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TOURISM’S COMING OF AGE
B A D G E
Photo: Courtesy of SLTA
NOVEMBER 25, 2017
VACATIONING MILLENNIALS ARE CHANGING THE FACE OF CARIBBEAN TOURISM BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
TOURISM EDITION
Thomas Cook’s quest for cool Peter Fankhauser is sitting by the pool on a sumptuous silver futon and is clearly enjoying his surroundings. “You are just [made to feel] welcome here, and that is the cool atmosphere we are trying to create,” he says. Page 3
Tui: putting Das Boot in Even a well-bonused banker, buying a BMW for ready money, cannot splash the cash quite like Fritz Joussen. The boss of Tui is contemplating purchasing two ocean-going ships with his spare change. The FTSE 100 travel group has an appetite for hard assets at a time when ‘capital light’ is a mantra for some rivals. Page 14
Millennials, those born in the early to mid-80s, are coming of age - and they vacation very differently from their Gen X parents. With different needs, priorities and spending power, these travellers are making their mark on Caribbean tourism as the industry evolves to better cater to them. According to the United Nations, 200 million millennial tourists generate more than US$180bn in tourism revenue each year and this lucrative sector has grown almost 30 per cent since 2007. By 2023, millennials will comprise 50% of the travelling public. Competing for the millennial dollar is forcing the Caribbean to reimagine its tourism product - moving away from the formulaic sun, sand and sea brand into something more innovative, unique and authentic. Page 2
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NOVEMBER 25, 2017
TOURISM EDITION
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MILLENNIAL TOURISM Vacationing millennials are changing the face of Caribbean tourism BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
The STAR Businessweek BY CHRISTIAN WAYNE – EDITOR AT LARGE
Accounting for over 13% of GDP, the Tourism and Hospitality industry is one of Saint Lucia’s most dynamic sectors. In 2013 alone, Saint Lucia won over 100 international destination tourism awards and, despite a dampening in overall tourism expenditure, the island is still projecting modest growth in 2018 as several strategic initiatives from major resorts, travel partners and the country’s new Tourism Authority begin to take effect. While the future of Saint Lucia’s tourism industry is bright, growing pains should nevertheless be expected. Not only have travellers themselves changed (see Millennial Tourism, here on page 2) but so has the industry itself. Technology has transformed the business of tourism in many ways but with new opportunities come new challenges (see Small Pond or Big Fish? Airbnb in the Caribbean, on page 5). Amidst chaos, however, lies opportunity. The SLTA is embodying that mantra as it continues efforts in the international marketing arena to spread awareness that, despite a tumultuous hurricane season, Saint Lucia is, in fact, open for business. In this special Tourism Edition of The STAR Businessweek, we’ll hear from industry specialists on the state of Tourism and what we can expect on Saint Lucia’s horizon.
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Millennials, those born in the early to mid80s, are coming of age - and they vacation very differently from their Gen X parents. With different needs, priorities and spending power, these travellers are making their mark on Caribbean tourism as the industry evolves to better cater to them. According to the United Nations, 200 million millennial tourists generate more than US$180bn in tourism revenue each year and this lucrative sector has grown almost 30 per cent since 2007. By 2023, millennials will comprise 50% of the travelling public. Competing for the millennial dollar is forcing the Caribbean to reimagine its tourism product - moving away from the formulaic sun, sand and sea brand into something more innovative, unique and authentic.
RE-THINKING THE BUSINESS MODEL
The millennial traveller is more likely to be found hiking a nature trail than relaxing by the pool. According to a 2014 Harris Poll, 78% would rather spend their money on experiences than things - making them a challenge for the Caribbean, where the tourism industry has long-relied on beaches and sunshine. “Millennials are much more adventurous. They want to explore and experience things beyond the sun, sand and sea,” says Frank Comito, CEO of the Caribbean Hotel and Tourism Association (CHTA). “They are forcing us to re-think our business model.” Saint Lucia’s Tourism Minister Dominic Fedee agrees, saying: “Millennials want to do exciting things, they want something ‘instagram-worthy’. Millennials play a leading role in tourism and will continue to play that leading role. They are the future of tourism and you need to be able to plan for that business.”
Over the last decade, the Caribbean has been steadily diversifying its tourism product to offer a wide range of exciting experiences to younger visitors. From eco-tours to sharkdiving, and historic walking trails to carnival, Caribbean destinations are becoming adept at capitalising on their natural and cultural assets to lure in millennials. “Change is good,” says Comito, and the changing face of tourism is proving especially good for the region’s SMEs who are finding millennial-friendly niches to exploit. Comito says: “Millennials’ curiosity is feeding into new businesses. It is supply and demand. We are already seeing different types of businesses emerging, homespun businesses that are giving millennials what they want. We may see some shifting to fuel even greater development of our historic sites and our urban areas.” Whether it is creating new tourism apps, running an Airbnb or creating a foodie walking tour, more and more innovative entrepreneurs are finding a way into the market thanks to millennial demand. “Millennial tourism creates greater opportunity for different types of business and employment,” says Comito. “We talk a lot about linkages and leakages in our tourism economy - millennials can provide these linkages.”
HISTORY AND HERITAGE
As the industry evolves to develop a more unique product, heritage tourism has grown in importance. This niche sector will not only help put destinations on the map for millennials but also give individual islands a chance to differentiate from the pack and be seen in their own right, rather than as just another part of the Caribbean. In Saint Lucia, the Saint Lucia Tourism Authority (SLTA) has revived the concept of ‘village tourism’. This initiative, which is
TOURISM EDITION
expected to officially launch before the end of the year, will take a more communitycentred approach to tourism, encouraging Saint Lucian ownership. Getting more Saint Lucians involved in the industry at a grassroots level will give visiting millennials the chance to meet and learn from locals - something that they value highly. A report from industry research group Wyse Travel Confederation shows that 55% of millennial tourists want to interact with locals, 46% are looking to experience everyday life and 43% want to increase their knowledge of the destination. Historic and cultural sites give the Caribbean a chance to show that it is more than its climate and to show off its very varied ancestry. “We have French, English, Dutch and Spanish influences in our music, culture and architecture,” says Comito. “The variety and diversity we have over one region is amazing.”
MARKETING TO MILLENNIALS
Having the right product is one thing, letting the market know you’re there is another. Marketing to millennials means going online to target the digital generation where they live. Recently the SLTA took to social media, using the platform heavily to signal that the island was open for business following hurricanes Irma and Maria. It also announced that it would increase investment into digital marketing so that future campaigns could have better market penetration. Businesses that will thrive in the digital tourism marketplace are those that not only know the millennial mindset but have the technical skills to reach them. The CHTA runs seminars and other events to try to bring its members up to speed. Comito says: “Millennial tourists require a whole different approach with social and digital media. Businesses that are savvy in that area are going to do well. We do educational events for the industry, to share the latest best practices. These enable our people to recognise the opportunities and be better equipped to deal with those opportunities.” As the industry takes proactive steps to transform its thinking and offerings, Comito says he is optimistic about the sector’s future. While there are challenges ahead, he believes the Caribbean can meet the needs of the newest generation of travellers - provided it focuses on what it does best. “It is a very competitive, global world out there and it is becoming even more so which challenges us as a region to look at new and different ways we can take advantage of the depth and breadth of the assets we have. The core [of our tourism product] is unmatched anywhere in the world.”
TOURISM EDITION
TOURISM EDITION
THE STAR BUSINESSWEEK
NOVEMBER 25, 2017
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THOMAS COOK’S QUEST FOR COOL BY FT CORRESPONDENT
Casa Cook, Kos: the open-plan Beach Club invites you to create your own summer stories. It’s the community hangout for like-minded people to connect and live up life together Peter Fankhauser is sitting by the pool on a sumptuous silver futon and is clearly enjoying his surroundings. “You are just [made to feel] welcome here, and that is the cool atmosphere we are trying to create,” he says. It’s a word that the chief executive of Thomas Cook, Europe’s second-largest package holiday company, keeps coming back to — guests, furniture, even the gym instructor, are all declared ‘cool’. We are at Casa Cook on the Greek island of Kos. It is a newly opened beach resort, the second in an emerging boutique chain being created by the company, aimed at younger, more affluent and, yes, cooler travellers. To Fankhauser’s left, the Aegean Sea twinkles under a hot sun. On his right, a young man mixes cocktails behind the bar while a woman, dressed all in black, serves coffee. I can’t help noticing that the staff here are drop-dead gorgeous. “The people have to fit into it,” the Swiss executive, 56, says in his heavy accent. “The [workers] who are here have to be cool as well. This is exactly what makes the difference.” Looks matter, because Thomas Cook is a 176-year-old company attempting a sudden makeover. For decades the company and other high-street tour operators relied on the hordes of European families who escaped each summer to beach resorts in Spain, Greece and Turkey. ‘Cheap ’n’ cheerful’ tours were built through economies of scale: massive hotels, crowded beaches and full English breakfasts. The model is under strain. A combination of low-cost airlines and online travel agents have made it easier for bargain-hunting customers to create their own cheap holidays online. Bricks-and-mortar travel agents have taken a hit — Thomas Cook has about 700 branches in the UK today, compared with 1,700 in 2010. Tui, the world’s biggest tour operator, with brands that include Thomson and First Choice, has been shifting its focus from selling package holidays towards buying cruise ships and operating hotels. It says that within three years more than half of its profits
will come from tourism businesses other than package holiday sales. Meanwhile millennial travellers have increasingly prized authenticity and unique experiences over one-size-fits-all packages, and have sought them via home-sharing sites such as Airbnb. Noticing the shift, many of the largest hotel corporations have spun off collections of properties that make little or no mention of their parent brand, and instead play up their interior design, heritage or location. Marriott has its Autograph Collection, Hilton has Curio, Hyatt has its Unbound Collection. Casa Cook is an attempt to cater to this image-conscious modern traveller who demands a beautiful backdrop for their selfies. Thomas Cook’s yellow heart logo is conspicuously absent; in fact, despite the nod in the name, there is no visible sign that this is one of the group’s properties. “We want to show that we can attract people who were probably not thinking of a package tour operator before,” says Fankhauser. “We want to show that the package tour operator is not what it was, that we’ve innovated and we have re-energised Thomas Cook and reloaded it to make a really modern holiday provider.” The company is best known for creating family-friendly holidays but the facilities at Casa Cook are focussed on grown-ups. Drifting through the resort is the constant hum of electronic dance music. There is a well-equipped gym, an outdoor yoga deck and Turkish-style hammam — but no play areas. One morning, I see a child entertaining herself by building a pile of rocks. Another kid balances a plum on his knuckle to pass the time. Around them, adults are piling into a nutritious buffet breakfast at the open-plan restaurant. Dried coti berries and pumpkin seeds are available; sausages are not. The first Casa Cook resort opened in Rhodes last year and Fankhauser wants to create 10 more over the next three years. Only two locations, in Croatia and Crete, are so far confirmed. He concedes that there will never
TOURISM PULSE!
15% increase in Stay-Over Arrivals (4,000 arrivals) vs October last year
96% 24% 8%
increase in France arrivals increase in U.K. arrivals increase in U.S. arrivals
be a huge number of Casa Cook resorts: “It’s not going to be 100 because . . . we don’t want to dump the market.” These hotels are intended to be Thomas Cook’s high-end offering but Fankhauser admits they may represent just “1 per cent” of the overall business. So, is Casa Cook just a very plush marketing gimmick? He insists that the resorts are part of a broader strategy. Five years ago the company offered packaged stays at more than 10,000 properties, the majority of which were owned and operated by outside hoteliers. At most of them Thomas Cook would merely pre-book a number of rooms for its customers who would be holidaying alongside the guests of other tour operators. Today it offers just 2,500 hotels. The company owns five of these and just over 180 are “own brand” properties — including Casa Cook — which are run on management contracts in which Thomas Cook has full control over the look and feel of the hotel. The rest are “selected partner” hotels which Thomas Cook pays to gain exclusive access or a large allocation of rooms. In return, it demands a decisive say over how each place is run — everything from what is on the restaurant menu to how maids do the bedding. Slashing the number of hotels means it can streamline the business, reducing, for example, the number of holiday reps and safety auditors while maintaining tighter quality control. “You want to do something like this where the margin is much higher,” says Fankhauser. “You essentially make more money from operating a hotel like this.” And though bohemians want to tread an unworn path, Fankhauser says there are benefits to package holidays that will ensure that they remain popular. Two days after my visit an earthquake hit Kos, killing two tourists and injuring hundreds. Casa Cook suffered a short power cut, the guests were unharmed and all continued their stay at the resort. But some Thomas Cook customers elsewhere on the island were moved or flown home. “If something goes terribly wrong, we are there,” says Fankhauser. “That is a form of reassurance and we are not shy to talk about it.” On one wrist Fankhauser wears an expensivelooking silver Omega, on the other a Fitbit fitness tracker. He has worked in the travel industry for 28 years, over which time he has gained a reputation for turning around failing companies, and joined Thomas Cook in 2001 as it faced a turbulent decade. “We were in such a difficult situation in 2011, at the edge of a failure, that the first priority was just to stop the bleeding,” he recalls. That year Thomas Cook needed a £200m loan to tackle a cash crisis that had jeopardised its survival. There followed a cost-cutting drive with the closure of high-street stores in favour of online sales and a focus on packages that used its own airline fleet and hotels. Fankhauser became chief
executive in 2014 and the following year, for the first time in five years, the company returned to profit. Yet during the battle to stay afloat, he admits the company lost its focus on customers. In 2006 Christi and Bobby Shepherd, aged seven and six, died from carbon monoxide poisoning while staying in a bungalow in Corfu on a Thomas Cook holiday. For years the company refused to accept blame. After taking the top job, on legal advice Fankhauser maintained the company’s silence but in 2015 he apologised to the family, offering them ‘a financial gesture of goodwill’. “It was not only Corfu,” he says. “There were other cases that were not so public. I had to do a lot of things together with my lawyer and then say, ‘Hey, we missed something here. Now, guys, we have to change.’” Creating more upmarket beach resorts that take pride in customer service is part of that shift. “As a package tour operator you can no longer be a seven-day or 14-day holiday mass brand — you [have to] give the customer something different . . . in terms of flexibility, in terms of product quality, in terms of customer focus.” He says Casa Cook is not “just for those who have a lot of money — it has to be affordable”. But it is targeted at liberal metropolitan types — people like me. And for the most part, it works. The hotel, just outside the village of Marmari, has 100 rooms in buildings that adhere to the local cubist style. The beach is secluded: a long private strip of sand where there are plentiful towels for guests but no need to rush and place one on a lounger to reserve it. Rooms are spacious. Primary colours are abandoned for grey concrete floors, brown Bakelite fittings and dark wood furnishings. The winning feature is that half of the rooms have a small pool right outside, most shared with one or two neighbours though some suites have a private pool of their own. What can be improved? Fankhauser hesitates. “No, really nothing. Maybe the mineral water.” Really, nothing? He backtracks, saying the layout of the minibar could be tinkered with. “So the bottles are not laying, but standing. Because in my minibar a bottle fell out,” he says, gesturing that the drink erupted. “But it’s really a detail.” Details matter, of course. My gaze drifts back to the staff. The waiters have a habit of placing their hand on the shoulder of guests, a small gesture that could be deemed overfamiliar but is actually disarming. Fankhauser says his mantra to the resort’s staff is to “wear their [guests’] flip-flops . . . put yourself in the shoes how you would like to be treated.” None of the workers actually wear flip-flops, though. Most are in sleek black trainers which are far cooler.
THE END OF OCTOBER MARKS THE 10TH STRAIGHT MONTH OF RECORD BREAKING FIGURES, WITH YTD GROWTH RECORDED IN ALL MARKETS!
10% YTD increase in stay over arrivals in all markets
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THE STAR BUSINESSWEEK
NOVEMBER 25, 2017
TOURISM EDITION
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THE SLTA REBRANDS AND RETOOLS TOURISM EDITION
The newly created Saint Lucia Tourism Authority focuses on rebranding the destination and rejuvenating its tourism product BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
In May 2017 Prime Minister Allen Chastanet delivered his first budget address promising a “re-engineered” tourism sector that would serve as “a catalyst for economic growth”. Guiding this re-engineering is the newly formed Saint Lucia Tourism Authority which takes up from the Saint Lucia Tourism Board (SLTB) the mantle of marketing the destination. The process of dissolving the SLTB and transitioning into the SLTA began late last year when questions were raised as to how the former was managing its budget. Concerns over expenditure, particularly funds diverted to the country’s annual Jazz Festival, led the government to seek a more streamlined approach. The new and improved SLTA had its official launch last month and has set its sights on product development and marketing - giving the country a fresh new rebrand and enticing visitors with a unique and authentically Saint Lucian product.
TRANSITIONING
Tourism Minister Dominic Fedee says one of the advantages that the new entity has over its predecessor is clarity. “Our approach is a lot more focussed now,” he says. “The previous focus was on events management
and marketing. Now we have a very specific focus on marketing the destination and improving its visibility.” The mandate isn’t the only thing that’s changed. In order to fully represent all stakeholders within the industry, some re-structuring was needed. Where the SLTB had 12 directors on its board, the SLTA will have just seven. Four will be appointed by the tourism minister and the rest nominated by the private sector. “The new entity gives the private sector a great stake,” explains Fedee. “We do not have the over-politicization of the board. We are empowering the private sector.” In addition, the SLTA will draw some of its funding from external sources rather than being dependent on the public purse. This kind of financing is intended to make the entity more secure and shield it from the uncertainty of budgetary constraints. Fedee says: “The SLTA will raise its own revenue in conjunction with the Ministry of Finance. The marketing budget should not continue to come from central government’s capital expenditure. In times of financial stress, governments have reduced the budget without consideration for the authority’s importance in driving tourism and maintaining and expanding growth.” To raise capital, the Authority is aiming to
Be part of our paradise
Minister of Tourism Dominic Fedee leading Saint Lucia’s international marketing efforts
collaborate with online booking engines introducing a “very conservative” room charge. It will also take US$10 from the US$35 airport development tax introduced this year. The SLTA expects to spend around EC$50m through 2018. While this is an increase from the EC$40m spent by the SLTB last year, Fedee says it is justified given the size of the task ahead. “There has to be more investments made so we can heighten awareness and plan for a lot of the new rooms that are coming on. We want to do a lot of new things over the next three years so there is more visibility, then we can scale back.”
DEVELOPING THE PRODUCT
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Central to the SLTA’s mission in the next few years is product development. Recognising that most travellers are now shying away from the traditional beach holiday and seeking out more innovative experiences, Fedee says Saint Lucia must re-package itself accordingly. “For a long time, the ‘Simply Beautiful’ brand worked but the world is changing and travellers are looking for more adventurous experiences,” he says. “Saint Lucia has to do a better job of showing its culture and heritage; we have these various assets that we have left languishing. We are looking at product development to sustain the interest in Saint Lucia, raise revenue and create exciting opportunities.” The minister is particularly enthusiastic about the SLTA’s ‘village tourism’ initiative. A new spin on an old idea, this project will transform eight villages on the island into themed hubs. It will include a culinary village, an artist’s village, a festival village and a spa and rejuvenation village. “We will focus them as tourist destinations to give us a platform on which we can build,” says Fedee who hopes the scheme will spread the
benefits of tourism out from the hospitality sector into every facet of the economy. “We want to get Saint Lucians into these small businesses. Not just attractions but inns, bed and breakfast places, restaurants. With the right conditions and the right training we can put them under one umbrella so they can all be part of the brand together.”
BUYING INTO THE BRAND
Developing an attractive brand that will appeal to the changing demographic of travellers is a key priority for the SLTA. The organisation will shortly launch a new campaign with the tagline ‘Saint Lucia, Let Her Inspire You’. Much of the marketing will be done online, hoping to reach a global audience and strike a chord with millennial travellers in particular. Fedee says: “You get a lot of return for investment when you do digital marketing so it is a very big push for us. We also do radio, television and other traditional advertising but the digital component is a key factor.” The theme of inspiration in the new branding material speaks to Saint Lucia’s unique landscape, culture and history. Fedee believes the destination has something to capture the imagination of visitors and set it apart from other islands in the region, and says: “Saint Lucia has a vibe about it. We are not just a bland island. We have our volcano, our cocoa plantations, our health and rejuvenation sector. The mountains are amazing, the people are amazing. We also have the French and British colonial history that has left us with an extraordinary culture and we are an extraordinary people as a result. “A lot of people are coming and a lot of investors are flocking here because they see Saint Lucia as the next big place to explode. We have that momentum behind us.”
TOURISM EDITION
TOURISM EDITION
THE STAR BUSINESSWEEK
NOVEMBER 25, 2017
SMALL POND OR BIG FISH? Airbnb in the Caribbean BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
Since its early beginnings in San Francisco all the way back in 2008, Airbnb has proved immensely popular in the Caribbean and around the world. Recent figures indicate over US$266 million has been earned via Airbnb throughout the Caribbean and the Yucatan Peninsula of Mexico from January to September of 2017. This figure is all the more impressive when one considers the lower costs of many Airbnb accommodations compared to traditional hotels. Yet Airbnb does cater to a diverse clientele. Not only is it growing in popularity with tourists and short-term stayers but also the luxury crowd. The potential to rent Bird Island off the coast of Belize as your own private island (for around US$600 per night) is surely one of the most novel attractions offered by the app but is also just one of many islands you can rent via the service. The growth of Airbnb has been closely followed, especially by incumbents in the tourism industry. With such rapid growth of the hospitality service, veteran hoteliers and established accommodation businesses have anguished over what threat Airbnb poses to their business. In turn, in what areas does Airbnb hold a true advantage, as opposed to simply pioneering new services that longstanding businesses could incorporate too?
THE AIRBNB ADVANTAGE
Breaking with old conventions and offering something new is a core part of every new business that seeks an edge in the market. Undoubtedly, where Airbnb has done especially well is the deliberate effort to market its service as one that is global in reach but local in access. While previously many tourists would have to hop from site to site to organise their accommodation over a long trip or many nations, via Airbnb it can be done on just one platform. This is an aspect where traditional hotels could continue to make better inroads as even chains that have many locations around the world often ask the user to navigate from one local site to another in order to make a booking. Beyond this, Airbnb also allows for the easy arrangement of medium-term accommodation such as one to three months. Not only for holidayers‚ but people who may be moving house‚ or in one location for a time on business‚ this can be a great solution that is more affordable than a hotel but doesn’t require the complex paperwork that can come with renting a home.
looked to do so with precision. For its part, Airbnb has looked to build a working relationship with a number of governments in the region‚ and this should be recognised. Alongside a high level meeting with the Caribbean Tourism Organisation earlier in the year, Airbnb has also reached deals with the Jamaican government, the Bermudan government and others to grow tourism. While Airbnb may be a poster child of ‘disruption’, these partnerships have shown its constructive impact on the industry. Furthermore, though these partnerships don’t eradicate all challenges surrounding Airbnb, they do decrease the likelihood of a bitter rancour evolving, the likes of which saw fellow disruptor and ridesharing services Uber receive a ban in London‚ UK back in September (which is now currently on appeal). Nonetheless, the evolving nature and rapid growth of Airbnb could mean these foundations are tested. Presently there are two major issues that loom especially large surrounding Airbnb’s status in the Caribbean, and indeed around the globe.
DISRUPTING INDUSTRY
LEGAL ISSUES
While Airbnb has entered the market as a potential competitor to traditional accommodation businesses, it has also
While Airbnb offers great flexibility to a traveller, it is clear this freedom has sometimes come with its own unique problems. While private property laws have been a pillar of Western society for hundreds of years, the ability for individuals who are renters or lessees to then sub-rent their residence to an Airbnb user (whether the landlord is aware of this or not) has generated complex legal questions. While most often this may be a minor issue such as who is responsible if a shower doesn’t work or a window is broken - it can also be more problematic when questions of trespass, liability and more serious episodes like an accident or even a death have occurred.
TAX ISSUES
One of the chief issues with Airbnb has been with tax. This has been a common theme not only in the Caribbean but around the world as the Panama Papers and Paradise Papers have exposed the strategies of many wealthy investors and businesses in tax minimisation. Though Airbnb has begun addressing this issue in recent times - notably forming an agreement with the U.S. Virgin Islands government in May - there remains work to be done. It need be underscored that tax minimisation may be unsavoury to many readers but it is also legal, and there is no suggestion that Airbnb or any parties named in the Paradise Papers or Panama Papers leaks broke the law. Yet when Airbnb globally has shifted profits offshore in other territories, it’s been faced with the question: If you make money as a business locally, why can’t you have your profits taxed locally? This is a difficult question for any business but especially a tourism one. There have been a number of inquires into Airbnb’s tax status in other nations around the world. Though this is unlikely to have a direct impact on Airbnb’s operations in the region, it could have a knock-on effect if Caribbean islands feel their countries are getting a raw
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deal on tax compared to other nations. In this regard, the traditional hotel has a clear advantage as a known commodity. As a local business bound to operate by local laws and regulations, the shades of grey surrounding legal issues like duty of care, liability and voluntary assumption of risk do not exist in the same way. While far more tourists will likely pick their accommodation based on its location and views, over policy concerns, the revelations of tax minimisation offshore have done few favours for a number of prestigious global brands. Tourists seeking to ensure their tourism dollar goes to supporting a local business and local community may be wary of picking an Airbnb rental.
THE CHALLENGE TO HOTELS
It is worthwhile noting that Airbnb’s challenges to hotels in many areas are not direct. As Brian Chesky, Airbnb founder and CEO indicated back in May, an Airbnb stay is, on average, two and a half times longer than the average hotel stay. Further, around 20% of total Airbnb stays are for a duration longer than 30 days. Certainly there is contested space between hotels and Airbnb but it is asymmetrical. Its virtues notwithstanding, like Uber, Airbnb also poses a number of challenges beyond competition alone. These issues most immediately surround liability and taxation matters but also go beyond them. Just as Uber has generated immense debate in many cities around the world about its impact on licensed taxi drivers and concerns over whether Uber’s licensefree operation leaves veteran taxi drivers disadvantaged‚ so too has the rise of Airbnb seen a growth in Airbnb investment properties in many markets.
CONCLUSION
In less than a decade Airbnb has transformed the tourism market forever. Its innovations should be commended, and its partnerships with local governments noted. While the existing issues surrounding its service are not insignificant, they are also not insurmountable. Resolving the questions surrounding liability, security and local taxation of profits will not only benefit the tourism industries of our many Caribbean nations, but also Airbnb as a partner. At present there is also much evidence to suggest Airbnb can grow without posing a threat to existing hotels and tourism businesses. In fact, a number of hoteliers have sought to integrate Airbnb rentals into their existing business, offering dedicated Airbnb rentals alongside their other accommodation to ensure they cater to a new market in tandem with their longstanding clientele. For now, though, the situation remains fluid. For someone with a limited budget and a great sense of adventure, any concerns about Airbnb will likely seem minor compared to the many dollars they can save using the service. On the other hand, for traditional hotels that have maintained a longstanding business and loyal clientele, the quality of service and assurance of security that comes with their accomodation will surely stand them in good stead. All up, Airbnb has ensured there’s never been a more exciting time for the tourism industry in the Caribbean. Now the chief question for the future is: What changes come next?
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TOURISM EDITION
NOVEMBER 25, 2017 WWW.STLUCIASTAR.COM
THE STATE OF TOURISM -
TOURISM EDITION
An Interview with Sanovnik Destang BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
Mr. Sanovnik Destang, President of the SLHTA, is not your typical hotelier!
Sanovnik Destang is President of the Saint Lucia Hotel and Tourism Association (SLHTA) and Director and Regional Vice President of the Caribbean Hotel and Tourism Association (CHTA). A local Saint Lucian, second generation hotelier and CEO and owner of a successful Saint Lucian hotel group, Bay Gardens Resorts, Sanovnik is a professional with his finger on the pulse of Caribbean tourism. The STAR Businessweek sat with with Sanovnik to discuss the state of the tourism industry in Saint Lucia and the wider region.
Gardens Hotel. When opened, the Rodney Bay village location was great but they also were determined to make it a really special destination, with a focus on the CARICOM market and beyond, and with a goal to deliver a really great level of service to everyone that means people of all backgrounds, skin colours and countries. In 2002 we acquired Bay Gardens Inn, literally next to Bay Gardens Hotel. We built our flagship property, Bay Gardens Beach Resort - our four-star property on Reduit Beach - in 2007, and we’ve been growing ever since.
HOW DID YOUR FAMILY BECOME INVOLVED IN HOTELS? SANOVNIK: My parents began very
HOW HAS THE BUSINESS CHANGED OVER THE YEARS? SANOVNIK: I came on in 2008; it was a
late in their careers as business people. They were, in fact, late stage entrepreneurs generally. Both were trained teachers, and civil servants. They spent time some time in other industries before coming to hotels, first opening a fabric store in the early ‘80s, investing in a bit of real estate thereafter, and things like that. It was only in 1994 that my parents decided to get into the hotel business, with the Bay
different time. Till then I was a chartered accountant by profession, so too my wife, Julianna, I at KPMG, she at Deloitte. I think that background has continued to influence our approach today but we’ve also been receptive to all the new challenges we need to face. For example, in my parents’ generation you could set a rate and hold it. Now we have a perpetual discount economy. The idea of offering 50% off your rate constantly was
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unheard of whereas today it is common. Put simply, today there are no certainties surrounding the old certainties. Since 2007 that all has changed. You need to find a way to work with less, while also offering someone great service. This said, I always make a point to underscore: work with less does not mean working with less people. Sure, like any hotel, we have rotations of staff in the off-season versus the busy season but, actually, we’ve had a longstanding practice of never laying off our staff. It’s something we are very proud of and we always look to maintain. We can find new ways to save money and cut costs when needed but we won’t cut people. That’s a cornerstone of our business.
HOW HAVE RECENT HURRICANES AFFECTED THE WORK OF THE CHTA? SANOVNIK: Know our geography. Know
our region. Some islands are impacted but some untouched. We need to do a better job to get that message out. It is a shame some islands are impacted but not every one of them was, and so we need to work now on
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business as usual where we can, while we await the recovery and return of other islands.
WHAT IS THE MOST IMPORTANT CHALLENGE FOR THE CHTA? SANOVNIK: I think we really need to
work on showing how diverse our regional identity is. That may sound strange at first but I promise it makes sense in practice. We need only look at the drop of visitors we see across the region when a hurricane has occured to see this is a real problem. Make no mistake, we are certainly one region and share in the pain of a hurricane, and in the responsibility of rebuilding. In fact, our hotel, the SLHTA - through our Tourism Enhancement Fund (TEF) - and Saint Lucia as a whole have been deeply involved in the recovery efforts of Dominica and beyond. Nonetheless, we also need to ensure people understand that when a hurricane has occurred it is not the whole region that is impacted. This is a big problem as while tourists may need to stop visiting one island or nation for a while, there is no need to stop visiting others. What’s more, if they do, that just makes it harder for the whole region to recover as a whole. Truly the Caribbean is so big and diverse in terms of its many nations and locales, it’s critical we celebrate that, while also making sure people understand the differences from one nation to the next. Not only is this important for tourism, but our region as a whole.
SIMILARLY, WHAT IS THE MOST CHALLENGING ISSUE FOR THE SLHTA? SANOVNIK: Beyond hurricanes, we have
issues of safety and security like any other destination; issues of training and arming our human resource pool with the tools to deliver on our destination’s marketing promises. Sensitization of the great populace to the importance of tourism. Tourism affects everything. Our ability to lobby, our ability to get support for tourism. And people have a lot of sensitivity. The tourism dollar doesn’t just go to hoteliers. Tourism is not just about tourists; it’s about everyone. If you’re a banker, a certain percentage comes from employers; if you are a vendor, a certain percentage comes from the tourism industry. Data is a big way to help that. Subjective views are one thing but hard core data is another. There are so many opportunities unfulfilled for better agricultural and tourism linkages. I think we need to do more work to really build those. We have certainly done our part at the SLHTA and are the only HTA in the Caribbean with a dedicated Agricultural Liaison Officer who runs our Virtual Agricultural Clearing House (VACH). What this programme has accomplished using a simple Whatsapp platform to put hoteliers in touch with farmers has been amazing and it has so far yielded $1 million worth of business to farmers from our hotel partners in its first year.
HOW IS AIRBNB AFFECTING THE CARIBBEAN? SANOVNIK: I think this question really
covers two parts. The first is the issue of changes to the industry as a whole, and then what it means as it applies to Airbnb
Mr. Sanovnik Destang of Bay Gardens Resorts presenting a scholarship to a a student, one of the group’s many philanthropic activities
and the alternate accommodation sector particularly. I think the key factor for hoteliers in the Airbnb generation is the need to understand your model. You need to understand your staff and recognise - and I’m someone that is between Gen X and Gen Y in age - the different goals not only of business but also staff. The world of business has certainly changed in the last decade with the digital economy and that means finding new ways to engage and attract staff. It is really about looking to not only employ people but also find ways to actively support them to build and grow their skills and opportunities. Just because many more people change jobs statistically today than they used to a generation or two ago, that doesn’t mean a good business can’t hold its staff long-term. It’s about building a real team and real culture, beyond just a workplace. The second factor is being ready to change your operations, and make it truly agile. For example, we focus on getting online bookings through our website. We focus on digital marketing, were one of the first hotels to embrace online marketing and social media and to do it successfully in the Caribbean, and today we remain a leader in technology and e-marketing. I’m very proud of what we’ve done here at Bay Gardens Resorts as it’s not only been good for our business but proved to hotels around the region that this is worthwhile, and worth investing time in. The alternate accommodation sector (the so-called Airbnb sector) has been growing double digits on an annual basis in Saint Lucia. I think a few hoteliers wish that Airbnb would just go away but I know
Airbnb has an audience, and I understand why. They are reacting to demand. Airbnbers want space, they want freedom and an authentic cultural experience, and we as an industry have to be receptive to that. This said, I think some reform would be in everyone’s interest. The biggest concern for me with Airbnb is standards and taxation. Properties that are listed on Airbnb, Homeaway and other such sites have to meet safety and security standards as there remains a big difference today between the peace of mind someone can have booking a hotel where they know the host’s business is reputable, the security is strong, and so on. It can be harder to get that same guarantee when looking for a place on Airbnb. Beyond this, there is also the issue of taxation. I don’t think it should be groundbreaking if I say ‘when you earn money here, your profits should be reinvested here’. Again, this is something that is in everybody’s interest. If a business listed on Airbnb and other such sites is taxed here on money earned here, and that money is then reinvested in local tourism, then that is going to mean more business for them! In this regard, I certainly don’t think it is an ‘us versus them’ equation when it comes to traditional hoteliers and Airbnb. My hotel actually even advertises a couple of rooms on Airbnb, and caters to their audience happily with our restaurants and water park. It is just about getting the essential foundations right, and if we can do that, not only will Airbnb thrive but so, too, the tourism industry as a whole. It’s just about ensuring the pitch is even and match-ready.
I’d really love to see a hospitality training institute and a culinary institute in Saint Lucia. There’s a need for training, and staff trained from the ground up.
HOW WOULD YOU LIKE THE INDUSTRY TO EVOLVE? SANOVNIK: I’d really love to see a
hospitality training institute and a culinary institute in Saint Lucia. There’s a need for training, and staff trained from the ground up. We have a few training institutes but not a fully fledged one with a hotel and restaurant. It is unlikely to happen right now but I hope I’m part of it one day. In complement to this I’d really like to see a growth in the understanding of what a career in hospitality and tourism can offer. Some folks have this perception that an entry level job in hospitality is something you take for a time, or something in which you have a limited chance to grow. I’d actually say the opposite is true. There are a lot of fields that have some very difficult and arbitrary barriers so, while most certainly you need to build your skills and qualifications and experience to progress in this sector too - because it is built on providing great customer service at its core - it is also one where you can learn very fast and progress very fast accordingly. That can be done in Saint Lucia but also around the world, as no other industry gives you in-depth and immediate contact with people from so many professions and walks of life like this one does. We talk so often about what it means to be a global citizen in 2017. Well, working in tourism is a great way to build your understanding of what it is to be one, and how to become one. Truly, it’s something I really think about a lot and hope we’ll all think about more in the future. I came to this field after another career and on account of my parents’ background in it. I’m excited for my future and proud of what I’ve done so far but I’m even more excited by the idea of what the next generation could do: a young woman or man starting out in this field, at 18 years old, with the digital era and all its possibilities for tourism unfolding before them. Let’s work on creating a path for this generation; I know they’ll make us very proud.
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HOW INCLUSIVE ARE ALL-INCLUSIVE HOTELS? BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
Tourism will always be subject to change. As discussed in the articles on the growing popularity of Airbnb (page 5) and the state of the cruise ship industry post-hurricane Irma and Maria (page 10), the industry is one that must regularly deal with a variety of shifts in the economy and the environment. The growth of all-inclusive hotels and resorts is the latest chapter in this story. The concept of an all-inclusive hotel is largely unique to the Caribbean. There are a few in the US and Mexico‚ and a couple further afield in Asia‚ but the majority of them are found in our region. The exact reasons for this can vary. A favourable exchange rate with many nations helps. The aquatic nature of the Caribbean also plays a role, meaning tourists
are more likely to visit for a longer and more expensive stay instead of an ‘overnight’ trip‚ and also more likely to seek out beachfront hotels with watersports offerings. The reasons for the popularity of allinclusives are multiple. One thing for sure is what the concentration of all-inclusive hotels in the region means: for better or worse, the economic impact of changes in this area will always be substantial and unique to this part of the world.
ALL-INCLUSIVES VS. NON-ALL-INCLUSIVES
For those not yet familiar with the divide between all-inclusive and non-all-inclusive, a brief recap and some context is useful.
While all-inclusives can vary from one resort to another, an all-inclusive package usually includes accommodation, meals, drinks and access to non-motorised watersports equipment. In tandem with these amenities, all-inclusives are generally in resorts that provide a certain ‘theme’ or environment. While this could make for an awkward holiday for a couple celebrating their 50th wedding anniversary at an all-inclusive resort aimed at college-aged singles, the great benefits of an all-inclusive that caters to a particular audience is the delivery of a truly tailored experience. All-inclusives have been especially appealing for families as the ability to book a holiday with the kids and then enjoy a resort without always needing
The concept of an all-inclusive hotel is largely unique to the Caribbean. There are a few in the US and Mexico‚ and a couple further afield in Asia‚ but the majority of them are found in our region. The exact reasons for this can vary.
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to buy tickets, rent equipment, and pull out the wallet after every meal has made many holidays far less stressful for the parents. While it has many virtues, to those who don’t like it, an all-inclusive package can be a lot like a circus tent at a festival: a lot going on inside but being enclosed can take attention away from the attractions outside. As opposed to a dedicated resort, a non-all-inclusive provider is often at its best in the heart of a city, for travellers seeking a short stay whether a weekend getaway or an overnight business trip – and, accordingly, usually places a particular focus on its location and convenience. On this basis alone, the difference between all-inclusive and non-all-inclusive can seem quite straightforward. It is when one considers the impact on the wider hotel and tourism industry that it becomes clear how the differences are multi-layered and complex.
ALL-INCLUSIVES IN-DEPTH
The risk of the all-inclusive resorts is that the scope and reach of one hotel outpaces many other local providers. This is commonly known in business as ‘the WalMart effect’, whereby a major provider with greater resources can consolidate its hold on a market and offer more to consumers at a lower price than others, ultimately forcing previously established businesses into an unsustainable situation, or to even cease operations entirely. This also goes beyond hotels, and can impact local restaurants, bars, watersports providers, and more. While this challenge is very real, an allinclusive resort that can cater to many hundreds or even thousands of tourists can also help bring visitors to the Caribbean in a way that a non-all-inclusive hotel cannot. This is especially so when a hotel is part of a chain or has a partnership with other similar hotels around the world. With this comes the name recognition and celebration of a unique location - what Caribbean nation wouldn’t want a hotel in its country to feature alongside New York, Paris and Tokyo as other premier locations of a hotel chain? There’s also the ‘known quantity’ factor. A tourist who may not otherwise feel comfortable travelling in a Caribbean nation - they may be wary of challenges like the heat, a language barrier or the difficulty of finding outings and events that match their interests - can find themselves persuaded to visit by the promise of an easy and accessible all-inclusive resort. The rise of luxury camping (aka glamping) and adventure tourism has increasingly
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required hoteliers and providers to cater to niche interests in remote locations. Whether it is mountain climbing‚ river rapids riding or deep sea diving‚ certain hoteliers can provide an all-inclusive service that makes a trip seamless instead of stressful.
INTERACTION WITH BUSINESS AND COMMUNITY
It is important to recognise that the gulf between all-inclusive and non-all-inclusive is not always pronounced. Many businesses may provide an all-inclusive package that sees meals and entertainment included alongside accommodation, but do so across multiple locations and businesses. When tourists are spread across multiple premises and neighbourhoods, their incentive to interact and engage more widely with the community beyond the official all-inclusive offerings grows. This notwithstanding, continued growth of all-inclusive offerings could risk not only the vibrancy of local business and culture around it but also the attraction of a tourism destination as a whole - at least when planned poorly. Rather than seeking to seize a greater market share temporarily‚ hoteliers could find more stable and long-term success by seeking to integrate and partner with local establishments and attractions. This doesn’t need to come at the expense of an all-inclusive offering altogether‚ as hotels could still offer extras such as free breakfast and lunch‚ while offering all-
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inclusive discounts or deals with local bars and restaurants for dinners. While a renowned hotel chain can offer the tourist a certainty and peace of mind surrounding the quality of service they will receive, a concentration of all-inclusive resorts can grow the risk of ‘sameness’ in experience from one hotel to another. The first challenge is immediate, while the latter is long-term but more visible. All-inclusives won’t always include everything‚ as the package can vary from one place to another. Similarly‚ non-all-inclusives obviously won’t cover all expenses but may offer extras like free use of a gym or heavily discounted meals in the hotel’s restaurant that may make a tourist’s non-all-inclusive trip quite comparable to an all-inclusive one.
brings to tourism. Its rise means many tourists won’t seek out an all-inclusive package, or even traditional forms of accommodation when they travel, settling for a hammock or futon over a hotel room. The Airbnb phenomenon is one that poses opportunities and problems for hotels in the Caribbean generally and, whether an all-inclusive or non-all-inclusive provider, it represents a wildcard for the future of hotels all over. As discussed more in the dedicated Airbnb piece this week (page 5), Airbnb has some unique virtues but also real problems. It is here that non-inclusive hotels can seek to make their claim, offering a service that remains affordable, casual and easy, while also providing a level of security and protection that an Airbnb provider cannot. CONCLUSION All up, like two wings of a bird, it’s clear Ultimately for tourists it is a question of that the Caribbean tourism industry is at preference. All-inclusives will seek to take its best when there is a strong mix of allcare of everything during a visitor’s stay. inclusive and non-all-inclusive offerings. For some travellers this can be the ideal, With the popularity of all-inclusive resorts especially if age, mobility or just a sheer set to grow further, it is important for their desire to enjoy the holiday and ‘relax to the own operations, alongside that of their local max’ is a factor. For other tourists, travel is all about creating providers, that they build their offerings into the economy around them. one’s own unique experiences, and having In turn, for non-all-inclusive providers, the flexibility to do so is vital. That is where now is the time to also build those links, companies like Airbnb and creative hoteliers to underscore to a potential visitor that come in. while their business may not include By contrast, non-inclusive providers must everything, there is ample in the surrounding seek to maintain a competitive advantage neighbourhood and community to make their with all-inclusive providers, while also hotel the perfect choice. navigating the unique dilemma Airbnb
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KICKING THE TYRES ON THE CRUISE INDUSTRY
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BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
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The Caribbean and the cruise industry have a unique relationship. Given the importance of tourism to the economies of so many nations across the region, cruise ships will always be a vital part of the regional economy. In turn, the unique beauty and appeal of the Carribbean will ensure its waterways remain a key destination for any cruise provider. September saw the savagery of Hurricanes Irma and Maria, causing immense damage in the region, and brought about a temporary end to regular cruise ship visits to many beloved ports. Nonetheless, the damage cased by the hurricanes was not spread evenly. The cruise industry in many nations was able to continue, as alternative ports were used while recovery works occurred. Since then‚ many nations that sustained damage are now beginning to resume usual service. Accordingly, it’s a fitting time to take an in-depth look at the cruise industry in the Caribbean, and how events of recent months will impact its long-term future. The Caribbean region is no stranger to hurricanes. That said‚ no matter how
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battle-hardened a Caribbean resident may be towards the realities of hurricanes, it’s impossible to become used to their force. Recent months showed this vividly as some of the most powerful hurricanes on record tore through the region and its surrounds. After the impact of Irma and Maria we are beginning to see signs of strong recovery around the Caribbean. By no means is life back to normal everywhere, and neither is business. Nonetheless, it’s a reality of recovery that momentum spurs momentum, as progress on rebuilding in one field can quickly flow over into another (and free up resources along the way). In the immediate aftermath of Irma‚ three Royal Caribbean cruisers set sail for the Caribbean‚ only this time on humanitarian voyages. The Adventure of the Seas’ journey to St Maarten on September 20 to render aid rather than provide relaxation was a leading example of corporate social responsibility. While the damage seen this hurricane season to nations like St Maarten‚ Puerto Rico and Dominica has been substantial‚ a number of nations, like Saint Lucia, were
largely undamaged. Others, like the Bahamas, sustained damaged but mainly to remote coastland or islands not visited by tourists. Then there are those, like St. Kitts and Antigua‚ who did suffer damage but have since resumed cruise operations. While time and care must be taken in the rebuilding and recovery of host nations, the overall message from cruise providers is: the industry goes on - and must go on. This is to ensure the impact of the hurricane season’s damage does not needlessly spread, for example: visitors unable to visit closed ports but also those that remained open - victims of the mistaken perception that the hurricanes damaged them as well. In 2015 the global cruise industry earned revenue in excess of US$39.5 billion. This came after achieving substantial growth in years prior, with strong performances in years since. While hurricanes and other natural disasters are certainly a setback for the industry, its overall performance and global market provides a resilient climate for its ongoing growth.
Matthew Beaubrun, Chief Executive Officer of Cox & Company Tours, feels that now is a vital time to not only spread the word about the recovery under way since this season’s hurricanes but also to reinforce a message of continual operation by cruise ships as a whole. “I think one of the important messages to get out is the Caribbean is always open for business as a cruise region. It’s crucial that tourists understand the size of the Caribbean”, says Beaubrun. “I also think, unquestionably, that one of the key things is getting the infrastructure up and running ASAP. While by no means does it solve every problem with a recovery effort, if you have an airport open and a port in operation, you are able to move and transfer tourists through. Even if parts of a city or nation are still recovering, having that accessibility can be vital.” One of the unique appeals of the Caribbean is the accessibility of its attractions. While other regions of the world can, indeed, offer their own attractions - a cruise along Western Canada and through Alaska gives you glaciers and whales, and one through Europe gives you ancient art and culture - no other region can offer 30 distinctive nations in such close proximity. By way of contrast, Africa’s 52 nations is close to double the Caribbean’s count but the African region is spread over 30 million square kilometers. The Caribbean is under a tenth of that size, with a total area of 2.8 million square kilometers. The size makes the region easy to travel and, given the significant mass of water, makes it a dream region for cruising. In addition, it’s not only a question of accessibility but also the attractions on offer here. ‘’There is nowhere quite like the Caribbean. It offers you a wonderful climate, a safe experience, a rich collection of history, nations and cultures. It is also close to the major market of the US and even delivers an easy seagoing journey as our waters are usually very calm and placid,’’ says Beaubrun. ‘’I’d also say we’ve an incredible history too! A mix of cultural influences from African to Spanish and German to Portuguese to British and French and more! All of those cultures have left their own legacy upon the story of the region and its people.” The cruise industry - like all Caribbean islands, our local businesses and the tourism industry as a whole - has indeed faced a testing year due to a devastating hurricane season. A strong recovery effort has been made, and attention is slowly beginning to turn once again to future progress. It is not quite calm seas or clear skies ahead for the industry but this may soon be visible on the horizon.
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NATURAL DISASTER RECOVERY AND REVIVING TOURISM BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
We’ve discussed prior what it takes for an individual business to recover from a hurricane (see How Can Businesses Respond Effectively To Each Hurricane? on page 1 of our October 7, 2017 issue). Our step by step guide talked about the principles and foundational steps needed to go from the aftermath of a storm to the resumption of normal business operations. Beyond individual businesses, reviving a whole industry can be a far greater challenge. This is particularly true of the tourism industry, a vital cornerstone of the Caribbean as a region but an industry uniquely vulnerable to the weather in a way that other others, e.g. banking, are not. Let’s look at how, beyond a business, an entire industry goes about recovery.
AGILITY
For an industry like tourism, that is vital to the regional economy, it’s essential to return tourists and customers to the islands as fast as possible. This can be particularly difficult in circumstances where one destination is ready again for operation but others are not. While charter tours, cruise ships and other tourism providers may have previously travelled across a set itinerary of islands, when a hurricane has damaged a port, adjustments need to occur. While this is no easy feat, it is also not impossible. Puerto Rico sustained substantial damage this hurricane season but the Bahamas faced relatively little damage. Provided one port remains open when another closes, a cruise provider is already more than halfway to a remedy.
LOGISTICS
Recovery from hurricane damage requires work and restoration across multiple fronts. Puerto Rico is illustrative of how these challenges are interwoven with one another: in the absence of a consistent electricity supply, businesses cannot operate. This means even essential services like banks can struggle to provide basic transactions, placing more pressure on aid and not-for-profit groups to meet the needs of the wider community. This problem is compounded by a number of Puerto Ricans who have been displaced, having moved away temporarily from their local community to reside elsewhere as restorations proceed. While a port may be open to receive a ship, the industry that supports it may be nonexistent until recovery is achieved. There is also the question of priority. Governments will seek to restore tourism services as quickly as possible but need to first attend to providing emergency services to locals. Beyond this, the restoration of key community infrastructure like housing, schools, essential retail and utilities will take priority.
GRASSROOTS
The Caribbean also faces a unique problem when it comes to generating tourism post-disaster. The region, as a whole, is recognised as an enticing destination. This is an advantage‚ just as the United States or
Puerto Rico: hurricane knocks out power. Residents face months without electricity
Europe is recognised as a region with multiple destinations and diversity to attract a variety of tourists. The downside to this is that, unlike the United States or Europe‚ if tourists hear of a disaster that has impacted the Caribbean‚ they can misperceive that it has affected the entire region. This was echoed by Matthew Beaubrun of Cox & Co. in our article on cruise ships (page 10). This misperception needs to be corrected to ensure that the damage caused by a hurricane isn’t compounded by seeing business and tourism drop when many nations - like Saint Lucia in this hurricane season - essentially suffered no damage. Getting the message out that the Caribbean is not only open for business right now but is always open for business, even if a hurricane has come through the region, is a key theme across this special Tourism Edition. It will also benefit all Caribbean business owners if together we can broaden awareness beyond our borders.
GLOBAL ENGAGEMENT
Beyond the restoration of services, the tourism industry needs to market heavily the fact that ‘business as usual’ for many islands has more or less resumed. This is something that has been a consistent theme across our articles discussing tourism in the post-Irma and Maria era. While this is similar to the task of any business, more is involved for a whole industry. A local business in the Dominican Republic, St Kitts and Nevis or Guadeloupe may indeed need to resume operations in competition with other local providers. The Caribbean tourism industry needs to resume operations in competition with other tourism regions. While it should be noted that the scope and reach of global tourism providers is immense - and so a five-star cruise liner that regularly sailed to the Caribbean pre-disaster can easily be enticed to return - the difficulty of attracting tourists who may otherwise seek to travel through the Americas, Europe or even Asia means this is no easy task.
EDUCATION AND PREPARATION Beyond restoration of services, and
communication that tourism is back (and never really goes away, given the size of the Caribbean), it is essential that all Caribbeans revisit that old and familiar question: Where do we go from here? The raw power of nature, as seen in a hurricane, can often make seeking answers to this
question painful, and feel fruitless. While there is no big, magic solution to dealing with the damage a hurricane can cause, there are many little solutions that, together, can amount to real progress. Improving communications, coordination between stakeholders, and looking to identify areas where improvements and reforms can occur all serve as foundational goals in this sphere. Ultimately, any hurricane or natural disaster will always bring about damage, disruption and heartbreak. Any suggestion otherwise would overlook the reality of the challenge, and do a disservice to all in the tourism industry, alongside the entire Caribbean community. This notwithstanding, by building upon our experience and understanding, and enhancing our capacity to respond year by year, we can not only address the harm quicker but also increase our ability to minimise as much as possible the threat posed by future hurricanes to tourism and the livelihood of so many businesses in the region. Gains here may be incremental but remain incredibly important to pursue. That’s the region’s task ahead.
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NOVEMBER 25, 2017
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Timeshares to Airbnb:
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“BRING IT ON!” BY KAYRA WILLIAMS , STAR BUSINESSWEEK CORRESPONDENT
There continues to be a great story to tell about vacation ownership. That much was clear when Interval International hosted the 19th edition of its Shared Ownership Investment Conference last month. With our Special Tourism Edition quickly approaching, The STAR Businessweek couldn’t miss an opportunity to hear some of the biggest names in the tourism industry! The US timeshare market has recorded its seventh consecutive year of growth, with Hawaii’s timeshare industry adding US$5.3 billion to the economy. Global shared vacation ownership occupancy was 76 % in 2014 and up to 79 % in 2015. Internationally 91 properties were to be added to the mix in 2017, making available 7,300 units to the shared vacation ownership industry. At the heart of all things timeshare is Interval International, a global vacation exchange network that has been doing business in the Caribbean and around the world since 1976. Presently Interval’s network consists of approximately two million member-families around the world, 3,000 affiliated resorts in 80-plus countries and consumers who, on average, own almost two weeks of vacation time. At this year’s Shared Ownership
The
and Investment Conference, Interval representatives painted a clearer picture of their members, and their overall contribution to the tourism industry. “Our members are travelling for leisure, around 23 nights per year . . . these are affluent consumers who are in the top 20-plus per cent of households,” said Neil Kolton, Interval’s Director of Caribbean and Florida Resort Sales. “They really value travel, and they travel a lot. The demographic of our members is at the top level of the industry today.” Interval works as a go-between for timeshare owner and resort developer, serving developers in the capacity of partner, helping in every stage of the business development process including programme design, digital sales and marketing, as well as financial services and reservations. As part of their membership benefits, Interval members can convert or trade their timeshare weeks or points to offset the cost of booking a hotel almost anywhere in the world. During an interview with media as part of this year’s conference, Kolton said timeshares continued to grow in popularity as consumers continued to demand more for their buck – timeshares give buyers the ability to purchase
Spirit of
future vacations in quality accommodations without the commitment and expense of a second home. Timeshares have made notable strides throughout the years but the industry is not without its challenges. In July this year a four-year sentence was given to a lawyer for involvement in a fraudulent timeshare scheme that cost resorts hundreds of thousands of dollars and resulted in several would-be customers becoming victims of identity theft. Ken McKelvey, American Resort Development Association Resort Owners’ Coalition (ARDAROC) Chairman, applauded the verdict saying it sent a strong message to criminals that fraud and deceptive activities would not be tolerated by the industry. The industry had also come up against fierce competition from services, including Airbnb, which offer travellers alternatives to traditional hotel accommodation. Kolton had words of counsel for vacation rental marketplaces like Airbnb and Homeaway: “Don’t be afraid of regulations, embrace it. It will make you stronger and better. It did it for us.” He highlighted some of the strengths of the timeshare industry as compared to competitors. Frequent health and safety inspections, cyber security, top of the line sales and operational processes, and key control were some of the pluses that set the timeshare industry apart, according to Kolton. “Airbnb doesn’t have any of those things. Bring on the competition,” he challenged, Kolton and other key stakeholders at the conference expressed concerns about the cost of travel to the region which they felt needed to be addressed, while other international markets continued to grow and competition intensified. This was timely, particularly in light of the effects of recent hurricanes: the region saw a decline in visitor arrivals after super storms ripped through several Caribbean islands. A campaign has since been put in place to send an amplified message throughout the world that the Caribbean is, in fact, open for business. Also up for discussion was the Citizenship by Investment Programme (CIP). When asked whether he felt programmes like the CIP had a positive or negative impact on the timeshare industry, Kolton shared, “It has opened some new affiliation opportunities for Interval because some of these resorts do have a Citizenship by Investment component, whether they’re selling home ownership, real estate or fractional ownership. We’re also looking at exchange opportunities because the developers like the opportunity to affiliate that product with an exchange company like Interval. In some of these foreign jurisdictions, having the validation of quality and an affiliation with a luxury, globally-recognized hospitality brand, that is very beneficial to them in their sales efforts.” During the ‘Market Watch: Latin America and the Caribbean’ session, comparisons were made between annual occupancies for timeshare resorts in the Caribbean versus traditional hotels, with the latter often notably higher. The range was typically 15-20
percent higher, frequently due to larger travel parties. The consensus of the panel was that timeshares are beneficial to properties due to their strong occupancy rates. In the Caribbean this was demonstrated in markets like Aruba where timeshares have been on the upswing. Leading destinations in that regard tended to be those with diversified tourism economies, with offerings that ranged from all-inclusive to timeshare and second home residential-type products. Creative membership programmes in all-inclusive resorts that were not necessarily classified as timeshares had also been gaining popularity and generating a significant number of sales. Still in the Caribbean perspective, Kolton made reference to Bay Gardens Beach Resort in Saint Lucia whose Managing Director, Sanovnik Destang, attended the conference this year. “They’ve done a really nice job with their all-inclusive programme in Saint Lucia. It’s actually a traditional European Plan (EP) hotel, part of the vacation ownership programme, but they’ve seen a lot of growth in all-inclusive since they launched the all-inclusive plan as well. They’ve partnered with several local businesses and restaurants so part of their whole all-inclusive programme is that the consumers are actually able to dine at a selection of local restaurants.” (Read our full interview with the Bay Gardens Resorts CEO on page 6). His point solidified initial observations that creativity always won in the hospitality industry. Kolton felt there was room for properties in general to collaborate even further when it came to local excursions, activities and dining options at other establishments. One thing was certain: all-inclusive hotels and resorts were gaining popularity in the timeshare market. “I think both timeshare and all-inclusive vacationing are sectors that are continuing to grow,” he concluded. This year’s conference presented timeshare owners, and others interested in getting into the industry, with the opportunity to learn about the market from others with years of experience. In one of the final sessions, dubbed ‘View From the Top’, David Siegel, President and CEO of West Gate Las Vegas Resort & Casino, spoke about the transition to timeshare and advised hoteliers, hoping to convert their properties, to be sensitive to the historical aspects of properties and long-time staff. Other areas that needed to be considered prior to making the decision included acquisition cost versus starting off on a new plot of land. Also on the panel during that discussion were Mike Flaskey, CEO, Diamond Resorts International, Tom Nelson, President and CEO, Holiday Inn Club Vacations and Orange Lake Resorts, and Andy Stuart, President and CEO, Norwegian Cruise Lines. This year’s Shared Ownership Investment Conference shed a new light on a segment of the travel industry that has seen numerous scandals and reputational damage over the years. While the future of timeshare seems strong, the one certainty is that it’s too soon to count them out!
TOURISM EDITION
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TOURISM EDITION
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TUI: PUTTING DAS BOOT IN BY FT CORRESPONDENT
Even a well-bonused banker, buying a BMW for ready money, cannot splash the cash quite like Fritz Joussen. The boss of Tui is contemplating purchasing two ocean-going ships with his spare change. The FTSE 100 travel group has an appetite for hard assets at a time when ‘capital light’ is a mantra for some rivals. Sailing against the tide has advantages. Perils, too. Tui is the world’s largest holiday company. But most revenues come from customers in colder, wetter parts of western Europe such as Germany where Tui is headquartered. Sales, though rising this year, have been flatter than Benelux due to weak economies and terror attacks at holiday resorts. The group has depended on self-help to bolster profits which rose 42 per cent to €290m over nine months, as measured by earnings before interest,
High overheads will dent payouts if holidaymakers shun the resorts and sea lanes where TUI is strong
tax, depreciation and amortisation. Tui has cut costs, partly by absorbing its UK affiliate. It has clung on to customers despite competition from online rivals. The group is investing in hotels and ships, reasoning that if you offer something special, you retain pricing power. By favouring cruising and the year-round Caribbean, Tui also reduces the seasonality of its business. Mr Joussen is feeling flush after making €770m from selling a niche holiday business and shares in a shipping group. Without adding to modest debts, he could afford to buy cruise liners called Mein Schiff 1 and 2 (the name Das Boot having already featured in a drama about a U-boat). Tui’s fleet has grown to 20 vessels. The balance sheet value of ships, hotels and other hard assets has jumped from €2.6bn to €4.2bn in three years. Returns on assets are thus set to stay low compared with the likes of capital-light groups like hotelier IHG. That does not matter if rising free cash flow supports higher dividends. But high overheads would dent payouts if holidaymakers shun the resorts and sea lanes where Tui is strong. Shares on a relatively low forward earnings multiple of 12 foghorn the risks.
FINANCIALLY SPEAKING Financial Literacy 101 presented by Bank of Saint Lucia
THE BUSINESS OF FINANCIAL INCLUSION According to the World Bank, “Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.” Recent statistics published by the Wall Street Journal, revealed that in developing countries, 60% of the population do not possess bank accounts. Access to affordable banking and financial services is necessary to enable saving, facilitate larger purchases, and to further invest, for example in much needed healthcare and educational goals. For business owners, accessing additional credit begins with satisfactorily operating an account. Financial inclusion:
Builds capacity for future growth, improved GDP. Fosters greater productive employment opportunities
The ultimate goal of ‘financial inclusion’ is to improve the overall quality of life by addressing poverty in a sustainable way. The support of financial inclusion however, requires the collaborative efforts of all stakeholders including banks and financial institutions, investors, policy makers, regulators and local governments. Strategies required for the advancement of a financial inclusion agenda include: Leadership: cultivating a broad based government commitment to financial inclusion as a catalyst to alleviating poverty. Diversity: Implementing policy approaches which promote competition and provide market based incentives for delivery of sustainable financial access and usage of a broad range of affordable services (savings, credit, payments and transfers, insurance) as well as a diversity of service providers Innovation: Promoting technological and institutional innovation as a means to expand financial system access and usage, inclusive of addressing infrastructural weaknesses.
Facilitates day to day banking Enables savings and investment, e.g. education or healthcare Provides access to credit Fosters entrepreneurship Supports individual and small enterprise planning and risk management Builds stronger financial institutions which in turn support the markets and fosters a more system sustainability Facilitates economic development
Faster, safer, more convenient
Protection: Encouraging a comprehensive approach to consumer protection that recognizes the roles of government, providers and consumers. Empowerment: Developing financial literacy and financial capability at the local, sub regional and regional level. Policy: Create a policy that is proportionate with the risks involved in such innovative products and services and is based on an understanding of the gaps and barriers in existing regulation. Framework: Create a framework which reflects international standards, national circumstances and support for a competitive landscape.
The achievement of financial inclusion does present significant challenges, including high maintenance costs and risks to financial institutions, particularly indigenous ones; however discussions must be advanced on the above mentioned strategies. The key is to implement indicators to monitor and measure progress and to adjust where necessary. The benefits of financial inclusion are substantial, not only to the individual consumer but for the developing economy as well. • Use credit and debit cards where it
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TOURISM EDITION
TOURISM EDITION NexusTours-Magazine-ad-St Lucia-6.5x11inches.pdf
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MAKING
MOVES
TOURISM EDITION
CAN’T KNOCK HIS HUSTLE!
even beach chairs. I’ve had to put together packages with beach chairs, meals and drinks for the day. I like to use IG as well: I put up images of the beach, massage video clips, and I tied it all in with my personal IG.
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BY KAYRA WILLIAMS, STAR BUSINESSWEEK CORRESPONDENT
WHAT IDEAS DO YOU HAVE TO IMPROVE VIGIE BEACH? CARIMME: I have two; one really big one:
arrime St Rose is not your typical beach boy. During the busy months of the cruise season you’ll find him on Vigie beach pushing his business, Soulagement, which includes beach chair rentals and professional beachside massages. When the season dies down he falls back on his refrigeration and air conditioning certification – carefully honed skills that have earned him quite a reputation with some of the island’s biggest hotels. At 27, Carrime knows a good opportunity when he sees one, and this week we got him to spill the beans on a very multi-faceted (not to mention ambitious!) professional outlook.
Vigie beach has a very strong current; if the government, or another investor, could put a wave breaker in that would reduce the loss of sand on the shore, that would be great because now, there is no proper way to access the beach. If you want to go down to the shore, you have to jump, slide or do something. That’s one of the most important things. Besides that? Water sports, and I think that’s coming soon.
HOW DO YOU INTERACT WITH OTHERS IN THE MARKET? CARIMME: Other than the taxi drivers,
TELL US WHAT YOU DO. CARRIME: I run a small beach chair
operation at Vigie beach to complement the new beach facility the government built with the Taiwanese. I have my beach vending license, which I got from the National Conservation Authority (NCA), which allows me to rent out my chairs. I also have a massage therapy vending license which enables me to, more or less, administer massage treatments on the beach. The massage component is a partnership between myself and a young lady called Carla Marie who is the original therapist for the business. I have two massaging apparatus that I can use – one table and one Italian massage chair - so I can accommodate two persons at one time. With the chair, you can do your chest and your back in a sitting position.
DESCRIBE A TYPICAL DAY. CARRIME: We’d get tourists coming by
off the beach and locals would also come but mostly by appointment. We advertise treatments and promotions – they’d be able to get five treatments for a reasonable price. The tourists are more interested in the ‘US$1 a Minute’ promotion. It’s the same price for locals but if they have a specific treatment, then they pay the regular price for that treatment unless they come with a promotion or gift certificate, which is also available. When it comes to getting customers, the taxi drivers are really the ones behind it. The guests come off at the cruise ship terminal and then they find themselves here, through referrals from the taxi drivers. They tell the taxi drivers they want to go to the beach. Most times they want to go to Pigeon Point or ‘the ramp’, specifically, because they know there’s water sports but when they want a nice quiet place to relax, without pushy vendors, they come to Vigie beach.
TOURISM EDITION
there’s really one other entity that I deal with on the beach and that’s Hibiscus Tours. They run a site tour for sometimes an hour or two which includes a train bringing people to the beach for that time period. That’s where we see a lot of numbers coming to the beach, especially Vigie beach. With the taxis, the further they go, the more they can charge. There are some other companies that have started doing site tours but mostly for pictures. If they started spending some more time on Vigie beach, I’d be able to say we have a relationship with them.
Vigie beach, Saint Lucia: Carrime St. Rose (left), owner of Soulagement, with masseuse Johnelle
IS THERE A LOT OF COMPETITION? CARIMME: There is. Now that I have more
competition this year, business has gotten slower. Last year I was here alone and I was winning. The massage offering came on board this year. I started with the beach chairs last year and there was no one else on this beach. I was the pioneer here with the beach chairs; before you knew it that changed. Now there are three new vendors. I have noticed, though, that the NCA has stopped issuing beach vending licenses for this period because they don’t want too many vendors on the beach. I would make good money on a weekend but my chairs are empty for now. I have to hustle more. I have to stand by the road to make sure the taxi drivers come to my designated spot because, if not, they go further down the beach. We have a good partnership going. Sometimes you need to give them an incentive. Some of the chairs in this area are not mine but I treat them like my own. They belong to my ‘padna’, Blackboy. Just because we’re in business, doesn’t mean I’m going to hold him by his throat.
WHAT IS YOUR PROFESSIONAL BACKGROUND? CARIMME: I am a refrigeration and air-
conditioning technician by trade. I got my license from Sustainable Development. I’ve worked at different resorts, on a full-time and part-time basis. When it’s the cruise ship season I normally take a break from work and I come to the beach. I come not only to relax - because it’s a wonderful setting - but, as they say, ‘to make a change’. When there is no cruise, that is what I go back to – installing and repairing; generally that’s what I do.
WHAT LURED YOU TO BUSINESS ON THE BEACH? CARIMME: Having more disposable
income, and the ambiance.
HOW DO YOU PROMOTE YOUR BUSINESS? CARIMME: I use the various social
media platforms, especially Instagram and Facebook, for the massage aspect. For the beach chairs I like to use Cruise Critic, a forum website, very much like TripAdvisor. It’s a little more personal. People email you about their arrival dates, what they’re looking for, if they can pay in advance . . . things to that effect. If you have PayPal they want you to organise various things,
HOW DO YOU PERCEIVE DOING BUSINESS IN SAINT LUCIA? CARIMME: Doing business in Saint Lucia
requires a lot of discipline and determination, especially as a young person. The first time I came up with a business concept it was an endeavour called ‘Extreme Sports Saint Lucia Limited’. That never went anywhere. I tried to introduce paintball with two other guys. These two other guys butted heads and split ways. I was kind of the mediator between the two of them. I registered a company and tried to get them to come together. I had the land, they had the money – you find that injection is often the hardest thing, to get people with money to support you. I had done all the legwork in terms of preparing the land, getting the land surveyed and organised, getting the business name registered; it was up to them to put up their money to buy equipment. When we finally got to that point I found out they’d already bought the equipment and were bluffing me about having money so, they basically just took my idea and started their own thing. Doing business in Saint Lucia, you just have to be a hard worker. It’s always a challenge to start something new but it pays off when you keep trying.
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