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Should We Be Concerned Over The Current Viability Of Our Tourism Industry?

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Submitted by Adrian Loveridge
Ms. Sue Springer Executive Vice President Barbados Hotel & Tourism Association Barbados
Sue Springer, Executive Vice President Barbados Hotel & Tourism Association Barbados

When one of our largest hotel groups recently published their accounts for the financial year ending 30th September 2009, it sent a powerful wake-up call to our tourism policymakers. A total of 1,530 rooms spread across five hotels, three of which are here in Barbados managed a total turnover of BDS$62 million. Even at a virtually impossible occupancy rate of 100 per cent, that is an average room rate of US$110 per night. At a more realistic rate of 75 per cent that average drop to just US$74. Clearly to maintain a 4 star standard on an all-inclusive basis with continuously escalating costs, this cannot be sustainable.

Discounting has become a way of life for many hotels and other tourism players, simply to maintain the numbers and staffing levels. ‘We’ have added 80,000 new airline seats annually alone from the United States, a market that has not registered any consistence growth over seven years. Already, even before the end of the peak winter season, flights are being cancelled, so what happens post Easter?

Despite the appointment of a new Advertising Agency, a new website and a massive increase of the marketing budget in our second largest market, we still seem not to be able to influence the numbers in relation to the monies spent. Apart from the Tourism Industry Relief Fund (TIRF), the private sector has largely been left to survive on their own, forced to absorb constantly increasing operational costs, while being encouraged to safeguard employment.

Meanwhile Governments appear to be impervious to lowering the cost of travel. The cheapest return flights from Gatwick to Barbados with either scheduled airline, is according to their own websites UK Pounds 590 for travel in June. A staggering UK Pounds 192.80 of that figure is made of taxes and add-ons. Travel within the Caribbean is no different. Out of a US$276.50 return ticket from St. Lucia to Barbados with LIAT, US$112.50 is for taxes and add-ons.

The Barbados Hotel and Tourism Association has convened an emergency meeting later this week to discuss marketing ideas for spring, summer and winter 2010. The notice is aptly headed ‘Something has to be done’! I hope that the meeting will be well attended and that the very best minds in marketing with new ideas and concepts will be listened to. And just maybe their suggestions will be implemented.

‘Something has to be done’!

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25 responses to “Should We Be Concerned Over The Current Viability Of Our Tourism Industry?”

  1. charles alleyne Avatar
    charles alleyne

    It amazes me… why are we paying a very large amounts of money to persons at the BTA, for doing what.The BTA continues to spend a considerable amounts of tax paying dollars to produce absolutely nothing.Why should we have a board with 18 members and still cannot come up with ideas that are viable and pratical.I think an overhaul of the BTA is needed at this time.Long term strategic plan needs to be implemented for the entire tourism sector.We continue to recognised that in the US where jobs and businesses have been lost forever, but still the BTA would not look to new areas to exploit.Those persons entrusted at the helm please come up with a workable plan in order for the tourism sector to rebound again.

  2. David Avatar
    David

    Yet again BU is forced to ask, where is the Tourism Master Plan?

  3. Donald Duck, Esq Avatar
    Donald Duck, Esq

    if the minister is not producing then “shuffle” him.

  4. Donald Duck, Esq Avatar
    Donald Duck, Esq

    The master plan will arrive just before elections and so will the amendments to the TDA promised in 2008. Mark my word.

  5. Donald Duck, Esq Avatar
    Donald Duck, Esq

    If it was not for the efforts of the previous administration to get west jet and jet blue to fly into Barbados where would we be today.

    What initiative has this administration brought to the table since taking office. They can’t say it is the toursim releif fund since they copied what what the previous administration had puit in place when last we had an economic downturn.

  6. Love Avatar
    Love

    Donald Duck…stop the damn quaking !

    What was there to copy from the BLP…?

    OOOOOPPSSS….

    * Do you mean GREENLAND dump ?

    * A land bank where poor people could not get houses /house spots ?

    * A gems project where the late Bree St. John said Rodney Wilkinson should have been locked up ?

    * The construction of Dodds prison where Mia Mottley could not tell Barbadians if it was $ US OR BDS $ ?

    This is what you want a caring DLP to follow ???

  7. Donald Duck, Esq Avatar
    Donald Duck, Esq

    Did you hear Daicd Estwick on Sunday saying how lashley had built 80 houses in 2 years. How many were promised under this administration

  8. Donald Duck, Esq Avatar
    Donald Duck, Esq

    HH

    Why do you not tell people about such things as

    -the hilton
    -the expanded airport
    -the coast guard
    -our enhanced road system
    -a more secure NIS regime
    -modern law courts
    -a thriving international business sector which survived the onslaught of the OECD
    -a VAT regime delivering to this administration enough income to keep it going

  9. David Avatar
    David

    We have to be mindful that the current economic situation is unprecedented.To use out of context statements i.e. quote from the manifesto maybe somewhat disingenuous.

  10. littleboy Avatar
    littleboy

    Charles Alleyne
    18 BTA members? That is NOT TRUE.
    Adrian Loveridge, if Almond earned $62million from 1,530 rooms at 100% the per room rate would be LOWER than at 75%. Please check your maths…It would be 148.50@ 75%.
    We live in the world and this is the worst recession in years.
    The numbers from the US have increased since October by percentages in excess of 20 per cent.

    Please, let us use truth in lieu of panic and misinformation

  11. Adrian Loveridge Avatar
    Adrian Loveridge

    Charles,

    Suggest that YOU do the maths and read my letter VERY carefully.

    BDS$62 million turnover.

    1,530 rooms x 365 nights x 75% occupancy = US$74 per ROOM per NIGHT.

    You will have noted that I have CLEARLY stated WHICH currencies and that the $148 you show of course is BDS$148 or US$74.

    Please also check monthly arrivals from the US.
    Some are up since October 2009 and some show almost no growth at all despite adding 80,000 airlines seats annually out of that market.

    Betwen 2002 and 2007 the US market averaged an annual growth of only 1.2% DESPITE massive increases in marketing budgets.

    Remind me again, when did the recession start?

    We can go on making excuses but it isn’t going to get us anywhere!

  12. Adrian Loveridge Avatar
    Adrian Loveridge

    Above letter should also be addressed to LittleBoy
    who should really read any comments very carefully and look up the meaning of ‘misinformation’.

  13. littleboy Avatar
    littleboy

    AL
    The income produced is $62million.divided by 1530 divided by 365 equals $111.02158 per day.

    75% of 1530 rooms is 1,147.5

    If the income produced by 1,147.5 rooms is $62 million
    $62million divided by 1,147.5 divided by 365 equals $148.02877 per day.
    “Misinformation ” according to the Oxford dictionary means “wrong or misleading ” information.

  14. Adrian Loveridge Avatar
    Adrian Loveridge

    LittleBoy,

    You are NOT reading my initial comment or subsquent.
    LOOK at the currencies QUOTED:

    BDS$62 million turnover.

    US$74 per ROOM per night based on 75% occupancy.

    No misinformation, you just seem to lack the ability to read and understand what I have said.

    US$1 = BDS$2

  15. littleboy Avatar
    littleboy

    You stated that @75% there was an “average DROP’ per room per day. Your words not mine.
    My concern is about the suggestion that there is a room rate “DROP” when less rooms are occupied

  16. John Da Silva Avatar
    John Da Silva

    The US$74 figure is correct, but the US$110 at 100% occupancy is not correct. It should be US$55. If occupancy falls, achieved rates at a fixed level of revenue will increase. However, this does not change to point that Adrian is making. More dollars are being spent on marketing and subsidies with nothing to show. It seems that there are few industries in Barbados that can survive without subsidies. It would make sense to me to reduce the size of government, cut taxes and bureaucracy, and allow the private sector to grow and flourish. Politicians are constantly asking people to live prudent financial lives, while at the same time allowing government to spend more than it collects in taxes and running up huge debts. This is not sustainable.

  17. Adrian Loveridge Avatar
    Adrian Loveridge

    John,

    Thank you for the correction.
    You are absolutely right, I had not changed the US$ to BDS$ for the 100% occupancy level.

    And you have re-inforced my main point.
    That rates like this are not sustainable and readers should take into account that BDS$62 million includes
    the critical four winter peak season months.

    You may be able to continually prop-up Government owned entities like GEMS (Hotels and Resorts Ltd),
    maintaining employment artificially, but you cannot do it with an entire private sector tourism industry.

    I am told that the UK long stay visitors were down 21% in February (or at least the bulk of the month).

    If we cannot pay our bills in the winter, then the summer becomes even more challenging.

  18. littleboy Avatar
    littleboy

    My maths is correct Adrian. Admit it and move on.
    Stop talking about the “drops” please. What has been happening in the US over the past months since October? What about Canada, Europe, and the new markets that will be coming on stream. Give some encouragement please. World Tourism has been suffering a decrease.
    For Pete’s sake, give some sensible alternatives and stop bellyaching.

    Barbados is not the only country in the world and those of you who live here should show some loyalty, if not patriotism.

    Think on these things

  19. Adrian Loveridge Avatar
    Adrian Loveridge

    Littleboy,

    ‘Loyalty’ and ‘patriotism’

    Interesting words, Littleboy.

    I think we have demonstrated this by ensuring our hotel is full, employing 20% more staff and paying our considerable taxes during a recession.

    We havn’t had to go cap-in-hand to any Government for TIRP funds.

    Now just exactly what have you done, Littleboy?

  20. Austin Avatar
    Austin

    “Think BTA Think…”

    Point 1 >> As a business man you simply cannot expect to continue the same old basic tourism improvement strategy, with the same old insider folks and get different result.

    Point 2 >> Having lots of US friends I have made the observation that Barbados is still largely unknown to many americans as a great vacation destination. We need to re-think our US marketing outreach strategy from top to bottom. They are very few ads educating the US market on Barbados, when we represent exactly what many are looking. Jamaica conversely as an example has developed an execellent US marketing strategy, so why can’t we.

    Point 3 >> Bajan yankees and their families also represent a US market base that needs more attention, while the hotel stay component is not as attractive they spend lots locally which is exactly what our economy needs in these challenging economic times….

    Point 4 >> We also need to attract more US airline carriers to Barbados to match our investment in rooms, if the pipeline into Barbados remains the same how can we expect a larger output.

    BTA, you need to save the $$$ spent on family and friends tourism industry consultants and start using plain old common sense.

  21. littleboy Avatar
    littleboy

    ad hominem attacks are not “kool”.

    However, I have contributed my TAXES and NIS for more than thirty years. I have served more visitors from rum punch to coca cola than there are rooms in Barbados.
    I have supplied security for several establishments on the island…need I say “what (I) have done for Barbados?

    My story is simple…people all over the world read these blogs, so loyal bajans should be truthful and not indulge in scare tactics.
    My political party is BARBADOS!

  22. David Avatar
    David

    @Adrian et al

    Please explain the implication of the following development given the importance of airline seats on the Barbados/London route.

    Caribbean Airlines-British Airways agreement ends

    March 11th, 2010

    Thursday, March 11 2010

    THE code share agreement between Caribbean Airlines and British Airways comes to an end on March 27. The airline is currently pursuing other arrangements to offer direct service to/from London, UK. In the interim, Caribbean Airlines will continue to offer timely connecting services to London via Barbados and any of our international gateways.

    Caribbean Airlines launched its codeshare service with British Airways between Port-of-Spain, Trinidad, and London on March 25. Under the codeshare agreement signed late last year, Caribbean Airlines partnered with British Airways to offer daily flights from Barbados and Trinidad to London’s Gatwick Airport. On Wednesdays, Thursdays and Saturdays, the Boeing 777 flights originate in Trinidad, stop in Barbados and continue on to Gatwick. On the remaining days, the flight originates in Barbados, but Caribbean Airlines operates a shuttle service to provide a seamless connection to the BA London flight. Caribbean Airlines’ customers can redeem frequent flyer rewards on the London flights.

    Caribbean Miles customers are advised that due to the expiration of its Frequent Flyer agreement with British Airways, members of both programmes will be able to earn miles on either airline up to the expiration date of 27 March.

    As of March 27, both British Airways and BW members will have 30 days to book and to be ticketed for reward flights on either carrier. These tickets will be valid for 12 months from the date of issue. Caribbean Miles customers should therefore note that the last date of acceptance for completed travel will be no later than April 27.

    Both British Airways and Caribbean Airlines members will be able to apply for retroactive credit of miles earned up to six months after the partnership expiration date of March 27. Therefore the last date for the submission of these requests will be no later than 27 September 27.

    Caribbean Miles customers would no longer be able to earn miles for travel on flights operated by British Airways March 27 or to redeem miles for travel on flights operated by British Airways after April 27.

    Executive Club customers would no longer be able to earn miles for travel on flights operated by BW after March 27 or to redeem miles for travel on flights operated by BW after April 27.

    Customers are encouraged to visit http://www.caribbean-airlines.com for further information and updates.

  23. Adrian Loveridge Avatar
    Adrian Loveridge

    David,

    As I understand there is general concern over the availability of seats out of the UK to Barbados.
    There was discussion some months ago that Virgin would operate a second weekly flight out of Manchester to ‘make-up’ for the lost BMI service.
    At yesterday’s emergency BHTA marketing meeting a major hotelier stated that the two scheduled carriers did not have seats available in April.
    So its a catch 22 situation in the UK market.
    If there are no available seats, then we cannot hope to fill the empty rooms.

    While ‘we’ have increased flight capacity out of the US market by a staggering 80,000 seats per annum, US Airways will terminate the Philadelphia service either later this month or early April.
    Delta has already cancelled certain days of the week.
    This has and will cost hoteliers tens of thousands of Dollars.
    The good news is that WestJet out of Toronto will operate a year round 5 days a week service and that JetBlue out of JFK are still operating daily.

  24. David Avatar
    David

    @ Adrian L et al

    The following may interest planners in your industry. You should pass along if you feel it is of value. BU’s interpretation of the quote below suggests that if the EU Commission allows AA, BA and Iberia Airlines to continue with its One World Alliance i.e. the three airlines expressing concerns that their extensive cooperation, which involves revenue-sharing and joint management of schedules, pricing and capacity, the airline which will find itself most effected will be Virgin, a major carrier bring seats into Barbados and the Windward Islands market.

    Antitrust: Commission market tests commitments proposed by BA, AA and Iberia concerning transatlantic co-operation

    The European Commission today has invited comments from interested parties on commitments proposed by British Airways, American Airlines and Iberia to address concerns that their planned alliance may harm consumers on transatlantic routes. In September 2009, the Commission sent a Statement of Objections to the three airlines expressing concerns that their extensive cooperation, which involves revenue-sharing and joint management of schedules, pricing and capacity, may be in breach of EU antitrust rules (see MEMO/09/430). The parties have notably offered to make landing and take off slots available at London Heathrow, London Gatwick and/or New York John F. Kennedy airports to facilitate entry of competitors on routes to New York, Boston, Dallas and Miami. If the market test confirms that the proposed commitments remedy the competition concerns, the Commission may adopt a decision under Article 9 of Regulation 1/2003, making the commitments legally binding on the parties.

    In April 2009, the Commission opened a formal investigation into the cooperation of oneworld alliance members British Airways, American Airlines and Iberia on passenger transport on routes between Europe and North America (see MEMO/09/168 ). It sent a Statement of Objections to the parties on 29 September 2009 (see MEMO/09/430 ) taking the view that the agreement may be in breach of EU rules on anti-competitive business practices (Article 101 of the Treaty on the Functioning of the European Union). British Airways, American Airlines and Iberia jointly offered a set of commitments, in accordance with Article 9 of Regulation 1/2003, in order to alleviate the Commission’s competition concerns.

    Proposed commitments

    The commitments proposed by the parties are primarily aimed at enabling competing airlines to start operating on the affected routes by lowering barriers to entry. Concretely, they offer to make available landing and take-off slots at London Heathrow or London Gatwick airports on routes to Boston, New York, Dallas and Miami. On the London-New York city pair, the parties also propose to provide the competitor with operating authorisations at New York JFK airport.

    In addition, British Airways, American Airlines and Iberia undertake to provide access to their frequent flyer programmes on the relevant routes, allowing passengers of the qualified new entrants to accrue and redeem miles on the parties’ frequent flyer programmes.

    The parties also propose to allow fare combinability and offer special prorate agreements in relation to the routes of concern, which would enable competitors to offer tickets on the parties’ flights and facilitate access to connecting traffic. Finally, the parties commit to regularly submit data concerning their cooperation, which would facilitate an evaluation of the alliance’s impact on the markets over time. To monitor the implementation of the commitments, a trustee would be appointed.

    Throughout its investigation the Commission has been in close contact with the US Department of Transportation, which is conducting a parallel review under US rules.

    Background

    In accordance with Article 27(4) of Regulation 1/2003, a summary of the proposed commitments has been published in the EU’s Official Journal on 10 March 2010 (OJ C 58). The full version of the commitments is available on the Commission’s website.

    Interested parties are invited to submit their comments to the Commission by 10 April 2010.

    Subject to comments received, the Commission may decide to make the commitments legally binding on British Airways, American Airlines and Iberia under Article 9 of Regulation 1/2003, without concluding whether or not there has been or still is an infringement of EU competition rules.

  25. Avatar
    Anonymous

    The elephant in the living room everyone prefers to ignore in regards to our much vaunted, free enterprise, capitalist economic systems is the effect of peaking oil production and the consequent decreases in energy availability along with rising energy prices that accompany peak. Alternative energy solutions most likely will turn out to be an inadequate replacement for the very energy dense, and until recently, cheap petroleum our economies have used to fuel their growth over the last 100 plus years.

    Getting the story right
    by Chris Martenson

    Now that I have returned from my UK trip, where I had the opportunity to present the main story of the Crash Course at the Parliament, at the London School of Economics, and to councillors and members of the Scottish Parliament, I’ve come away with an even stronger sense of the true dimensions of our predicament and what must be done.

    We desperately need to start telling ourselves a new story, one that at least fits the known data, and we need to be far more urgent in our preparations for a future that is now upon us. This is not a US or a UK story, but one that applies equally to us all, no matter where we live. It is a global story.
    A Bedtime Story

    New home sales fell apart in January, tanking to their lowest levels in nearly 50 years. This is not surprising to me. The economy is not doing okay, is not in recovery, and is sliding down a slope of excessive debt and decades of overindulgence and structural imbalances that will take quite some time to repair. And that’s assuming there are no exogenous shocks from oil scarcity or other resource issues along the way.

    Despite everything that has transpired to reveal the deep structural flaws in our economy and its main theories, few in the media and government seem to be able to grasp the concept that the story has changed and that all efforts to perpetuate ‘the story’ will only prolong the agony and make things worse.

    Let’s examine the evidence:

    SNIP

    This is why there’s no “solution” out there. And it the reason why I am continually vexed by the recurring question, “What should we do?” because often it is posed in a way that implies a different question is being asked: “What can we do to maintain everything we currently see around us?” Unless a massive new source of high-quality energy is found, there is almost no chance of maintaining our economy in its present form. (emphasis added /GM)

    And this is why I claim that the next twenty years will be completely unlike the last twenty years. They don’t necessarily have to be terrible, but they certainly won’t follow a similar trajectory.

    It is critical that we understand that we are not facing a problem, but a predicament. Problems have solutions, while predicaments only have outcomes. You can solve the former but only manage the latter.

    Since we have a gigantic predicament on our hands, and we cannot predict how things will evolve or devolve when our economic model is starved for energy, the only rational response is to try to build resilience into our most basic and critical operating systems.

    Full article posted here:
    http://www.energybulletin.net/node/51923

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