MIAMI—The Caribbean region needs marketing power, and it needs it now, according to panelists speaking on Monday’s “Hotel Leaders Speak Out” general session to open the Caribbean Hotel & Resort Investment Summit.
Facing a long climb out of a rut exacerbated by the recession, the region is in desperate need of a cooperative program to attract new visitors, which will enable hoteliers to improve bottom-line goals, the panelists said.
“We, as a region, need to be looking at affiliation ... combine databases, synergize marketing. It becomes destination marketing,” said George Markantonis, president and managing director of Kerzner International Bahamas, which operates the Atlantis Resort. “(Atlantis has) a lot of firepower, but it’s not enough for what we face as a region.”
“(The Caribbean) is an incredible value today, and it’s the No. 1 demanded destination for U.S. travelers,” said Steve Joyce, president and CEO of Choice Hotels International. “Awareness of the value and the opportunities is not out there. There is a need to take advantage of those circumstances. The question is, ‘How do you create more interest in that value?’”
Ralph Taylor, president and CEO of Almond Resorts, said Caribbean governments need to step up to the plate in a variety of ways, including on the marketing front. The Caribbean Hotel & Tourism Association has attempted to create a joint marketing effort and, at one time, nearly had it completed. Taylor lamented the $7 million spent on an advertising campaign in 2002 that never came to fruition. “(It) is sitting on a shelf (of an advertising agency) in California,” he said.
“The region needs to have its own advertising campaign, which raises the level of the water,” he said. “None of these properties, even Atlantis, have enough money to exploit the opportunity.
Somehow we have to convince regional governments to create regional awareness.”
Lack of airlift remains a concern
As is the norm when discussing challenges facing the Caribbean region, the lack of sufficient airlift was part of the conversation Monday.
Joyce, whose company has nine franchised properties in the region, projected that leisure travel will be double what the business travel will be in 2012, and the region needs more airplane capacity.
“Lift is a big issue,” he said.
Markantonis said airlift is the biggest issue facing the region, and it’s going to be more of an issue when Baha Mar, a $3.4-billion resort with about 2,500 rooms that is under construction in the Bahamas, opens in late 2014.
“We need 500,000 more arrivals a year to sustain both properties, and we don’t want to wait until 2015 (to start looking for more airlift),” he said, adding that the two properties have teamed up in their quest. “We’re visiting one airline after another, showing the data, showing the budgets. We know we have to get seats in there.”
More airlift is important to attract the coveted casino players that both properties target, according to Markantonis.
“Casino players in general want a direct flight, or they will go somewhere else,” he said.
Additional airlift also comes into play for new development, Markantonis said.
“We have to have a compelling story when we go to lenders—it’s not a compelling story if we have the exact same markets for 10 years,” he said.
The region has seen much more air traffic from Central America and South America, thanks mainly to increased connections in Panama City, Panama, he said. And because Baha Mar’s main financial supplier is the Export-Import Bank of China, Markantonis said he expects more flights from Asia to touch down in the Caribbean.
Other challenges face industry
There are other challenges for the region’s hotel operators, the panelists said.
“The major costs are labor, (food and beverage) and energy—those are the costs that are going to kill you,” Taylor said.
He said becoming eco-friendly is the right thing to do from a business perspective.
“It makes so much sense to use light bulbs that use 1/10th the energy (of regular light bulbs),” he said. “There are a lot of costs you can cut just being energy efficient.”
The Caribbean’s chefs need to be more creative in using indigenous food to reduce the costs of important food, he said.
Joyce said reducing consumption is a key for more success, and hoteliers can be creative when it comes to encouraging guests to cut back.
“A friend of mine who owns 10 all-inclusives put scales in his rooms and food costs went down 15%,” he said with a laugh. “That’s a true story.”
All-inclusive resorts, cruises are hot topics
All-inclusive resorts are more popular in the Caribbean than any other destination. Joyce said he has explored having Choice enter that sector but hasn’t found the right opportunity.
“It is a very attractive model,” he said.
Taylor said he expects the all-inclusive business to continue to grow in the Caribbean because consumers are looking for value and convenience.
“That’s also why the cruise sector works: it’s a bundling of services that interest people for one price,” he said. “It allows people to plan their holidays better.”
The cruise industry offers a unique challenge for the Caribbean—one that the hoteliers don’t like.
“All of us in the hotel industry need to face this: The cruise industry has emerged as a major competitor,” Markantonis said.
Nassau, Jamaica, can handle six cruise ships a day, and Atlantis does everything it can to get passengers to visit the resort. Exposing those passengers to the island’s offerings is important for the future, Markantonis said. A cruise guest is worth about $70 a day to the local economy, while a hotel guest is worth more than $200.
“The worst thing that can happen is if cruise ships only go to their own private islands,” he said. “That would be a disaster.”
Taylor said the cruise industry has a unique business model that works in its favor.
“The people who run cruise companies are smart businessmen and businesswomen,” he said. “They get the governments to allow them to use the waters, the facilities for very little cost. That’s good business.”