Adrian Loveridge Column – Getting the Price Right
Just how important will pricing be in the recovery of tourism to Barbados?
What prompted this question came about after scanning through holiday package offerings that are currently available and advertised in our principal markets.
Standing out was an offer from a major British tour operator, highlighted by a company called Holiday Pirates, which included return British Airways economy class flights from Gatwick to Barbados with one checked and one cabin bag, 7 nights at a named ‘3-star’ south- coast hotel with daily breakfast for GB Pounds 697 per person, based on two sharing room for departures in October.
After extensive searches through many online flight only comparative websites, it was impossible to find any fares which included at least one checked suitcase for under GB Pounds 400 return to Barbados.
While tour operators traditionally negotiate ‘special’ ITX (inclusive tour) fares from the airlines, it seems highly unlikely that these could possibly fall below the GB Pounds 400 mark, especially as recently pointed out, that over half of this amount is made up of Government taxes.
So just for moment, let’s assume the tour operator is actually paying around GB Pounds 400 per return flight. That’s leaves a tiny GB Pounds 297 to cover 7 night’s hotel accommodation, breakfast and any taxes (VAT) not paid separately in room levies by the actual guests.
Clearly there also has to be a profit element within the retail price for the tour operator to economically function, but let’s ignore that for a moment.
Based on current Sterling/US$ exchange rates, that leaves a microscopic US$54.72 per person per night to cover the hotel room, VAT and breakfast cost.
Can this possibly be sustainable, even if we assume that the majority of this property’s rooms are not filled at this low rate?
This particular hotel may consider that the only way they can fill their almost 100 rooms is by granting large tour operator allocations at heavily discounted rates.
But, clearly this figure is not even remotely close to what is required in the medium to long term across our entire hotel offerings, to ensure economic viability returns to the sector?
Especially when many hotels are still owed considerable amounts of money for stays completed, prior to the pandemic, by the travel trade.
While at the same time thousands of holidaymakers are still trying to extract due refunds on cancelled flights and packages, making it highly unlikely that they will use the same booking method again, anytime soon.
On a far more positive note, it was very encouraging to see one of our leading wine merchants, partner with a popular Christ Church restaurant which has recently re-opened its doors, by offering a complimentary glass of Prosecco and a 5% discount on lunch or dinner bookings until the end of this month.
To me it’s a win-win situation for all involved and I hope that other companies will follow this encouraging example.
While sadly, domestic tourism has been largely ignored so far by our policymakers, there still remains a staunch core of locals, both corporate and individuals, together with second-home overseas residents, whose numbers can make a significant difference to the resurgence of our restaurants.