January 30, 2013 at 5:54 p.m.
Tourism's slide will continue without a good plan
Although the Minister for Tourism has not yet reported 2009's earnings from tourism, he has, in his most recent press statement, relayed enough information to enable the following comparisons and comments to be made:
* Total air arrivals for 2009: 235,860 (down 27,753 or 12 per cent on 263,613 for 2008). Of these, the minister said 18 per cent were business visitors (42,455) up just under 1 per cent on 2008 (42,170).
* Another portion of air arrivers are reported (DOT) as families and friends of guest workers. These were said to be 16 per cent of air arrivers (37,737).
* So leisure visitors (air arrivers less business visitors and family visiting friends) totalled 155,668.
* Cruise visitors (at 323,182) were up 13 per cent on 2008. Only 2006 and 2007 have higher totals.
* Total Visitor count, according to the Minister, is 559,042 [Up 1.6% or 9,021 on 2008's 550,021.]
* My projection is that total Cruise Visitor spending is likely to be about $66m [up about 14% or about $9m on 2008].
* My projection is that total Air Arrivals (leisure, business, family visiting) spending is likely to be about $286m [down 20% or about $58m on 2008].
* My projection is that total income from all Tourism for all of 2009 is likely to be about $352m [down 12 per cent or about $50m from 2008. Likely 2009's overall income will fall in the range $340m-$370m].
The increased numbers consist solely of Cruise Visitors. These spend only 15c for every $1 spent by an air arriver. Seven additional Cruise Visitors are necessary to compensate for each lost Air Arriver. For 2009, Bermuda would have required (27,753 fewer Air Arrivers x 7 = 194,271) about 194,271 additional Cruise Visitors to cover the spending loss resulting from those 27,753 fewer Air Arrivers.
Adding the 194,271 additional cruisers needed to the 323,182 cruisers who actually came equals 517,453 total cruise visitors. This 517,453 is the total number required to take Tourist revenue back up to the $402m level reached in 2008. As it is, the 9,021 additional cruisers only made up for the loss of about 1,300 Air Arrivers, leaving 95 per cent of that lost Air Arriver income still to be made up.
Infrastructure
This 517,453 is over 160,000 more (45 per cent more) than we had in Bermuda's best-ever Cruise Arrival year 2007 - when 354,024 Cruisers came. These 160,000 additional cruisers would mandate about sixty additional cruise ship visits to Bermuda.
Can Bermuda and its infrastructure adequately and profitably deal with over 500,000 Cruise Visitors? Can Bermuda absorb over two hundred mega-ship and smaller ship visits in a typical nine-month cruising year? [Turks & Caicos had 514,000 Cruise Visitors in 2009.]
With around 500,000 Cruise Arrivers, Bermuda's maximum income from this size group of Cruisers - in 2010 and going forward - would likely be around $105m/$115m. Bermuda would still need at least another $300m from Air Arrivals. This suggests an Air Arrivals size of at least 250,000 per year. This combination of Cruise and Air Arrivers should provide national revenue of about $400m/$425m. This $400m/$425m would be about the same dollar volume as in 2008. But it would be more than in 2009. However, as in 2009, this Air Arrival total is unlikely to provide and maintain hotel occupancy rates that will make existing hotels profitable. [Turks & Caicos had 351,500 Air Arrivals in 2009]
The increasing and obvious importance - now almost one out of five air arrivers - of International Business (IB) is stamped on tourism. Without IB, and not forgetting the now significant and important visits from the relatively well-to-do family and friends who visit our better-paid working (expatriate) residents employed in IB and its supporting services, Bermuda tourist totals would have fallen to where they were prior to 1965. By this reckoning, the real leisure visitor total for all of 2009 is less than 156,000; rather than the 235,860 that the Minister for Tourism reported as the grand total.
With Elbow Beach's recent partial closure, only Grotto Bay and the two Fairmont Princesses are still in full operation. Bermuda now has about the same number of major unit hotels that it had in 1960 - which was before Carlton Beach (later Sonesta Beach), Southampton Princess, and the Holiday Inn/Loews/Club Med hotel complexes were built.
Across the Industry, tourist beds in licensed accommodation peaked at 10,040 beds in 1987. By 2000, Bermuda was down to 6,678 beds. From 2000 to 2009, Bermuda lost another 1,000 beds, dropping to under 5,600 beds. The number of licensed units fell from 99 in 1987, to 63 in 2000, and is now under 50. From peak in 1987, a 44 per cent drop in hotel beds and a 50 per cent drop in licensed units.
In 2009, was Bermuda solely and specially impacted by global and US economic woes?
Not solely. Not specially. From arrival figures for 2009 seen in all Caribbean destinations, it is clear that the 'global recession' and the U.S. recession does not have and has not had an absolute and universally negative impact on Tourists coming out of the U.S. and Canada.
In the Caribbean, in 2009, Jamaica suffered its worst ever year for murders. However, following an aggressive marketing campaign, Jamaica had an overall 3.6 per cent increase in Air Tourist arrivals. Turks & Caicos, Guyana, Cuba, Curacao, Grenada, and several other islands also saw overall increases.
However, many other Caribbean destinations saw declines ranging from -0.4 per cent in Barbados to -22.6 per cent in Anguilla.
Clearly, for some destinations and even in this economic climate, well thought out and aggressive marketing campaigns, combined with good attractions within the destination itself, succeeded in either maintaining growth or not losing numbers.
When compared to Tourism in the Caribbean, Bermuda seems to be behaving and grouping with the more successful sector in the Caribbean. However, Bermuda is actually performing differently from this group of apparently successful Caribbean destinations.
Bucked the trend
Similar to the members of this group, Bermuda, with its 1.6 per cent overall growth bucked the trend in arrivals that affected the majority of the destinations. However, Bermuda performed contrarily because although Bermuda had an overall increase, Bermuda contrarily suffered a simultaneous and large - projected to be around 12 per cent - decline in income from tourism.
For Bermuda, between 2000 and 2009, these four critical changes have occurred:
* Overall small increase in total arrivals (4 per cent increase in total arrivals - 538,059 in 2000 and 559,612 in 2009)
* Overall significant increase in Cruise Arrivals and reflecting the 2003 switchover from majority Air Arrivals to majority Cruise Arrivals (57 per cent increase in Cruise Arrivals - 209,000 in 2000 to 323,000 in 2009)
* Overall significant decline in Air Arrivals as that 2003 switchover took effect (28 per cent decline in Air Arrivals - 328,000 in 2000 to 236,000 in 2009)
* A significant decline in National Income from Tourism reflecting changes in spending patterns in the new, post switchover, majority group (16 per cent decline in actual dollar income(*) - $421m in 2000 to $352m [projected] in 2009 which is $69m less in 2009 than ten years earlier in 2000.)
These numbers, trends, and changes show that if Bermuda has had a strategic national tourism plan, then over the past ten years, it has not worked to the benefit of Bermuda. If, on the other hand, Bermuda has had a succession of tourism policies and plans, they also have not worked for the benefit of Bermuda.
Clearly, there has to be some kind of major change in Bermuda's marketing actions and with on-island Bermuda factors that can be controlled or changed.
Four critical questions:
* Ultimately, will Bermuda's tourist industry continue to degrade to the point where leisure visitors slide to around 100,000 - 120,000 with, hopefully, business visitors and family and friends filling a gap and pushing Air Arrival totals back up to the low totals of 180,000 - 210,000?
* Will material real change occur in national tourism policy and planning, or will the downhill air arrivals slide continue?
* Does Bermuda actually have a coherent National Tourism Policy that conceives, works, plans, and is staffed and funded on a long-term strategic basis?
* Who will act to make the changes that will result in a reversal of the long-term trend that currently exists?[[In-content Ad]]
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