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Tourism Minister Ends Deals That 'Screwed The Bahamas'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Minister of Tourism yesterday said the Government has restructured Grand Bahama ferry/cruise ship incentive packages that previously "screwed the Bahamas".

Dionisio D'Aguilar told Tribune Business that his ministry had sought to move away from "marketing deals" where operators received a fixed, lump sum upfront to incentive packages that were linked to performance.

He explained that the Ministry of Tourism had "entered into arrangements" with Balearia, Grand Celebration/Paradise Cruises and FRS Caribbean where departure tax rebates will be based on the volume of passengers brought to Grand Bahama.

And the rebates will be greater, or 'double', for stopover passengers as opposed to 'day trippers', Mr D'Aguilar revealed, as the Ministry of Tourism sought to build a visitor base to sustain a revived tourism product based on the hoped-for Grand Lucayan purchase.

The Minister also revealed that a deal had been struck with Sunwing and its Vacation Express tour operator affiliate to resume their summer programme, which is expected to bring more than 20,000 extra visitors to Freeport.The withdrawal of that programme this year, in response to the lack of room inventory caused by the Grand Lucayan's post-Hurricane Matthew closure, cost the city 30 per cent of its summer market. Mr D'Aguilar yesterday admitted that Freeport "can't take another year like 2017" and, while optimistic that the Wynn Group will close their Grand Lucayan purchase, warned "we're not out of the woods yet".

"We're very excited about the signing of the Letter of Intent," he told Tribune Business in relation to the Grand Lucayan, "but in the meantime we've been striking deals and entering into relationships with the ferry companies; Balearia, Grand Celebration and FRS.

"The relationships we've entered into with all of them are very wise and very sound because their compensation is based on the number of passengers they bring to the island. We have struck deals so that the incentive is greater if they bring a stopover visitor than if they bring a day tripper."

Mr D'Aguilar said the ferry operators would receive a $10 per head departure tax rebate on every stopover visitor they brought to Grand Bahama, who spent at least one night in a hotel. This rebate, though, will be cut by 50 per cent to $5 for every 'day tripper' who travels to Freeport and back to south Florida the same day.

The structure is designed to ensure the ferry companies promote Freeport's wider tourism product and hotels to their passengers, thereby ensuring an increase in higher-yielding stopover visitors and rise in total tourist spend that benefits Bahamian businesses and workers.

"The ferry companies will get a rebate on the departure tax based on the type of passengers they bring," Mr D'Aguilar reiterated. "A day tripper will earn them a smaller rebate than if they bring a stopover visitor.

"In the past these companies would secure marketing deals whereby the Ministry of Tourism would give them a fixed amount, and there was no relationship between performance and pay.

"We want to incentivise them to bring as many passengers as they can, and the more they bring the more they recover, as opposed to marketing support deals. I don't like these marketing support deals because inevitably the Ministry of Tourism gets screwed and the country gets screwed," the Minister told Tribune Business.

"We're trying to move away from these fixed marketing deals that don't reward you for performance... The past deals had no relationship with passengers brought to the island. They are good deals for Freeport, and these are the future we are going to use to negotiate deals with people bringing passengers to the island."

Mr D'Aguilar said tying departure tax rebates to volumes would encourage the three ferry operators to bring more passengers to Freeport, while also "getting the stopover component of their business to grow".

He added that a further boost will come when Paradise Cruises adds a second ship between Florida and Freeport in April 2018, supporting the Grand Celebration's Christmas Eve return from hurricane relief duty in the southern Caribbean.

As for stopover airlift, Mr D'Aguilar told Tribune Business: "We've also signed a deal with Sunwing to resume a service they did not offer this year, but did in 2016, that covers the summer months from May to October.

"We're hoping they will bring in excess of 20,000 people during that period. They're your preferred stopover visitors."

Tribune Business revealed last year how Sunwing/Vacation Express's decision to withdraw from providing summer airlift cost Freeport/Grand Bahama 30 per cent of its market for that period.

The loss was described as a "devastating" blow that exacerbated the Grand Lucayan's loss and the lingering effects of Hurricane Matthew, given that the service had generated 236,000 room nights since starting in 2014.

Vacation Express brought 68,587 room nights to Grand Bahama in 2014, and peaked the following year at around 110,000, before dropping to 57,800 in 2016 - a figure influenced by Hurricane Matthew.

However, the resumption of Sunwing/Vacation Express's service will likely raise hopes that Memories is poised to return as an operator for one of the three Grand Lucayan properties, given that all three entities are part of the same group owned by the tour operator giant, TUI.

Mr D'Aguilar attributed their 2017 pull-out to the Grand Lucayan's closure and loss of 1100 rooms, accounting for 59 per cent of the island's room inventory, which left Sunwing/Vacation Express with a lack of accommodation for their clients.

He conceded, though, that despite the potential Wynn purchase and re-opening of the Grand Lucayan, Freeport's tourism product may not be back to full speed until late 2018 due to the $30-$70 million renovations required at the property.

"It needs significant renovations," Mr D'Aguilar said, "and by Christmas next year we're hoping to be ready to roll. That's the plan for Freeport. We're optimistic now there's this Letter of Intent.

"It all depends on when Freeport's room inventory comes back on stream, but 2017 was a horrible year for the city because of lack of inventory. Things can only move up from here. Freeport can't take another year like this one."

Noting that Grand Bahama elected FNM MPs to the House of Assembly, Mr D'Aguilar added: "We owe it to them to make sure they get a better deal for 2018. We're very optimistic things will improve in 2018.

"It may be a little slow at the outset, but as the year progresses things will pick up. The first hurdle is to negotiate the Heads of Agreement and re-open the Grand Lucayan. We're not out of the woods yet, but it's a first step and we're making good progress."

Comments

SP 1 year, 5 months ago

Dionisio D'Aguilar and the Ministry Of Tourism must place serious focus on expanding excursion shore amenities if we expect to capitalize on any possible rise in total tourist spend benefiting the Bahamian economy, businesses, and workers!

Heads in beds and high day visitor numbers are redundant if ways and means of increasing visitor per capita resort spend are not hurridly implemented.

Minister D'Aguilar repeatedly expressed understanding and concern that increased visitor spend is vitally important to the health of the economy, however, no evidence to date indicates any diversification in new resort excursion amenities to achieving this goal.

Thank GOD, at least we are finally beyond the asinine stupidity rational of Vincent Vanderpool Wallace and Obie Wilchcombe barometer of gauging the health of tourism on arrival numbers alone, with absolutely no consideration of visitor per capita resort spend. These two jackass idiot geniuses were totally out of touch with the basic fundamentals of a resort destination objective to maximise profits with visitor spend opportunities.

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TheMadHatter 1 year, 5 months ago

Good points SP. I, on the other hand, prefer to commend Mr. D'Aguilar for this positive move. As I've said many times, I am not an FNM and had VERY little faith in this Govt back in May. However, they do seem to be making quite a few positive steps. Every other week there is some positive announcement in business or in criminal probes into fiscal waste etc.

We would certainly be much better with Prime Minister Mortimer. However, we are all in the same boat and I wish the best of success to this Government - which for the time being is "our" Government.

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concerned799 1 year, 5 months ago

You are right, SP, gov needs to focus on bottom line tourist spend not numbers of "cruise arrivals". Gov seems off to a great start here, now we just need the right policies to steer the #1 industry towards visitors who stay in over night hotels and AWAY from $60 per person day visitors from cruise ships.

SP - once EVERYONE knows the days of visitors being able to see the Bahamas and spend nothing on its economy are over, they will eventually invest in land based products. Certainly targeted loans to new and diversified "things to do" is an idea. Why not a world class "museum of the Bahamas/Caribbean" in Nassau?! Caribbean Art Museum?!

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PatMac 1 year, 5 months ago

This article concerns me from a few perspectives.

I am concerned that the Minister is using an overly simplistic argument to justify making a change to a complex matter, which seems to be his modus operandi. Marketing is not simple. Any marketing dollar that successfully promotes The Bahamas will result in increased interest from potential visitors. Once interested, persons will look for a way to come to The Bahamas. Some will chose to come by air and some will prefer to come by cruise ship. Those that chose to come by cruise ship will have the choice of which island they want and some will chose Freeport. Ultimately, they will select the carrier that appeals to them. However, the underlying dollar that got this party started is not necessarily from the carrier, but they will benefit from that dollar in terms of being selected as the carrier of choice and secondly in terms of getting rewarded by the MOT based on this new strategy. In this example, did the new MOT strategy actually result in a direct increase in tourism??? NO!!! However, the new strategy will still reward the carrier thus making this strategy ineffective and doing exactly what he claims it will solve - swinging The Bahamas.

Second, this article does not speak to budget so its impossible to evaluate it properly. e.g. How much was spent in the past based on the previous strategy and how does that compare to the new strategy using the same volumes in visitor arrivals? Without this information, its impossible to evaluate which strategy is better in terms of total cost.

Third, how will this new strategy be managed? Do we have a cost effective and reliable way to both obtain and check the information on excursion versus stop over visitors from the carriers. I would not just trust them to provide the breakdown without having checks and balances in place. Unless we know how this will be implemented, again, we cant evaluate the approrpiateness of this decision. The administrative cost could be high and frankly, I'd prefer to spend the money in Ads than admin stuff.

Fourth, what are the carriers saying about this change? It would be good to know their thoughts before we make a conclusion about this.

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JohnDoe 1 year, 5 months ago

Great observations. Every business deal must be evaluated within the context of the business environment and dynamics within which that deal is created. The headline sounds good but without additional information we really have no idea whether or not this is a good deal or idea. What is a bit concerning is this braggadocious style and attitude which reminds me of Trump's style, which as we have come to know often have no basis in truth, integrity, facts or strategic results. So if there must be winners and losers does that mean that these operators are now the the losers and one's being screwed. I wonder how this would impact their behavior and how they feel about the Minister bragging about it? There is a tried, proven and established approach to making great deals and also building great relationships all at the same time.

The issue above is but a small component to a much larger issue. The entire value chain of our Tourism product is tilted so as to maximize the dollars captured either by the cruise ships or the hotels and minimize the amount spent outside of those venues.

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sheeprunner12 1 year, 5 months ago

Will DD still only focus on NP/GB tourism market in 2018????????? ......... Or will he pretend to care about building the market in the Out Islands ...... where stop-over tourists spend far more money???

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concerned799 1 year, 5 months ago

JohnDoe, I would focus more on the cruise industry. A hotel must by nature hire Bahamian employees, with workers able to organize if they wish, and be possibly built by local workers, while none of a cruise ships on board revenue ever hits the Bahamas. They even make their own electricity and pay no gaming tax!

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JohnDoe 1 year, 5 months ago

During the 1980's there were many Bahamian owned restaurants on or right off Bay street that offered authentic Bahamian cuisine and had as its major clientele visitors staying in the Paradise Island and Nassau hotels. Today, hotel visitors come to Nassau or Paradise Island and it is not unusual that they never even leave the hotel compounds or spend a dollar outside of those compounds.

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gbgal 1 year, 5 months ago

Airlift is a major problem still. Last minute tourists had no way to get to GB on 22 Dec! Even the boats had no seats...sounds good but this situation does not make for happy visitors. We have to make it easy for them to get here.

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