Sluggish tourism

Hamilton Princess

The Hamilton Princess’s new 1609 wing

The Bermuda Tourism Authority released its second quarter arrival statistics last week, which gave some indication of the health, or lack thereof, of Bermuda’s second economic pillar.

Tourism continues to attract a greater amount of attention in Bermuda than its limited economic weight would suggest it deserves. This is partly attributable to its historic legacy but more importantly because it remains a major employer, arguably generating more jobs – especially for people with a limited skill set – than international business.

And as some economic observers have noted, even a financially unsuccessful tourism sector is needed if Bermuda is to continue to attract and retain international business.

Bermuda has also embarked on still fairly novel experiment in tourism, by ceding much of the Government direction of tourism to the BTA. This experiment is still in its early stages, but the second quarter figures give some clues as to how the BTA is getting on.

The statistics are a little disappointing, especially given the continued US economic recovery:

Overall Q2 arrivals: Up five percent to 223,121

Year to date arrivals: Up four percent to 254,342

Q2 and YTD cruise arrivals: Up nine percent to 146,916

Q2 air arrivals: Down three percent to 72,838

YTD air arrivals: Down two percent to 103,804

So the overall increase was mainly driven by the rise in cruise arrivals, and the main reason they were up over 2013 was because a number of cruise arrivals were cancelled last year because of a fire on one cruise ship and because of the remedial work on the Heritage Wharf.

In other words, had 2013 been a “normal” cruise season, cruise arrivals in 2014 would probably be flat – and certainly not up as much as nine percent.

The figures are still welcome – but they do not suggest a great improvement in Bermuda’s tourism performance.

Worse, air arrivals are down. Again, there is a capacity reason for this – the number of hotel rooms available were down by eight percent in Q2 due to renovations, mainly to the Hamilton Princess. Available rooms were down 12 percent YTD, mainly for the same reason.

Occupancy rates for the hotels actually increased, but the number of rooms booked actually fell, which is worrying, although it may reflect the inability of people to book rooms at peak periods.

Because of the seasonal nature of Bermuda’s tourism industry, it has a couple of problems. In the offseason, most of Bermuda’s hotels have pretty poor occupancy rates (in the first quarter, occupancy rates reported by hotels were 40 percent; in 2013 they were around 30%).

On the other side of the coin, Bermuda does not have sufficient capacity in the peak period – during the Newport Race in June,   an insurance conference was being held at the same time, and people were complaining they couldn’t get a room.

Still, there is an expectation that the BTA would bring private sector energy and innovation to the sector and start to improve arrivals.

That’s not quite been the case, although the fact the BTA has still been recruiting its team and building its organization may have something to do with it.

The BTA also noted: “It should be noted that external factors such as inaccurate information about beach pollution, air route shifts, public transportation disruptions, reductions in international business and fewer hotel beds at higher rates all could impede Bermuda’s fledgling economic revitalisation.”

That may be so, but in the end, the BTA will be judged on how it overcomes hurdles and produces results.

There is some other good news. It looks like some of the projected hotel developments are gathering steam, and if casino legislation passes, and it likely will, this will also help, although not by as much as its keenest proponents might think.

The need for better service in our hotels remains vital as does the need for plant improvements. And it’s ironic that the biggest hiccup in tourism this week came in public transport at Dockyard – the one area that remains under direct Government control. So perhaps it is just as well that tourism is now in more autonomous hands.



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