic Council (SER) when reviewed in 2013, which suggested that increased enforcement of current regulations were a better alternative. Furthermore, the SER pointed out that if no Sint Maartener had the qualifications for a job position, it would be necessary to evaluate potential weaknesses in the education system.
Port Authority strategizes with financial sector Port Authorities met with RBC Bank representatives on February 11 to discuss a way forward for reinventing the cruise sector. Port CEO Mark Mingo would like to see small entrepreneurs provide tour offerings focused on heritage and culture. However, the introduction of new projects entails business loans, which is the where the bank plays a role. Mingo is suggesting that RBC, which has been a financial supporter of the harbor, continue with that support by considering projects that will enhance the overall cruise product and in turn, improve the economy to which the port contributes 1/3 of GDP.
Sector Developments Medical travel continues to increase Travel for medical care continues to put pressures on public accounts. Social insurance SZV sent a total of 2,096 patients abroad for care in 2014. This compares to 1,982 in 2013, which represents growth of +5.7% YoY. Referrals to the Dominican Republic were up +64% YoY, positioning DR as the second top destination for referred medical patients (accounting for 29% of the total). Nearly 47% of total referrals were sent to Curaçao and 19% to Colombia.
Automated passport control could be in the cards
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Automated passport control at the Princess Juliana International Airport is being evaluated by the Ministry of Tourism and Transport, Ministry of Justice (Immigration) and airport officials. The system seeks to expedite the Immigration and Customs clearance process at the airport, and to improve data collection, safety and efficiency. The airport and Immigration Service are collaborating to evaluate E-Gates and Pre-clearance.
sint maarten (d) Winair passes on lower fuel costs Cost reductions are being passed on by Winair as international fuel prices have favorably impacted operating costs. The company announced a (30)% drop in the fuel surcharge after February 1, 2015.
SMART Trade Show to showcase St Maarten The 14th St Martin, St Maarten Annual Regional Trade show (SMART) takes place this year at the Sonesta Maho Beach Resort and Casino from May 13-15. The event will gather tour operators, travel agents, travel writers and event planners from across the Americas. SMART will also provide a platform for hoteliers and other tourism stakeholders to showcase their products and services to a wide audience.
Caravanserai debacle to drive legislative changes Timeshare owners from Caravanserai have formed an Association to pursue legal action against the new owners of the property. The property was acquired at auction by Alegria Real Estate in 2014, and shortly thereafter the new owners sent a communication to timeshare owners from the property indicating their rights had been null and void. Beneficial owner Ray Sidhom will also face legal action.
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The Minister of Tourism and Economic Affairs Claret Connor has said that draft legislation submitted under the prior government will be evaluated to amend the Civil Code and improve regulation of the timeshare industry. The amendment will favor consumer protection for timeshare owners.
Saint-Martin (F)
Overview and Landscape SAINT-MARTIN (F) ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
0.7
1.0
Impacted by Hurricane Gonzalo
Inflation %
1.9
1.8
Falling oil prices will impact
Over the last 17 years, 96% of visitors to the island were estimated to have visited the Dutch side, while only 4% visited the French side, including visitors by plane or boat. This underscores a key challenge for Saint-Martin, which has not received the same benefits of tourism as its neighbor.
Source: See Note 1 (final page)
While remaining at a weak level, economic activity has in fact strengthened in recent years. Economic activity has inched up from +0.54% growth in 2010 to +0.7% growth in 2013 and a similar result in 2014. An estimated 70% of demand in the market has been generated by the public sector over the past 10 years, highlighting an important structural challenge for the Saint-Martin market. The unemployment rate closed 2014 at 23.67%, but has been trending downwards. In late 2014, damages caused by Hurricane Gonzalo led to a state of natural disaster being declared in Saint-Martin. Severe damage was noted to boats, property and utilities, including public facilities. The hotel and retail sector suffered property damage, with rehabilitation works necessary.
Local construction workers have heavily criticized the award of large-scale contracts to foreign contractors. The construction industry reports low activity, with the Cité Scolaire project being the main source of business in 2014. The project will conclude in 2015, and a lack of investment from the private sector provides for a grim outlook. Projects now in the pipeline that will benefit construction activity include the new wastewater treatment facility, renovations to the Royal Beach Hotel and the pier expansion at the Port of Galisbay. The Bay of Marigot is expected to have a significant economic impact once works are underway, which may not be until 2016.
3
Things to Watch
> Evolution of unemployment > Impacts of new tax policy > Grand Case airport expansion and Marigot renewal project to favor construction
Tourism Performance
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The French side of the island continues to receive considerably less tourists than the Dutch side. The performance of the tourism sector in Saint-Martin is thus related to the performance on the Dutch side, which posted a record year in 2014. Improvements in the US and European economies helped drive arrivals to the island up in 2014, and extraordinary performance from the cruise sector saw over 2 million cruise passengers reaching the island.
saint-martin (f) Between 1996 and 2013, 96% of visitors to the island were visiting the Dutch side, while only 4% were visiting the French side, this includes visitors by plane or boat. This is according to official figures presented by IEDOM. Factors behind these low numbers include lack of infrastructure and development on the French side to accommodate the same numbers on the Dutch side. Cruise passengers arriving to the Dutch side surpassed the 2- million mark last year, while on the French side the figures remain in the thousands. It is more difficult for large ships to maneuver the arrival on the French side, and the infrastructure on the Dutch side is more apt for large cruise arrivals. The French side has thus focused on high-end, smaller vessels from 100 to 360 passengers. Air traffic also mostly arrives to the Princess Juliana International Airport on the Dutch side. Grand Case airport on the French side does not have a long enough runway to accommodate as large of aircraft as the Dutch side. Nonetheless, the airport has reported increases in passenger flows in recent years. Since 2006, the French side has lost some 1,600 hotel rooms from its inventory since 2006, and maintains occupancy rates of around 55%. Tourism accounts for roughly 28% of employment, largely in the hospitality, transport and restaurant sector. Roughly 1/4 of companies registered in Saint-Martin work in the hotel & restaurant sector.
Tourism Construction Royal Beach renovations progress Renovations on the Royal Beach Hotel continue to progress, with the first phase of upgrades slated to be completed this year. Developers of the new residential portion of the property indicate that 92 apartments will be made available for sale, all ocean-front properties. Residences will be configured as studios, one-bedroom, two-bedroom, or three-bedroom apartments or duplexes. The restoration of shops in Baie Nettle is also underway. The 110-room hotel is also slated to be renovated in two years’ time.
Marigot Waterfront development under evaluation Plans to revamp Marigot Waterfront are being subjected to further analysis. This includes preliminary studies on the channel size, the design of the dam, dimensions of docks, evaluation of alternative cruise scenario and an environmental assessment. The evaluation is being carried out by Ricochin Consultants, and the firms Landot & Associés Selarl, Stratorial Finances, Sarl Tropisme and Egis Ports. Planned changes will allow the area to support inter-island maritime traffic, 2 average cruise liners and 94 spots for smaller vessels. This will involve dredging to 6.5-8 meters. The full scope of work also includes backfilling some 21.5-hectares and the construction of a breakwater to support the required infrastructure for the port, hotels and public services activities. €132k is the estimated cost for these improvements, which will be financed by investors. Consultations remain open on the project.
Tourism Policy & Initiatives Tourism stakeholders call for new labor policy
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Calling for reduced labor costs, particularly in the hotel sector, Chamber of Commerce President Jean Arnell has called on the Overseas Ministry to create a new policy to provide relief for the sector. Arnell cites estimates that labor costs to sales amount to 48% in Saint-Martin, which he compares to 34% in France.
saint-martin (f) Arnell has further called for efforts to build out high-end hotels, as well as to build out attractions that win the French side a share of cruise arrival spend from the 2-million visitors per year arriving on the Dutch side. Arnell asserts that measures can be taken to facilitate investment, such as exempting transfer and succession taxes and providing for more flexible zoning regulations. The Local Urbanization Plan will be concluded at the end of Q1 2015, a welcome development that is blamed for stalling construction projects.
Changes and reforms in 2015 laid out for Overseas Territory • Minimum wage SMIC moves to an hourly gross of €9.61, an increase of +0.8% bringing the monthly wage to €1,457.52 for Saint-Martin and Saint Barths. • Family benefits (including back to school, small child allocation, etc) were increased +0.7%. • Social Welfare RSA was increased +0.9% to €513.88 per month for a single individual, for a single parent €770.82 and for a couple with two children €1,079.14. This remains at half the amount applied at the national level. • Room tax applied is €1.5 for 3-star facilities, €2.25 for 4-star facilities and €4 for above 4-star. • CICE tax credit enters into its second phase, seeking to lower labor costs by (4-6)% on salaries of up to 2.5 minimum wages. • Innovation tax credit will be increase from 20% to 40%, and the Research tax credit from 30% to 50% of expenses up to the established threshold.
Sector Developments €2.2MM for Tourism Office The Tourism Office has been granted a €3.24MM budget for 2015. The budget will be funded 99% by the Collectivité and is being increased +2.5% YoY. Roughly 1/3 of expenses will be destined towards personnel expenses and 50% towards promoting the destination. The evolving target of the destination is reflected in the budget allocation with 20% of marketing communications to be focused toward the Canadian market, 20% to the US, 17% to South America, 13% to Europe and 20% to cruise markets. Furthermore, the tourism office has earmarked €600k from the 2014 budget for expenses to be incurred in 2015 related to the image of the destination.
Heineken Regatta will not stop in Marigot The Heineken Regatta, an annual nautical event, will not be stopping in Marigot this year. The Office of Tourism decided not to participate after a bill that was double that of years previous was given, and not foreseen in the Office of Tourism’s budget.
Destination wins nominations in World Travel Awards
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Saint-Martin has been nominated in three categories in the 22nd edition of the World Travel Awards. First Caribbean Destination, Best Honeymoon Destination, and the Most Romantic Caribbean Destination are the 3 categories in which St-Martin is nominated. Three of its beaches were also recently recognized by major travel website, TripAdvisor.
Saint Vincent and the Grenadines
Overview and Landscape ST VINCENT AND THE GRENADINES ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
-1.3
1.7
Construction of airport to favor
Inflation %
0.2
1.5
Fuel price decline & agro output
Source: See Note 1 (final page)
SVG’s economic recovery from the global economic crisis was further stalled by the December 2013 trough system that caused widespread flooding that damaged infrastructure, housing and agriculture. Tourism activity declined in both 2013 and 2014. Construction materials imports dropped (13.4)% in response to slower activity in the sector as the execution of public capital spending was slow on the Argyle International Airport and the South Leeward highway. The residential and commercial construction sector, however, posted growth in credit, indicating that these segments will make investments. Consumer prices remained virtually flat YoY in December up +0.1%. Clothing & Footwear costs dropped (2.7)% YoY, Housing, Utilities, Gas & Fuel costs declined (1.6)%. Meanwhile, Communication costs increased +3.9% and Transport costs rose +2.2%.
Tourism results will be closely tied to the performance of regional and global economies, with the cruise sector expected to continue to deliver strong results. Agriculture will increase production in the non-banana sector with livestock continuing to play an important role. The manufacturing sector is expected to post strong results fueled by local and export demand. Intensified construction activity at the Argyle International Airport and flood recovery are expected to spur investment going forward as well as works on the South Leeward Highway. The International Airport Development Company indicates that construction of the airport has been accelerated in order to achieve the goal of opening by year-end 2015. This will provide a boost to other sectors into 2015 including wholesale & retail, mining & quarrying, and communications. The conclusion of work is also expected to motivate hotel and tourism operators to advance investment plans once they see that the infrastructure will be finalized.
3
Things to Watch
> Completion of the Argyle International Airport and resulting airlift > Execution of public infrastructure investment > Residential and commercial construction
Tourism Performance
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Stay-over tourist arrivals were down (1.4)% YoY to 70,713. The drop came in the context of a (1.9)% reduction in the number of US visitors, and in spite of growth from Canada +0.8% and Europe +1.9%. Other markets posted a (4.9)% drop in arrivals. Cruise passengers were up +6.2% YoY to 85,170. Yacht arrivals were estimated up +9% in the first 3 quarters of 2014.
saint vincent and the grenadines SAINT VINCENT AND THE GRENADINES STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
5.9
6.4
7.6
5.5
4.7
6.5
7.9
6.5
3.2
4.0
5.1
9.0
72.5
2011
6.2
6.4
6.4
7.5
5.0
7.0
7.4
6.2
3.5
4.4
5.1
8.9
73.9
2012
6.6
7.0
7.6
6.7
5.2
6.3
8.2
5.6
3.2
4.0
4.9
9.1
74.4
2013
6.2
6.3
7.4
5.3
5.4
6.1
7.8
6.1
3.1
4.0
4.9
9.3
71.7
6.4
4.3
6.1
7.5
5.4
3.4
3.9
5.1
9.0
2014
6.4
6.5
6.6
2015
7.0
6.2
7.5
2013YTD
6.2
12.5
19.8
25.1
30.5
36.6
44.4
50.5
53.6
57.5
62.4
71.7
71.7
25.9
30.3
36.4
43.8
49.2
52.7
56.6
61.7
70.7
70.7
2014YTD
6.4
12.9
19.5
2015YTD
7.0
13.1
20.7
YTDΔ YoY '15
9.8%
1.9%
5.9%
70.7 20.7
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
In 2015, arrivals have picked up, accumulating growth of 5.9% in the first quarter, the best Q1 result since 2012. A total of 20,658 stayover tourists visited SVG in the first three months of the year. Cruise arrivals also increased during the quarter, up +1.6% to 48,816. The opening of the Argyle International Airport is highly regarded as a game changer for St Vincent and the Grenadines. The airport will provide the infrastructure to improve access for larger planes and increase connectivity. The investment will also provide additional confidence to investors in the sector, as government plans to pump $74.7MM into the Argyle International Airport expansion this year. Government is also considering a $6MM expansion of the Cruise Ship berth.
Tourism Construction International airport construction faces delays Inclement weather and a lack of allocated resources combined to cause delays in the construction of the Argyle International Airport. The airport will complete in 2015, according to the PM, and government has provided a new EC $74.7MM injection to the project. Works have advanced with pavementing the runway, taxiways and apron. Pavement and concrete works on the Aerodrome will conclude in Q2 2015.
Tourism Policy & Initiatives Chilean Ambassador appointed at critical time for relations Andreas Wickham is the first non-resident Ambassador of SVG to Chile. Wickham presented his credentials to Chilean President Michelle Bachelet in Santiago, Chile on February 24. Wickham’s assignment comes as SVG and Chile are negotiating an Air Transportation Agreement that would open air travel and investment opportunities between the countries. Chile and SVG established diplomatic relations in 1990.
Sector Developments International airport presents opportunities to entrepreneurs
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As SVG nears the opening of Argyle International Airport, Prime Minister Ralph Gonsalves is calling on local business leaders to take full advantage of the benefits the airport will bring. Government is preparing to offer a host of concessions to hoteliers with the goal of increasing room revenue, and entrepreneurs are encouraged to develop available lands in order to enhance SVG’s overall tourism product.
saint vincent and the grenadines Licenses issued to hoteliers The SVG Hotel and Tourism Authority (SVGTA) granted business licenses to 35 hoteliers following a series of requisite inspections. The set of standards implemented and enforced by the SVGTA are meant to assure that properties are reaching certain benchmarks for hospitality, which is deemed particularly important as the opening of the Argyle International Airport promises to usher in an era of increased stay-over arrivals. The SVGTA and the Ministry of Tourism are encouraging all stakeholders to work hard to improve the overall tourism product across SVG.
Blue Lagoon reopens as port of entry The Blue Lagoon Hotel & Marina (formerly the Sunsail) has reopened after a major renovation process that began in November 2013. The renovations include upgrades to every room and the addition of several amenities, including: the Calm Waters Restaurant, Bar & Lounge, Café Soleil, Flow Beach Bar, the Gold Doubloon Grocery Market & Chandlery, Indigo Dive and Watersports, Horizon Yacht Charters and a conference room. A fitness center, swimming pool, landscaping work and additional guest suites remain under construction. Blue Lagoon is now a port of entry, with customs and immigration services available from 1-4 pm daily, adding convenience for guests using the marina facility.
Argyle to feature solar power A US $750k photovoltaic system will generate 220 kW of power to Argyle International Airport’s (AIA) terminal building. The CARICOM Development Fund is providing a concessional loan with a two-year moratorium on repayment to advance the goal of making AIA a green operation. The loan agreement was signed in March.
Government company to manage Argyle A government company will be set up to manage the Argyle International Airport, as announced by PM Gonsalves in Parliament on March 3. The framework of the company is currently being established. The PM also noted that government is targeting a number of airlines for service agreements ahead of the airport’s opening, including American Airlines, JetBlue, Delta, Spirit, WestJet, British Airways and Caribbean Airlines. Government has not yet indicated if any of the carriers intend to operate at Argyle.
Local investment sought for Argyle The International Airport Development Company (IADC) is appealing to Vincentians to continue to donate to the Contributory Fund for the Argyle International Airport. With work progressing, local contributions are seen as a way to help assure that planned works are completed on time. The airport is scheduled to open by the end of this year.
SVG invests in LIAT
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In keeping with a shareholder agreement, SVG has recently pumped $592k in to regional airline LIAT. Under the agreement, Antigua will contribute $1MM, Barbados $2MM and Dominica $200k. It was also agreed, at a February shareholders meeting, that LIAT’s central hub will be relocated from Antigua and Barbuda to Barbados, due to its potential for opening gateways to other countries.
Suriname Overview and Landscape SURINAME ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
4.0
4.3
Merian mine to provide upside
Inflation %
4.2
3.5
Falling oil prices will impact
Source: See Note 1 (final page)
Economic policy is widely expected to stand its course even after the May elections. Lower prices for the country’s main export products such as gold and crude oil, and a fragility in the aluminum industry combined to put pressures on export accounts, government revenues and international reserves in 2014. A (34)% reduction in revenues from the mining activities was recorded last year. The reduction in international reserves is expected to be temporary as FDI and export expansion projects come on stream. The Central Bank CBvS intervened in the foreign exchange market in January, to counter the impacts of lower revenues from the mining sector.
Suriname remains vulnerable, due to the small size of its economy and its dependence on the fluctuating price of raw materials. The expansion of gold mining is expected to partially offset the drop in oil prices and bauxite prices. Roughly 40% of GDP is directly related to the extractive industries with gold accounting for 2/3 of exports. While gold prices remain low, the country’s trade surplus is likely to weaken resulting in a current account deficit in the range of 5% of GDP. Suriname has proven its ability to attract long-term foreign investment projects in oil and gold mining, and measures to spur investment in other sectors would be beneficial to broadening the nation’s economic base.
3
Things to Watch
> Execution of works on the Merian Mine > Public spending leading up to general election > Export and investment dynamics/timing and respective impacts on international reserves
Tourism Performance Tourism arrivals in 2014 grew +1% YoY to 251,611. Arrivals from the Caribbean remained flat in 2014 at 15,787. US arrivals picked up, rising +7% YoY to 7,797. Arrivals from Canada grew +3.6% to 1,826.
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Bordering countries remain one of the main source markets, accounting for 37.6% of total arrivals in 2014. All three markets posted declines in 2014. Arrivals from Brazil fell (38)% YoY, from Guyana fell (7.1)% and from French Guiana fell (4.8)%. The Netherlands, which accounts for 36.6% of total arrivals was offsetting with growth of +6.2%. Arrivals from Venezuela were up +4 times YoY to 7,777. China also posted strong growth of +29.5% to 3,050.
suriname SURINAME STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
14.8
16.3
16.3
16.3
14.5
12.6
23.9
20.4
13.5
17.2
15.8
22.7
204.3
2011
15.7
15.6
18.2
19.8
15.0
16.6
23.9
22.4
15.0
18.0
16.8
23.5
220.5
2012
17.0
18.8
16.6
19.3
16.9
16.3
27.7
27.4
14.9
18.1
20.4
26.6
240.0
2013
18.8
19.1
20.1
19.8
15.8
16.7
28.6
31.6
14.0
18.8
19.0
26.9
249.1
2014
17.7
17.6
20.5
21.0
19.6
18.5
26.4
30.6
17.0
19.3
15.9
27.5
251.6
2013YTD
18.8
37.9
58.0
77.8
93.6
110.3
138.9
170.5
184.5
203.3
222.2
249.1
249.1
2014YTD
17.7
35.3
55.9
76.8
96.4
114.9
141.2
171.9
188.9
208.2
224.1
251.6
251.6
-5.9%
-6.7%
-3.7%
-1.3%
2.9%
4.1%
1.7%
0.8%
2.4%
2.4%
0.8%
1.0%
2015
2015YTD YTDΔ YoY '14
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
The World Travel & Tourism Council reports that tourism contributes only 2.7% to GDP, and forecasts this will further decrease to 2.1% over the next ten years. Only 2.5% of employment is directly or indirectly related to the tourism industry, with 5,000 jobs, according to the WTTC. This figure is forecast to decline further in 2015, falling (7.7)% to 4,500 jobs. SURINAME TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM
Growth
Av. annual
Indicator
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
154.7
195.8
-5.9%
3.0%
Total contribution to GDP % Share
2.7%
2.1%
n/a
n/a
Visitor exports US $MM
109.4
140.3
-6.0%
3.1%
Domestic spending US $MM
49.3
67.9
1.9%
3.1%
Leisure spending US $MM
115.9
158.0
-4.1%
3.6%
Business spending US $MM
42.9
50.2
-1.9%
1.8%
Capital investment US $MM
33.2
44.4
-2.9%
3.2%
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Open skies agreement in plans with the Netherlands Suriname is prepared to sign an open skies agreement with the Netherlands, says Minister of Transport Falisi Pinas, who traveled to the Netherlands for the Holiday Fair 2015. Pinas remained in the Netherlands for a week after the January 18 close of the fair, and declared his willingness to engage with the Dutch government about an open skies agreement. The Netherlands last year determined that the current agreement between the countries is satisfactory, as it contains room for another two carriers in each country to conduct Paramaribo-Amsterdam service.
Tourism Construction Nickerie airport construction faces funding delays
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Improvements to the Majoor Henry Fernandes Int’l Airport in Nickerie will not be completed in the short-term, according to Minister of Public Works Rabin Parmessar. Work, which stands at 75% complete, has been halted at the airport since November 2013 due to budgetary constraints. Improvements include an extension of the runway to 1250 feet and the construction of a new control tower. When complete, the airport is expected to boost tourism in western Suriname as well as the marketing of agricultural products.
suriname Tourism Policy & Initiatives Open skies agreement planned with Venezuela Foreign Affairs Winston Lackin and his Venezuelan counterpart Delcy Rodriguez signed a series of accords to move forward initiatives including a fisheries agreement and an open skies agreement. The latter is expected to expand tourism between the nations.
Agro-ecotourism to boost offering The Agro-ecotourism project will help boost Suriname’s tourism industry by involving the country’s indigenous populations to integrate cultural and biodiversity components to the product. Tourism training opportunities are being made available to four native villages on how to build up a local tourism industry that involves agriculture (the growing of pineapples, for example) as well as cultural heritage and the unspoiled natural surroundings of the populations.
Sector Developments Tourism earnings expected to rise
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Tourism earnings stand to grow substantially through the Central Suriname Nature Reserve (CSNR), according to Conservation International Suriname (CIS). CIS asserts that a number of studies have indicated that a public-private partnership in sustainable tourism can unlock the potential of the CSNR and more than double its receipts. It is estimated that an investment of US $800k will be required to make the CSNR export-ready, bringing the area up to acceptable standards for international tour operators. CIS invited tourism stakeholders to participate in a January 6 meeting in order to exchange ideas for the CSNR.
Trinidad and Tobago
Overview and Landscape TRINIDAD AND TOBAGO ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
0.7
1.2
Non-energy sector drives growth
Inflation % (ave) 5.4
5.7
Agro output drop drove Q4 spike
Delays in government investments have been confirmed including the TT $50MM investment in the Port of Galeota Phase 2, the TT $20MM investment reductions in Industrial Parks projects, and the TT $180MM savings in the planned Curepe Interchange project, among others.
Source: See Note 1 (final page)
The energy sector will grow in 2015, in spite of the drop in oil price, providing momentum to the economy. The non-energy sector’s growth is expected to slow with respect to 2014. Energy and government sectors will continue to be major levers of economic activity in the country. The energy sector contributed an estimated 43% to GDP and 85% of merchandise exports in 2014. Persistently low oil prices led the government to re-estimate its Budget based on a US $45 per barrel oil price and US $2.25 per MMBTU for gas. These figures translated into a TT $7.4B revenue shortfall, which is being tackled through both expenditure reductions and extraordinary revenues from the government’s continued public offering program.
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Headline inflation was 8.5% in December 2014, a sharp uptick from the figure of 5.5% that started off that year. The level was not sustained with inflation slowing to 7.6% in January 2015 and 6.1% in February. Food prices have been a major contributor, which the Central Bank attributes largely to price increases for locally grown fruits and vegetables. Government is expected to continue to apply an expansionary fiscal policy, further exerting pressures on core inflation by increasing liquidity levels.
3
Things to Watch
caribbean tourism • Q2-2015 | www.globalnewsmatters.com
> Falling energy prices and budget cuts > US Fed interest rate increases > Timing of the 2015 election and implications
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Economic growth will be mild in 2015, though expected to accelerate with respect to 2014. Amidst the recent fall in oil prices, economic diversification has again been plunged into the limelight. The non-energy sector will continue to be the main engine of growth, and maintenance work impacting the energy sector has concluded in favor of the energy outlook.
The Repo rate was increased by +0.25 percentage points to 3.5% at the January Monetary Policy meeting. The decision came in the context of the US Federal Reserve outlook for its mid-term monetary policy, which is expected to drive up rates on US dollar assets in H2 2015.
trinidad and tobago Tourism Performance The tourism sector is reporting gains from lower oil prices, according to the Tourism Minister, who points to an inverse relationship between oil prices and number of arrivals. T&T received a total of 42,820 cruise passengers in 2014. Cruise arrivals to T&T rose by +30.1% YoY in 2014, as the Southern Caribbean regained capacity foregone during the high oil price environment of prior years. Nonetheless, the Caribbean Tourism Organization asserts that ships are being repositioned outside of the region, which could dampen prospects for 2015. Stay-over arrivals reached 412,537 in 2014. The breakdown by source market reveals that 39.8% of total arrivals were from the US, 14.5% from Canada and 18.4% from Europe. Smith Travel Research reports that the occupancy rate in Trinidad & Tobago has fallen slightly, from 67.4% in the first quarter of 2014 to 66.6% in Q1 2015. The Average Daily Rate has dropped (2.8)% YoY to US $171.18. Revenue per Available Room slid (4.1)% YoY to US $113.96 at the end of Q1 2015. TRINIDAD & TOBAGO STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2014
29.6
44.0
33.8
33.1
30.1
33.3
40.2
35.8
27.7
30.7
31.0
43.3
412.5
2015
35.4
48.0
2014YTD
29.6
73.7
2015YTD
35.4
83.4
YTDΔ YoY
19.6%
13.3%
83.4 107.5
140.5
170.6
204.0
244.1
279.9
307.6
338.3
369.3
412.5
412.5
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Tourism arrivals posted strong growth in the first two months of 2015, up an accumulated +13.3% YoY. The total number of arrivals for the period reached 83,448. In the first two months of 2015, the US remained the top source market, accounting for 38.4% of all tourists. Europe followed with 19.4% and Canada with 13.3%. The World Travel & Tourism Council estimates that 8.7% of GDP is contributed directly or indirectly by the tourism sector. This figure will firm to 9% by 2025. The sector employs directly or indirectly 72,500 people, accounting for 11.6% of total employment in 2014, according to the WTTC. This is expected to show further gains in 2015, rising to 73,500. TRINIDAD & TOBAGO TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
2,032.5
2,607.3
2.5%
2.3%
Total contribution to GDP % Share
8.7%
9.0%
n/a
n/a
Visitor exports US $MM
822.5
1,073.4
3.1%
2.4%
Domestic spending US $MM
835.9
1,036.0
1.7%
2.0%
1,335.4
1,716.6
2.2%
2.3%
Business spending US $MM
323.0
392.7
3.3%
1.6%
Capital investment US $MM
340.7
450.1
4.1%
2.4%
Leisure spending US $MM
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Source: World Travel & Tourism Council Economic Impact Report 2015
trinidad and tobago Market Access Tobago links with Sao Paulo Tobago will receive weekly flights to Sao Paulo (stopping in Barbados) with Brazilian Airline GOL. The largest airline in Brazil agreed to program the route after two years of negotiations with the Tobago House of Assembly’s Division of Tourism and Transportation. The seven hour flight, with a US $599 introductory fare of return, launched its first commercial service in late January.
CAL increases frequency to NY Caribbean Airlines announced increased flight frequencies to New York to serve increased demand. An additional daily non-stop to NY will bring the daily total number of flights to the destination to three. CAL began servicing London four times weekly in early February.
Virgin Atlantic reinitiated flights to Tobago The Virgin Atlantic flight to Tobago reinitiated on March 29, with the UK airlink expected to provide a major boost to the island’s tourism sector. The flight, however, was reported by Tobago media to have arrived with only 7 passengers aboard. The route will be shared with St Lucia, and the London-Gatwick connection affords access to other markets in Europe and around the globe. Service was initially re-launched with a weekly frequency, but will be increased to twice weekly during the winter season.
Carnival brings 530 CAL flights to Tobago Tobago was serviced with 530 flights (inbound and outbound) during Carnival by Caribbean Airlines. The state-run airline offered a total of 36,384 seats to Tobago during the period of February 12-23. A total of 34 additional flights were added during the week (inbound and outbound) with 3,860 additional seats.
Eastern Caribbean Ferry loses steam The Eastern Caribbean Ferry project has lost priority following a decision from the Tobago House of Assembly. The THA will focus efforts on improving the ferry service to Trinidad before creating new routes. Among other challenges, the EC Ferry project faces the aging fleet of ferries, which currently has the ferries operating at slower speeds and has forced changes to schedules.
Carnival Cruise to call on Tobago in 2016 Carnival Cruise lines will begin calling on Tobago in 2016, according to the Tobago House of Assembly (THA). The THA anticipates that the cruise line alone will contribute 10,642 passengers for the 2015/2016 season, bringing total arrivals to an estimated 81,050. The country reported strong growth in cruise arrivals in 2014, with the total number of passengers moving from 33 thousand to nearly 43 thousand YoY.
Tourism Construction Piarco AeroPark tender re-issued The tender for the shopping complex and entertainment center at the Piarco AeroPark has been re-issued. The scope of the project includes duty-free areas, a conference center, a hotel, retail, recreational areas, service companies, storage facilities, trade and aviation services. RFPs are available at the cashier’s booth in the South Terminal of the Piarco Airport. An information session was held on April 29. Bids are due on September 3.
Brighton Port investment to develop southwest
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The TT $256MM Brighton Port investment will be undertaken as planned, as affirmed by the Ministry of Energy and Energy Affairs. The investment entails upgrades to Berth 2 over the next two years, and the project is being executed by National Energy (NE) as activity is expected to increase in the coming years. The program represents part of government’s strategy to develop the southwestern peninsula of the country.
trinidad and tobago Maracas renovations to be carried out in 2015 Maracas Beach will undergo renovations following Cabinet’s approval of TT $89MM in works. Works will be executed over a period of nine months. Scope of the project will include the construction of a road and water treatment plant, repaving the parking lot and building new kiosks.
US $32MM in tourism investment slated for 2015 Vying to add luxury hotel rooms to the islands’ offering, the Tobago House of Assembly (THA) is investing US $32MM on two hotels to foster growth in the tourism sector on the island. Plans call for an extra 56 rooms to be online in the 4-star to 5-star category, following completion of works. Both properties, worth US $24MM and US $8MM, known as the Sanctuary Resort and Manta Lodge, respectively, will benefit from additional spending to be refurnished and reopened for clients in 2015.
Tourism Policy & Initiatives Tourism incentives driving results Tourism incentives have led to renovations at 439 small- to medium-sized hotels and guesthouses. The Tourism Development Company (TDC) manages the incentive under the Hotel and Guesthouse Room Stock Upgrade Incentive Project. Since 2010, the initiative has focused on upgrading small and medium hotels’ capacity and will soon include expansion of larger hotels to foster development, and meet or exceed international expectations for tourism accommodations.
Sector Developments CAL posts US $60MM loss in 2014 State-owned Caribbean Airlines reported US $60MM in losses for 2014, according to reports from Finance Minister Larry Howai. The Minister asserts that the losses took into account the US $38MM equity injection provided by a grant from the Government of Trinidad & Tobago in 2014. The Minister cites the company’s strategic planning targets, which aim to break even in 2017.
Port Authority has new Chairman
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The Port Authority appointed Suresh Gangapersad as the new Chairman with the goal of ensuring maximum output and improving operating procedures and costs. In addition to imports, exports, container cargo trans-shipments and transportation to storage facilities, the Chairman cites that the real estate arm POSINCO and the Inter-Island Transport Service TTIT also fall under the responsibility of the Authority. Gangapersad will move to increase efforts focused on optimizing operations, strengthening inter-fleet management and improving cost structures.
Turks and Caicos Islands
Overview and Landscape
Indicator
2014e
2015f
Comment
GDP Growth %
3.5
4.6
Tourism arrivals/FDI fuel growth
Inflation %
2.5
2.3
Falling oil prices will impact
Source: See Note 1 (final page)
Construction and tourism set the pace for economic growth in 2014 with outstanding results that trickled down into related sectors. Stay-over arrivals surged +50% YoY and cruise passenger arrivals grew +25%. Construction material imports nearly doubled for the year, up +92% YoY in terms of value. Construction permits were up +13% in number to 247 for the year and +21% in value to US $110.7MM. Employment expanded YoY in 2014, with the number of registered jobs up +7.5% YoY to 16,450.
boutique resort. Sunset Point Development Company also looks to build a 12-story, condominium-style 250-room hotel in Grace Bay, Providenciales. The 124-luxury-room, $224MM Desarrollos Hotel Group development was recently inked with government with works to begin in November. The $220MM Cooper Jack Development will be in works in Q3 to build the mixed-use 281-room resort.
3
Things to Watch
> Expansion of airports > Ability to spawn tourism from South America > Execution of announced private tourism development projects
Tourism Performance
Government revenues outperformed budget by 41% and expenses were (4.8)% below budget, generating an operating surplus of US $140MM. Total outstanding national debt ended 2014 at US $192.6MM.
TCI was one of the fastest growing tourism destinations within the Caribbean in 2014. Last year, TCI recorded its highest number of both cruise passengers and stay-over tourists. Progress was made on several fronts leading to this outcome, such as creating airline services through JFK and Logan Airport, cooperating with private sector partners on market strategies, and fostering new relationships with Latin American countries.
The pipeline of construction activity is gaining momentum and will fare well for growth in 2015. The construction of a US $165MM, 250-room resort, is in the plans for Governors Beach in Grand Turk. The Aniyana Resort will also begin construction in 2015, comprised of beachfront property as well as a
Total arrivals (stay-over + cruise passengers) reached 1,407,313, up +31.6% from the 1,069,497 registered in 2013. Stay-over tourism arrivals grew a resounding +50% YoY to 435,385 in 2014. Double-digit growth was registered in the first 3 quarters, with Q4 figures growing +136.8% YoY.
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TURKS AND CAICOS ISLANDS ECONOMIC INDICATORS AND FORECAST
turks and caicos Arrivals from the US were up +52% YoY to 351,533. Canada and Europe both posted +49% growth in arrivals to 47,431 and 9,961, respectively. Arrivals from Brazil were up +70% and from the Caribbean rose +23%. The US accounts for 80.7% of arrivals to TCI, followed by Canada at 10.9% and the Caribbean at 4.5%. Cruise passenger arrivals rose +25% to 971,838. This was a record for Grand Turk Cruise Center, as a total of 343 ships called at the port, up +32.9% YoY. A large part of this growth was recorded in the first quarter, with arrivals up +46% YoY and double-digit growth followed in Q2 and Q3. The number of calls rose +57% in Q1 and +52% in Q2.
TURKS AND CAICOS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2013
24.4
24.8
31.9
28.8
23.4
25.8
28.6
25.2
11.4
15.7
21.9
28.7
290.6
2014
31.2
33.0
41.4
34.2
28.8
30.9
34.2
30.2
14.7
36.4
53.4
67.2
435.4
2013YTD
24.4
49.1
81.0
109.8
133.2
159.0
187.6
212.8
224.3
240.0
261.8
290.6
290.6
2014YTD
31.2
64.1
105.5
139.7
168.5
199.3
233.6
263.7
278.4
314.8
368.2
435.4
435.4
27.9%
30.5%
30.2%
27.3%
26.5%
25.3%
24.5%
23.9%
24.1%
31.2%
40.6%
49.8%
2015
2015YTD YTDΔ YoY '14
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
Market Access Private jet market a major source of tourism In the past year, Providenciales’ private jet market has earned US $94MM. Elite Traveler Magazine has revealed that the Caribbean has become one of the more preferred areas of travel for affluent travelers. On average, private jet travelers bring in US $69k in revenue to their destination. TCI, along with Nassau and St Maarten, led the way in destinations for private jets, accounting for at least half of the 12,566 jet charter flights to the Caribbean in 2014.
British Airways to add weekly flight to Providenciales British Airways has announced that it will provide an additional weekly flight to Providenciales Airport, through London Gatwick. Currently, British Airways operates one flight a week to TCI, however, this will be moved to two flights beginning October 29, 2015.
Blue Heron opens $16MM private air center Blue Heron Aviation opened its new $16MM private air center at the Providenciales International Airport on January 12. The 6,800 sq ft facility boasts a conference room, on-site customs and immigration, security, restroom facilities and a rest area for crewmembers.
Tourism Construction Providenciales Airport concludes renovations
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Providenciales’ International Airport has been renovated and refurbished. The airport re-opened in late December after a 21-month, US $60MM project to remodel the facility. The project included an expansion of the terminal departure area and check-in area, additional parking, a new kiosk system, a diplomatic room and a runway extension. With the successful completion of Providenciales’ airport, the Premier is now set on the expansion of South Caicos’ airport terminal, as well as putting into place a sufficient transportation system for TCI. The Premier believes this will only solidify and expand TCI’s tourism sector.
turks and caicos South Caicos Airport construction underway The project for upgrading South Caicos Airport has begun. The TCI Airports Authority has announced that initial steps are being taken to begin the upgrades. The project will include a rehabilitation of the runway, apron, fire hall, terminal building and the tower.
Other projects to follow in 2015 Several announced projects have not seen major advances in 2015, and should be kept on the radar. Last year, a Development Agreement was singed with Circle Holdings for a $100MM, 17-acre site hotel and marina, expected to bring 300-400 new jobs. Construction is slated to begin in 2015. The project will include 140 suites, 7 penthouse suites, a boardwalk, boutiques, restaurants, pools, a casino, event facility, a spa and gardens. Government signed an MoU mid-year in 2014 for the re-development of the abandoned and unfinished Toscana Resort in Grace Bay, Providenciales. The $40MM development will have approximately 54 rooms. Other projects include the construction of a US $165MM, 250-room resort, is in plans for Governors Beach in Grand Turk, consisting of 250 hotel rooms, 50 1,000-sq ft luxury rooms, 10 beachfront properties, condos, a spa, restaurants and a conference center. The Aniyana Resort was planned to begin construction in H1 15, comprised of beachfront property as well as a boutique resort. Sunset Point Development Company also looks to build a 12-story condominium-style, 250-room hotel in Grace Bay, Providenciales.
Tourism Policy & Initiatives TCI adamant on South America Targeting Brazil as a source market is an agreed objective of a majority of TCI’s government. However, views are conflicted when it comes to how to develop this new segment. Currently, TCI has an agent in Brazil that is promoting its tourism. However, the lead representative of the Opposition strongly insists that only US $100k, if used properly, could spark up new relations by promoting TCI as a new destination for Brazil during that country’s winter months. If accomplished, TCI would have a full year of tourism, even during its off-season, which occurs during spring and summer in North America.
Beaches campaign reaches 2,500 travel agents Beaches has conducted a successful outreach campaign to over 2,500 of North America’s top travel agents. TCI welcomed Beaches’ US $5MM Megafam Campaign in early January. Nearly 85% of the agents experienced TCI for the first time and were exposed to tours, excursions and cuisine over the three-day visit. The agents were visiting from 19 different North American hubs.
Cabinet approves TCI London office Cabinet approved the details for the establishment of a TCI office in London. The office will allow for improved relations between the Governments, as well as the EU. The office will be used to promote tourism as well as investment and financial services.
Sector Developments FBO dispute before Integrity Commission
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TCI’s Integrity Commission is now involved with the dispute between Fixed Base Operations (FBO) and Providenciales Air Center (PAC). PAC filed a judicial review following the TCI Airport Authority (TCIAA) and government’s decision to lease land to the FBO. The center argues that once the land was handed it over, it was used for commercial opportunities as opposed to public use, violating its compulsory acquisition. The judicial review will be extended pending a decision.
turks and caicos Tourism Board Director received accolades TCI’s Tourism Board Director has been nominated as a recipient of a World Travel Award, one of the most valued awards in terms of the tourism industry. Director Ralph Higgs has been successful in promoting TCI’s domestic tourism sector, however, also has future plans to expand the sector by marketing Marquee Island’s nature and attractions in the upcoming year. Higgs was named as the World Travel Awards’ Tourism Director of the Year. Higgs, his staff and Board of Directors have improved TCI’s tourism sector with assistance from the Hotel & Tourism Association and the TCI Airports Authority.
Royale Casino prepares for sneak preview
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Caicos’ Royale Casino facility will be open to the public Q1 for a sneak preview. An estimated US $2MM has gone into the 15,000 square ft project. The casino will employ around 75 locals who will be trained by professionals. The casino will include a restaurant run by Smoky’s and a third floor dedicated to various “MIPS” (Most Important Person). Tables have potential winnings of up to US $50k, while designated machine areas offer potential to win up to US $75k.
US Virgin Islands
Overview and Landscape US VIRGIN ISLANDS ECONOMIC INDICATORS AND FORECAST Indicator
2014e
2015f
Comment
GDP Growth %
1.3
1.5
Fiscal woes/unfunded liabilities
Inflation %
2.5
2.0
Falling oil prices will impact
Source: See Note 1 (final page)
Economic activity was weak in 2014, though tourism and exports performed strongly. The pipeline of investment fares well for the 2015 forecast. Both the cruise passenger and stayover visitor arrival figures increased roughly +4% YoY in 2014. USVI has a tourism-dependent economy that is broadly exposed to natural disasters. The closure of the HOVENSA refinery led exports to bottom-out, after ceasing operations in 2012. The refinery was also the territory’s largest source of employment, costing St Croix thousands of jobs and was the main contributor to tax revenues for the territory.
Positive signs have been perceived in 2015. Auto sales climbed sharply YoY in January to 252 units, which represented growth of +40.8% YoY. The December opening of the 297-room Dreams Sugar Bay resort in St Thomas is expected to provide a boost to the destination. Works are also slated to commence on the Summers End Marina project in Coral Bay and the dredging of Crown Bay. Government-funded housing projects are also expected to advance at an estimated cost of US $30MM to complete 102 units.
“Economic activity was weak in 2014, though tourism and exports performed strongly.”
3
Things to Watch
> Housing and tourism construction activity > US legislation on rum rebate > Unfunded pension system
Tourism Performance Cruise arrivals breached the 2-million mark, growing +4.3% YoY to 2,083,890 in 2014. Over 95% of arrivals were to St Thomas/ St John, which welcomed 1,979,926 cruise passengers in the year and posted growth of +4.9% YoY. St Croix received 127,238 cruise passengers in 2014, growing +9.3% YoY.
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Stay-over arrivals grew +3.9% to 730,367. St Thomas/St John registered +5.6% growth in stay-over arrivals to 601,944, accounting for 82.4% of the total. St Croix posted a contraction in the number of stay-over tourists, down (3.4)% to 128,423, and accounting for the remaining 17.6%.
us virgin islands The result came in spite of a reduction in major carrier direct flight seats per week. The Bureau of Economic Research indicates a contraction of (14.2)% YoY in this indicator. The number of major carrier direct flight seats per week dropped (15)% YoY for St Thomas/St John to 12,562 and fell (10)% YoY to 2,499 for St Croix. US VIRGIN ISLANDS STAY-OVER ARRIVALS (IN 000'S) YEAR
J
F
M
A
M
J
J
A
S
O
N
D
TOT/YTD
2010
66.2
66.4
81.0
66.5
57.3
59.7
65.5
50.9
27.9
38.4
48.1
63.3
691.2
2011
67.2
63.8
74.7
63.4
49.2
56.7
65.1
47.5
27.8
39.9
52.7
71.0
679.0
2012
70.5
72.3
83.4
74.1
61.9
66.2
69.1
49.5
31.5
35.0
54.3
69.8
737.7
61.7
58.4
58.8
50.3
27.9
34.6
51.2
72.2
703.0
67.1
62.3
64.6
68.8
52.5
28.5
39.8
53.7
74.9
730.4
2013
70.5
69.6
83.1
2014
70.0
66.4
81.8
2015
71.8
69.9
141.7
2013YTD
70.5
140.1
223.2
288.0
349.7
408.1
466.9
517.1
545.0
579.6
630.8
703.0
4.922.0
2014YTD
70.0
136.4
218.2
285.3
347.6
412.3
481.0
533.5
561.9
601.8
655.5
730.4
730.4
2015YTD
71.8
141.7
Source: All figures derived from Country Stats Dept, Tourism Authority/Ministry, CTO, Ports/Airports Authority, Annual Reports & Budget Statement, and other sources considered reliable by GNM, including GNM's own calculations.
In the first two months of 2015, USVI has accumulated growth in stay-over arrivals of +3.9% to 141,713. Cruise passenger arrivals have, nonetheless, fallen. In Q1 2015, cruise passengers arrivals were down (6.4)% YoY to 645,186. The World Travel & Tourism Council estimates that tourism’s direct and indirect contribution to GDP is 29.9%. An estimated 27% of total employment is generated by the sector, expected to increase in 2015 to a total of 12,500 jobs. USVI TRAVEL & TOURISM ECONOMIC CONTRIBUTION FORECASTS Real Value US $MM Indicator
Growth
Av. annual
2014
2025
2015
'15-'25
Total contribution to GDP US $MM
1,353.9
1,798.8
2.8%
2.6%
Total contribution to GDP % Share
29.9%
30.8%
n/a
n/a
Visitor exports US $MM
1,318.6
1,873.6
4.6%
3.1%
153.2
195.3
0.8%
2.4%
1,388.3
1,961.1
4.4%
3.1%
Business spending US $MM
83.4
107.9
1.5%
2.5%
Capital investment US $MM
379.6
470.2
4.1%
1.8%
Domestic spending US $MM Leisure spending US $MM
Source: World Travel & Tourism Council Economic Impact Report 2015
Market Access Air access with the US steady Major airlines serving the airport are American from Miami and JFK, Delta from Atlanta and JFK, JetBlue from San Juan PR and Boston, US Air from Charlotte and Philadelphia, United Air from Washington, Chicago and Newark, Spirit from Ft Lauderdale, Sun Country from Minneapolis (charter) and Primera Air from Denmark (scheduled charter).
St Thomas to receive Quantum of the Seas
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Royal Caribbean International’s largest cruise ship made a visit to St Thomas. The Quantum of the Seas measures 1,140 ft, making it the largest in the West Indian Co LTD (WICO). The president of WICO has expressed that this type of cruise liner is becoming the norm within the industry. Various members of USVI’s government were given specialized tours of the vessel, which includes: a rock climbing wall, a self-pouring bar, a basketball court and 2,090 rooms.
us virgin islands Tourism Construction Crown Bay receives dredging permits Dredging at Crown Bay was authorized by the Army Corps of Engineers, allowing works to advance on the project. The East Gregerie Channel will be dredged, averting the loss of 17 cruise ship calls to St Thomas. The US $2.5MM project will be concluded in late Q2.
Summer’s End loses grant funding The Summers End Marina project entails cleaning the sea bottom, pumping out wastewater, removing neglected vessels, as well as creating a fish and farmers market. The project has received local backlash, creating the need for a legislative hearing, and recently lost US $300k in grant funding to cover soft costs of the initiative from the US Fish and Wildlife Service. The project has been granted an Army Corps of Engineers permit.
Other projects to follow in 2015 The development of a boutique resort by the Water Island Development Company (WIDC) will move forward with a lease in place with Government on the property. The US $140MM residential construction project requires approval from the Department of the Interior. The proposed development of a Golf Resort and Casino on St Croix to be developed by Golden Resorts will have a budget of US $275MM. The project will include 400 luxury rooms as well as a 1,400 seating capacity convention center. The resort will include a casino, restaurants, a spa, as well as an 18-hole golf course.
Tourism Policy & Initiatives Tourism Commission to continue under new administration Beverly Nicholson-Doty has been re-nominated as Tourism Commissioner. Doty aims to make the transition from “Tourists” to “Travelers,” emphasizing the notion that tourists seek merely comfort and lounging, while travelers seek extraordinary experiences. She hopes to create stronger ties between tourism and recreation, which could allow for larger premium payments with the creation of a unique experience on USVI.
USVI cuts subsidy of Customs and Border Patrol USVI has decided to no longer subsidize certain services for US Customs and Border Patrol. USVI’s Governor claimed that the subsidization of these services has cost USVI millions of dollars annually. It was agreed that the federal government will now fund pre-clearance inspections, as well as other activities, allowing for USVI to retain its own custom duties in regards to its General Fund needs.
Art-based tourism act reviewed by legislature The Revised Sustainable Tourism through Art-based Revenue Streams (STARS) Act is making its way through the Senate. The Act aims to attract film, video and music production to the islands. The current amendment to the act makes provides a 9% rebate on gross expenditures up to US $500k, a 10% refund if production promotes USVI, a 10% rebate if the production is held on St Croix, as well as possible hotel tax waivers. It was recently vetoed by Governor John deJongh Jr because he wanted to see incentives for local producers. The Bill will be presented to the full Senate within the next couple weeks.
Cuba could be up-and-coming competitor
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USVI tourism authorities have cautioned that lighter restrictions for US travelers to Cuba could result in the detour of cruise tourism away from USVI destinations. Nonetheless, the peaked interest in the Caribbean is seen as an opportunity, particularly since US travelers have no passport requirement to travel to USVI. USVI draws nearly 90% of visitors from the US market and tourism officials signal that building competitiveness and enhancing the marketing efforts will be necessary in light of the potential for Cuba to arise as a competing destination.
us virgin islands Sector Developments Dreams Sugar Bay to provide a boost for St Thomas The December opening of the 297-room Dreams Sugar Bay resort in St Thomas is expected to provide a boost to the destination. The property is the first AMResorts hotel in the USVI, and the company asserts that since US visitors do not require a passport, the facility is a natural extension of the company’s destination offering. The company signals that some 64% of US citizens do not own a passport.
National Parks launches app for self-guided tours National Parks Services located on St Croix recently announced the creation of an app allowing for self-guided tours of the site. The app is free and available on both iTunes and Google Play stores. Features of the app include: maps, trail tours, areas of interest, a compass, regulations, local weather, as well as a customizable electronic postcards.
Film business on the rise USVI’s film business has been steadily increasing. Due to USVI’s ease of accessibility and leniency in regards to acquiring a visa, companies such as Sports Illustrated are beginning to show preference towards USVI for their filming. USVI’s film industry is also unique in that it provides packages to its clients that include details on hotel expenses, food, transportation, as well as access to local equipment.
Boutique rum distillery to attract tourists A boutique rum distillery will be opened in a naval building and serve as a tourist attraction. The distillery will be located in Crown Bay inside a refurbished warehouse constructed during WWII. Robert Apfel is the investor behind the project and he intends to grow his own sugarcane nearby for distillation into rum. The distillery will also include a café and gift shop.
Concordia could soon change hands The Concordia Eco-Resort, located on Saltpond Bay has a potential buyer. The resort includes 50 acres of privately owned land, eco-tent units, a restaurant, along with 42 units of cutting edge iterations. Annually, the resort accommodates around 4,000 people. Details have not been disclosed yet in regards to who the potential buyer is.
Pre-check available at King Airport King Airport will now be offering a Transportation and Security pre-check. Flyers can pay US $85 every 5 years to be members of the TSA Pre-check. The Pre-check now allows for 250 passengers to be processed in an hour, as compared to the old system that could only process 160 passengers and hour.
WICO suspends pier project in St Thomas The West Indian Company Ltd (WICO) has decided to suspend its project to build a new cruise ship pier in downtown St Thomas. WICO’s Board Chairman disclosed the company fears of the environmental impacts that the Long Bay Landing pier would cause and the potential damage it could cause to the quality of life for the residents.
Notes 1. Forecasts and Estimates included in tables and charts are derived from Central Bank, Statistics Office, government forecasts, Finance Ministries, IMF World Economic Outlook, ratings agencies (S&P, Moody’s, Fitch, AM Best, CariCRIS) and GNM Calculations.
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