1 / 22

CARRIBEAN ASSOCIATION OF INDIGENOUS BANKS

CARRIBEAN ASSOCIATION OF INDIGENOUS BANKS. Sue Springer November 19 th 2008. Overview. The importance of Tourism Business State of the Industry Economic Analysis of major markets Operating Costs Ideas for working together to survive this challenge?. The Tourism Business.

kyran
Download Presentation

CARRIBEAN ASSOCIATION OF INDIGENOUS BANKS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CARRIBEAN ASSOCIATION OF INDIGENOUS BANKS Sue Springer November 19th 2008

  2. Overview • The importance of Tourism Business • State of the Industry • Economic Analysis of major markets • Operating Costs • Ideas for working together to survive this challenge?

  3. The Tourism Business • The Caribbean is a region that is the most highly dependant on tourism in the world • Despite economic decline a vacation is still high priority • WTTC continues to predict growth in travel and tourism of some 3% year on year over the next 5 years world wide

  4. State of the Industry • Different for each Island • Spanish speaking islands with lower prices • Atlantis hotel in Bahamas laid off 800 staff • Barbados 4% decline in long stay arrivals for October compared to 2007 • Overall arrivals decline of 0.6% to end of October 2008 • Projection by FTO bookings up 15% for 2009 at the present time • Dynamic times & the situation changing DAILY

  5. Economic Analysis - Canada • Higher oil prices & slowing economy @ a more rapid rate than anticipated - affecting all areas • Canadian $ fell to US$0.93 cents • Economy forecasted to grow by only 1.7% in 2008, down from 2.7% in 2007 • 40% of Canada’s GDP generated from exports to USA • Auto & auto parts largest export – All 3 major US auto makers cutting production in plants in Ontario & Quebec.

  6. Economic Analysis - USA • Burdens of both high oil prices & the sub-prime banking crisis wrought havoc on the economy of the USA • Exacerbated most recently by the demise of Lehman Bros. ect • Today General Motors, Chrysler & Ford have requested Federal monies to stay in business – (US$25Bn) • Biggest fall of US wholesale in 60 years - down 70% • Overall lack of consumer confidence • Causing consumers to rethink travel habits • Unleashing a ‘stay at home mentality’ or “Stay-cations” • Election fever over

  7. Economic Analysis - UK • Alistair Darling – Chancellor of Exchequer recently said “Britain faces ‘arguably the worst’ economic downturn in 60 years” • Fresh economic data = a feeling of austerity, after yrs of debt-fuelled spending • 12.7% decline in property prices during September compared to the same month a yr. ago • BOE left interest rates unchanged @5% for the 5th month • Expected that interest rates may change this week • Inflation 4.4% more than double the target rate expected to increase to 5% by yr end.

  8. Economic Analysis – UK Contd. • Real inflation including Fuel & Mortgage = 10.6% (per the Financial Times) • Household savings @ their lowest level since 1950’s • People trading down of groceries – Supermarket own-label goods up 6% • New car registrations down 18.6% in August lowest since 1966, the hardest hit the more expensive makes, BWM down 40%, Land Rover 58%, Jaguar 41%, Mercedes 35% • Unemployment projection of 2M by year end. • The exchange rate for the pound declining daily now below Bds$3

  9. Economic Analysis - Caribbean & Latin America • All the Caribbean islands facing high prices on oil, utilities & food. • Major investments with high end product, both hotels and villa multi use complexes have been halted or are on a slow down • Challenges with capacity in airlift at peak times • Major challenge with price of air fares • Majority of the price includes high governmental taxes

  10. Operating Costs in Barbados • Electricity bills increased over the past six months as much as 45 to 65% • Improved valuation on lands showing increases of 60 to 80% = increased land taxes • A Wage increase for hotel workers in December of 5.5% a total of about 12% over two years when compounded • 50% Excise tax added to alcohol – impacted on the All inclusive hotels as rates are fixed for the next year. • An active hurricane season in the region may impact on insurance rates for Barbados

  11. Despite all of these increases HOTELS CANNOT INCREASE RATES AS WE LIVE IN A WORLD OF DISCOUNTS & /OR VALUE ADDED

  12. A Discounted World • Due to the global economic tsunami that we all face • Discounting or value added is the name of the game • Jamaica hotels discounting rates by 30% • Free air fares being offered in some cases • Free flights for children • Half price for a companion flying • Tacticals being offered in the market place by everyone • The world is on sale!!!!

  13. Ideas for working together to survive this challenge? Moratorium on loan principal - hotels to only pay interest or even to capitalise the interest depending on the level of debt – Limited period 1 yr to 18 months • Hotels unable to service the loan will close & what do we do with these properties • Redundancies equal possible challenges re personal loans • 100 staff with an average loan of $30,000 = $3M to be written off

  14. Ideas for working together to survive this challenge contd. • Globally Governments facilitating monies to bail out entities • Governments could create a guarantee system for hotels in trouble • Enterprise Growth Fund in Barbados – set up with funds for 9/11, small hotels initiative, environmental retrofit project ect. • EGF – create an equity position in the business

  15. Ideas for working together to survive this challenge contd. Reduced Cash Flow • Additional facilitation e.g. soft loan • Lower Overdraft interest rates • Temporary financing facility

  16. Ideas for working together to survive this challenge contd. Reschedule Debt • Hotel funding in the original state historically a challenge • Length of repayment given in first phase too aggressive • Increase period of time for repayment of loans -10 yrs to 15yrs, 15yrs to 20yrs

  17. Ideas for working together to survive this challenge contd. Expediency • All assistance to be confirmed within a 30 day period • Allows business to plan their next months business cycle • Assists with managing cash flow

  18. Ideas for working together to survive this challenge contd. • Tourism is the primary industry in the Caribbean • Appears that there is a disconnect with the tourism industry • Possibility of a Tourism specialist to be on the staff in the banks • Lack of knowledge can cause conservatism

  19. Ideas for working together to survive this challenge contd. • Some companies forced to go abroad for loans • Resistance to the industry due to instability • Often tourism is described as a high risk industry • Tourism is not an industry but a business • It is the main export for many of the Caribbean islands • History has proven that TOURISM recovers & bounces back after disasters – 9/11, SARS, Iraq War, Terrorism, Tsunami, Hurricanes, Recession

  20. Help us to survive! • We will survive & bounce back after this economic tsunami • Help us to be one of your surviving customers

  21. I thank you!

More Related