Caribbean tourism hit by recession

<<< Atlantis on Paradise Island, Bahamas.

By JACQUELINE CHARLES
jcharles@MiamiHerald.com

First, the Bahamas’ marquee hotel dismissed hundreds of workers. Then, a prestigious $500-a-night resort announced it was shutting its doors, and this week — two more announcements of hotel closures: one permanent, the other temporary.

It has been anything but a pretty year for tourism in the Bahamas — and not even Sunday’s Miss Universe pageant at Atlantis resort on Paradise Island appears to be immune from the global economic meltdown.

Just days before NBC’s live pageant telecast, Bahamian tourism officials, who were banking on the event’s marketing glitz to spark life back into their struggling economy, announced a sale on tickets: four for the price of three.

“I am sure, to some degree, the recession does affect these things, but to what degree, I am not sure,” said Tourism Minister Vincent Vanderpool-Wallace, who added that the slow sales have more to do with the high ticket prices than the country’s tourism woes.

“We are charging prices for tickets that are probably unprecedented in recent times.” Still there is no question that the tiny tourism-dependent Bahamas, like most of its Caribbean neighbors, is feeling the economic squeeze even as Federal Reserve board Chairman Ben Bernanke reported Friday that the deep global recession is nearing an end.

Last year, the 3,000 room Atlantis laid off 800 workers, or 10 percent of its staff. Then in May, the Four Seasons in Exuma closed. Then this week, just as Sandals International Resort announced that it had purchased The Four Seasons, the general manager of the Port Lucaya Resort and Yacht Club in Grand Bahama announced that it was shutting its doors on Aug. 31 after nearly 16 years.

The announcement came just days after the Wyndam Nassau Resort & Crystal Palace Casino said it will be closed until Oct. 5.

`FEEL THE IMPACT’

“Until such time that the recession ends and consumer confidence begins to return, we will continue to feel the impact,” Bahamas Hotel Association President Robert Sands said on the heels of this month’s BHA mid-year economic review and tourism outlook survey.

The report’s findings in a nutshell: despite deep room discounts at island hotels and other aggressive marketing, hoteliers continue to see a drop in sales and room occupancy. And at least three out of four of the 30 hotels surveyed anticipate a continue fall in revenues this year.

The Bahamas survey echoes findings by Atlanta-based PKF Hospitality Research (PKFHR), which recently issued its own bit of gloom for Caribbean hotels and resorts. In addition to a continued drop in profits — it averaged 16 percent last year — and closures like the Four Seasons, a number of Caribbean hotel projects from the Dominican Republic to the Turks and Caicos to St. Lucia have been stalled mid-way through construction, company officials said.

“It’s affecting everybody in all market sectors, from luxury to all-inclusives. And those that don’t have good airlifts are suffering the worse,” Scott Smith, the group’s senior vice president, told The Miami Herald.

But what may be bad news for hoteliers, is good news for consumers.

“Now is a great time to travel in the Caribbean if you have the time and affordability,” Smith said. “It’s the cheapest it has ever been.”

In addition to deep discounting at myriad hotels, airline fares to a number of destinations have also dropped, and carriers like American Airlines are adding flights to the region, he said.

“Now is not the time to put up the shutters and hide. You have to go out there and attract the people who are traveling to come to your destination,” said Alec Sanguinetti, CEO of the Caribbean Hotel & Tourism Association, which has offices in Coral Gables. “In these times you have to maintain your aggressive posture in the market place.”

Still, the Caribbean should brace itself for a difficult time ahead as the World Trade & Tourism Council forecasts that the region will lose about 146,000 tourism-reated jobs by year’s end, Sanguinetti added.

Caribbean tourism officials and governments, scrambling to slow the downturn, have pushed several creative marketing strategies, from slashing room rates to promoting lower airfares.

But the one plan that all Caribbean tourism officials have embraced remains on hold: a One Caribbean regional marketing campaign.
Caribbean Community leaders first promoted the idea 17 years ago and agreed as recently as last summer to pursue it in earnest. But during last month’s meeting of Caribbean leaders in Guyana, several countries continued to balk at a proposal to fund the scheme by adding $3 to every ticket issued to the Caribbean.

“If $3 deters anybody from coming to the Caribbean perhaps, then, they are better off staying at home,” a frustrated Sanguinetti said.

The Bahamas is among the most vocal of the countries resisting the additional ticket cost.
Vanderpool-Wallace said Bahamas’ research has shown that higher airline costs are a disincentive for travel. And after ignoring this reality for years, he said, the country is pushing an effort for lower airfares especially targeting South Florida residents.

“Our research has shown that it some days it is cheaper for the customer to fly from Miami to Las Vegas than the Bahamas. We cannot survive in that kind of environment,” he said. “We must reflect our proximity in air ticket prices, to get to us.”

RIDING IT OUT

But some doubt whether lower airfares alone are sufficient to sustain the Caribbean hotel and tourism industry.

“The challenge for us is to ride out this wave,” said John Maginley, Antigua and Barbuda tourism minister and chairman of the Caribbean Tourism Organization. “We have a long history of people traveling to the Caribbean, we think people will come back.”

Meanwhile, as for Sunday’s Miss Universe, Atlantis’ top executive says he expects the event to be completely sold out by the time the first contestant struts across the stage.

“Tickets have been selling rapidly as we approach the main event,” said George Markantonis, president and managing director of Kerzner International Bahamas, which operates the resort and casino. “I am confident of a sell-out by Sunday evening.”