"I don't want to say we're about to fall off the ledge," says David Wong, the head of the Tobago division of the Trinidad and Tobago Chamber of Commerce, "but we're close."The ledge, in this case, is economic collapse, caused by the fall-off in tourist arrivals to about one-third of its peak in 2005. This is the consensus among business people, politicians, and ordinary citizens in Tobago: everywhere in the island, businesses are closing, hotels are empty, restaurants and tour operators are laying off staff, and, says Wong, "even the sugar cake (seller) people are feeling it".
Tobago's labour force has two main employers: the government, which employs about 60 per cent of the work force; and the tourism industry, which employs what's left. There is no in-between, and it's widely held that most Tobagonians have traditionally held two jobs: one for the government in the day, and the other in the hotels in the evening. (However, there are no readily available hard data establishing this.)
With the severe downturn in the number of arrivals, many ordinary Tobagonians have had their incomes cut in half. From (according to the CSO) a high of 86,466 arrivals in 2005, last year only about 30,000 tourists visited Tobago. The obvious cause for the decline is the world financial crisis of late 2008, but the numbers had begun to decline from 2006, which saw a 35 per cent drop in arrivals, to 55,769. There was a slight rebound the following year, to 62,999, but in 2008, arrivals dropped to 23,580.
The fact that the decline was caused by factors other than the 2008 crisis is supported by the fact that other destinations in the Caribbean and elsewhere have rebounded. The United Nations World Tourism Organisation (UNWTO), in a release in May, reported that tourism in South America and Asia grew by double digits in 2010. The World Travel and Tourism Organisation (WTTC) reported that tourism's total contribution to GDP for the Caribbean went from $14 billion in 2007 to $15.8 billion in 2010.
There are competing theories as to why the decline started two years before 2008. It might have been structural factors: other destinations were more attractive, and more became widely available to foreign tourists. Some in Tobago, mainly investors and those in the tourism business, propose that the imposition of a land license requirement for investors, which was introduced in 2007, deterred new investment and compounded the problem. The forms to make the applications were not available for more than two years after licensing requirement became law. The first licenses were issued in 2010. By then, said a real estate agent (who did not wish to be named), all the investors had either gotten fed up, or been frustrated. This license introduction was coupled, tourist industry people say, with the emergence of an official attitude that tourism was a "volatile" business, which was not in Tobago's long-term interest. The position also emerged that the economy should be diversified, and the idea of the Cove Industrial Park. Others point to the emergence of an attitude of imminent takeover of Tobago by outsiders, and loss of land by Tobagonians.
This is a thorny area, since the discussion easily devolves into a white (investors, hoteliers) against black (Tobagonians) and foreign against local. The investors say they are invested to the hilt, and have as much, if not more to lose than the average Tobagonian.The desire for the preservation of patrimony was evident in the Tobago House of Assembly's 2011 budget statement delivered by Dr Anslem London, who justified the THA's decision to "intervene" (by placing a bid) when the Culloden Estate, a site in a designated tourist development area, came on the market.
He said: "The descendants of slaves are required to do everything in our power to respect the honour and legacy of our ancestors in Culloden," and various other areas. In a statement reported in the Trinidad Guardian on July 6, THA chief secretary Orville London was reported as saying the THA now owned 34 estates, comprising more than 12,000 acres of land in the island. This constituted 40 per cent of the land in Tobago, and, said London, the THA would ensure that the land was disbursed to the benefit of Tobagonians.
However, London believes the THA's and his positions have been misunderstood. He says the THA does appreciate the importance of tourism, and has no wish to compete with tourism investors. He says also that the intervention in the Culloden Estate was in response to many Tobagonians' requests for land for village expansion. The THA has no intention of competing with private investors, and indeed remains open to overtures from investors for the development of Culloden.
As for the general situation: "There is no gainsaying it (the downturn in arrivals)," and the importance for the economy, London said. In response to the problem, "THA has initiated a number of initiatives to boost arrivals: marketing, airlift, and quality of rooms. We have been working on all those aspects."He says the Vanguard Hotel will be opened on schedule by November 1, which will provide a much-needed boost to the numbers of rooms available. However, London says, he also has a responsibility to ensure that Tobago's interests are served."We were distressed that the licensing forms took so long to be created," he said.
But he does not deny the licensing process is elaborate. This is to discourage speculation, which would price the land out of the hands of locals, and ensure that serious investors only came into the island to set up hotels and other businesses.As elected representatives, continues London: "We also have to have some vision for the development of Tobago, this is not emotionalism that is our duty-the development of communities in a way that brings optimum benefit."
In mid-2011, the THA and THTA have arrived at a convergence of views: there is no doubt there is a crisis that needs to be addressed immediately. There is also no doubt that tourism is critical to the island's economy and its people's development. But the contretemps of the last few years have had long-lasting consequences. The effects of the downturn, now three years long, are not localised to Tobago, or to the tourism sector. The ripples spread through the island's ecology and to Trinidad.
Rosemarie James, the local representative of the British-based Travel Foundation, a charity whose agenda is to set up sustainable projects which benefit communities British tourists visit, says their projects included waste management, farms, aquaculture, craft and environmental protection-all managed, and benefiting locals. "At the peak there were 28 farmers and their families, who made about half-million supplying hotels with produce," she said."Schools were encouraged to grow herbs to supply the hotels, and the money went directly to the schools. The Plymouth Anglican school was able to add a new wing with the proceeds."
Now, all the farmers have stopped producing, and all the projects are slowing or have stopped. This same applies to fishermen, and general labour. One hotel owner says he has been forced to put staff on a two-day week, and let go some. Effects are also being felt by suppliers in Trinidad, who service the Tobago distributors. However, the effects are not uniform-the ANSA McAL chief executive in Tobago, Andre Jacelon reports that the conglomerate's business remains healthy in Tobago.
ANSA McAL appears to be one of the rare exceptions. One business person reported that Tobago's cash flow problems had become so severe, they estimate that bank loan defaults have reached about 20 per cent. (The Bankers' Association did not respond to requests for data.)Hoteliers and small retailers have begun to take longer and longer to pay, and cheques have started to bounce. And even the small groceries and convenience shops have begun to default. "We've fought really hard," says David Wong, "for the last three years, we've liquidated assets to remain viable."But that is not a sustainable strategy. There are many ideas and strategies from various groups in the island as to how to solve the problem.
The Tobago Hotel and Tourism Association (THTA) proposed a "Crisis Plan" in June 2010. The introductory statement mentioned high levels of debt and unpaid bills by members, and a critique of the present policy regime which, the document said, "has caused conflict, wasted scarce resources and sent mixed messages to investors (particularly FDI), employees, managers, consultants, and our foreign visitors".
The recommendations include the streamlining of the decision-making institutions, and a six-point plan which includes addressing room stock, air lift, branding, environment, community benefits, and visitor experience. It is worth noting that nothing the THTA has proposed is new. In a lecture given at the Fourth International Business, Banking and Finance Conference at the Hilton in June, Caribbean Development Bank president Dr Warren Smith laid out similar arguments to improve investment flows which visited many of the THTA concerns, beginning with the need to attract more private, as opposed to public investment.
So the theory as to what to do is not new, and the policy prescriptions are appreciated by the THA. Orville London said the THA had begun a renewed marketing thrust, and are addressing airlift concerns, and room stock. However, says Wong, the problem is that all entities market separately. A coordinated approach would strengthen the effort and refine the message. Even the THA concern about the development of locals seem to be addressed in the Travel Foundation's initiatives.
One area over which the THTA and THA disagree is the importance of domestic tourism (Trinidadian) visitors. London says the Trinidadian tourist is highly underestimated as a source of revenue. The hoteliers dispute this. One restaurant owner says that Trinidadians would come to his establishment and argue about the price of an entrée (TT$80), and divide one entrée into four. Others pack their cars with food from Trinidad and use the ferry. Others patronise KFC and other fast food outlets, and they rarely stay at hotels, preferring to rent small guest house rooms, and overload them, putting as many as ten people in a two-person room. However, the hoteliers agree, for long holiday weekends, Trinidadians do behave like tourists. If local airlift were simpler and seats more readily available on short notice, they feel the traffic would improve.
As for the financial situation of the small businesses, in the immediate and short terms, THTA members agree, there is need for financial relief, either in the form of a government guarantee to reassure investors, and bank flexibility.So far the THA's position is that it is outside its powers to provide such guarantees, and the 2012 budget speech recommended "consultation between the THA and the Central Government" to address those issues. There are, however, a few things that all Tobagonians agree on: rapid action is needed. Without action, the consequences would mean irreparable damage to Tobago and Trinidad.