AGM & Conference of the CAIBAGM & Conference of the CAIB

FINANCING OPPORTUNITIES & FINANCING OPPORTUNITIES & PORTFOLIO MANAGEMENT PORTFOLIO MANAGEMENT STRATEGIESSTRATEGIES

Status of USA EconomyStatus of USA Economy

American jobless 10 million, most in American jobless 10 million, most in 25 years25 years

Huge current account deficit - about Huge current account deficit - about 6% of GDP, way above the 3% 6% of GDP, way above the 3% sustainable levelsustainable level

Credit crunch and reduced Credit crunch and reduced disposable incomesdisposable incomes

Uncertainty regarding the future!!Uncertainty regarding the future!!

Status UK EconomyStatus UK Economy

UK jobless 1.8 millionUK jobless 1.8 million the pound above $2.11 in November 2007the pound above $2.11 in November 2007 Nov 11, 2008, the pound fell 0.2 per cent Nov 11, 2008, the pound fell 0.2 per cent

to $1.5580to $1.5580 Worries over the outlook for the economyWorries over the outlook for the economy Investors abandoning UK financial stocks.Investors abandoning UK financial stocks.

Aviation Status – UK Aviation Status – UK

British Airways reported a 92% slump British Airways reported a 92% slump in first-half profits yesterday due to in first-half profits yesterday due to high fuel costs and the banking high fuel costs and the banking crisis.crisis.

BA said it would cut capacity next BA said it would cut capacity next summer, usually the busiest period summer, usually the busiest period for carriers, as it signalled a for carriers, as it signalled a pessimistic outlook for 2009pessimistic outlook for 2009

Aviation Status – UK & USAAviation Status – UK & USA

XL Leisure Group termination of XL Leisure Group termination of service from London Gatwick to service from London Gatwick to Barbados, St Lucia and Antigua Barbados, St Lucia and Antigua

BMI termination of service from BMI termination of service from Gatwick to to Barbados and AntiguaGatwick to to Barbados and Antigua

Aviation Status - CaribbeanAviation Status - Caribbean

December 2008, U.S. airlines have December 2008, U.S. airlines have scheduled 17% less service to the Caribbean scheduled 17% less service to the Caribbean islands, including Puerto Rico and the U.S. islands, including Puerto Rico and the U.S. Virgin Islands, compared with December Virgin Islands, compared with December 2007 (Source: OAG flight schedules) 2007 (Source: OAG flight schedules)

Reduction in service to international Reduction in service to international markets—including regional turboprop markets—including regional turboprop service, mostly by American Eagle, to service, mostly by American Eagle, to neighboring Caribbean destinations. neighboring Caribbean destinations.

Aviation Status - CaribbeanAviation Status - Caribbean

October 2007, there were 418 weekly flights to October 2007, there were 418 weekly flights to international markets; October 2008, only 268 international markets; October 2008, only 268 weekly flights (35.9% reduction from 2007). weekly flights (35.9% reduction from 2007).

Number of seats per week to these Number of seats per week to these international markets reduce 34.6% in just one international markets reduce 34.6% in just one year, from 28,742 last October to 18,799 in Oct year, from 28,742 last October to 18,799 in Oct 20082008

The cutbacks come at a time when the The cutbacks come at a time when the Caribbean is seeing huge investment and Caribbean is seeing huge investment and expansion in physical plant.expansion in physical plant.

Aviation Status - CaribbeanAviation Status - Caribbean

Jamaica has entered an agreement Jamaica has entered an agreement with the US legacy carrier American with the US legacy carrier American Airlines, to guarantee well over 2,000 Airlines, to guarantee well over 2,000 additional seats per week to the additional seats per week to the islandisland

AA service to Grenada and St. LuciaAA service to Grenada and St. Lucia New nonstop service fro France to New nonstop service fro France to

the Bahamas from December 2008the Bahamas from December 2008

Tourism and Economic Tourism and Economic ImpactImpact

Jamaica expects a 30 per cent decrease Jamaica expects a 30 per cent decrease in stopover arrivals for the upcoming in stopover arrivals for the upcoming winter tourist season winter tourist season

"We are feeling it here in The Bahamas in "We are feeling it here in The Bahamas in a very substantial way. "People are a very substantial way. "People are working one and two days a week, many working one and two days a week, many aren't working at all, some have been laid aren't working at all, some have been laid off and others will be laid off." (P.M. off and others will be laid off." (P.M. Ingraham of the Bahamas)Ingraham of the Bahamas)

Tourism and Economic Tourism and Economic ImpactImpact

"What has happened in the world is going "What has happened in the world is going to take quite a while to go away.“ (P.M. to take quite a while to go away.“ (P.M. Ingraham of the Bahamas)Ingraham of the Bahamas)

The current situation is quite different The current situation is quite different from that which existed at 9-11. Then it from that which existed at 9-11. Then it was an issue of fear and the effects were was an issue of fear and the effects were mostly felt in the USA and Britain to a mostly felt in the USA and Britain to a lesser extent but, people still had money lesser extent but, people still had money to travel. Today, the issue is one of to travel. Today, the issue is one of economic and financial uncertainty, economic and financial uncertainty, primarily as they relate to jobs and primarily as they relate to jobs and incomes and, these concerns are global. incomes and, these concerns are global.

Tourism and Economic Tourism and Economic ImpactImpact

UN World Tourism Organization (WTO) UN World Tourism Organization (WTO) World Tourism Barometer projects that World Tourism Barometer projects that the first five months of the year were the first five months of the year were strong enough to propel overall global strong enough to propel overall global tourism growth by two percent for the tourism growth by two percent for the year.year.

The current troubled economic scenario The current troubled economic scenario is expected to continue into 2009is expected to continue into 2009

Prognosis for the FuturePrognosis for the Future

Past experience has shown that travel and Past experience has shown that travel and tourism always rebounds from cyclical tourism always rebounds from cyclical downturns - sometimes even stronger downturns - sometimes even stronger than before.than before.

governments should provide a supportive governments should provide a supportive policy framework to help stimulate policy framework to help stimulate demand and ensure that travel and demand and ensure that travel and tourism continues to generate tourism continues to generate employment employment

A Look at TrendsA Look at Trends

international arrivals in 1950international arrivals in 1950 estimated 806 million in 2005estimated 806 million in 2005 average annual growth rate of 6.5%average annual growth rate of 6.5% International tourist arrivals reached International tourist arrivals reached

903 million in 2007903 million in 2007 International tourism receipts grew International tourism receipts grew

to US$ 856 billion to US$ 856 billion

Projections for GrowthProjections for Growth

Long-haul travel worldwide projected Long-haul travel worldwide projected to grow at 5.4 per cent per year over to grow at 5.4 per cent per year over the period 1995-2020the period 1995-2020

international tourist arrivals international tourist arrivals worldwide 1.6 billion forecast by worldwide 1.6 billion forecast by 20202020

Projections for GrowthProjections for Growth

WTO projects that by 2020 the top three WTO projects that by 2020 the top three receiving regions receiving regions

Europe (717 million tourists)Europe (717 million tourists) East Asia and the Pacific (397 million)East Asia and the Pacific (397 million) the Americas (282 million)the Americas (282 million) Africa (77 million)Africa (77 million) the Middle East (69 million)the Middle East (69 million) South Asia (19 million)South Asia (19 million)

OpportunitiesOpportunities

Marketing the Caribbean as a single Marketing the Caribbean as a single destinationdestination

Review and strengthen regulatory Review and strengthen regulatory framework for investmentframework for investment

Further diversify tourism product - sports, Further diversify tourism product - sports, health, culinary, MICE, ancillary services and health, culinary, MICE, ancillary services and

markets – India, China, South Americamarkets – India, China, South America Create vehicles and instruments for greater Create vehicles and instruments for greater

local participation in tourism investment local participation in tourism investment

OpportunitiesOpportunities

Prepare implementable Tourism master Prepare implementable Tourism master Plans to guide the development of the Plans to guide the development of the sectorsector

Undertake airline capacity studies to Undertake airline capacity studies to ensure that plans for aviation support ensure that plans for aviation support plans for expansion in the plans for expansion in the accommodation sub-sectoraccommodation sub-sector

Re-focus on tourism public education and Re-focus on tourism public education and awarenessawareness

End of Part 1End of Part 1

Projections for GrowthProjections for Growth

Worldwide, international tourist Worldwide, international tourist arrivals grew at around 5% between arrivals grew at around 5% between January and April 2008, compared to January and April 2008, compared to the same period of 2007the same period of 2007

MARKET PERFORMANCEMARKET PERFORMANCE

United StatesUnited States Grew by an average 2.8% per annum since 2002Grew by an average 2.8% per annum since 2002 Up by 1.5% during Jan-Jul 2008Up by 1.5% during Jan-Jul 2008 Unexpected hikes in oil prices almost crippled Unexpected hikes in oil prices almost crippled

some airlinessome airlines AA: Reduced seating capacity from Sept. – Jan; AA: Reduced seating capacity from Sept. – Jan;

also down for Europe; fares significantly upalso down for Europe; fares significantly up Air Jamaica, Delta and Continental increased Air Jamaica, Delta and Continental increased

capacity;capacity; BMI termination of service to Barbados and AntiguaBMI termination of service to Barbados and Antigua Tour operators: Bookings down across the boardTour operators: Bookings down across the board

MARKET PERFORMANCEMARKET PERFORMANCE

CANADACANADA Grew by an average 10.4% per annum since Grew by an average 10.4% per annum since

20022002 Up by 17.7% during Jan-Jul 2008Up by 17.7% during Jan-Jul 2008 Still among stronger economies in G8; Still among stronger economies in G8;

projected GDP growth: 3.1% in 2006 & 2007projected GDP growth: 3.1% in 2006 & 2007 Best performing Caribbean market mainly to Best performing Caribbean market mainly to

Cuba & Dom RepCuba & Dom Rep Expected to retain resilience in the coming Expected to retain resilience in the coming

year.year.

MARKET PERFORMANCEMARKET PERFORMANCE

EUROPEEUROPE Grew by an average 3.0% per annum Grew by an average 3.0% per annum

since 2002since 2002 Up by 11.5% during Jan-Jul 2008;Up by 11.5% during Jan-Jul 2008; Year started remarkably well but dived; Year started remarkably well but dived;

affected by galloping oil prices, etcaffected by galloping oil prices, etc General outlook for weak 2008/9 winterGeneral outlook for weak 2008/9 winter

January – September 2008*January – September 2008* Jan-Jul % changeJan-Jul % change 2008 2008/’072008 2008/’07 Occupancy 67.6% -2.3%Occupancy 67.6% -2.3% Room Rate $182.71 -7.4%Room Rate $182.71 -7.4% RevPAR $123.60 -9.5%RevPAR $123.60 -9.5%