This era can be characterized by a series of economic challenges which started with United States economic crisis in 2007 , quickly followed by the global economic crisis in 2009. Other countries such as Greece, Portugal , Spain , Ireland to name a few, also suffered from the repercussion of ballooning government debts.
By August 2014, amid the fragility of slow economic recovery for the United States and Britain , OPEC began major talks forecasting uncertain times for economies hinged on “black gold”. Venezuela, T&T’s neighboring oil producing country,having been in political crisis for some time, is now faced with the added pressure of the plunging price of oil , worsening the country’s fragile economic situation.
Russia, on the other hand, an emerging national economy , a major player of BRIC (Brazil, Russia, India and China), when oil was trading at $100 a barrel, had to declare the country’s recession by mid year 2015. Russia had the pressure of western sanctions but the slump in the price of oil quickly changed their financial standing. As a result the central bank of Russia halted FOREX as a means to moderately draw from its reserves and to maintain a facility to finance future federal budgets. Even the economy of Brazil has been downgraded by the ratings agency and projected 3% contraction by year end 2015.
As a mere observer of the world economic situation during these tumultuous times of volatile stock markets, combined with the crisis of world strife, natural disasters and impending political threats, it should be obvious, that Trinidad and Tobago is not impervious to these circumstances.
Research has shown that there are three elements which constitute a crisis: a trigger to cause a change; the inability to cope with the change; and the threat to the existence of organisations.
The trigger of the slump in the price of oil is controlled externally by world market forces which has impacted on the financial stability for the islands. Therefore, it is somewhat difficult to comprehend why our leaders wish to debate the terminology of whether T&T is in a Downturn or Recession. The issue that is before us, is that the Government needs to be proactive to maintain positive financial indicators, attractive for foreign investments. Ultimately , public outbursts against financial governance of our country would only compromise our nations international reputation.
My focus with this article is to look at whether the tourism sector can weather the storm. The fact is, threats from external forces would be the cause for a recession and it would impact on the US currency and taxation; whilst internal forces would impact inflationary costs, resources, and profitability . With both internal and external forces being negative then the outcome of how our leaders and our association cope with these threats would determine the perception of our tourism sector. It is expected that with the shrinking of capital markets and decreased government and corporate spend, that the tourism sector would be the first to feel the pinch.
Greece, for instance, has shown that the impact of the recession has affected lodging, food service, events, activities and hospitality products. Many resorts were faced with foreclosure, whilst others provided limited services. Government spend on health and sanitary services also shrunk, leading to limited medical services and poor standards for the industry. Crime , unemployment and other social issues also impacted negatively in the industry forging a low tourist perception of the destination. Thus, the issue of convincing a consumer to travel to a destination to consume products and services in this climate would be a difficult. Therefore innovative strategies, such as using comparative advantages and other business measures are needed to adjust to these adverse business times. Interestingly, one of my colleagues, the Vice President of Russia’s largest leading restaurant company concurred, by being resolute in taking action to steady his business.
With respect to the sector of T&T , after the state of emergency in 2011, many operators knee jerk response were to lower prices for market positioning. With the continued shock to the sector and the flat line approach to effective destination management, combined with unsustainable plans, many operators have been unable to rebound to regain levels of occupancy and prices.
I suspect that with the contraction to the economy, stakeholders would have to revisit people management, revenue strategies, innovative business model restructuring; whilst government should consider niche product lines, incentivized programs, re visit green policies and conservation priorities, review taxation to name a few.
These solutions , in my perspective, with the collaboration of stakeholders and government, can positively transform a declining industry to become resilient in the impending perfect storm.