2012 Year End Tourism Report & 2013 Outlook

Ladies and Gentlemen, thank you all for being here today and allowing me to share with you both a look back at tourism’s results from the past year as well as, more importantly, our forward-looking plans for what lies ahead in the coming year.

As you all are aware, it has only been a few short months since the general election, when the citizens of Bermuda gave us the important responsibility to help shape our country’s future. When Premier Cannonier asked me to take on the task of serving as Minister of Tourism Development and Transport, I accepted knowing that this is an area that has faced, and continues to face, tremendous challenges. But I also knew it was an area with tremendous opportunity for success.

Today I want to talk to you about both aspects – challenges and opportunities. In looking back at 2012, on the surface we can see challenges. Overall visitor arrivals decreased by 6% – from roughly 655,000 visitors in 2011 to 615,000 in 2012. Within those numbers, air arrivals dropped by less than 2%, while cruise arrivals, after a record high year in 2011, declined by 9% due to 20 fewer ship calls in 2012.

While those numbers overall are disappointing and need to be turned around, we see within them some positive signs and opportunities.

For example, we saw more than a 4% increase in overall leisure visitors in 2012. This number is significant as the leisure traveler is our primary target audience and the area towards which the bulk our sales and marketing efforts have been focused. These vacationers represent 65% of all visitors to the island, so realizing continued growth here is crucial.

Among our geographic markets, Canada, in particular, has been a positive success story, increasing air arrivals by 4.6% year over year and by nearly 20% since 2009. Our core North American geographic markets on the whole held firm and actually increased their share overall. These markets include New York, Massachusetts, New Jersey, Pennsylvania and Connecticut in the United States, as well as Ontario in Canada. The Rest of the World market showed increases in visitation for the year as well, rising by 8%, showing continued potential for growth.

In line with the goal of driving arrivals in the shoulder season, we have seen increases in both the U.S. and Canada, with the latter experiencing double digit growth in February, March and April 2012. Looking ahead, new shoulder season packages are being created for North America based on the hubs identified within the National Tourism Plan in order to optimize this encouraging trend. To be clear the vast majority of our sales, advertising and marketing dollars will continue to be targeted at the main North East corridor of the United States.

In considering all of these numbers, it is imperative that we work closely with our airline partners to ensure that we safeguard our flights and increase load factors in line with their needs as well as ours. This is a top priority for us in 2013 as we continue to strengthen our relationships with the airlines and work in unison with them to continue to make Bermuda an attractive and easily accessible destination.

The success story of 2012, the Canadian market, has become a challenge this year as we have heard the announcement of Air Canada’s three and four day service reductions. This will be a significant blow if not corrected and, as a result I will be leading a delegation of technical officers next week to meet the leaders of the Air Canada organization. We hope to be able to forge a solution that increases service by the fall.

As we address these challenges, we must also capitalize on the successes. Delta’s new service from New York which commenced yesterday is one example. This additional lift from this important gateway will certainly be a boost to offset our Canadian reduction.

So, ladies and gentlemen, you may ask what was the greatest challenge in 2012? In looking at the numbers, it is clear that the island’s convention business was the sector that struggled the most, down by nearly 50%, while those visitors to the Island for business, and to visit friends and relatives also declined by 9% each.

Recognizing the tremendous impact of the convention market, the Department of Tourism is launching an aggressive new marketing campaign aimed at increasing the group business that includes new creative with tag lines that match the new “So Much More” brand.

We are optimistic that the “So Much More” campaign is one that will continue to help drive business. In looking at the campaign’s impact since it was introduced in August, we saw load factors increase every month – a positive sign that our message is getting through.

Moving forward, however, we want to take the campaign to the next level and use it to focus more on helping the consumer make an emotional connection with Bermuda as a brand. Our next creative shoot to help achieve this goal will take place on island in May and we look forward to sharing the progress of this campaign with you soon.

Preliminary air arrival results for the first quarter of 2013 present a mixed bag so far. January was up 5%, February was down 4% and we are currently completing the tabulation for March arrivals. The total room occupancy of the islands large hotels is projected at 5% down for the first quarter of 2013.

As we look into the pacing, or forward projections of the islands hotels, we note that there has been some pick up of business.

Total Rooms on the books for are showing some improvement, up 2% for the next six months. Transient rooms (or direct bookings) on the books for the next 6 months are down 3% vs. last year. Group rooms on the books for the next 6 months are up 6% versus the same period last year. Tour Operator rooms on the books are up by 13% versus this time in 2012 with large increases in the months of June, July and August.

Ladies and gentlemen, I see many more opportunities ahead in 2013 and beyond and it is my job to ensure that we have the right tools in place to transform opportunities into success. As such, shortly after accepting this position, I began the process to implement the establishment of a National Tourism Authority. It is our goal to ensure that the Authority brings a level of consistency that has been previously lacking when priorities shifted each time a new Tourism Minister was appointed. Our intention is to provide tangible power and responsibility within the Authority, free of political interference.

Under the leadership of Authority Chairman David Dodwell, I am confident that we are headed in the right direction in creating a mechanism that will help drive tourism forward and provide the Department of Tourism with the direction and resources it needs to be successful.

Along those lines, the Department’s overseas sales and marketing offices continue their efforts to drive awareness and business for the destination, working in unison with the on-island team that is tasked with product development and sports marketing, among other creative responsibilities.

As such they will soon embark on two major sales and marketing road shows targeting influencers among high-end travel agencies, media and consumers in major cities in the UK in April and the east coast of the United States in May. Plans are also in place to do the same in Canada in September.

We have just launched our new German language website to help impact a market where we see encouraging potential for growth. We are working hard there to build relationships with key tour operators to drive more business in shoulder season, with the medium term goal to deliver 2,000 passengers per year.

We will continue to invest in our wholesale and tour operator partners as well, and I am happy to say that forward pacing looks strong from the U.S.A, Canada and UK. In fact, Expedia, our largest partner, is already pacing ahead by 17%.

The work being done overseas by our sales and marketing team goes hand-in-hand with the efforts of our on-island staff. Each is tasked with implementing the strategy set out in the National Tourism Plan that was introduced in 2012 and we will see those efforts grow in 2013 and beyond.

One of the vital components identified in the National Tourism Plan was creating an increased awareness of Bermuda’s world-class sporting product to drive visitation. Sports is a uniting factor that brings people from all walks of life together. We believe that our proximity, facilities and weather all help make us an attractive option for the sports tourism market.

In 2012, The Department of Tourism sponsored financially, or with in-kind services, more than 40 sports tourism-related events that brought several thousand visitors to our shores. The Department will look to expand on the number of events and thus the visitors coming to Bermuda in 2013 for sports-related experiences. We will also look to work with our sports tourism product providers to ensure that they are effectively marketed and promoted and thus living up to our visitors’ expectations.

The performance of each sports tourism event sponsored by the Department of Tourism is analyzed against the Department’s goals and objectives. They have been assessed through a performance-based model to ensure that they stimulate our economy by bringing visitors to our shores; act as awareness enhancers of our product via, TV, online, print and social media; provide value added opportunities for visitors planning a Bermuda vacation; and act as a basis for attracting future business.

Sports Tourism also highlights Bermuda to millions of TV viewers, internet and social media users around the world. Not only do sports tourism events bring visitors, but the value of the media exposure for events such as the PGA Grand Slam of Golf and The Argo Group Gold Cup successfully reach into the tens of millions of dollars and puts Bermuda at the forefront of the consumer’s mind when considering a vacation destination.

As such, we are happy with the new two-year agreement with the PGA Grand Slam of Golf, and the 2013 tournament will be held Oct 14-16, 2013. It will once again be televised in a multitude of different countries around the world.

We also look forward once again to hosting the Charleston – Bermuda Race in May. This event is particularly relevant as yacht business continues to grow out of our main U.S. market. In 2012 we saw a 65% increase in yacht arrivals and we look for that number to continue to strengthen moving forward.

Other growing events such as the Round The Sound Swim, Bermuda Regional Bridge Tournament, The Bermuda Open Volleyball Tournament, The Bermuda Beach Tennis Tournament and the Gosling’s Invitational Golf Tournament appeal to various niche markets that Bermuda has done well to attract. They bring visitors to our shores in smaller numbers, but at critical times during our Golf and Spa season when business is usually slower.

Events such as The PGA Grand Slam of Golf, the World Rugby Classic and the Argo Group Gold Cup show the synergistic relationship between business and tourism as they provide excellent corporate hospitality, networking and team building vehicles that portrays Bermuda as a destination for both business and pleasure and expand our potential for long term sustainability.

We look forward to partnering and building quick-win, new sporting events in 2013 to include niche markets in lacrosse, youth soccer and sailing, field hockey, adventure races, yoga and various other sports that will bring visitors to our shores.

While sports tourism will continue to be an important pillar of our tourism business, our Product Development team is working hard to ensure that there is no shortage of diverse cultural events and activities to attract and entertain visitors. The worst thing that can be said about a destination is that it is boring and we are working to guarantee that those words are never uttered on our shores.

The Product Development section of Tourism financially supports more than 50 local events which provide value-added opportunities for our visitors throughout the year. In addition, the Department provides many in-kind services to local event producers for initiatives that provide a visitor experience. Collectively, hundreds of thousands of our visitors have participated in, or have been a spectator at events, supported by Tourism. These include:

• Bermuda Nights – This initiative showcases our amazing local entertainers throughout the summer and provides our visitors with an opportunity to mix and mingle with locals, enjoy Bermudian cuisine in Barr’s Bay Park. Going forward in 2013/14 the Department plans to host 6 to 10 Bermuda Nights.
• Senior & Junior Ambassador Programme – Our Senior Ambassadors have great knowledge of Bermuda and provide assistance to our visitors in high traffic areas. Additionally, through BDOT’s Junior Ambassador programme, 10 young students were exposed to multiple aspects of Tourism and Hospitality. Going forward into 2013/14 these programmes will remain as is.
• Gombey Saturday in the Park – With over 100 visitors in attendance weekly to watch a live Gombey performance and have their picture taken with Gombeys, this event has become a visitor favorite on Saturdays and we plan to continue this great initiative with the kind support of the City of Hamilton in 2013.
• Cupmatch Summer Splash Visitors Cruise and Cup Match Visitors Stall – Known for our famed hospitality, the Department was able to host hundreds of visitors as well as overseas media on two cruises over the Cup Match holiday as well as share interesting history and facts about cricket at our Cup Match Visitor stall with thousands of visitors in Bermuda for the holiday. We will continue these efforts in 2013.
• Entertainment in Hotels – This initiative highlights Bermuda’s talented local musicians and provides additional opportunities for entertainers to perform in front of our visitors at six hotel properties.
• Sizzling Summer and Rendezvous Activities together provide year round historical, cultural and fun interactive tours and events for our visitors to enjoy, and the majority of these offerings are FREE. In partnership with Community and Cultural Affairs in winter and many talented local vendors in summer, there is so much more to see and do in Bermuda which is all made possible through the efforts and support of the Department.
• Spring Break – with the rebirth of Spring Break the Department has grown the overseas students from 250 in 2012 to 420 in 2013 and will continue to grow this initiative going forward into 2014.

In 2013/14 the Department will expand on the National Tourism Plan for more eco- and cultural offerings. In November we will offer three new exciting tours for visitors to explore Tom Moore’s jungle, Castle Island and our South Shore Beaches. This year the Department will also continue with its support of the arts working closely with the West End Development Corporation, St. George’s Corporation, the City of Hamilton and the Chamber of Commerce. We recently hosted several journalists from the U.S. on an arts and culture-themed visit and they were blown away by the amount of talented working artists as well as our rich and distinctive cultural heritage. This is an area we plan to continue to cultivate moving forward as it meets our goal of providing opportunities to differentiate us from our competitors and promote aspects of our experience that are uniquely Bermudian.

Ladies and gentlemen, there is much work still to do to rebuild our economy and our tourism industry. Our challenges will not be resolved overnight, but they WILL be resolved. Dr. Martin Luther King, Jr. once said, “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge.” I see a bright future ahead of us for our country and our tourism industry, but we will only get there by working together and utilizing our greatest strength: the intelligence, creativity, hard-working spirit and indomitable will of the Bermudian people. Together we can and will achieve anything.

Thank you ladies and gentlemen.

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