Bermuda has to re-price itself into a niche market

Will Bermuda be able to return to its heyday Tourism of the three golden decades of the 1960s to 1980s? No. Too much has changed.

Will Bermuda be able to survive on the 148,000 air arriving leisure tourists that Bermuda got in 2010? No. Bermuda’s foreign exchange needs are now far too high.

Can Bermuda rebuild its bed count to its 1987 peak of 10,040 beds? No. Too much — especially on-island — has changed.

Does Bermuda need tourism if Bermuda is to continue as a national economy where GDP does not plummet to the $5,000m level and keep heading down? Bermuda sure as hell does!

Will a vibrant international Business sector remain based in Bermuda if tourism fails? Absolutely not! A modicum of successful high-end tourism is essential to the continued on-island existence of international business.

With the right questions asked, the next action is the hunt for solutions. Not just any solution as happened with that ill-thought through SDO/TPC kerfuffle; but a strategic solution with a best chance of success.

In seeking a solution, the first thing to be tackled is the vexing but critical matter of price. Not what we Bermudians think we want to charge or get — which is the way that we tackled the SDO/TPC issue.

Instead, we need to look at the market and see just what it is that the ordinary unfeeling uncaring market is prepared to pay — and what that ordinary market demands and expects in return! This second part is THE most important part and is the part given far too little attention by all the developers who have already failed, who are about to fail, and whose investors have stepped back.

Bermuda and the TPC concept were, and still are, offering the right product to the wrong market. That right product wrong market syndrome also applies to Bermuda’s national tourism marketing plan — if such a plan exists.

Over the past decade, Bermuda has evolved into a different niche product. Bermuda’s current niche is best and most precisely defined as a ‘Bloomberg’ niche.

Bermuda is an ideal hidey-hole for people who “juswannagetawayfromitall” and chill. Bermuda is not for energetic 30-Somethings seeking a grand time and needing lots of entertainment. Nor is Bermuda for people seeking a country in which to meet interesting and colourful ‘natives’ with strange and exotic customs. Nor does Bermuda offer the esoteric and exciting things experienced in a walk through a Costa Rican rainforest.

Bermuda is a quiet, staid, conservative, clean, and still relatively safe urban/suburban environment with customs and a culture that, for the moment, are still sufficiently different from that of the US so that Bermuda seems to be a ‘foreign’ place.

Amenities

TPC was and still is offering too few amenities (no convenient marina capability, no dedicated private car for owners/residents, no easy beach access) for the prices that it was and is asking. TPC costs far more and offers far less than similar concepts in the Caribbean who offer all the amenities listed — and more on top.

Seeking to charge the $500 plus a day room rates that Bermuda says it needs for hotel profitability, Bermuda faces exactly the same problem confronting TPC. Chucking in casinos and expensive entertainment creates exactly the same problem that TPC has; that of tossing additional expense generators onto the cost pile in order to improve profit potential.

To maintain a GDP that does not plummet below $5,000m, most workers in Bermuda — and especially Bermudians — MUST have and must maintain average employment income around the currently reported $76,000 a year mark [figure from the Department of Statistics]. 

If Bermuda and Bermudians go below that national employment income mark, then hotel costs can drop and hotels can become profitable. But GDP will plummet. A plummeting GDP will create consequential national social tensions that will cause entirely predictable social irruptions. The social irruptions will kill any tourist ‘product’ that might then exist.

Bermuda’s ‘Fata’ is welded to international business. Tourism, re-gearing itself to servicing its real and new niche of ‘chillers’, has to recognize this new niche, re-price itself, and accept its new place in Bermuda’s national economy.

I’ve only scratched the surface here. I hope I set off a discussion that, at the outset, commences by asking the right questions and properly considers the strategic problems of national positioning and national economic impact and practical national supportability.

Special report: Tourism

• Last chance to save tourism
• High-class hotels needed to hook wealthy travellers
• 'Success lies with well-heeled visitors'
• Promise of cruise business a cause for optimism
• Watersports firms feel the tourism squeeze
• Liveries slash number of bikes to rent
• Eateries cautiously optimistic for 2011
• Cruise ships are 'wiping out' mid-size hotels but there's reason for hope
• Ten ideas that might boost the industry
• One of our pressing needs in hospitality: good service
• Viewpoint: Has Bermuda lived up to expectations?
• Bermuda has to re-price itself into a niche market