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Airlift issue causes turbulence in Caribbean
November 14 2011

Hoteliers speaking during last week’s Caribbean Hotel Investment Conference & Operations Summit fretted over the changing nature of U.S. airlines that serve the region.

Highlights
  • “People have to be able to get to the islands in affordable fashion,” said Ken Blatt, principal and COO of the hospitality division with Caribbean Property Group.
  • JetBlue Airways looks at three things when it is considering going into a specific market: the number of customers interested in traveling to the destination; the relationships it has within the destination, including with the visitors bureau and local hotels; and infrastructure.
  • Most hotel-and-tourism executives prefer to see more direct flights into the region.

NASSAU, The Bahamas—Hoteliers in the Caribbean region don’t worry much about the old adage that the hotel industry is all about “location, location, location.” After all, where in the Caribbean isn’t a top-notch tourist destination? What keeps them up at night is “airlift, airlift, airlift”—or the lack thereof.

At least that’s the way it appeared during last week’s panel discussions at the Caribbean Hotel Investment Conference & Operations Summit held at The Atlantis Resort. The region’s constant struggle to find the right mix of airlift was a common thread throughout the conference.

“The word is ‘lift, lift, lift,’” said Ken Blatt, principal and COO of the hospitality division with Caribbean Property Group, during the opening general session called “What Are We Doing Wrong? Regional Challenges.” “People have to be able to get to the islands in affordable fashion.”

CPG owns 10 hotels in the Caribbean region, such as: the Ritz-Carlton Hotel and Casino in San Juan, Puerto Rico; the Marriott Aruba Resort & Stellaris Casino in Palm Beach, Aruba; and three Courtyard by Marriott Hotels in Costa Rica, Dominican Republic and Trinidad & Tobago.

Blatt decried American Airlines’ decision to change its airlift plan in Puerto Rico as “very challenging.”

 

Galo Beltran of Executive Airlines and Chad Meyerson of JetBlue Airways listen in on a panel on airlift during the Caribbean Hotel Investment Conference & Operations Summit in Nassau, Bahamas, last week.

Airlines respond
Galo Beltran, VP of business planning for Executive Airlines, a subsidiary of American Airlines that operates American Eagle Airlines, said American
changed its plan to a more hub-and-spoke approach, which will help more people get around within the Caribbean islands.
Chad Meyerson, director of global sales for JetBlue Airways, said his company’s foray into the Caribbean has been “incredibly successful.”

 

“It’s one of the largest drivers of profits in JetBlue markets,” he said.

Meyerson said JetBlue looks at three things when it is considering going into a specific market: the number of customers interested in traveling to the destination; the relationships it has within the destination, including with the visitors bureau and local hotels; and the infrastructure.

“There has to be enough infrastructure to support the seats coming into that market,” he said, adding the volatility of fuel costs make every decision more risky.

Luring in the airlines
Vincent Vanderpool-Wallace, minister of tourism and aviation for the government of the Bahamas, said islands of the Caribbean face a double-edged sword when it comes to their close proximity to the U.S. because they’re a short flight away from the mainland, but it’s a costly proposition for airlines to fly the routes.

Strategy Ad Will Appear Here

“The laser-like focus for us has to be to provide low-cost yield that (airlines) are comfortable with,” he said. “Taxes added to ticket (prices) provide the biggest hurdle. Make the cost of access as low as you possibly can, and by magic your destination is much more visible.”

“The taxation situation is incredibly difficult for us,” JetBlue’s Myerson said. He gave an example of a flight between Puerto Rico and Dominican Republic, which had fares less than US$100 round trip but taxes made the total cost US$250.

During another session about innovations in the region, panelists answered why Caribbean governments and hotel companies don’t start their own airlines to create more airlift.

“Governments aren’t in business to run airlines,” said attorney Matthew Norton, partner with Parker Poe Adams & Bernstein LLP.

Keys to success
Aly-kahn Merali?, executive VP of acquisitions and strategic development for Gencom Group, a Miami-based privately held international hotel company the holdings of which include the Ritz-Carlton Rose Island in the Bahamas, said the important thing is all interested parties must work together to make Caribbean tourism a success.

“We should focus on what we do well,” he said. “Perhaps expanding and taking on additional responsibility; that’s probably something like catching a falling knife …

“The world is screaming for transparency. We need to have transparency and clarity among each other,” he added.

 

Paul Burke, COO, Kerzner International Bahamas Limited.

But it all boils down to having quality airlines serving the regions—airlines that cater to the type of guests hotels are trying to attract, Blatt said.

 

 “Direct flights are important, said Paul Burke, COO of Kerzner International Bahamas Limited, which owns and operates Atlantis. “Our customers are arriving with children and grandparents, and it’s very important for us to make it convenient, hassle free. People are coming here for four to seven days, and they bring a lot of stuff with them.”

Vanderpool-Wallace said of equal importance is the ability to appeal to impulse vacationers—those travelers deciding to take a holiday on short notice.

“When it comes to impulse business, it’s non-stop (flights) or nothing,” he said.

Island nations in the region like that type of business in part because the stays are shorter, he said.

“The shorter the stay, the higher the daily spend,” he said. “By having non-stop (flights), you get a better spend.”

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