Tour-operator driven business model killing Barbados tourism industry

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“So many of our hoteliers are contemplating simply throwing in the towel”

Adrian Loveridge, small hotel owner - now selling!

Adrian Loveridge, small hotel owner – now selling!

Like many other people involved in the tourism sector, I have wondered for a very long time exactly how financial data is collected and used to shape national tourism policy.

As part of the arduous lead up to prepare all the required paperwork for the eventual sale of our small hotel, we have to obtain many official documents. This includes a Certificate of Good Standing from the Corporate Affairs and Intellectual Property Office to state they have in their possession our last twenty something years of certified accounts.

Don’t get me wrong – I have absolutely no objection to them having every intimate detail of our financial trading over the previous two decades. But I just wonder: Is any part of the information we voluntarily supply passed on to Ministries, including tourism, or other institutions like the Central Bank, so that it can be used in defining policy making?

Without reasonable profits, hotels cannot maintain the quality of their tourism product

What prompted these thoughts was looking through a real estate description of one of the many hotels that are on the market for sale and trying to fully understand all of the reasons why such a large percentage of our accommodation providers desperately need to be upgraded.

The hotel in question has 150 rooms located on a 525 feet wide prime beachfront site and spread over about 5 acres on the south coast. According to the agent, the hotel has ‘generated significant annual gross revenue averaging more than BDS$10 million over the last four years’.

At first, it looks an attractive acquisition prospect, but then consider this…

If the BDS$10 million quoted is annual turnover, then with an average occupancy level of 65 per cent across the year, which is considerably higher than the ‘norm’ on Barbados, that would only equate to BDS$281, or US$140 per room per occupied night. Clearly, it cannot be overly profitable or the agent would not qualify the offering with ‘it is being offered well below replacement cost’.

Has the over reliance on tour operator generated business and prolonged periods of discounting eroded margins to the point where so many of our hoteliers are contemplating simply throwing in the towel?

When conducting a comparison with our own small Peach & Quiet Hotel property, we averaged BDS$454, or US$227 per occupied room night in the last financial year ended – mostly due to the fact that almost 100 per cent of our business is booked directly at rack rate.

Last week, UK travel giant, Thomas Cook announced it was closing another 195 high street stores, shedding more than 2,500 jobs. The British trade body, ABTA, estimate over 1,400 agencies have closed their doors during the last ten years and that’s in the United Kingdom alone.

People are booking for themselves using the internet

A recent TripAdvisor survey polled across 35,000 people, conducted between December 2012 and January 2013, concluded that only 7 per cent of holidaymakers went into a travel agency to actually book their last holiday.  27 per cent booked via web-based travel agencies and 23 per cent direct with the accommodation’s own website. What does the remaining 47 per cent do?

So clearly the distribution of our product and way it is booked has dramatically changed, yet ‘we’ as a destination appear to be doing things in the same old way.

Is it time that we look very carefully at how, as a destination, ‘our’ business is both generated and delivered – to see not only the best way we can claw back the arrival numbers, but also maximise the revenue earned?

7 Comments

Filed under Barbados, Barbados Tourism

7 responses to “Tour-operator driven business model killing Barbados tourism industry

  1. A good example of what happens if you fail to deal with changes can be seen in a publication titled “Who Moved My Cheese?” by Dr. Spencer Johnson. Those responsible for tourism and legal practices in the Caribbean could benefit from reading this book. Failing to keep up with change and market trends is a recipe for disater.

  2. Carson C. Cadogan

    “So many of our hoteliers are contemplating simply throwing in the towel”

    So many of our hoteliers are too damn lazy. they need to pull their own weight and stop depending on taxpayers money in one form or the other.

  3. Adrian Loveridge

    Carson, you mean like the neat $1 million YOUR hotel received of TIRF (taxpayers) monies? Gosh! you must be admitting to be lazy!

  4. Can never build a business on lies. Unless you are a lawyer.

  5. Well Well

    Taxpayers money will have to stop funding these private hotels, everyone is now admitting it is going nowhere fast yet monies are being poured into this hole.

  6. Carson C. Cadogan

    The taxpayers 0f this country are tired propping up this Industry..

    As I said earlier hoteliers have to pull their own weight.

  7. Adrian Loveridge

    Carson, I think what you are trying to say is that SOME hoteliers have to pull their weight, like the one you work for. ie; stop begging for further amounts of taxpapers monies. Surely over $800,000 of taxpayers monies was enough for you Carson?
    Many of us hoteliers did not get ANY, perhaps because there wasn’t any left.