Adrian Loveridge Column – Dishonest Tour Operators

Will the traditional model of largely being a tour operator dependent tourism destination dramatically change – as we know it – after the end of the Coronavirus crisis?

What prompted these thoughts were the widespread reporting of the huge amounts of monies still owed to our hotel and lodging sector, despite the guests having already been hosted and returned to their homes.

Simply put, the respective tour operators have been paid in full by the guests/clients, almost always, many months prior to arrival ‘to be held in trust for payment to hotels shortly after the delivery of the service’. But in thousands of cases the hotel or villa has yet to be recompensed.

All associated costs, with those guests stay, have of course been spent or committed to ensure there was in fact accommodation ready on arrival and was maintained during their stay. The outstanding exception perhaps, could be the VAT (Valued Added Tax) and room levies, which may be still owed to Government.

Frank Comito, CEO and Director General of the Caribbean Hotel and Tourism Association (CHTA) has called on international tour operators which have delayed paying hotels for services delivered to the operators’ clients as early as January to expedite payment to avoid the collapse of some Caribbean properties.

In a letter to major trade organisations representing the bulk of tour operators that do business with the Caribbean, ‘Comito stated that 69 per cent of hotels report that they have not been receiving timely reimbursements from tour operators to services provided during the first quarter of 2020’.

Adding ‘the average amount owed to hotels by tour operators is US$219,000 per hotel, with a number of hotels reporting outstanding amounts in excess of US$1 million and one hotel being out-of-pocket US$15 million’.

Equally alarming is that several of the largest travel companies have ‘asked’, or perhaps better described as demanded, delayed payment terms with as little as 25 per cent of the amounts owing being paid within the foreseeable future, followed by further interest free stage increments over the remainder of the year.

We were tour operators for 12 years in the United Kingdom, immediately prior to our acquisition and operation of a small hotel on Barbados. After renovations and opening, we initially decided that was the preferred method of filling our property.  For the first four years, we courted and accommodated clients from some of the biggest British travel companies. While, negotiating the next year’s discounted rack rates and room allocation, each using their competitive might to further drive down prices, to the point where we just said, this is simply not working for us. Ultimately there was barely any ‘profit’ remaining to help maintain the condition of the hotel, let alone enhance it.

We then systematically initiated a direct booking policy, which worked for us, with a 95 per cent plus conversion ratio and close to 100 per cent occupancy for at least six months of the year. Having just 22 rooms, that course was realistic and achievable, but with 100 or more, the reliance on operator and/or travel agent bookings becomes more critical.

Our larger hotels will now have to decide what degree of desperation exists when they are negotiating any new contracts and whether payment terms have to be severely revised that include the provision for forward deposit payment to secure the most competitive terms.

31 comments

  • Hi Adrian,
    Your submission is relevant but regretfully is not new.
    I was a Director of the Barbados Hotel Association (BHA) in the late 1970s when this discussion was as pertinent then as it is today. The “rascals” at that time were the Canadian tour operators who were the major contributors of business to Barbados.

    One large one had gone into bankruptcy and caused havoc on the island. A meeting of the BHA was held and a decision taken to be strong and forthright with them and subsequently a delegation of 4 persons were sent to meet with them. History shows that they returned with little or no change as the tour operators had a card in their sleeve. It was the beginning of tourism to Cuba with far cheaper prices and they threatened to turn business away from Barbados. Simply put, we had no leverage.

    After 50 years the discussion is still the same – only different markets. Today, it is the UK producing the major business and it does not matter what you say, when the contracts manager of Thomas Cook, Virgin Holidays, TUI or BA Holidays comes to the island and tells any hotel the price they are willing to pay and that they must be given 90 days credit, the hotelier if they want business, signs willingly on the dotted line.

    Covid-19 has created a significant opening for the industry.

    Because the tour operators abroad are not refunding clients, it has made the public realize for the first time that they do not need or trust tour operators. Clients can easily book a flight online and an hotel via websites like hotels.com, booking.com etc

    This is the perfect time to set up an online Barbados hotel booking engine and back it up with a bond in the UK via ATOL. As none of the online hotel booking engines are bonded this will make clients feel secure of booking with Brand Barbados, and I am sure that they will do so in numbers.

    This company can use the booking data to see trends each week and so have the opportunity to monitor bookings and come up with strategic offers for specific periods. There are enough social media marketing tools today to ensure that the Barbados message is not only strong but well received. More importantly all data collected from their clients when booking and at the hotels is theirs to use to market to these clients over and over again.

    Learn from Sandals.
    Unique Vacations Inc in Miami not only controls the Sandals hotel inventory but also through this wholly owned booking company, provides clients with the means to get to the hotels, as well as all activities sold at the hotel as extras to their all inclusive. Even thought they compete with the tour operators in all the markets, they are a very useful tool that ensures success for Sandals & Beaches.

    It is time that the control of the tourism destiny of Barbados be in the hands, minds and souls of Barbadians!

    Like

  • With COVID 19 we keep hearing the same thing being repeated, there is opportunity to pursue real change.

    Like

  • nothing will change. bajans, i am afraid, are talkers not doers

    Like

  • Yet we double down on tourism and hope for the best!
    UWI Cave Hill should be shut down immediately.

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  • The reason why nothing changes is because the B/DLP are commited to maintaining the status quo which serves the interests of the local and foreign elites that they both serve. Workers will need to put forward what best serves our interests and go all out to secure it.

    Liked by 1 person

  • Piece the Prophet

    @ Mr Nehaul,

    Who are you?

    You said and de ole man quotes

    “…This company can use the booking data to see trends each week and so have the opportunity to monitor bookings and come up with strategic offers for specific periods. There are enough social media marketing tools today to ensure that the Barbados message is not only strong but well received.

    More importantly all data collected from their clients when booking and at the hotels is theirs to use to market to these clients over and over again…”

    On the few occasions de ole man has commented here in Loveridge articles I have made reference to this same thing.

    ICT GATEWAYs that are direct links to the marketplace.

    The idea you suggest is brilliant BUT IT WILL DIE IN UTERO NOT ONLY because Oblong Heads like Kerrie Simmons et al abound at the organisations that are needed** to subscribe to your idea to make it economically viable BUT BECAUSE COVID-19 HAS CHANGED THE WORLD.

    Tourism will not be resuscitated for a while, look how we still have people testing Covid-19 positive 90 days later!

    In 5 years perhaps such a system may be germane but the returns on the investment in this environment ARE NOT GOING TO BE WORTH THE EFFORT.

    we are promoting ghost towns.

    This is the age of “COVID COMPLIANT” staycations where it is going to be local clients and accredited Non Covid infected regional travellers who will keep said hotels from closing down!

    Liked by 2 people

  • @piece
    To answer your question, I am simply a proud offshore son of the soil with the hope that my suggestion may go a long way in helping make Barbados the dynamic engine of the Caribbean again.

    FYI, some of our neighbors are already announcing a reopening of their hotels.
    See St Lucia press release below which was sent out today.

    [CASTRIES, SAINT LUCIA (May 18, 2020) – The Government of Saint Lucia has announced a phased approach to reopening the island’s tourism sector in a responsible manner, beginning June 4, 2020.

    The strategy, which was unveiled by Minister of Tourism Dominic Fedee, protects nationals and visitors from the threat of Coronavirus Disease 2019 (COVID-19) through advance testing; daily screening and monitoring of staff and visitors; sanitisation at various points throughout the travellers’ journey; and new social distancing protocols.
    Phase One of the reopening includes welcoming international flights at Hewanorra International Airport (UVF) from the United States only. Travellers are advised to check with airlines regarding flight schedules and rules prior to booking. In anticipation of these first visitors, some 1,500 hotel rooms in Saint Lucia are being prepared to open in early June, pending completion of a new COVID-19 certification process…]

    I do not believe that one can safely reopen Barbados today or in the short term with covid-19 guarantees. To reopen now will probably place the Barbados population in jeopardy as the virus is still rampant in the USA and Europe. My suggestion in the previous post of a booking center was for the local tourism industry and Government to plan a long term strategy. The task is not impossible as I have been a part of planning and implementation of a similar endeavor and seen it work.

    Like

  • Vincent Codrington

    @ Piece the Prophet

    Your intervention above underlines the fact that we are still in the midst of a pandemic. Unfortunately they are those who are in denial and want the economy and society to operate as normal(Pre COVID). Change requires a new approach.

    Liked by 1 person

  • Tour Operators/Tourism ???

    The travel shutdown has exposed the delicate balance of the travel ecosystem, with many suppliers struggling or just declining to offer customers refunds on trips that the companies have been forced to cancel.

    Others, such as G Adventures, say they are simply sticking with their long-standing policies against offering anything but future credits on canceled trips, because that not only helps them and advisors hold on to customers through rebookings, it also supports the global supply chain that, like everyone else, is suffering.

    “The general theme is [operators] want to give refunds, but unfortunately, a lot of them just don’t have the money,” said Lucas Ennis, head of sales for WeTravel. “Not because they have spent it on their staff, but because they have given it out to different partners.”

    Like

  • Mr. Neahaul

    I appreciate your quote while referring to Barbados as “the dynamic engine of the Caribbean again”.
    However, the future will charter our (Gem/Pearl) Here in the Atlantic.

    Tourism will not be the same “anywhere in the world “. We need to revisit our (brand) going forward.

    Like

  • @Tony
    Let me be clear. Travel & Tourism will continue to be the largest industry worldwide due to the need and desire for people to travel. The virus can be likened to a stock market correction. It is merely a hiccup but be assured that flights, cruises, trains and other means of transport will shortly begin again. If destinations are not ready they will loose. By the way, do you really think that the Caribbean wedding planned for May with 150 guests will not now be rescheduled for the fall?

    We as a tour operator had a niche in the Swedish celebration market (weddings, honeymoons, 50th, 60th & 70th birthdays) as these are very special times when people spent more on their trips. The covid-19 has affected us all and presently Sweden is closed for all outbound travel until June 15th. All of our clients who were booked between March & July have been repaid as per law but I can assure you that they are all awaiting the time when they can travel again.

    Don’t be fooled by others who think that the major industry in Barbados can be closed and another started immediately. Having said that I am of the opinion that we can always do better. We can have a more digitalised hospitality industry, a better educated workforce and most importantly a system of creating wealth for those who work in tourism.(numerous schemes are available)

    On visiting the island from time to time I note that probably due to the high costs in Barbados our long stay visitors seem to be older (I have not seen any recent arrival statistics) and although their need for nice beaches, food, good accommodation and infrastructure is adequately met, there is a very serious lack of entertainment for them. There are no longer any dinner shows, places like the Caribbean Pepperpot, jazz clubs, or any other form of entertainment for an older clientele.

    Whether it is the USA, UK, Europe or Caribbean we need to understand our markets and provide for them.

    Regarding social media, it is alleged that the Russians sat in St Petersburg and using social media manipulated other countries voting. During the past year, I have seen fantastic creative images and videos on Facebook promoting elements of Barbados which originated in Barbados. Why can we not use this local talent, fine tune it and create spectacular social media campaigns of Barbados that will convince the world that they should not wait too long to visit?

    Later…

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  • Piece the Prophet

    @ Mr Nehaul

    De ole man is and has always been in this choir which you are speaking of.

    So do not think I am decrying the idea.

    What is my concern is not the technology through which the offering can be facilitated, it is the issue of the nature of Covid-19

    I believe that it is going to be found that Covid-19 has achieved the characteristics of cancer insofar as a malignant cancer can seem to become dormant then reactivate months afterwards with more malice than previously.

    3 bajans get reported as having it on May 18th!

    So the issue is incubation period AND SECOND WAVE VIRULENCE

    Now while de ole man cannot project virulence quantum with any factual information I can speak to the issue of an unknown incubation period and non congruent infection instances.

    But I also accept that monoeconomies such as Barbados is, cant stay closed forever.

    Like

  • Mr. Nehaul

    I sincerely hope and pray for the return of tourism to our shores in a big way. The dependency is paramount.

    When? Time will determine.

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  • As a small hotel manager and in the business for about 12 yrs. We have had our share of losses via tour operators etc. These tour operators are from hell.
    The thoughts by Mr Nehaul are for ever in my thoughts. Why not a platform like booking .com for Barbados or the caribbean. When the internet came on stream I was excited. No more middle man. You go sraight to the source. But no, they found a way to take this away from us. When are we going to fight back. The millions being spent on the operators can be spent make our own platform a reality.

    Like

  • West Africa tourist to BDS ???

    We need to extend our brand to attract tourists from African countries. They are so close. 2456.46 nautical miles to (Dakar) west African city.

    Foreign exchange???

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  • @Tony

    You are opening a can of worms. Africans are not profiled as ‘tourists’ by the establishment.

    Like

  • David

    “WOW”

    I rest my case.

    Like

  • peterlawrencethompson

    @Andrew Nehaul
    Is tourism the largest industry in the world? https://qz.com/1419103/is-tourism-really-the-worlds-largest-industry/
    No, not really.

    Like

  • @Peter

    The criteria used to measure is direct spend? The author opines it depends on the measurement used.

    Like

  • peterlawrencethompson

    @TonyMay 18, 2020 1:31 PM
    It takes much more than physical proximity of a potential tourism source market to make it economically viable. West Africa is not a viable source market for the following reasons: their GDP per capita is lower that ours, so they are simply not wealthy enough to give a fraction of that wealth to us; they have no winter weather, and winter weather is still the prime motivator of our tourism product.

    It would be much more practical to develop a tourism industry in the other direction for Black people from the diaspora making a pilgrimage to Mother Africa.

    Like

  • NorthernObserver

    Last week the dishonesty lay with the airlines, this week with the tour operators. In fact, similar ‘dishonesty’ can be found within many. Another word is cash flow management. Within the circular flow of money are groups of differing sizes and power, they use this to extract the shortest inflow times and longest outflow times. They become little banks. They exceed the ‘matching principle’.
    Mr.Nehaul’s suggestion is a good one. Yet, bookingbarbados.com will either have to accept business from the pirates who exist, or ????
    hotels.com, trivago, expedia, travelocity, vrbo etc etc are ALL owned by the expediagroup.
    bookings.com is part of Booking Holdings, which also owns priceline, kayak, agoda, cheapflights etc etc
    They will stretch their suppliers just like anybody else.

    Like

  • Piece the Prophet

    @ Julia

    You said and I quote

    “… When are we going to fight back.

    The millions being spent on the operators can be spent make our own platform a reality…”

    De ole man going first welcome you to Barbados Underground (though it is not my job but I gine welcome you anyways)

    De 2nd reason I gine welcome you is cause you is a woman, probably the first woman practitioner in Tourism who has opened a serious kettle of worms heah pun Barbados Underground with your comment

    Now, most of de people heah does bow down to big names in dis sector, but de ole man doan bow to no man of woman born.

    So I see you as an equal who has asked a very serious question!

    First point Ms. Julia. To “fight” back demands that people have the balls to fight and then to know what they are “fighting”

    You have been in this market place for 12 years, tell de ole man dis.

    Have you encountered either requirement under Kerrie Oblong Head or Richard Sealy?

    And de ole man does not mean the paucity of skills at ministerial level alone, I mean de functionaries.

    2nd point. What is the Software Requirements Specification of this platform you are speaking about?

    Additionally have you encountered any minister or functionary who comprehends what is needed in the platform of which you speak?

    3rd Question. You have spoken to the “millions being spent”. Suppose de ole man said that such a platform would cost US$1 M would you care to explain to the other readers here, most of whom are talk giants, how that platform can make money?

    4th Question Ms. Julia. Could you as “a small hotel manager” quantify for the talk giants here, how much money you have spent in marketing OVER THE LAST 12 YEARS?

    De ole man just want you to give these mout giants here an idea of the amount of money that platform could make, if it were to proactively pursued by just the small hotel owners Ms. Julia.

    Humour an octogenarian who does only post here cause I ent got nuffin to do with my time pun a day.

    Like

  • Piece the Prophet

    @ the Honourable Blogmaster your assistance please with an item here for Ms. Julia

    Like

  • What will BDS GDP look like at the end of fiscal 2020 ???

    Gross capital formation (% of GDP) in Barbados was 11.26 as of 2018. Its highest value over the past 43 years was 27.56

    Statistical Concept and Methodology: Gross domestic product (GDP) from the expenditure side is made up of household final consumption expenditure, general government final consumption expenditure, gross capital formation (private and public investment in fixed assets, changes in inventories, and net acquisitions of valuables), and net exports (exports minus imports) of goods and services. Such expenditures are recorded in purchaser prices and include net taxes on products.

    Source: World Bank national accounts data, and OECD National Accounts data files.

    Like

  • Perhaps the folks pinning their hopes on a revival of tourism are being buoyed by articles like this.

    Lori Cooper got to thinking last week about late autumn in Canada, where it’s cold, and in other parts of the world, where it’s not. So the 61-year-old resident of Pickering, near Toronto, booked a Holland America Line cruise to the Caribbean in November…………..

    https://www.washingtonpost.com/travel/2020/05/15/pandemic-grounded-cruise-ships-indefinitely-bookings-are-still-rolling/?itid=hp_travel-table-8-12_btwi-cruise-530p-0516%3Ahomepage%2Fstory-ans

    Like

  • William Skinner

    Mr. Nehaul makes the point that there are no more jazz clubs etc. He is obviously talking about the Bel Air, that was the major attraction on Bay Street for decades. We also had a few others and there were quite a few discos and so on.
    He better than most knows what has been killing Tourism on the island since the 80s. He knows about the attempts to blame the beach vendors for all the serious mismanagement; he knows about those hoteliers whose restaurant prices were pure murder; he knows about the treatment meted out to Black American tourists; he knows that while many thought that all the gigolos were black that there were dozens of white Bajan gigolos as well; he knows that hoteliers would allow white gigolos on their properties with tourist women but not black gigolos.
    I have tried my best to expose the one sidedness of Loveridge’s columns where he constantly wrote as if everybody reading him were uninformed.
    I owned a very small tour company back in the eighties. I arranged with a mini bus owner to transport my clients. I can publicly state that one of the major tour bus operators ripped off the tourists. Many of my clients told me that they had been recommend to” go around the island” with me although in many cases , they had already taken the tour with the major operator.
    Boomers restaurant was hugely popular because the owner skillfully involved the beach vendors in his marketing efforts. Every single tourist on St Lawrence Gap and beyond knew of and ended up at Boomers.
    I know of very small restaurants that did extremely well because of proper prices and service. I was the night manager of such an establishment.
    The truth is now being exposed and when further researched and honestly revealed it will be proven beyond doubt that white Bajans in cahoots with white expatriates literally killed the goose that lays the golden egg.
    Imagine we are here discussing something as simple as incorporating basic technology into an industry that has been the economic life blood of the country for fifty years.
    Let them go and blame the boys on the beach for that too.
    More to come.
    Mr. Nehaul knows.

    Liked by 1 person

  • Beaches/venders

    Are you related to Jack or John Deere Sir.??

    Like

  • HOLETOWN

    The seven-storey, 250-room US$200 million luxury resort will replace the old Discovery Bay Hotel on the island’s west coast.

    https://barbadostoday.bb/2020/05/20/hotel-project-will-impact-st-james-area/

    Like

  • Pingback: ADRIAN LOVERIDGE COLUMN – DISHONEST TOUR OPERATORS – Caribbean Empowerment Blog

  • St. Lucia and Antigua plan to open their borders to tourists beginning June 4, that decision will put pressure on the other tourism destinations to follow suit.

    https://www.travelagentcentral.com/caribbean/saint-lucia-plans-to-reopen-tourism-sector-june-4

    Like

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