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The Economics Of The Best Of Barbados Programme.

Submitted by Adrian Loveridge 28 February 2008 The Barbados Tourism Authority has brought back the Best of Barbados programme for summer 2008, which will run from 1st May until 15th July and then again from 1st September until 30th November. For periods other than September the incentive to purchase the package is a US$200 air…

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Submitted by Adrian Loveridge

28 February 2008

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The Barbados Tourism Authority has brought back the Best of Barbados programme for summer 2008, which will run from 1st May until 15th July and then again from 1st September until 30th November. For periods other than September the incentive to purchase the package is a US$200 air credit per person, one nights free accommodation, daily complimentary breakfast and a US$25 voucher towards Oistins Fish Fry.

During September that air credit increases to US$300 and two night’s accommodation is ‘free’. Our small hotel is experiencing its best ever winter season with an occupancy rate averaging around 99 per cent. Our average room rate is US$99 per night plus VAT (7.5%). In two months we go into the eight long summer months season and are always left with the same challenging decision, should we stay open and hopefully generate enough business to be viable or should we close?

If we stay open we have to compete with the Best of Barbados programme. We have not joined other hotels in the promotion because we feel it is against the overall national economic interest of the country. Time and time again, discount driven promotions have been proven to attract the least destination loyal visitors. Generally they will book whatever is cheap this year and do exactly the same, next.

So let us do the maths based on an average room rate of US$99 plus VAT. Remember that Barbados is largely a tour operator business driven destination, so rates paid by the leading operators are often up to 40% below published rack rates.

Example ONE

Clients booking Peach and Quiet directly:

7 nights room at US$99 plus VAT divided by two (half twin)

7 breakfasts at US$12 plus VAT

Total US$469.84

Example TWO

Clients booking Best of Barbados package for months other than September.

6 nights room (one free) at US$99 plus VAT divided by two (half twin)

Daily free breakfast and Oistins voucher

Total US$319.27

LESS air credit US$200 and half Oistins voucher

Total net Revenue US$106.77

Example THREE

Clients booking Best of Barbados package in September.

5 nights room (two free) at US$99 plus VAT divided by two (half twin)

Daily Free Breakfast and Oistins voucher

Total US$266.06

Less US$300 air credit and half Oistins voucher

Total net LOSS for each BOB visitor – US$46.44

Arguments can be made that clients purchasing the BOB packages will spend other monies when on Barbados. BUT ancillary services and attractions are also heavily discounted and the evidence does NOT exist to demonstrate that persons purchasing budget packages are among the higher spenders. Many of us understood the logic of implementing a discount promotion after 911, but seven long years on, its time we moved on with a more creative and rewarding national marketing strategy.

If ‘out of the box’ thinking in tourism is going to become a reality, then it has to start somewhere!

 

 

23 responses to “The Economics Of The Best Of Barbados Programme.”

  1. Best Of Barbados Tourism Promotions: Using Your Tax Dollars To Harm Small Businesses « Barbados Free Press

    […] on over to Barbados Underground and read “The Economics of the Best of Barbados Programme“ by Adrian Loveridge and then decide whether you think that the new government should […]

  2. Bajanboy Avatar
    Bajanboy

    This is one of the games that the BTA and government play to make it seem that everything is going well with tourism in Barbados.

    I remember when they used to add the number of long stay and cruise arrivals together to give the total number of visitors to Barbados, which is as meaningless a statistic as you can get.

    The Best of Barbados promotion will allow the BTA to trumpet that summer arrivals are up, without allowing a true understanding of the impact of those arrivals on the economy of Barbados. The economic impact of tourism (both in terms of daily visitor expenditure and jobs created) is the only thing that matters when measuring how the industry is doing. The government has been manipulating statistics forever, and they are unlikely to stop now which is unfortunate because it limits any real debate in tourism that could help us become more competitive.

    Adrian mentions a good point in that the Best of Barbados programme sucks the wind out of the better and more competitive hotels that would normally do better during the discount periods and only supports the more mediocre properties out there. Another issue that will arise is that discounting forces hotels to cut corners. For example, guests will be given the cheapest breakfast possible with as few staff as possible to serve it to minimise the costs of that aspect of the promotion. The staff themselves may be less motivated because there will be no service change to be had for breakfast.

  3. degap Avatar
    degap

    “Mo’ tourists mo’ money”

    Isn’t the whole point of the BOB to increase arrivals, interest, employment, and revenue during the off peak seasons? To the extent that this promotion accomplishes this, what’s the problem? If no tourists are on the island, how can they send money here? There are very few tourists who visit Barbados to stay locked up in their room 24/7. With no promotion, hotels close down, poor people get sent home, “ancillary services” will also see a slowdown and the multiplier effect will drag down the entire economy. I don’t know if it is or not, but the BOB should be heavily marketed throughout the Caribbean in the interest of intra-regional travel of course.

  4. Adrian Loveridge Avatar
    Adrian Loveridge

    degap…

    Once again you seem to have missed the point.
    The whole idea is to maximise our tourism earnings not sell it below cost.
    If you discount any product to the detriment of the the MAJORITY of the industry, what have you achieved?

  5. degap Avatar
    degap

    “BOB’s down with OPT’s”

    No hotel is excluded from BOB, so individual hotels are free to participate or as you suggested close down or operate at 75% or 50% capacity. If hotels close down and workers are sent home, how does that “maximize our tourism earnings”? BOB is (or should be) targeting a different market from the usual peak season tourists, so I don’t see how the Barbados Brand will be adversely affected by this promotion.

  6. Carson C. Cadogan Avatar
    Carson C. Cadogan

    OFF TOPIC BUT……

    “PM’s ultimatum

    Date February 07, 2008
    Brief by Tracy Moore
    CONTRACTORS working on the ABC Highway Expansion Project have until the end of this month to come up with a fixed-price contract for Phase 1 of the plan.

    If they don’t, the Government will hire local contractors to do the job”

    Let me take this opportunity to remind all contractors working on the ABC highway project that the end of the month is tomorrow, Friday 29, 2008. I hope that they have not forgotten. They have until midnight Friday night to come up with a dollar figure.

    They should also bear in mind that the Barbados Labour Party is no longer in power and the gravy train has stopped.

    We DLP supporters are watching this situation very carefully.

    Carson C. Cadogan
    Eagle Hall
    St. Michael

    Mr. Cadogan please note that we have not taken any action that we are aware to place your postings in moderations. Frome time to time wordpress will spam legitimate comments.

    David

  7. Rohan Avatar
    Rohan

    I Would love to do a full review of your hotel on my website Adrian.

    This is a great article and echoes my sentiments exactly. Barbados has to find a way out of marketing by price (the bottom of Maslow’s hierarchy of needs for the social science scholars out there) and move up that pyramid. Marketing by tapping into higher emotional levels and not the lowest common denominator of price.

    For the U.S based folks. Think of Walmart, and then think of Apple Inc. Which one would you more likely want to be associated with.

    Anyhow, enough of a rant, Adrian, great article!
    Guidance
    Rohan

  8. peltdownman Avatar
    peltdownman

    Adrian
    Why don’t you do what the Bridgetown merchants do when they have a sale. You jack up your rack rate and discount it to US$99.00. We fall for it all the time in Barbados, so why wouldn’t they do so in the U.S.? After all, they voted Bush in as President.

  9. boom Avatar
    boom

    Being #1 on Trip Advisor shouldn’t hurt business much…The well traveled traveler usually reads before they book.

  10. David Avatar
    David

    Slightly off topic but interesting move by the new government. It makes us go ummmm.

    Barbados to amalgamate three public companies
    Published on Thursday, February 28, 2008 Email To Friend Print Version

    BRIDGETOWN, Barbados: Government The government of Barbados is proposing to amalgamate three public companies that essentially perform similar functions and tasks, all in an effort to streamline their operations and improve efficiency.

    This is the word from Minister of Tourism, Richard Sealy, who revealed this week that at a recent Cabinet meeting a decision was taken to amalgamate Needham’s Point Development Incorporated, Needham’s Point Holdings Limited and the Barbados Tourism Investment Incorporated into one entity, under the designation “Barbados Tourism Investment Inc. (BTI)”.

    In explaining this development, Sealy said “the three companies share the same overall mandate to undertake investments in the tourism sector for the benefit of the country, and as such, the achievement of government’s economic goals and the meeting of genuine social needs by Barbados’ tourism sector, would be most efficiently met by the amalgamation.”

    Sealy also said, “The proposed amalgamation would be subject to proper legal arrangements and to full consultations with the staff of the three entities.”

    http://www.caribbeannetnews.com/news-6346–26-26–.html

  11. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    The Governor of the Central Bank of Barbados, Dr. Marion Williams, is reported to have said that the link of the Barbados Dollar to the continuing weakening United States Dollar would present Barbados’ greatest challenge (Daily Nation, Thursday, February 28, 2008), presumably, at this juncture.

    In an address titled: The Global Economic Outlook and the Implications for Barbados, at the monthly meeting of the Barbados Chamber and Commerce and Industry at the Hilton Hotel on Wednesday of this week, Dr. Williams is quoted as having said “that a weak currency would raise the prices of imports from non-dollar sources while lowering the prices of exports” and that “it would also attract a larger number of visitors from non-dollar sources but push down United States visitor arrivals” (Daily Nation, Thursday, February 28, 2008).

    Also, what is important to note in this same news story is how the Governor is at this stage reporting (some) likely economic outcomes which include “slowdown in world economic growth, recession in the United States economy and reduction in local foreign exchange earnings”.

    However, Dr Brian Francis, writing in an article titled: Identify Priority Areas Early, in the Barbados Business Authority, Monday, January 21, 2008, made mention of the fact that the DLP Manifesto pledges to give maximum priority to the creation of a macro-economic environment that stresses “fiscal prudence, PROTECTION OF THE FIXED EXCHANGE-RATE REGIME, a firmly managed debt accumulation strategy, and the accomplishment of full employment”.

    What is quite clear here, though, is that there is a sign of SEVERE inconsistency between what is the present outlook of the Governor of the Central Bank, and what is the present stategy of this new DLP Government, in terms of our fixed exchange rate parity regime of which the US $ 1 = BDS $ 2 is the ONLY fixed exchange rate parity that we know of for the Barbados Dollar out of all the other currency parities with the Barbados Dollar, and in terms of its significance.

    Hence, even though the Governor is WRONG to suggest that the link of the Barbados Dollar with a weakening US Dollar NOW presents our greatest challenge – the fact of the matter being that this parity and some of its very harmful effects have been for about 20 something years doing tremendous and untold damage to esp. our production and distribution and financial affairs – what the Governor seems however to be suggesting, and in PDC’s view she would be RIGHT if she is actually doing so, is that this parity of the Barbados Dollar with this weakening of the US Dollar is sufficient to seriously undermine (further?) Barbados’ Balance of Trade and Payments situation with the rest of the world. Given that the Barbados economy is already so acutely import-led, PDC knows that what such ( retention of this linkage ) and some of its very harmful effects would also do is to swiftly and totally ruin this ALREADY SHORT-SIGHTED AND OVERLY PREJUDICED DOMESTICALLY CONSERVATIVE macro-economic agenda that the DLP has for Barbados, and to help present the conditions for the going up in flames of those many quixotic DLP manifesto proposals like 500 homes in 500 days.

    Finally, The People’s Democratic Congress, in its Pre-Election Mnifesto of 2006, and in its Election Manifesto of 2008, has clearly stated that A PDC Government will Abolish ALL Exhange Rates Parities with the Barbados Dollar; make sure that Imports of Goods and Services into Barbados are Zero-“priced” at ALL Points of Entry; and make sure that Exports of Goods and Services from Barbados shall be paid for in Local Currency/”Prices”. Indeed, these strategies shall be put in place by such a government so that, among other things, Barbados would be seen, by esp. many of its citizens, as NOT ONLY being able to correctly cushion the worst effects upon it of any serious international political, economic, trade, financial and other relevant disequilibria, but also as being able to properly maximize and build on many of those important opportunities being provided by a modern but increasingly complex global political, economic, trading, and financial system for Barbados becoming a world class society.

    PDC

  12. Member of BU Family Avatar
    Member of BU Family

    Adrian spoke about Barbados operating the tourism industry out of the box. This featured article showes Cayman getting ready to do just that, and what is Barbados doing?

    Little Cayman – set to ‘go green’
    Published on Friday, February 29, 2008 Email To Friend Print Version

    Over the next eighteen months the viability of and process of becoming a Green Globe certified destination would be investigated. This will involve the implementation of laws, policies and practices to ensure that all activities in Little Cayman are in line with the principles of sustainable tourism development.

    At a press conference on Monday 18 February Tourism Minister, the Hon Charles Clifford, announced this initiative as part of the Cayman Islands Environmental Project for the Tourism Sector (CEPTS).

    “Little Cayman is obviously the best positioned of the Cayman Islands to pursue a green destination programme,” said Mr Clifford. “The island has a very small, permanent population, few hotels and is already positioned in the international marketplace as a pristine and unspoilt destination.

    Green Globe is an international tourism standard developed after the United Nations Earth Summit.  The standards were developed to address the environmental problems tourism contributes to throughout the world.

    The benefits of better environmental management are both from a business perspective and for conservation and preservation.

    “Not only will this give us a competitive edge over other destinations, it will also help us to preserve the island’s stunning beauty and diversity of wildlife,” said Mr Clifford.

    “In common with most countries in the region, tourism development in the Cayman Islands is primarily located within the sensitive coastal zone and there is a growing local awareness of the need to protect the environmental resources that attract visitors to our destination in the first place,” explained Mr Clifford.

    Later phases of CEPTS will include “greening” other tourism-related sectors and businesses, such as restaurants, tour operators, water sports operators and additional attractions.

    “The Cayman Islands has to be commended for its efforts in committing to sustainable tourism development and creating a sustainable environment that will foster economic growth, increase livelihood and reposition the destination in the international marketplace,” said Hugh Cressner, Sustainable Tourism Development Expert for PA Government Services, the consulting firm hired for the implementation of CEPTS.

    Turks and Caicos recently announced plans to transform Salt Cay Island in the Caribbean’s first “Green Island.” “Any new development will be consistent with that philosophy (of sustainable development),” said Premier of Turks and Caicos, Dr Michael Misick.

    Phase 1 of the Project in the Cayman Islands, which will last 18 months, focuses on conducting environmental audits and establishing environmental management systems for the tourist accommodations sector. Pilot properties include Southern Cross Club, Little Cayman Beach Resort and Pirates Point Resort in Little Cayman; Brac Reef Beach Resort in Cayman Brac; and Compass Point, Sunshine Suites and Cobalt Coast Resort in Grand Cayman.

    http://www.caymannetnews.com/news-5690–7-7–.html

  13. Brutus Avatar
    Brutus

    I don’t understand Adrian’s calculations – is the air credit paid by the individual hotel, or by the government? Seems to me that the cost to the hotel would only be the free night(s) and the free breakfasts. Do these visitors get the Best of Barbados special PLUS the tour operator discount? (This would then be a heavily discounted room rate.)

    If the promotion results in an individual hotel significantly increasing its summer occupancy then isn’t this better for the hotel? In other words, the increased room revenue would have to be more than the revenue lost from the free breakfasts.

    However as a nation, we would also have to compare the costs to the government of subsidizing this program to the benefits to the economy. Fuerthermore, does this spending replace some of the summer advertising that the government would normally undertake?

    I think we need an idea of, on average, how many additional visitors come to Barbados because of the Best of Barbados special. If too many people who were otherwise going to come anyway take advantage of the special, then it would not be worth the expenditure. I would also hope that repeat visitors can not get the special each time they come.

  14. Donald Duck, Esq Avatar
    Donald Duck, Esq

    Is Adrian L going to be so critical now that he is on the BTA board?

    Taylor taking over at BTA
    Published on: 3/1/08.

    ONE of this island’s leading hoteliers, Ralph Taylor, has been appointed as the new chairman of the Barbados Tourism Authority (BTA).

    Taylor is chairman and chief executive officer of Almond Resorts Inc., and also chairman of the Caribbean Hotel Association Charitable Trust. He was a former deputy chairman of the BTA and a former president of the Barbados Hotel and Tourism Association (BHTA).

    The new deputy chairman of the BTA is entrepreneur Austin Husbands.

    The other members of the board are Denis Roach, Roseanne Myers, Adrian Loveridge, Dr Jeannine Comma, Eric Mapp, Shelly Williams, Michael Yearwood, Sunil Chatrani, Alvin Jemmott, Dean Jean-Marie, Steve Alleyne, Bernard Weatherhead; and a representative of the Barbados Association of Retailers, Vendors and Entrepreneurs, the Barbados Workers’ Union; president of the BHTA or his nominee; and the permanent secretary in the Ministry of Tourism or his nominee.

    The appointments take effect from today. (BGIS)

    Congrats to Adrian!!!

  15. Tell me Why Avatar
    Tell me Why

    If we stay open we have to compete with the Best of Barbados programme. We have not joined other hotels in the promotion because we feel it is against the overall national economic interest of the country.
    …………………………………………………………………….
    Congrats Adrian on your appointment, we know that the public will have a clear voice regarding the performance of the BTA. We will now hear about the true position of the GEMS deal, we will now hear about the Best of Barbados programme and its effect on non associates in the said programme.

    But I have a fear about your position based on objection of the Best of Barbados programme which starts May 1, 2008. Will this programme be scraped or will you tow the line in allowing to continue although you has reservations on its earning capacity and the hurting of small hotels like your own Peach and Quiet?

    Remember, it is going to be your conscience based on ethical and moral principles that might allow you to be comfortable in your position as a BTA member.

  16. Adrian Loveridge Avatar
    Adrian Loveridge

    Thanks Donald Duck Esq.

    Tell me Why…

    I have just left a meeting of the new Board and Minister of Tourism and he has encouraged us to be frank and fair.
    That is EXACTLY what I am going to be and at the same time I expect to retain all my ethical and moral principals.
    I have not compromised these in the last forty two years in the tourism industry.
    It isn’t going to start now but by the definition of a board, decisions made will be collective.

  17. Wishing in Vain Avatar
    Wishing in Vain

    I would like to express my thanks to Mr Adrian Loveridge for being the lone voice in exposing the extreme poor management of the Board and Ministry of Tourism and for having the guts to stand out and make your valued opinions know to the public.
    It is with great pride that I learnt of your selection to the Barbados Board of Tourism, I trust that you continue to make a valuable contribution to this sector of the economy and to the well being of Barbados in general, my congrats to you Sir.

  18. Adrian Loveridge Avatar
    Adrian Loveridge

    Thank you Wishing in Vain….

  19. Wishing in Vain Avatar
    Wishing in Vain

    You are welcome, I am very happy that your contribution has been noted by the new Gov’t.

  20. David Avatar
    David

    Adrian L, on behalf of the BU household, we heartily congratulate you on your appointment to the BTA board. Our only disappointment is that your prolific writings on tourism matters may now be curtailed given your collective responsibility to the the BTA .

  21. Wishing in Vain Avatar
    Wishing in Vain

    The price of success my friend David, the price of success. You provided the avenue for people such as Adrian to get his message accross, and congrats to you as well.

  22. Donald Duck, Esq Avatar
    Donald Duck, Esq

    BU

    BFP will not publish my comments offering my sympathy to the remaining Board members of the BTA in having to deal with Adrian L. I hope that you will publish this comments

  23. David F Avatar
    David F

    I think that for many small hotels the best of barbados program is excellent. Initially attracting customers because of price is not a bad thing. This would only be a problem is Barbados had nothing to offer people when they arrived on the island, However, it is quite the opposite. I think that many tourists who have chosen to come to Barbados because of the price thoroughly enjoy themselves and continue to come back even if they are later forced to pay a higher price. Many travellers who want an island vacation simply want the sun, the sand, and to enjoy themselves and when they are searching for this it might be hard to distinguish Barbados from many of the other wonderful caribbean islands. Think about it, for the average tourist many things about the islands are the same. However, if we can get them to Barbados, they see the beauty for themselves and then are willing to come back. I have seem happen with many tourists over the years.

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