MINUTES OF THE MEETING OF THE CTO COUNCIL OF TOURISM MINISTERS AND COMMISSIONERS HELD AT ATLANTIS PARADISE ISLAND RESORT, PARADISE ISLAND, THE BAHAMAS, ON SUNDAY JANUARY 22, 2012 AT 3:35 P.M.

ATTENDANCE CTO STAFF

St. Kitts & Nevis Chairman: Hon. Richard Skerritt Present Mr. Hugh Riley Anguilla Hon. Haydn Hughes Present Mr. Neil Walters Antigua & Barbuda Hon. Herbert John Maginley Present Aruba Hon. Otmar E. Oduber B.Sc. Absent Bahamas Hon. Vincent Vanderpool-Wallace Present Barbados Hon. Richard Sealy Present Belize Hon. Manuel Heredia Jr. Absent Bermuda Hon. Wayne Furbert Present Bonaire Hon. Burney El Hage Absent B.V.I. Ms. Hadassah Ward Present Cayman Islands Mr. Shomari Scott Present Cuba Hon. Manuel Marrero Cruz Absent Curaçao Mr. Ghatim Kabbara Present Dominica Hon. Ian Douglas Absent Grenada Hon. Peter David Present Guadeloupe Hon. Josette Borel-Lincertin Absent Hon. Manniram Prashad Absent Haiti Mr. Daniel Fouchard Present Hon. Wykeham McNeill Present Martinique Mrs. Valerie Vulcain-Augustine Present Montserrat Hon. Reuben Meade Absent Puerto Rico Hon. Mario Gonzáles-LaFuente Present St. Eustatius Hon. Clyde van Putten Absent St. Lucia Hon. Lorne Theophilus Present St. Maarten Ms. May-ling Chun Present St. Martin Hon. Ida Zin-Ka-Leu Present St. Vincent &The Grenadines Mr. Glen Beache Present Trinidad & Tobago Ms. Sandra Perkins Present Turks & Caicos Mr. Kingsley R. Been Present U.S.Virgin Islands Hon. Beverly Nicholson Doty Present Venezuela Hon. Alejandro Fleming Cabrera Absent

Minutes of the Meeting of the Council of Tourism Ministers & Commissioners Atlantis Paradise Island Resort, Paradise Island, The Bahamas Sunday January 22, 2012 Page 1

MEETING OF THE COUNCIL OF TOURISM MINISTERS AND COMMISSIONERS OF THE CARIBBEAN TOURISM ORGANIZATION

TO BE HELD ON

SUNDAY, JANUARY 22, 2012 3:35 p.m. to 5:00 p.m.

Hera Room Atlantis Paradise Island Resort Paradise Island, BAHAMAS

DRAFT AGENDA

1. Call to order

2. Adoption of the Agenda

3. Welcome new Ministers

4. Confirmation of the Minutes of the Meeting held on Thursday, September 15, 2011 at Hotel Le Domaine, St. Martin.

5. Matters Arising from the Minutes

6. The Way Forward for the CTO

7. Next steps on the Air Passenger Duty

8. Any Other Business

9. Date of the Next Meeting

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FOLLOW-UP ACTION 1. CALL TO ORDER

The meeting began at 3:51pm

The meeting was called to order by the Chairman of the Council of Ministers and Commissioners of Tourism, Senator, the Honourable Richard Skerritt.

2. ROLL CALL

The roll call was performed by the Director of Finance and it was ascertained that a quorum was present.

The Chairman welcomed new ministers; Minister Lorne Theophilus of St. Lucia, Minister Wykeham McNeill of Jamaica, and Minister Wayne Furbert of Bermuda.

The Chairman offered congratulations to the Executive Director of the Puerto Rico

Tourism Company (PRTC) Mr. Mario González-Lafuente, on his appointment to the Travel and Tourism Advisory Board (TTAB) of the US Department of Commerce.

Mr. González-Lafuente in response thanked the Chairman and asked that he be allowed to be the voice of the Caribbean during his tenure on the Board.

He referred to the Intransit Lounge in Puerto Rico, which had been closed since September 11, 2001and asked CTO to assist with the provision of statistics to prove the benefits of the Intransit Lounge and of having it reopened.

He further noted that the recommendations of the TTAB are followed by actions and this is where Puerto Rico believes it could be very beneficial to the Caribbean.

The Chairman invited members to channel their concerns to Puerto Rico and asked the CTO to provide the PRTC with the necessary information to assist it with its case H. Riley

regarding the Intransit Lounge.

Due to the sensitive nature of the discussions to follow, the Chairman asked persons not Ministers or not representing their Ministers to leave the room.

3. ADOPTION OF THE AGENDA

The agenda was adopted on a motion by and seconded by the USVI.

Mr. Riley noted the insertion of a presentation by Dr. Edward Greene of the Caribbean Public Health Agency (CARPHA) into the agenda as part of item number 8.

Minutes of the Meeting of the Council of Tourism Ministers & Commissioners Atlantis Paradise Island Resort, Paradise Island, The Bahamas Sunday January 22, 2012 Page 3

FOLLOW-UP ACTION The Chairman noted that the CTO’s Board of Directors had asked to make a presentation re: the transitioning of the assets of CTO USA to CTDC and after a brief discussion it

was agreed that this should occur during item number 6.

He also noted that the CHTA had asked that a video on ‘Taste of the Caribbean’ be shown during the meeting and this would take place immediately after Dr. Greene’s presentation.

The Chairman noted the presence of Mr. Beache of St. Vincent and the Grenadines and the newly appointed CEO of TIDCO, Ms. Sandra Perkins as well as others representing their ministers.

4. CONFIRMATION OF THE MINUTES OF THE MEETING HELD SEPTEMBER 15, 2011 IN ST. MARTIN

The minutes were adopted as read on a motion by Grenada and seconded by Antigua and Barbuda.

5. MATTERS ARISING

The Chairman noted the matter of WTTC and Mr. Scowsill on page 4 of the Minutes.

Mr. Riley pointed out that the WTTC was ensuring that the Caribbean has a signature on

the ‘Golden Book’ of Travel and Tourism, especially given the importance of tourism to the region.

The Chairman noted that CTO’s Research department had conducted research on summer cruising in the Caribbean and that a follow-up study on winter cruising had been

done to assess the differences between the two types of traveler.

Commissioner Nicholson referred to the Business Research and Economic Advisors (BREA) study which is in progress and noted that there have been some discrepancies between CTO and BREA studies in the past.

The Chairman pointed out that the CTO study was a more marketing related study while BREA performed their studies on behalf of the FCCA from a more economic standpoint.

In referring to page 6 of the Minutes of the previous meeting, Minister Maginley asked

about the WTTC document analyzing the revenue loss to the UK government due to the Air Passenger Duty (APD) and whether this document was now available. Mr. Riley noted that this was not the case.

Minutes of the Meeting of the Council of Tourism Ministers & Commissioners Atlantis Paradise Island Resort, Paradise Island, The Bahamas Sunday January 22, 2012 Page 4

FOLLOW-UP ACTION The Chairman informed the meeting that the CTDC had signed a contract with Tambourine Creative to redesign the www.caribbeantravel.com website. He pointed out that pledged contributions had been made towards the cost of this exercise and that the website was expected to be up and running by the third quarter of 2012.

Minister Sealy in referring to Redjet noted that some additional routes had come on stream since September 2012. He noted that the new competitor forced LIAT and

Caribbean Airlines (CAL) to run specials. He further noted that the Barbados government has supported Redjet and pointed out the need for more players, more aircraft and more competition.

Minister Sealy referred to the fact that there is a LIAT meeting every quarter and suggested that CTO become more involved at the LIAT shareholder level as he felt this could prove useful and assist with intra-regional travel issues. He noted that there are some issues with LIAT and its operations and suggested that LIAT’s shareholders may have to take on more responsibility like has done with CAL and Jamaica with Air Jamaica.

Minister Maginley also noted great concern over LIAT and he also referred to its challenges. But he pointed out that LIAT was a social necessity and that to treat its operations simply as a commercial exercise would lead to non-profitable routes being dropped.

Minister Maginley further noted that the three current LIAT shareholders were firm on their social role. He pointed out that it was not a level playing field and noted issues with taxes and the fare guarantee arrangements made with external carriers which were not made with LIAT. He suggested that some of the short trips LIAT made may have to go away, mainly to maintain operational efficiency.

In referring to Minister Sealy’s submission, Minister Maginley offered on the Council’s behalf to propose CTO’s input at the next LIAT shareholder’s meeting.

Minister David noted his agreement with Barbados and Antigua and Barbuda and pointed out that Grenada is on record as seeking to become a shareholder of LIAT. He indicated that there were some issues with LIAT’s management but suggested that LIAT was an essential public utility for the Eastern Caribbean.

Mr. Beache recognized the constant support for LIAT from several countries and that competitors for LIAT have been in and out of the market. He pointed out issues with running a short haul airline, shareholder funding issues and industrial relations issues. He suggested that there be discussions at the Heads of Government level before CTO’s involvement.

The Chairman noted CTO’s role in the past in resolving issues between intra-regional airlines and a proposed increased focus on intra-regional travel matters.

Minutes of the Meeting of the Council of Tourism Ministers & Commissioners Atlantis Paradise Island Resort, Paradise Island, The Bahamas Sunday January 22, 2012 Page 5

FOLLOW-UP ACTION Mr. González-Lafuente noted a 3.8% increase in cruise ship visits for Puerto Rico comprised of increases in both intransit and homeport visits. He suggested that the

International Intransit Lounge affects the way Puerto Rico operates as a hub for the Caribbean and Latin America and this will impact Eastern and Southern Caribbean nations.

The Chairman indicated that the Leadership Conference in St. Kitts will have as a key

topic the area of intra-regional travel.

6. WAY FORWARD FOR CTO

The Chairman noted that in St. Martin in September 2011 the Council took a policy decision in Caucus to support the Caribbean Tourism Development Company (CTDC). He further noted that by the end of June 2012 the CTO will cease its marketing functions in North America and hand over its marketing assets to CTDC, in an attempt to improve the way the Caribbean brand is promoted. He also indicated that the CTO Secretariat

Had been charged with the responsibility of creating a paper by the January meetings to assist with the finalization of the transition of the assets to CTDC.

The Chairman pointed out that an official policy decision could not be taken since there was no quorum at the time since the quorum in existence during the Council meeting

shrank to below a quorum when the meeting went into Caucus. He reiterated that the aim of the decision was to give CTDC the tools and the mandate to market the Caribbean brand in North America.

The Chairman noted that there was some uncertainty regarding the policy decision and

its implications. He noted that the policy was designed based on feedback from previous Councils, Boards of Directors and Executive Committees. He suggested that there were issues with the marketing of the Caribbean brand and there was a need for change.

In going on to discuss CTDC the Chairman noted that the current CTDC Board,

comprised of six (6) CTO Directors and six (6) CHTA Directors, is functioning and is moving steadily forward to take over the North American marketing function, with a CEO expected to be in place by the second half of 2012.

Mr. Riley read from the paper which was circulated to all members of the Council.

The Chairman opened the floor for discussion.

Mr. Kabbara of Curacao introduced himself as speaking on behalf of the Commissioner of Tourism. He noted that that there many questions on this matter in the meetings

earlier in the day and that they may come from a sense that member countries are putting funds into CTO, but this new operation will create additional costs. He further stated that members may not be feeling as if they are getting enough value for their money.

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FOLLOW-UP ACTION

He agreed with the reactivation of the Caribbean brand, but pointed out the need for more information.

The Chairman noted that CTO USA operation costs $1.5 million every year, but the new CTDC would be less costly to operate and it would also generate additional revenue to further reduce the effect of the operational costs. He referred to the ‘What Happens to

Your Money presentation which explains how members’ contributions are spent.

The Chairman went on to explain the CTDC operation as a virtual office, initially with low administrative costs. There would be market specific skills with a team comprised of a CEO and associates including CTO USA and ultimately CTO UK staff.

The Chairman also pointed out that currently marketing contributions are assessed at $3.2 million but less than 50% or $1.6 million is normally collected. He noted that the new plan is being worked out but suggested that the new plan would encourage buy-in by countries and also be on a pay-to-play basis.

The Chairman further suggested that CTO would have a key coordinating role in marketing the Caribbean globally. He also suggested that CTO USA could be reduced to three full time employees and one part time employee by the second half of 2012.

Minister Maginley noted that there is a role for CTO USA according to the CTO report. He referred to the fact that the Bahamas was closing its New York office and that Antigua and Barbuda had considered closing their New York office given that CTO had an office there. He pointed out that there were some very important considerations in having a downtown office in a major city. He gave Antigua and Barbuda’s strong support for the CTDC and the new marketing direction.

The Chairman pointed out that CTDC was based on a decision made several years before by the CTO Council and that previously there were some issues with the CTDC focus. He suggested that now is the right time and circumstance to move CTDC forward as there was a need to search for advantages in the current market conditions. He noted that in doing so CTDC was expected to bring return on the investment by members and generate its own funding in an entrepreneurial type of manner.

Mr. Been of Turks and Caicos asked about the transition process, while noting the termination of the North American Public Relations (PR) firms’ contracts. He also asked about the CTDC CEO and the selection process for that position.

The Chairman responded by indicating that the CTDC Board had made an offer to an individual to be CEO of CTDC and would begin carrying out the company’s marketing plans.

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FOLLOW-UP ACTION

The Chairman suggested that CTO USA will continue in New York if the meeting accepts the paper which was circulated and that CTO USA will co-exist initially with CTDC to move CTDC along in marketing the Caribbean brand. He pointed out that members can continue to engage CTO USA but the marketing functions will be performed by CTDC.

Mr. González-Lafuente reiterated the need to create efficiencies and suggested that the CTDC will operate like a Destination Marketing Organization (DMO).

In response to a question on the reporting lines in CTDC and specifically to whom the CEO reports posed by Mr. González-Lafuente, the Chairman gave a brief history of the

CTDC operation and the composition of the CTDC Board. He pointed out that:

• The company was registered in the USA and Cayman Islands and revived in May 2011.

• There was a twelve person Board with six (6) CTO and six (6) CHTA members.

• The CTO members are: The Chairman of the Council of Ministers and Commissioners of Tourism, The Secretary General, Commissioner of Tourism for the USVI, Minister of Tourism for the Bahamas, The President, Comite Martiniquais du Tourisme, and the Director of Tourism for Jamaica.

• The CTO Chairman of the Council is the Co-Chairman with the President of the CHTA. The Chairman noted that the CTDC Board had approached the Hon. Minister Vincent Vanderpool-Wallace and that an offer had been made to him earlier in the day with a view that he would take up office prior to June 30, 2012. He further stated that Minister Vanderpool-Wallace is the visionary who created CTDC.

In response to a query by Minister Maginley on the composition of the CTDC Board and its selection, the Chairman pointed out that CTDC’s Articles of Association gives the CTO Chairman of the Council the mandate to select the CTO members of the Board. He noted that the CTDC’s Board is designed to be comprised of technical people.

The Chairman continued that CTO’s Board of Directors will continue to be the main marketing advisory body and it must create linkages with CTDC.

Minister Maginely suggested that it must be clear that CTDC’s Board members must represent CTO’s interests. He noted some issues with the functioning of the CTDC Board in the past.

The Chairman agreed and also cited previous issues with micromanagement and political interference, but he pointed out that CTO will do everything to ensure that CTDC

Minutes of the Meeting of the Council of Tourism Ministers & Commissioners Atlantis Paradise Island Resort, Paradise Island, The Bahamas Sunday January 22, 2012 Page 8

FOLLOW-UP ACTION continues and is successful. In responding to Mr. González-Lafuente’s question on timelines, the Chairman noted that the CTDC’s CEO is expected to be in place by June 1 and the CTO restructuring should be completed by July 1, 2012.

Mr. González-Lafuente indicated Puerto Rico’s support.

Minister Sealy also gave Barbados’ support for the initiative; he did refer to previous issues related to funding, but cited the fact that CTO was returning to its core functions of advocacy, research and human resource development with the marketing now including a private sector role. He suggested that the CTO Board should always be taken along in any decision making process. He pointed out the need to make the structures correct in CTDC.

Minister Vanderpool-Wallace in explaining the genesis of CTDC, noted:

• That previously there was very little collaboration between CTO and the then CHA

• The need to collaborate with Caribbean hoteliers

• CTO pushed for CHA to become CHTA

• They are now both using the same Caribbean logo after unanimous agreement on its visual and audio elements.

• CTO and CHTA now moving to a single marketing function with a single website with a revenue earning booking engine for all Caribbean properties. Minister Vanderpool-Wallace noted that he was appreciative of the offer by CTDC’s Board but that he was not yet in a position to definitively accept the offer.

Mr. Kabbara asked about CHTA funds for CTDC and the Chairman in responding noted that CHTA was not contributing enough. He pointed out that the CTDC’s initial project – the redesign of the website was funded mainly by CTO’s members’ pledges as well as RMF contributions to the tune of $275,000.

Mr. Beache noted that St. Vincent and the Grenadines still had some issues with CTDC, but agreed with the choice of CEO. He went on to note that there was a lack of communication on the activities of CTDC.

Mr. Beache continued by referring to the decision made in St. Martin and the subsequent decision to terminate the PR contracts and noted some reservations about the process used to make decisions.

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FOLLOW-UP ACTION

He suggested that although CTO may be too big to always satisfy all members there may be a need to canvass members to see if they are comfortable with their RMF funds being used to fund CTDC.

Minister Maginley stated that the decisions regarding the formation of CTDC were made several years before and noted that up to 2011 the issues with CTDC were administrative in nature.

Mr. Beache stated that St. Vincent and the Grenadines was not in support of CTDC as it currently stands and noted concerns about CHTA’s contributions.

The Chairman suggested that CTDC could produce its audited financial statements at an annual shareholders’ meeting to inform members of the company’s financial status.

The Chairman invited the Chairman of the CTO Board of Directors to make the Board’s presentation to the Council.

Mrs. Jeffers read the Board’s submission:

“While we support the CTDC, the Board of Directors needs to ensure that a business and operational plan is in place for CTDC in order for the members of the Board to be comfortable with the transfer of CTO assets. It has already been agreed than an operational audit of the CTO be carried out. It is therefore recommended that this audit: a: Be expanded to include the impact of the CTDC operation b: Be carried out as soon as possible before the decision to transfer the assets of CTO USA to CTDC is made.”

In adding their comments to the Board submission, Mr. Beache noted a lack of communication between Directors and Ministers and Commissioners and Mr. Kabbara reiterated the need for more information and suggested that the CTDC operational plan be circulated to everyone.

Minister Maginley moved that the Board’s resolution be accepted as read, this was seconded by Minister Vanderpool-Wallace.

Ms. Ward suggested that the mandate of the Organizational Audit include assessing the marketing needs of the Caribbean brand. She also suggested that the transfer of assets should only be to an established entity with an approved plan. Ms. Ward also asked for more transparency on the use of funds by CTDC.

The Chairman noted that CTDC has a vision for creating and developing a global Caribbean brand. He pointed out that there will be no full closure of CTO in North

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FOLLOW-UP ACTION America. He reiterated that not enough was being done with the little funding available for RMF and that it could no longer be business as usual.

The Chairman reaffirmed that CTDC will be responsible for marketing the Caribbean brand in North America and that CTDC’s marketing plan is CTO’s marketing plan. He pointed out that visionary moves do not always gain consensus.

Ms. Chun noted that based on the discussion St. Maarten looks forward to the activities of CTDC.

The Chairman invited members to vote on the proposal that the CTO marketing function be transferred to CTDC and that the CTO maintain a presence in North America.

Members voted by a show of hands. Twelve (12) members voted in favour, one (1) member against and the eight (8) remaining members present abstained.

7. ANY OTHER BUSINESS

Minister David thanked Ministers Skerritt and Sealy for attending the Tourism Conference in Grenada during November 2011.

The Chairman invited Dr. Edward Greene of CARPHA to give his brief presentation.

Dr. Greene recognized Minister Maginley’s role in the process when he was Minister of Health for Antigua and Barbuda.

He noted that CARPHA was in partnership with CTO/CHTA to do a series of programs.

He further noted that CARPHA’s work was set to begin on January 23, 2012 under the interim leadership of Dr. Jerome Walcott, former Minister of Health in Barbados. He stated that CTO would be an observer on the supervisory board which was set to meet in March 2012.

The Chairman thanked Dr. Greene and asked members to review the documentation circulated during the meeting. Dr. Greene’s presentation is attached to these Minutes.

There being no other business the meeting was adjourned at 6:31pm.

CONFIRMED………..………………………………………………….

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FOLLOW-UP ACTION DATE………………….……………………………………………….

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FOLLOW-UP ACTION

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