Good Luck Minister Richard Sealy!

First I would like to sincerely congratulate the new Minister of Tourism, the Honourable Richard Sealy, and wish him every success in this post. By now I am sure he will be grappling with the problem of surrounding himself with people that can and will make a positive difference. Whether to allow the status quo to remain or to risk bringing in new and yet unproven expertise at least in the public sector?

He will also have to ask a number of critical questions including why under the last 13 or 14 years has Barbados seen the closure of some 27 hotels when no other major Caribbean destination has witnessed such a virtual decline in room stock over this period?

And what is also so remarkable is that despite the loss of all these hotels, if statistical information is to be believed, why have our long stay visitor arrival numbers grown by around 100,000 but our average annual hotel room occupancy has remained stagnant, barely reaching 50 per cent? Particular emphasis has been placed on a reported increase in average visitor spending, but has this taken into account, inflation and the fact visitors are spending more simply because everything costs more?

Equally alarming is the loss of airlift. According in the Ministry of Tourism own figures, over 67,000 airline seats were lost in the first nine months of last year alone. Virtually every Minister of Tourism across the region (and some Prime Minister’s) have negatively commented on LIAT’s return to a monopoly position and the raising of airfares to historically high levels with the dramatic effect this has had on intra regional travel.

The Minister will also have to query if the budget allocated to the Barbados Tourism Authority is being spent in the most effective way. Is it time to move from a single national marketing initiative, called the Best of Barbados programme, which relies on substantive discounting and effectively sells the product below cost in some cases?

If I may be as bold to offer the new Minister any advice, my first suggestion would be to get to know the everyday tourism players. Take (and make) the time to visit every hotel unannounced, every restaurant, every attraction and activity! Speak to the ordinary tourism workers, the red caps, taxi drivers, waiters, room maids etc. Show them you are genuinely interested. You don’t have to follow all their advice, but at least they will know you care. Finally, never (ever) forget, tourism is a people business. It’s the people that bring out visitors back. If they come back on their own accord, then we do not have to endlessly spend millions of dollars trying to attract replacements for them. They become our ambassadors and persuade their friends to visit Barbados at no cost to us.

Good Luck!

Adrian Loveridge

26th January 2008

19 thoughts on “Good Luck Minister Richard Sealy!

  1. Seems like good advice to us. Perhaps he needs to use his interpersonal skills to forge relationships with counterparts and other stakeholders in the region to develop a ONE Tourism Policy.The island chain represents a small region but still remains a diverse region.

    A marketing company worth its salt should relish the idea of developing destination programs for a group of Caribbean islands e.g. Barbados, Dominica, St. Lucia and.

  2. solid advice Adrian L. This part is a must>
    Take (and make) the time to visit every hotel unannounced, every restaurant, every attraction and activity! Speak to the ordinary tourism workers, the red caps, taxi drivers, waiters, room maids etc. Show them you are genuinely interested. Finally, never (ever) forget, tourism is a people business.
    Sealey has a daunting task. Vexed lackeys of BLP are everyhere in the industry to help him fail. Muscle Mary survived on patronage, buying journalists, wasteful spending and of course lies, lies, lies.
    I wish Sealey god speed. As a young man who is bright ,willing to listen and learn he should be able to negotiate the minefields the BLP left in tourism.

  3. My background education was as an economist. I am not sure people appreciate the international context in which our tourism product competes. Its hard to be self-critical but the bottom line is that we have nice beaches, some pretty countryside and good people, but compared with the rest of the world, ours is an expensive product. Our costs are high – principally labour costs – and so our prices are high. It is one of the reason why our main markets are those where people have some kind of historic connection and we find it hard to break into the US and continental European markets.

    Tourists from these markets have a choice of many places which offer better service than we offer, better infrastructure and other things. Increasingly, people are persuaded by the variety of activities and superlative hotels in Dubai, safaris in southern Africa and out-of-this-world service levels in Asia. Anyone been to an Aman resort? – we have nothing to compete with that, but our rates at our most expensive hotels are just as high. Try to get a room at the Hilton for less than US$300 with all taxes and charges, and then see how much luxury US$300 buys you around the world. People in the US and continental Europe dont pay $300 for a Hilton.

    We have two choices to say in business as a tourism destination, cut prices or raise our product quality to satisfy those who can afford our prices and bring in more of this type of client. Cutting prices means lowering our standard of living and endangering our environment, so we have to raise our product quality and exclusivity.

    The last thing you should do therefore is to mix the product with inferior or cheaper brands elsewhere in the region. That would be economic suicide.

    Mr. Sealy’s ideas of a more “local product” more engaging with the rest of Barbados are politically very attractive, but economically a little suspect. Our product has to be grounded, not on what we fancy we would like to supply, but what people who pay our prices are demanding.

    To some extent this is what is happening. Although the total number of airlift seats may have fallen, look at the increasing proportion of tourists paying for business-class tickets. Today, we don’t have as many cheap charter flights but we often have four flights a day between Virgin and BA with half plane taken up with premium priced seats. Many middle-market hotels have failed because they have been priced-out of the market they were in. In their place we have a new Four Seasons and a Banyan Tree coming along. But we have much more to do to stay competitive.

    Raising our product quality to attract tourists whose first thought is Sandy Lane or Four Seasons, is not about getting villages to make bamboo baskets or some market gardening. First and foremost we need to work harder at issues of service and product quality, but that is less politically attractive to say or do. Then we need to examine further the scope for high-class, non-beach toursim that encourages hotels away from the coast. Easier said than done and the experience of Villa Nova does not help.

    I wish Mr. Sealy well, but as Mr. Sandiford said yesterday, winning the election was the easy part, achieving the task is a lot harder to do than coming up with politically attractive slogans. I wish Mr. Sealy well and am confident that when Barbadians come together we can be world-beating.

  4. Thomas G we disagree with you on the point that Barbados should be wary of confusing our brand with the inferior brands offered by the lesser developed islands. The tourist product straddles several segments this is true but the traveller nowadays is one that wants BANG for dollars. Barbados cannot only be sustained by high end tourist dollars. We have a large select of small apartments, guest houses, hotels that operate still in the mass market and more importantly employ thousands of people.

    It is the theoretical approach which Lynch introduced to tourism which on paper appeared to be successful but in actuality had started to squeeze the life out of our sole foreign exchange earner.

  5. Dear David,

    The traveller who wants more bang for their buck, who does not have some prior connection to Barbados, will not come here because we are already too expensive. You will find that those middle-income market who do come have some connection (friends, family, always done it etc).

    To be competitive for the middle income market we have to keep our prices down, which means keeping our wages down. That is not good for Barbados.

    We will always have a guesthouse sector, but it cannot drive the economy. The bottom line is that we cannot be a high wage economy but a low cost tourist destination. Our wages are higher than St Lucia, Antigua or Tobago. We cannot compete with them for a similarly priced product, we have to move further upmarket than them. That is the simple , somewhat harsh, economics of it.

    Is the market big enough for us to focus exclusively on high value tourism? Off course it is. We only need 2% of the high value tourism market to have a good life.

    The hoteliers complain that they cannot compete because costs are too high (principally land and tax costs, labour costs). The question is, is it easier or better for us to lower costs or raise standards to validate higher prices? Clearly we should try and do as much of both as we can, but there is limited room in lowering costs. There is no point the government subsidising our flag ship industry with lower taxes or subsidies for certain costs. Our flag ship industry should be helping us support nascent industry. And so the only way to go is upmarket. It would be dangerous but maybe we can experiment a little with what “upmarket” is but we cannot experiment with being upmarket or not given our wages and economic aspirations.

  6. TG we are still struggling with your position. The current room stock to our view is not aligned with the strategy which your are proposing of a full steam ahead approach to grabbing mainly high enders. There is serious non-alignment.

    Maybe Adrian L can come and rescue us from ourselves.

  7. The nature of competitive markets is flux.

    What we are witnessing is the transition. Middle-market hotels that cannot compete with their offering are closing and high end hotels are coming in. The quality of the airlift is changing.

    I hope there will be room for innovation with some middle-market hotels that have a unique product surviving on their difference, some expensively upgrading themselves and others less expensively and hopefully sensitively, turning themselves into niche boutiques.

    Remember too, that “mass-market” has significant environmental costs. We want the smallest number of visitors, paying the highest mark ups that will maximise environmentally sustainable tourism dollars.

  8. David and Thomas..

    I agree with parts of what you both say.
    BUT Thomas look how long it has taken us (Barbados) to attract a Four Seasons and a Banyan Tree, and at the end of the day neither would be under construction if it wasn’t for the residential portion of the development.
    The Hilton would not have been built without taxpayers monies.
    Sandy Lane only has 112 rooms but its average room rate is 10 times more than Peach and Quiet, so of course it contribution to the national economy is greater in several ways.
    The small hotel sector on Barbados has over 2,300 rooms and thats only the ones the BTA knows about and not the large number operating without a licence.

    Barbados (in my opinion) has made the fundamental mistake of trying to be high-end, but then at the same time operating (for six/seven years) a programme which discounts the holiday price by up to US$300 per person (Best of Barbados).

    From a marketing perspective, it is sending mixed messages.
    Yes! we have this great product, but we only think you will purchase it if we reduce the price.

    In many respectives we are a a high cost destination due to some of the red tape.
    Try for instance to renew a hotel licence.
    Turn up at court will all the necessary clearance certificates (which take weeks to obtain), wait two hours for the magistrate and then be told, the Police did not know about the court hearing, so come back next week.
    Its all these silly little things that add up the cost of doing business here.

    The other thing Thomas has to realise that many of our middle market hotels fill there rooms with discounted tour operator rates, which are perhaps 40% BELOW the published rack rate.

    Even though we are managing to fill seats on Virgin and BA with some high end visitors you can still but a return ticket for a little over UK Pounds 300 through a consolidator.
    Effectively what we pay in the Caribbean to travel to another island, say like St. Kitts.
    And just GOOGLE affordable Barbados and look at some of the low priced packages available including Pounds 399 and 499 for flights and 7 nights accommodation.

    P & Q has gone about it a slightly different way, and even though our published rack rate is only US$109 per, we achieve an overall earning per occupied room night of around US$202.

    As a destination we need to retain more of our overall revenue from tourism rather than re-exporting a substantial portion of it.

    I could go on, but it seems like the policymakers are not listening.

  9. Adrian, I think that they are listening now, we have a very exciting and keen person in charge of the Ministry and for some reason I think that he wants to hear more of your thoughts and ideas.
    Is the Banyan Tree project still a go???

  10. Dear Adrian,

    First, congratulations on running a fine hotel. I wish your business well. I will visit you shortly to look around.

    You say nothing that contradicts what I have said.

    I am familiar with the sector and it does not surprise me that some of our hotels are discounting prices to get filled. It is also obvious to see that if they have to do that, they are unlikely to survive in the long run because of our high cost base.

    Indeed, many hotels with a fundamentally doomed business model have been temporarily cushioned by the weakness of the US dollar, but one day that will end and more of these hotels will close, unless they can do what you do.

    We should not respond by subsidising our hotel rooms or packages further. It makes no sense in the long-run. Costs will rise but the subsidies cannot. If we continue to offer subsidies our hotel industry of tomorrow will look like our sugar industry of today. This is a harsh thing to say, but that is the economic reality.

    We need to be in a market sector where our cost base can be consistently covered by the prices we can charge and for the most part, that will have to be more upmarket than our average hotel today. The Transition is happening. Within that transition there will be room for a small hotel that offers consistently high standards, perhaps through the way it treats, manages and trains its staff. Perhaps that is Peaches and Quiet. And such a small hotel would be better off, if they do not have to compete for staff and customers with hotels that are only kept in business by subsidies.

    However, that is easier said than done. I am not surprised it took a long time to bring the Four Seasons and Banyan Tree. They key to those chains is world-class excellence in service and, with pockets of exception, is not something we have a track record in. They are taking a risk and I hope they manage to make it work as their presence will galvanise the sector and ancillary industries like tours and restaurants.

    I agree that we need to reduce needless costs and some of these are to do with government regulation. YOu are right it is not all labour, land and taxes. We need to regulate the sector to ensure that the brand is not tarnished by a bad apple, but I am sure the regulation could be more efficient and cheaper, especially by using technology more. I hope Mr. Sealy listens to that. Queuing for a long time in person government licenses is not atypical in Barbados and that should be addressed, but the public service unions will object to the obvious solution of more web-based applications.

    Good luck.

  11. The Banyan Tree Hotel project is running into some challenges, but it is still a go. The Banyan Tree management contract is there and the forthcoming hotel is still advertised on the Banyan Tree website. The contractors have started some initial works.

    I reckon it will open in 2010/2011. And yes, like all other major hotel projects today, it will be financed in large part by the associated villa sales. The site is good and the plans are world class, but the villas are very pricey – again an indication of what you have to do to make a Barbados location work.

  12. In case I sound too close to Banyan Tree, I should add that I am not connected with them, only familiar with the financial side of things.

  13. Loveridge seems to me to be asking the Minister to ‘walk on water’, a feat which I doubt, even he, could achieve!!!!

    I expect the Minister will do his best! One must n’t ‘expect miracles’ of Bim. It’s one of very many holiday destinations in the world, and a pretty-expensive one, too, as far as I can see. Loveridge makes much of the fact that a number of hotels have closed in Bim in recent years. Well, is it possible that we had a surplus of hotels for the number of visitors we receive????

    What I should like to see is Bajans relying on tourism, less, for their income and diversifying more! I think the same point was made by the governor of the Barbados National Bank, the other day, and not waiting for the Indians to do it for them!!!!

  14. Barbados has, since the 90s, been fairly rapidly losing the competitive advantage that it would have managed to achieve in its tourism product in the 70s and 80s. Much of what we in Barbados have been losing with regard to that kind of advantage can be attributed to the multifarious changes that have come about in the global travel and leisure markets.

    For instance, there has been in recent time the popularing of nature-based tourism, which Barbados does NOT have much to offer in, but for which Dominica certainly does have a greater advantage in. Also, there has been in recent time the popularing of heritage-based tourism, which Barbados has little to offer in in comparison to, say, Egypt, which has long had very substantial archaeological and historical sites to show visitors. Also, some countries that never used to emphasize tourism as a major component of their GDPs, say, in the 70s and 80s, would have had to turn to looking at the great and relatively quick benefits that would be gained by emphasizing such, esp. when worsening fiscal circumstances would have seen to be brought on by national economic crisis. One of those countries is Cuba, which is itself reported by some tourism experts in Barbados to be providing severe competition to us in Barbados. Today, even wars in or between countries, or terrorist hot spots, or their opposites, will have a greater role in determining which destinations so many tourists will visit or not, so much more now than ever before, and esp. with this era being the “global information/communication techonlogical age”

    So, the once very popular sun, sea, and sand ideology and practice of the global travel and leisure market, and for which Barbadian tourism was to benefit greatly from, particularly, during the 70s and 80s, has become somewhat deemphasized or supplemented by increasing emphases being placed on the other aspects of the wider global tourism product. Therefore, diversification in the national tourism products themselves, or diversification in the so-called national economies of these countries has been warranted for many, many reasons, but not without necessitating esp. very negative changes in the cultures, customs, and sociologies of these countries.

    Therefore, even while we have seen millions of tourists and travellers flocking to those countries that have been very or fairly successful in packaging, marketing, pricing, and managing the costs of their tourism products and services to meet or effect these different changes in the global tourism product, and the millions of tourists and travellers that have also been flocking to destinations that have been very successful in doing those similar things in regard of the constants found in the global tourism product, we have also been seeing the very negatives that have been pervading esp. the host countries, with so many emphases being placed on global and national tourism.

    For instance, with Barbados failing to properly manage its entire tourism product since the 90s, it has also meant, and quite stupidly, that too many of our fertile agricultural lands have been devoted to tourists and leisure, and esp. in a country that is a land scarce one. What madness and ignorance of the highest order!! Such crass and blatant mismangement has also meant that too great a proportion of our skills, resources, finance and powers have unwisely been allocated to tourism planning and development, when some of those things should have instead been allocated to the greater and proper development of a hard core, efficent and environmentally sound industrial base for Barbados. Also, we have seen with this gross mismanagement of the tourism product of Barbados, the creation or development of so-called economies of scale that have been so structurally transient and slight and import-oriented in a global context, that they have followed their original source in NOT having far greater national cost-saving, foreign exchange saving and national resources connections with two very important industries in Barbados, Agriculture and Manufacturing. Hence, whereas the rent a vehicle business will cater to many tourists in Barbados, this business right now is NOT capable of buying some of these vehicles from Barbados, when some of these vehicles ought to have by now been assembled in Barbados. The aircraft that we depend upon to transport tourists to and from Barbados, we have NOT even started to assemble in Barbados, when we ought to have by now been assembling them.

    And the gross and reckless mismangement of NOT ONLY tourism, but also the entire so-called economy will continue for the forseeable future unless a PDC Government takes office in Barbados within reasonable distance!!


  15. “The Minister will be well advised to stay far away from Adrian L”

    Thats right stay away from the successful people who know what they are talking about.

    Donald Duck or PDC are really aliases for Goofy and Daffy Duck

  16. Mr/Mrs Bimbro..

    ‘ a surplus of hotels for the number of visitors we receive’

    An interesting comment.

    Since 1994 then we have lost 27 hotels.

    Long stay visitor arrivals have grown about 100,000 per annum but our hotel occupancy level has remained stagnant at around 50%.

    So the question again where are these extra 100,000 people staying?

  17. I have real concerns about the reliability of these figures being presented to the public, if we start from that point, little else can make sense coming out of anything Lynch or the PM had involvement with.

  18. Loveridge, I’m no expert on tourism but, from my slim knowledge of Bim, it’s high cost of living and high air-fares, I find it a wonder that ANYBODY, other than the super-rich can afford a holiday there. To give u an example; was acquainted with an English woman, married to a Bajan guy, with several children, who informed me, “they could n’t afford to go there, as it was so expenseive”!!!!

    Put it this way; I’m not going to condemn the minister before he’s properly, started, just because he’s black, and I would n’t expect u to, either!

    Give the man a chance. I’ve already, advised you to apply for an advisory posn – shall I come and hold your hand and take you down to Roebuck Street, or wherever his office is!!!! 🙂

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