A Review of the Effects of the Current Recession on Direct Tourism Services

 

17 September 2009

Although forecasted, the global economic recession has taken the world by surprise; not by its arrival but by the unforeseen length and severity of its impact.

From as early as the last quarter of 2008 the direct tourism services in Barbados began to see its effects on sales and revenue.  As is the case with any economic challenge we all began to prepare for the eminent yet unimaginable fiscal period.  We informed our staff that some rough times were ahead, projected as best we could the expected decline and reviewed our budgets to see where we could perhaps spend less without affecting the final product to the client.  All this I might add, whilst trying to remain cautiously optimistic that we could pull through the turmoil by mid-year 2009 or at least in time for the 2010 winter season.

The plan for 2009 was to keep our bottom lines low, to ensure that we remained as competitive in the market as possible and hope that the BTA could keep arrivals from drastically plummeting… and so they did! Barbados was in the forefront in the response to the economic decline, launching several early booking programmes in the various markets (Early Bird UK, Best of Barbados, Barbados VIP Card, Barbados Gourmet Card); all supported by the direct tourism sector, offering value beyond comparison to the client, far in advance of other competing destinations.  Despite this effort which resulted in lower arrivals figures, respectable none the less given the economic climate, consumer spending was far below the average.  The visitor was simply not venturing out as in the past to restaurants, nor purchasing tours and the other related tourism services but instead was content to enjoy the traditional sun, sea and sand of the island.

By early March the accommodation sector was reporting a decline in the forward booking window; persons who usually booked six months in advance were waiting until the last minute to confirm their bookings so projections into the year were slim.  With our sales continuing to decline the concern then became one of staffing. With such a sluggish economy, could we retain our current staff complements let alone our businesses?  We were soon apprised that Government had made available to the tourism sector the opportunity to apply to the Tourism Industry Relief Fund (TIRF); a condition of which was our commitment to retain our staff complement.  For the most part TIRF has been the saving grace for many of us and I am proud to report we have been able to maintain our 100% employment commitment.

Sadly for some of our fellow industry partners TIRF was not soon enough in coming and we have seen the closure of several restaurants and tours – Restaurant at South Sea, Calabaza, Olives, Aqua Restaurant & Lounge ,Simply GiGi, Bajan Helicopters and most recently Ocean Park. While the closure of these services and companies also faced other challenges, it just shows how fragile our ancillary services can be to the economic climate change.

Another major event and a blow to the tourism sector was the unplanned closure, (despite lobbying to delay until 2010) of Harrison’s Cave – the number one visitor attraction on the island.  It’s closure affected the potential revenue of various inter-related services in the tourism sector such as transport facilitators (taxi operators), tour operators and other tours which were being marketed as combinations.  It will remain closed for final renovations until mid-December 2009, barring any unexpected delays. The fundamental problem that some of the tourisms service providers had with this closure was not the necessity to close for the improvements of the project to continue, but in the manner or lack thereof, by how the industry was not informed in such a timely manner so that we could inform our suppliers accordingly, due to commitments that were made in our contracting process some one year prior. More importantly the negative affect this would add during a period that required all assets to be utilized to produce economic activity directly or indirectly through the local economy.

With Barbadians less likely to travel abroad, the BHTA launched the Staycation initiative to target the traditionally overlooked non-visitor market.  Offering residents and citizens discounted rates on accommodation, restaurants and tours so that they would be able to translate their inability to go abroad into an enjoyable vacation experience at home.  Re-discover Barbados’ program also lent much needed support to our restaurants allowing Barbadians to enjoy a night out at low rates.  Initiatives such as these cannot be overlooked as they keep the local economy in motion by enhancing spend and retaining valuable foreign currency.  Barbadians have responded well and have patronised our hotels, restaurants and tours, proving their loyalty to their economy.

Glimmers of hope are however on the horizon.  The cruise ship season is pending and it is projected to be strong, despite the loss of the Pullman Tours line and soon Ocean Village – I certainly hope this projection remains true to form.   We can expect sustained airlift from Jet Blue and West Jet and a few more airlines from less traditional markets are reported.   Another BHTA backed programme for the Barbadian and exterior markets – Passport to Pleasure is soon to come.

Few of us can say we have experienced a recession of this magnitude; however I believe that we have learnt a very important lesson thus far.  There have been reports of positive economic growth in the major external markets and hopefully this continues so by mid 2010 we will see the rebound in our economy.  I would like to suggest that we re-look and analyze our traditional source markets so that we can grow them by means of matching current travel & booking patterns, to reflect a stronger image so that we can become the premier destination of choice in the Caribbean and move away from discounting, to an added value destination. Until then all we can do is to dig in deeper with each adversity and work together to continue to come up with innovative solutions to this crisis to ensure a viable Barbados tourism product is maintained.

Written by Ralph White, Island Safari

About the Author

Wayne Capaldi

Wayne Capaldi

Wayne Capaldi, Managing Director Sandpiper and Coral Reef Club is a 25 year veteran in the hotel and tourism industry. Commonwealth Holiday Inns of Canada, based in Toronto, was where Wayne made his formal entry into hotels in 1983 and just after a year was asked to transfer to Barbados in a management capacity with the then Holiday Inn in Barbados. In 1985 Wayne was offered a position with The Sandpiper Hotel where he continues to this day in his official capacity as the Managing Director. Wayne is also a Director of the Coral Reef Club which together with his wife and extended family own and operate these two hotels which are members of the Small Luxury Hotels of the World. Wayne is also a keen aviation enthusiast having studied aviation and flight technology in 1977 with aspirations of being a commercial pilot someday. These dreams never materialized due to color blindness. As for his professional career, Wayne is currently the President of the Barbados Hotel and Tourism Association, a position which he held also in 2002 to 2004. He is a Director of the Barbados Tourism Authority and has served on the Board of Grantley Adams International Airport from 2001 to 2008 during which time the airport was undergoing a $250 million Airport Expansion Project as well as transferring operations from a Government controlled institution to private sector. Wayne is married with three children.