Column: “Is It Time To Change The Tune?”

August 26, 2015

[Opinion column written by Jeremy Deacon]

Again and again, the headlines scream ‘Tourist Arrivals Plummet’, a national hand wringing then ensues about why, the talk shows are abuzz with everyone’s solutions and the politicians embark on the blame game.

But are we too fixated with arrivals numbers and should we be more focused on how much visitors spend while in Bermuda? Should the focus be on the bottom line [ie profit and loss]?

For the first two quarters of this year, visitor spending has increased even though numbers have been down.

In quarter one of this year, the cost of hotel accommodation increased [the cynic in me thinks, ‘OK that’s the only reason spending is up’] compared to Q1 2014, but another look at the stats shows spending on meals and drinks us up as is spending on gifts, recreation and leisure and transport.

In Q2 this year, spending on accommodation is actually down on Q2 last year but spending is up in every other category. It meant that visitor spending in Q1 and Q2 was up a total of seven percent [an extra $74.32 per person.]

The BTA estimates that this contributed $1.3m more to the economy in Q2 compared to last and for the first six months of this year an extra $3.4m compared to last year.

It is not big numbers, but it has come at a time when more than 23,000 airline seats have been taken off Bermuda routes [Government has withdrawn some subsidies] and at a time when the Canadian dollar is struggling against the US dollar.

[As an aside, it is interesting that the BTA has floated the idea of ‘international business’ helping to subsidise flights on the basis that they need them as much as tourism. I don’t know if the importance of East Coast flights to IB justifies the cost.]

Look at these stories as examples: Air visitor spending declined by $2.4 million to $58.4 million in the fourth quarter of 2012, a 3.9% decrease. Air visitor expenditure in 2012 totaled $312 million, 10.5% lower than the level of expenditure reported in 2011.

And: Tourist contributions to Bermuda’s economy declined by $75 million in 2009 compared to the previous year with visitors spending $350 million on the island according to figures released by the Statistics Department today [Dec. 30].

Here the spending figures are neatly fudged, indicating how important the Minister regards them to be.

In my opinion, tourism is never going to bet back to the glory days, there is enormous competition from other destinations and the world is a far cheaper place to get around.

The new hotels being planned for Bermuda are smaller, boutique-like hotels which are nowhere near the capacity of an Atlantis.

Put together and they might add a few thousand bed nights a year – I believe the Tourism Minister would be happy with another 3,000 beds – but that is not enough to return to Bermuda’s tourism heyday.

So, should Bermuda now settle [is it settling] for a smaller number of tourists, but tourists with a high disposable income? Let me know what you think.

Speaking of smaller hotels, it finally looks as if St George’s is going to get a hotel at last. It’s only been 30 years in the making …. and I will only truly believe it when I see construction work. I am afraid I’ve been left highly cynical of hotel developments happening since the self-style ‘Platinum’ years.

I’m tired of politics, so I’m not going to get into the concessions debate – suffice to say that the Tourism Minister believes that there has not been an aggressive concessions structure in the past in order to make things financial viable.

I want to talk about St George’s and a town that, on the face of it, has been allowed by successive governments to slide into a terrible decline.

A new hotel will work wonders for St George’s. If everything goes according to plan, preparation work will start later this year and ground broken on the actual hotel in the first quarter of next year. It will also be another ‘brand name’ for Bermuda which is important as we only have two other brands: Rosewood Tucker’s Point and the Fairmont group.

Let’s face it, we all have our favourite brands: we usually go where we already know the brand or buy the brand we trust.

The new hotel will have around 120 beds and 200 in all when beds from proposed fractionals are included in the inventory. But will it be enough to tip the scales? If Bermuda was a ship, it would be sinking at the bow – such is the weight of Dockyard in terms of activity and visitor numbers.

Does St George’s need a cruise ship, with the subsequent widening of the Town Cut and a new pier [cost $50m?] or does it need a marina for luxury yachts and motor yachts?

I see that a new Facebook group has been started called Save St George’s Harbour which says: “This page was created in an effort to bring public awareness to the proposed plan to widen Town Cut in St. George’s Harbour.”

As I understand it, there is no definitive plan to widen Town Cut yet and I am told that Government is currently compiling a matrix to better compare the benefits of cruise ships and luxury yachts. I hope that the matrix is made public and not just the decision, which will be made by Cabinet.

Which leads me back on my original theme: would St George’s be better off attracting high net worth individuals with high spending power over cruise ships, which generate healthy tax revenues but who do not bring high-spending individuals.

Cruise companies and passengers like it when there is a ‘two-stop’ visit to a country – they move from Dockyard to St George’s – but would a hotel/super yacht combined approach actually bring more real wealth to the locals? Cruise ship passengers are notorious for trying on the tee-shirt to get a picture and then putting the shirt back …..

St George’s is an Economic Development Zone and has been since 2011, and it is also still Hub 1 in the National Tourism Plan.

New shops have opened and they are bringing much needed footfall to the town, but there still a lot of prime locations that are empty or up for sale.

If I were an alien who beamed into St George’s for a day, I would have no idea that the America’s Cup was coming, such is the lack of AC-related activity in the town.

The Minister believes it is up to the entrepreneur to do their bit and while I agree to an extent, personally I think this is where “Big Government’ comes in to help provide even more stimulus that an EEZ can, or has done so far. St George’s needs to be able to build on the back of the hotel.

I hear that there are some powerful groups in St George who are very conservative and who resist change. St George’s must change – any self-interests must be abandoned for the greater good otherwise Bermuda really will sink at the bow.

What do you think? Leave a comment or email jdeacon@northrock.bm

- Jeremy Deacon is a 30-year veteran of the media industry and currently runs public relations company Deep Blue Communications, www.deepbluecommunications.bm. He also freelances for publications in Bermuda and overseas, and is also the Executive Officer of the Media Council of Bermuda.

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Comments (26)

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  1. hmmm says:

    There you go JD, an opportunity for you to increase the value of St Georges. Why wait for someone else to do it.

  2. Jeremy Deacon says:

    Rhonda, i leave that to the experts who conduct the surveys

  3. Accurate says:

    Jeremy the glory years were the anomaly – never to be repeated. Boutique style smaller tourism will survive as slow downward spiral erodes expectations – as long as unrest can be staved off that is.

    • Jeremy Deacon says:

      what do you mean by unrest?

      • Accurate says:

        A lot of people are either going to be without a job or at best earning less for doing more if there is to be any chance of rescuing the greater economy – this is unlikely to go well. Lets hope I’m wrong and that Bermuda truly is another world. That’s one more ‘hope’ to add to the pile of hopes Bermuda seems to be pinning its future on.

      • Accurate says:

        A lot of people will have to lose their jobs or at best earn less for doing more if there is to be any chance of rescuing the greater economy. So far the idea of this is not going over very well. I hope I’m wrong and that the extremely perilous ‘glide slope’ can be safely navigated. That’s one ‘hope’ to add to the pile.

      • Impressive says:

        You know, the natives growing weary and almost to the point where they have lost any trust in the government.. In addition, the Opposition not sitting back and and allowing any and every contract or piece of legislation to get by without any due-diligence checks,, you know “unrest” smh

      • Carrot Top says:

        BIU wildcat strikes where tourists are left stranded because of some silly reason or poor excuse for a mid-day meeting.

  4. We could be better leveraging what we have already but we’re not. We could be building out a support framework to get more Bermudians to return to what was successful in the past –> guesthouses. More Bermudians need to be encouraged and supported in putting their apartments and properties online on modern sites like AirBnb. This generates money that stays on the island vs foreigner owned and operated hotels and cruise ships.

    As you’ve noted, we’ve focused too long on visitor numbers and not spending. Spending is what matters, especially spending which stays on island. Yet when you look at what is promoted rarely do we make it easy and accessible for visitors to spend their money. Instead we focus too much on throwing money at new things rather than making the most of what is available now.

    • Jeremy Deacon says:

      I believe I am right in saying that the BTA is now going to ask visitors where they stayed, ie a vacay rental or not, and that they are increasing their interest in that area

    • Accurate says:

      This is what I mean by lowered expectations – better to get several $2000-$3000 a week rentals than hold out for the never to return $15000 a month lease. Of course for the hyper-leveraged this type of seasonal income will not do.

    • Russ says:

      Denis, You make a great argument regarding the B&B’s. It makes great economic sense.

      You are also correct in that it is spending that matters. However, I would note that the targeting of the high rollers must consider whether Bermuda has a product of such high quality that the high rollers would spend their hard earned money. The rich got that way because they readily can spot value for money. I don’t see the value proposition … yet.

  5. Sickofantz says:

    I agree with Jeremy that High Net Worth visitors are the answer to most effectively exploiting the tourism opportunity.

    If I was marketing the island I would use a strapline like”Psst it’s still great. but keep it a secret”. ie. promote the exclusivity of the island and almost capitalise on it’s posh ‘classic’ past and the fact it’s quiet. Market the island virally as an exclusive ‘tip-off’ like the name of an up and coming stock, restaurant or race horse. “I would tell you where we vacation but I’m afraid I would have to kill you”.

    In the 1990′s Majorca successfully changed it’s down/mid market brand to a much more exclusive destination by attracting yachts and promoting it’s many luxury homes available for rental. Where the upmarket and monied go others followed into the many Majorcan boutique hotels many with interesting hisorical pasts (much like the whole town of St Georges)! The fact is the island isn’t cheap so stop talking to the cheap!

    • Triangle Drifter says:

      in other words, stop catering to the french fry & hamburger crowd. Is that it?

    • .... says:

      This would be great if we could back it up with providing the service and amenities the high end traveler is used to all over the world. Sadly we fall short of being able to do so much to often.

    • Russ says:

      It is not a question of ‘cheap.’ It is a question of pricing that reflects the value of the product, in essence Bermuda. Bermuda is clearly priced well beyond the value it offers. When the population decides that some income is better that no income the situation will change markedly and immediately. Visitors are not concerned with the cost to ‘produce’ a product. They are concerned with the value received for their money. It seems that few pay attention to the reality – the statistics. Even fewer know anything about tourism and the current economy.

  6. oh dear says:

    The Towne desperately needs attention – that’s for sure. The infrastructure is run down, the streets and pavements/sidewalks are a disgrace and dangerous- the weeds abound and enjoy a free expanding life style – the hang-abouts are not a pleasant sight, business is virtually non-existent and there is nothing to attract either tourists, locals or let alone a Hotel development. Money and serious effort is required to clean up, wake up and cheer up the Olde Towne. I know. I live here!

  7. MB says:

    Flew back to Bda from US East Coast this week, not one single tourist on my flight…gates for hawaii, mexico, caribbean abuzz with tourists. Guess off season starts in August now
    It is simple why-
    Flights cost too much, no big glitzy resort draw, same old boring hotels, with boring things to do

  8. Oh,I see now says:

    Stop looking for the tourist of the 80s and 90s with families of 5,6,and 7 sometimes 10 people at a time traveling together.Todays familiy is to say the least smaller because it’s a little more affordable.Those families could barely afforded the hotel room and airfare back than and with today’s economy it would be almost impossible now.We would need a marketing genius/airline pilot to get us out of this downward spiral we are in.All the BTA can do is give us information on where the pennies are coming from and in which specific areas,with that said how do we get past the real hurdle getting them here.

    The world is more open and the concept of a vacation has changed so much since our parents days.I read recently in the papers of three sisters who spread their vacation through several spots on the globe and traveled light.They got more bang for the buck of an adventure without two young ones and a husband in tow.With places like Cuba and who knows where else on the brink of busting open the pie is getting that much smaller.

    I guess it doesn’t hurt to try but I believe it is a waste to pay these people in the BTA all this money/bonuses for what we already know.We will never again come close to having tourism sustain the economy in a way as to take some of the pressure so to speak off of IB.I speak because I was in the hospitality industry in the 80s WHEN tourism was the big brother and IB was the little sister.Bermuda isn’t another world anymore and hasn’t been for a while ,it is a little disheartening to wake up from the matrix but a lot of us need too.

    • Russ says:

      Bermuda could easily be ‘another world’ again. Adapt to the changing holiday environment – price the product competitively. (My apologies – I said the 13 letter word!)

      The government sector – i.e. everyone working to take care of everyone – doesn’t work. Someone needs to generate the income that supports the infrastructure. .

  9. Real Deal says:

    If Delta Airlines lowered their fairs to and from Atlanta, I know for a fact air arrivals would skyrocket!

    • Russ says:

      Applies to realistic airfares on the Boston route as well.

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