Almond Beach Village (ABV) deposited hundreds of employees on the breadline yesterday. There is no need to rehash all that has been stated in recent weeks except to express commiserations with the employees of ABV. There is the saying that behind every grey cloud is a silver lining and BU remains bullish given the ‘quality’ of suitors vying for the St. Peter property.
When updated ARI financials are posted the country needs to answer the questions – what the hell happened at ABV given the leadership position it had in the market? How did the shareholders allow a property which was profitmaking for most of its existence to collapse? It is important for Barbados which depends almost solely on tourism – a strategic asset – to analyse what really happened to ABV. The fact that it used an all inclusive model is another consideration.
Based on the data supplied to the Caribbean Tourism Organization (CTO) by Barbados the performance has been good despite the challenging economic conditions. A trend analysis of the last decade shows that decline in arrivals was worse in the period 2001 to 2002. Surprisingly, a dive into the stats, four of the ten best months for arrivals since 2000 occurred post – 2008! What makes this highlight worthy is that it includes CWC 2007 activity. Minister Sealy and the Barbados Tourism Authority appear to be successful in luring tourists in numbers to Barbados but the dollar spend has declined significantly. Should the government continue to blame the economic climate or is it ineffective marketing?
Governor Worrell indicated in his press conference last week that there is little direct correlation between the GDP of our main tourist markets and the tourists who visit Barbados. However, what the research shows is that there is a strong link between the performance of those tourists’ capital markets and the decision to holiday in Barbados. BU research concludes that Capital markets are strongly influenced by GDP growth expectations and Barbados planners can use this approach to predict arrival trends months in advance. When people feel wealthier they spend more and the flipside is true – see chart above.
If we apply the analysis to ABV, in a market where tourist arrivals have been trending upward when juxtaposed with ABV’s poor financial health, it is evident Almond was a price taker, commendable in getting tourists through the door but whither cashflows?
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