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The Impact of Crime on Tourism in Trinidad and Tobago

By By Travis Rampersad Bank Risk Officer

According to the World Tourism Organisation, in 2010 tourist arrivals increased by 5%, following a contraction of 4.2% in 2009. The World Travel & Tourism Council estimated that the travel and tourism industry, from direct and indirect activities combined, now accounts for 9.2% of global GDP, 4.8% of world exports and 9.2% of world investment. Recognising the potential of this sector to provide economic growth and development, the Trinidad and Tobago Government has signalled its intention to make tourism an important platform to create sustainable jobs and increase its contribution to the country's GDP. The Government plans to expand the tourism product and use the country's festivals and cultural diversity to anchor a significant year-round tourism development programme. This article presents some stylised facts and attempts to explore some trends in the local tourism industry.

Trinidad and Tobago ranked 79th (out of 139 countries) in the Travel and Tourism Competitiveness Index (TTCI) 2011 — published biannually by the World Economic Forum (WEF). This was an improvement of five (5) places from 84th in 2009. Other Caribbean countries in the top 100 include Barbados (ranked 28th) and Jamaica (ranked 65th). The TTCI — which was developed within the context of the WEF's Industry Partnership Programme for the Aviation, Travel & Tourism sector — is based on several pillars of competitiveness. These pillars include: policy rules and regulations, environmental sustainability, safety and security, health and hygiene, prioritisation of travel and tourism, ground and air transport infrastructure, tourism and ICT infrastructure, price competitiveness, human, natural and cultural resources.

The World Travel and Tourism Council estimated in 2010 the Trinidad and Tobago tourism and travel industry accounted for 3.8% of GDP — a decrease from 4.4% in 2009, and provided 33,000 jobs — a decrease from 35,000 in 2009. This decline was largely due to the contraction of the local economy by 3.5% in 2009. There was marginal expansion of 0.6% in 2010. This was mainly largely attributable to upturn in the energy sector which was partially offset by further deterioration in the non energy sector.

Chart 1 shows that the country's number of monthly tourist arrivals exhibited a seasonal pattern during the period 2002 to 2009. The peak periods coincide with Carnival and the vacation periods July-August and December. Using publicly available data from the websites of the Tourism Development Company (TDC), the Central Statistical Office (CSO), the Central Bank of Trinidad and Tobago and the Trinidad and Tobago Police Service (TTPS) websites, the impact of crime on the travel and tourism industry in Trinidad and Tobago will be briefly examined in the remainder of this article.

The WEF takes crime into account, under the pillar of safety and security, when assessing a country's tourism competitiveness for the TTCI. Crime has the potential to significantly damage a country's travel and tourism industry. In Trinidad and Tobago, crime data from the Central Statistical Office shows that total serious crimes (includes murder, manslaughter, robbery, narcotics and forgery amongst others) has increased by approximately 30% over the last decade from 15,796 in 1998 to 20,566 in 2008. The murder rate has increased by approximately 293% from 120 in 2000 to 472 in 2010. Monthly data from January 2008 to November 2009 was used for the analysis. (Monthly crime data prior to January 2008 was not available on the TTPS website; monthly stop over tourist arrival data post November 2009 was not available on TDC or CSO websites.)

Simple linear regression analysis shows that there was a statistically significant relationship (at the 90% confidence level) between total stopover arrivals and total crime (from the previous month) for the period January 2008 to November 2009. Chart 2 illustrates that, in some instances, total tourist arrivals decrease as total crimes reported increases. Total tourist arrivals includes all international visitors to the country for purposes of business, leisure, study, visiting friends and relatives, wedding, honeymoon and others. The impact of reported crime on business, leisure and other tourism is examined in Charts 3 to 5.

The application of regression analysis reveals that there is no statistically significant relationship (at the 90%) between total business tourist arrivals and total crime during the period. Notwithstanding this fact, Chart 3 illustrates that, during some periods, business total tourist arrivals increase when total crimes reported from the previous month decreases. The chart suggests that crime may have impacted the investor climate in Trinidad and Tobago during the period.

Chart 4 shows the monthly number of other tourist arrivals (mainly tourists visiting friends and relatives in Trinidad and Tobago) versus the number of total reported crime for the previous month. Similar to business tourist arrivals, regression analysis demonstrates that there may not be a statistically significant relationship (at the 90%) between the two data sets plotted in Chart 4. A careful observation of the data plotted in the aforementioned chart, however, indicates that there are some instances in which other tourist arrivals increase when total crimes reported from the previous month decreases.

Chart 5 shows the leisure tourist arrivals exhibit a seasonal pattern with the peak periods being Carnival and the vacation periods of July-August and December. The number of leisure tourist arrivals is not significantly impacted by the number of total crimes reported from the previous month during the peak period. This is consistent with the results obtained using regression analysis and a confidence level of 90%.

The information presented in this article indicates there may not be significantly strong statistical results from the data to suggest that total reported crime considerably impacts the number of stop over tourist arrivals to Trinidad and Tobago. However, the charts presented do illustrate that the crime rate does affect some components of tourist arrivals to the country. The WEF has acknowledged the negative implications a country's crime rate can have on its travel and tourism industry, by the strong weighting it places on the safety and security pillar in its Travel and Tourism Competitiveness Index. Significant reductions in the country's crime may provide the added impetus to catalyse the optimisation and development of the travel and tourism industry in Trinidad and Tobago.

All information contained in this article has been obtained from sources that First Citizens Investment Services believes to be accurate and reliable. All opinions and estimates constitute the Author's judgment as of the date of the article; however neither its accuracy and completeness nor the opinions based thereon are guaranteed. As such, no warranty, express or implied, as to the accuracy, timeliness or completeness of this article is given or made by First Citizens Investment Services in any form whatsoever.

First Citizens Investment Services and/or it employees or directors may, where applicable, make markets and effect transactions, or have positions in securities or companies mentioned herein. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer or a solicitation to buy or sell.

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