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Tourism has been one of the hardest-hit industries across the world due to the COVID-19 pandemic. The populations of many countries have been under varying degrees of lockdown, including limits on access to international travel. This has led to severe economic issues for many tourism-dependent countries and regions due to the large scale global reduction in travel and tourism. 

To help mitigate the economic problems facing the Caribbean’s tourism industry, NCB Capital Markets (NCBCM), the region’s leading investment bank has announced the launch of its Tourism Response Impact Portfolio (TRIP) as part of its Stratus Alternative Funds SCC funding structure. The fund has been created to meet the specific needs of tourism businesses that operate within the Caribbean region, by providing customised financing solutions for a variety of stakeholders within the industry.  

The announcement of the TRIP initiative took place at the recent Island Innovation Island Finance Forum 2021 which took place virtually from 13th-16th April 2021. NCB Capital Markets was a Gold Sponsor of the IFF2021.

The Economic Significance of Tourism Within the Caribbean Region 

The importance of tourism to the Caribbean region cannot be overstated. According to the Caribbean Tourism Organization, there are an estimated 2.5 million people employed in this industry and nearly one-third of the region’s economic output is generated by it, either directly or indirectly.

For the majority of countries within the Caribbean, the economic impact has been severe, as it is the most-tourism dependent region in the world. Several of the region’s 26 small island states and dependencies were already heavily indebted before the pandemic struck. The immediate economic impacts from the pandemic have only further exacerbated the problems the region was facing.

Simone Hudson, Assistant Vice President, Alternatives & Fund Management at NCBCM, was one of the speakers at the ‘Impact Investing and ESG – An Opportunity for Financing Sustainable Development on Islands?’ session at the Island Finance Forum. She reiterated how important the tourism sector will remain within the Caribbean region. While it is clear that the industry has been affected particularly strongly, Simone provided a note of optimism that as the vaccine rollout continues across the world, there is certainly hope that the industry can recover.

The importance of the Tourism Response Impact Portfolio (TRIP)

The impacts of COVID-19 are expected to result in 1.2 million tourism job losses in the region and an estimated 27 billion dollar loss in tourism GDP, due to a 45 per cent decline in international arrivals. This is why the TRIP initiative is such a vital lifeline for this important industry, through the provision of creative funding.

Simone outlined NCB Capital’s commitment to addressing the outlook of the regional tourism industry through the TRIP funding initiative. It will be used to provide creative funding solutions to assist hoteliers and other tourism stakeholders in sustaining and retooling their businesses during the current difficult period. Industry experts expect that tourism will begin to reach a full recovery by 2022-2023. 

TRIP is the fourth fund under the Stratus Alternative Funds SCC funding superstructure which provides a wide range of high-yielding non-traditional alternative investment solutions to investors. Through the launch of TRIP, investors will be able to diversify their portfolios and gain higher returns than traditional wealth products. 

Timar Jackson, Manager, Origination and Structuring, NCB Capital Markets, was one of the speakers at the ‘Financing a Blue-Green Recovery for the Caribbean’ session at the IFF. He highlighted that innovation in financing structures will be required to finance a Blue-Green recovery in the Caribbean, as well as the development of new risk assessment frameworks. Additionally, he stated that as part of financing terms, lowering the cost of funds for players within the industry will be necessary.

 

To learn more about NCB Capital Markets, click here to view their website. You can also see all recordings of the IFF sessions as well as all other information related to the forum by clicking here. We would like to once again offer our thanks to NCB Capital Markets for being one of our Gold Sponsors at the IFF.

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