The Adrian Loveridge Column – The tax, the tax!

Officially from today, the second airline departure tax will be levied on all flight tickets purchased, adding another US$70 per person, irrespective of age, for extra regional travel and US$35 within the Caribbean.

Time will tell of course of the impact that it will have on arrival numbers and perhaps more importantly, average spend, but clearly in certain markets, it will have a profound effect.

Thomas Cook, one of the largest British tour operators, has reported a substantial drop in projected profits for the financial year ending 30th September. They are predicting a fall of GB Pounds 43 million, which when announced saw their share price fall by up to 25 per cent, blaming mostly the unseasonal long summer and prolonged hotel weather across Europe.

Chief executive, Peter Fankhauser, commented that ‘summer 2018 has seen a return of popularity of destinations such as Turkey and Tunisia’ and that ‘many customers spent June and July enjoying the sunshine at home and put off booking their holidays abroad, leading to even tougher competition and higher than usual levels of discounting in the late market of August and September’.

Concluding that, ‘our recent trading performance is clearly disappointing’.

While Barbados is not necessarily in the same market as Turkey and Tunisia, it must reflect of the value of currency exchange, price affordability and perceived value-for-money.

For many of our long term loyal British returnee visitors, this year they will be summing up if they can still continue to include us as a destination of choice, when as a result of our economic position, the cost of just about everything has risen substantially.

Should our tourism policymakers and planners be looking for additional creative ways to help mitigate these price hikes?

Absolutely!

Thomas Cook over the last few years have substantially increased their interests in owning and operating hotels, with a total now standing at 190, according to their website.

Is there some way that otherwise derelict hotels, like Silver Sands could be brought back into profitable use by smart partnering with them?

Not only would it create much needed employment in that area, but generate more foreign currency and entice the airline division of the company to extend its season service from Gatwick and Manchester to Barbados, throughout the summer months.

A revitalised Silver Sands could attract a year-round predominately ‘millennial’ following, who have a special interest in water sports, including kite, windsurf and SUP paddle boarding.

This property would appear to be a perfect match for their Cook’s Club or Casa Cook brands and as a recent media release indicated, the company is ‘hopeful of opening another ten youth focused hotels next year’.

I always find declared mission statements interesting, if not always compelling.

Cook’s Club is ‘leading the way in bringing a sense of urban cool to the beach’ and Casa Cook’s declaration is ‘laid back places for kindred spirits’ and ‘across cities and continents we’re connecting a new and multi-facet tribe of travellers – foodies, creators, trekkers, soul searchers, beach buffs, dancers, dreamers – individuals bound together by similar values and their shared quest for a deep fulfilling experience’.

Perhaps for a dinosaur like me, a touch too heady and feely, but maybe for many, captivating and alluring enough to book.

The Adrian Loveridge Column – Here Comes the Departure Tax!

While I know this week’s column is going to attract some criticism in certain quarters, I believe we still have to discuss these things and to creatively help mitigate the obvious negative consequences of such decisions.

We are now just days away from the 1st October 2018 imposition of what amounts to a secondary departure tax that our cherished visitors will be forced to pay, if they choose Barbados as their destination of choice.

Every man, women and child, irrespective of age, will have US$70 (currently GB Pounds 54.60) added to the cost of their airline tickets.

Most of us fully understand the reasons why and comprehend that tourism is our main and only significant foreign currency earner, which resulted in few other choices.

What remains incomprehensible is that once again the cruise sector has escaped, or some might say, evaded, any additional tax increases.

Pretty much everything of the potential damage caused by the further tax grab, is speculation, but there are certain inevitabilities. For most of our wealthy visitors, US$70 per person, or US$280 for a family of four, will probably make little difference.

However it would be absolute folly not to fully understand that our traditional accommodation base has changed dramatically over the last few years.

Travel giant Expedia registered the greatest recent growth from their HomeAway brand, one of the main competitors to Airbnb.

With very few exceptions, Barbados will now have the highest airfares within the Caribbean, already charging a US$27.50 departure tax, compounded by VAT (value added tax) on the outbound Barbados flight section.

None of us should dwell under the illusion that we will get the business anyway. People have choices and their own economic circumstances have a profound influence on the destination decision making process.

In the case of the United Kingdom, higher inflation than anticipated, the uncertainty of the ongoing Brexit saga and the substantially lower value of Sterling against the US$, all play a significant part.

There are some little caveats to ease the pain, at least in the British market.

Both Virgin and British Airways have introduced new levels of economy fares. Those either able or willing to forgo a checked piece of luggage will, at least for now, experience some minor savings.

My guess though, this will have very limited appeal, as for most of our lady visitors, part of the anticipation and experience is in packing variable clothing options.

Canny frequent flyers can look out for lower cost alternatives. As a member of American Airlines AAdvantage for over 23 years, I can still buy a one way ticket from Barbados to London Heathrow via Miami for US$52.50, plus 32,500 miles on selective travel dates.

Presumably, the US$70 will be added to that next month?

For a very long time, targeting those who already have sufficient earned miles has been an area that should have received more marketing attention.

This will have to change if we really want to retain market share.

For those on a budget (the vast majority of our visitors), several choices will be considered, including trading down to a less expensive lodging option, reducing the intended length of stay and spending less in the destination at restaurants, attractions, activities, shopping and car rental.

Ultimately, we will be judged by delivered value-for-money and the overall welcome our cherished visitors receive.

The Adrian Loveridge Column – Government Must Clarify Departure Tax ASAP!

I sincerely hope that as we are already in the month of August, with less than 60 days before the new Government imposes the additional ‘departure’ or airline tax of US$70 per person outside the region and US$35 within the Caribbean, that they will shortly clearly communicate how this levy will be collected.

Not surprisingly, in the absence of any clear guidelines, social media speculation has been rife and in many instances misleading.

On the popular TripAdvisor Barbados Forum, one person posted that they had received a response from the London office of the Barbados Tourism Marketing Inc., which stated ‘the intention is to have this departure tax included within the price of the  ticket – our team on the ground from the Ministry of Tourism are working with the relevant authorities to ensure this will be the case’.

At the time of submitting this column, no mention of this additional charge could be found on the websites of Virgin Atlantic, British Airways or Thomas Cook Airlines with most listing the conditions which indicate all mandatory taxes and charges are included.

By now of course, the vast majority of travellers have already paid for their flights and/or tour packages for arrivals after 1st October 2018.

Are they left to speculate that within the next few weeks, some sort of payment facility will be placed in the departure area of the Grantley Adams International Airport?

What sort of directive has been issued to the travel agents, tour operators and airlines and, if one has been distributed, why is there not more clarity on their websites and Facebook (FB) pages?

As a former travel agent and tour operator, the very last thing you want is not to possess the facts which can be accurately related to your clients. After all, that is why the vast majority of people book through third parties to avoid unnecessary unpleasant surprises.

Having been a Director and Committee chairman of our tourism trade body, the Barbados Hotel and Tourism Association, naturally I contacted them to clarify the situation, but sadly with the initial contact, no definitive information was available at this time.

The previous administration built quite a reputation for frequently not implementing efficient new policies in a timely manner over their decade of ‘governance’. Let us not repeat these same mistakes.

During the budget presentation in Parliament, Prime Minister, Mia Motley, said ‘it is anticipated that this measure in a full fiscal year will realise $95 million. $75 million to fund the Barbados Tourism Marketing Inc, and Barbados Tourism Product Authority with $20 million for regulation of tourism and civil aviation and the country’s shareholder responsibilities to LIAT’.

Applying simple division, BDS$95 million would equate to 678,571 long stay visitors paying the full US$70 per person, but allowing for the reduced intra Caribbean rate of US$35, this would obviously raise that overall number to reach that fiscal target.

According to available data, in 2017 Grantley Adams International Airport welcomed 663,441 visitors. Whether this included in-transit passengers is not clear.

What is also unanswered is whether cruise and fly arrivals be subject to this new levy or will they again escape paying any meaningful contribution to marketing Barbados.