Whither Tourism?

By G.A. Dwyer Astaphan

Located just next door to St. Maarten, a relatively short sail to St. Thomas, and interestingly different from both, our island makes a good case experientially, aesthetically and economically( in terms of cost to reach us) to be included in an itinerary that includes either or both of those marquee ports.

But that has always been the case.

What has made the difference is that over the years, St.Kitts has been able to add the requisite infrastructure to receive and process the ships and their passengers with relative safety and efficiency, and to assemble a package of organized tours and ‘organized’ shopping to attract the ships and passengers alike.

The cruise lines strive to make their passengers happy, and to make loads of money. And they’re masters at both.

They make money in three major ways, namely:

1. they buy airline tickets in massive bulk, and they put the air fare, together with a premium, into the packages which they sell to their customers;
2. they sell goods and services on board( just like, but in a grander way than most, land-based hotels); and
3. they earn substantial fees from organized tours and ‘organized’ shopping ashore.

What is an organized tour? It is basically a tour that is booked/sold by the cruise line to its passengers on behalf of a tour operator ashore with which the cruise line has an arrangement.

Under such arrangement, the cruise lines will only sell tours from which they can earn a fee. In St.Kitts, for example,  they will have contracts with specific providers of, say,  Brimstone Hill-Caribelle Batik tours, Scenic Railway tours, catamaran tours, and so on.

Under those contracts, the lines pay a discounted fee for the tours, and they add a healthy premium fro themselves as they sell the tours to their passengers.

The cruise lines earn billions of dollars each year doing this. So you can understand the importance of local organized tours to them.

But they also make bundles of money from ‘organized’ onshore shopping. While the ships are in port, their shops and casinos are to be closed. So they look to earn money from the owners of onshore stores( and casinos too).

They enter into contracts and they promote only those stores with which they have contracts. And when their passengers shop at those stores, the cruise lines collect 6%, sometimes more, as a commission.

That too adds up to serious money.

So if you look at what has been happening in St.Kitts over the years you will understand to a large extent why the island has enjoyed such significant growth in cruise passenger arrivals and in the average passenger( and crew) spend.

But there are problems in the cruise sector that need to be addressed.

For example, a smooth, professional and courteous way needs to be found to accommodate passengers who are not on organized tours. They represent over 50% of our cruise visitors, so they are too important in numbers, and the opportunity and responsibility too great, for us to leave things as they are, in what is little better than a ‘free-for-all’ at Port Zante.

They must be exposed to tours at the earliest opportunity after they disembark, and this must be done in a proper and controlled setting.

If this is done, we will have many more happy passengers (and a happy passenger is a destination’s best promoter and advertiser) and many, many more happy taxi and tour operators in St.Kitts.

And in the mix, loads and loads of extra, much-needed dollars will be pumped into our economy.

Meanwhile, we notice the lights of ships on the horizon at night, cruising around as they await dawn and entry into the next, nearby port of call.

This night cruising aspect is an important and can be a very pleasant part of the overall cruise experience, but it can be enjoyed whether the ship leaves port at 5 pm., 6 pm or 10 pm.

So if the next port of call is only an 8-hour sail away, or less, why not encourage the cruise lines to remain  in port later and to allow them to open their shops and casinos from 5 pm?

That way they can save money on fuel and other things, and make money on goods and services being sold on board.

While this is happening, there can be mini Carnivals at Port Zante, well and carefully managed, with the shops, restaurants and bars, both at Port Zante and elsewhere, as well as our taxi and tour operators, casinos, cultural performers, and others, getting a few extra hours of opportunity.

And out of all of this extra opportunity for onshore enterprises, the ships can also pick up extra fees and commissions.

Of course, this might not be feasible for every cruise line, or every ship or every call, but it seems to be worth exploring. And within the concept, there is a broad scope for productive and mutually beneficial negotiation, concessions and commitments between the destination and the cruise lines.

It is also time that locals be trained up in diamond cutting, gemology and in other areas of the jewelry business so that they can take up jobs and other opportunities.

Consideration ought to be given to a  policy on jobs fro sales clerks, diamond cutters, gemologists, supervisors and managers, so that citizens and qualified residents can get a fair chance to produce returns on the massive investment made in them over the years.

And an effort needs to be made to ensure that when commercial space becomes available at Port Zante, local entrepreneurs are given a fair chance to occupy that space.

This is not xenophobia. It is, instead, a rational and sustainable approach to national development that embraces a healthy, productive and fair mix of locals and foreigners in our job market and our economy.

I turn now to Stay-over Tourism.

There is ample evidence that this subsector is in trouble.

The Marriott Hotel’s staff complement is at its lowest ever, and a number of its workers are getting only three and four days of work weekly.

In an effort to avert disaster, accommodation in its Staff Quarters and at the Angelus have been rented to students at the universities based here in St.Kitts.

But the danger exists far beyond the gates of St.Kitts’ flagship hotel.

I am told that the Royal St.Kitts Hotel has rented about 200 of its 292 rooms to university students, while Sugar Bay Club and Bird Rock Beach Hotel have had to join in, for a total of over 350 of our hotel rooms being occupied by students.

And even with the remaining rooms on island, there is still a low occupancy rate.

That is alarming.And it is said that Ocean Terrace Inn is to be next in line.

While it is good that our Education Tourism subsector is strong and is able to come to the rescue of our Stay-over Tourism subsector, the idea is for these two subsectors to operate parallel to each other, and to have separate and substantial impacts on the micro-economics and the macro-economics of our nation, not for the one to have to be used to bail out the other.

Accordingly, as it is Education Tourism dollars rather than the traditional Stay-over Tourism dollars that are going into the hotels, a massive loss of revenue and a massive blow to our economy are being felt.

Yes, some people say that at least we have that to fall back on while other destinations have had hotel closures, and so on.

And I agree. So?

Meanwhile, as more and more students move into hotels, and some do this because they feel safer in hotels( which in itself is another major issue which needs to be faced urgently), more and more homeowners are beginning to worry, even to panic.

How many of us will be unable to maintain our mortgages as we lose our student tenants to the hotels? How many people will now have second thoughts about building homes with apartments  that would allow them to maintain their mortgages?

How will the construction sector and the housing market be affected by all of this?

And  it ought to come as no surprise, with our hotels taking such a beating for so long, some are in sub-par condition, and they do not have the money to refurbish and upgrade.

Trouble.

If radical steps are not taken quickly, we could well see in 2-3 years a  number of hotel closures.

Recently we have been seeing what some persons believe to be the evisceration of our mid-range hotel product. That would not be a good thing, because although it is good to peg ourselves at the higher levels of the industry, it will, for a number of reasons, continue to be necessary to maintain mid-market product.

The planes are coming. British Airways, American Airlines, Delta and US Airways and they are bringing over 2,000 seats a week to RLB Airport.

How many of those 2,000 seats are filled, and how many of the persons filling them are staying at our hotels, as against those visiting friends and relatives, and staying in private homes?

My guess is: not enough. If it were otherwise, we would not have these low occupancy levels.

Which also suggests that we probably owe the airlines millions of dollars. Perhaps the media can follow up on this to find out on behalf of the general public.

Are the hotel rates too high? Do our hoteliers know that when the market is down they must use their rooms as loss leaders? Is it the quality of the rooms and the properties that is keeping the tourists away? Is it the airfares?

Could it be that there is not sufficient, or sufficiently effective and focused, marketing? Does Government have the requisite amount of funds to properly market the destination?

What is the amount being collected for Hotel Accommodation Tax and Island Enhancement Fund? How is it being used?

Should Government consider expanding the Sugar Industry Diversification Fund( minus the objectionable and costly five-year global exclusive arrangement with Henley & Partner) to generate money for more effective marketing of the destination, and to provide soft loans to hotels for refurbishing and upgrade in time for the 2011 season?

And what will we do about the fear that is driving some students to the hotels?

Will we finally recognize that the problem of national security is monstrous, that it needs monstrous money, among other things, to bring it in line, and that we need to proceed without further delay to launch the National Security Development Fund or simply to expand the SIDF as aforesaid so that we can get the money to build out a proper National Security apparatus for the country?

If we can design a citizenship by investment scheme that is specific to holder and transact 500 of these units over the next five years at EC$1 million each, we would generate EC$500 million by the year 2015. That, or any reasonable percentage of it, would go a long way to help us out of this hole that we are in with regard to Stay-over Tourism and other things.

And let us end, where we began: with the Cruise subsector.

When will all of these islands stand together in their own cause and in the cause of Cruise, Stay-over, Education, Health, Eco, Sports, Evangelical and all other forms of Tourism, by calling on the Florida Caribbean Cruise Association’s member lines to collect US$20.00 for each ticket sold for a Caribbean cruise and to pass that money on to a well organized and transparently managed and administered Fund?

This process could generate over US$150 million annually for our islands. Money that is critically needed, money that we do not have and cannot get through taxation.

The Fund would be used to build out and sustain security and safety infrastructure  in the region, at island and regional levels. It would help with environmental stabilization and disaster prevention and mitigation issues. It would provide dollars for product development, marketing, plant and heritage site upgrade, airlift support, and human resource development.

It would enable the region to engage lobbyists at the centres of power in the world to promote and protect the Caribbean interests.

It would enormously relieve the financial and fiscal pressures on all of these governments, and in the process provide critical economic and social breathing room. It would not be a handout. Instead, it would be a levy well justified and a source of revenue that is well deserved.

And it would be more professional and less political.

The Cruise Lines will resist, but if we hold hands, hold one head, and graciously insist, they will come to realize that it is in their interests too. Very much so.

A good friend of mine frequently says: “Oh, yeah! Expect the worst!”

Maybe this time he is right. Because we have troubles.