The View from Europe: Cuba and the Caribbean tourism sector

By David Jessop:



The announcement in mid-December by President Obama and President Castro that Cuba and the US are moving to normalise relations has resulted in speculation about what this may mean for the Caribbean’s tourism sector.

For the most part what has been said and written has failed to understand the nature or complexity of what the US president has proposed, the process involved, or the fact that Cuba has revealed very little about what its detailed response will be.

That said, the news of a changed US-Cuba relationship is of course welcome, long overdue and begins to end the US imposed isolation of a Caribbean nation. It involves the full restoration of diplomatic relations by both sides and includes a range of measures for which the US president does not need the approval of Congress.

Although the US president made clear that, when it comes to US travellers, more US citizens will be able to visit Cuba under what is expected to be looser licensing arrangements, he was not freeing all individual US travel to Cuba.

Instead, the implication is that the granting of licences to travel in 12 identified US Treasury permitted areas* will be made easier. He also said that US credit and debit cards will be permitted for use by travellers to Cuba, US companies will be able to improve infrastructure linking the US and Cuba for commercial telecommunications and internet services, and according to a fact sheet accompanying his statement, foreign vessels will be able to enter the United States “after engaging in certain humanitarian trade with Cuba”.

Sometime in the coming weeks the new US Treasury regulations on Cuba will be published, which will spell out how these and other aspects of the new US travel regime will work. However, the present consensus in the US travel industry is that in future a general licensing system will enable tour operators to develop programmes within identified categories such as educational activities and US citizens will then be able to freely buy and travel within such packages on the basis they are giving the US government their word they are not simply engaging in tourism.

How this will work in practice and the extent to which current draconian US rules on the use of currency, or whether Cuba has the facilities or is geared up to receive many more visitors on this basis, remains to be seen.

Of more fundamental importance, although not directly related to tourism, was the announcement that President Obama was authorising his Secretary of State, John Kerry, to review, based on the facts, Cuba’s US designation as a state sponsor of terrorism. A change in this area would not only enable companies in the tourism sector, but in every other sector as well to be able to freely move funds in US dollars, invest, trade, book hotels or flights on airline websites on US servers, and much more.

The increasingly tough interpretation by the US Treasury in the last few years of regulations that flow from this designation has severely constrained all third country trade and services including from the Caribbean, as many companies and international banks have withdrawn from the Cuban market in order not to face huge fines in relation to the transfer of funds.

What happens next in practical terms may be slow and uncertain. However, it is clear that President Obama has initiated a process that he thinks will be sustainable beyond any Democrat administration. Although not spelt out, it would seem that he calculates that, in the case of Cuba, freer US travel and the weight of US corporate interest may force an unstoppable economic opening that a Republican dominated House and Senate or any future Republican president will not wish to turn back.

For his part, President Castro has made clear that Cuba will work with the US to improve relations but that that his country’s principal focus will be on an improved economic relationship and functional co-operation.

What this means is that, while US tourism (or more precisely the number of non Cuban-American US visitors travelling to Cuba) will remain constrained for the time being, there could be a quite sudden opening in between two to four years time, but only if that is what Cuba wants.

In this context, the most likely changes in the short term related to tourism are increasing pressure on the number of hotel rooms in Havana and popular destinations, and an upward trend in Cuba’s presently low room rates; increased investment in the hotel sector by foreign companies particularly in conjunction with military controlled tourism companies; pressure from US legacy carriers to fly scheduled services to Cuba out of the US; the increased attraction of sailboats into the newly completed marinas that Cuba has been constructing; an increasing number of calls by non-US cruise ships and perhaps, in time, US cruise ships if they home port in Cuba; and the rapid diversification and decentralisation of Cuba’s already significant tourism product.

Speaking recently in Barbados about the opportunity, the Caribbean Tourism Organisation’s secretary general, Hugh Riley, said that, contrary to the fears in some parts of the region, the strengthening of Cuba as a Caribbean tourism destination was good news, as it would attract more visitors into the region and could prove a gold mine for those willing to capitalise on it. The region, he said, needed to view normalised relations from an entrepreneurial point-of-view to determine how it could strike partnerships that would allow it to benefit.

The figures amplify Mr Riley’s point. While overall visitor arrivals totalled 2.8 million in 2013 – the spend was US$2.3 billion – Cuban official statistics record that only 92,000 US citizens visited Cuba that year; a figure that does not include another 350,000 to 400,000 Cuban Americans who visit annually, as Cuba does not consider them as visitors.

President Castro and President Obama both noted that the agreement to normalise relations would be challenging and take time. The announcement of an improved US-Cuba relationship is therefore best regarded in tourism terms as the starting gun for all Caribbean tourism interests to consider how, over time, they will respond to increasing competition for the US market.

*These are family visits; official business of the US government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain export transactions guidelines.

January 10, 2015

Caribbeannewsnow 

Young Bahamian Entrepreneurs in the tourism industry ...and the revitalisation of The Bahamas as a competitive touristic destination

 

Negotiating With The Gatekeeper: Young Entrepreneurs And Tourism

By Noelle Khalila Nicolls
Tribune242
Nassau, The Bahamas



IF the movements made by a handful of young Bahamian professionals over the past year in tourism are any indication of the entrepreneurial thinking of their counterparts, then there is some hope for the future outlook of tourism in the Bahamas.

 

Entrepreneurs such as Alanna Rogers, Jamie Lewis, Adlai Kerr and Scott Turnquest, owners of tourism startups Tru Bahamian Food Tours, Islandz Tours, and BahamaGo, are breaking barriers in tourism by going head to head with established businesses in nontraditional areas of the business. Their starups are refreshing additions to the product offering, and reflect a break from the tunnel vision way of thinking about tourism in terms of traditional service jobs, foreign direct investment and hotels.

 

The tour business in the Bahamas is not an easy one to get into. Ancient companies such as Majestic Tours, the last of the original travel agents from the days of white-only operators, have an effective monopoly over the key supply chains of visitors. And yet, Majestic Tours only places 19 amongst the 22 sightseeing tours ranked on Trip Advisor for Nassau based activities.

 

In the top spot on the Trip Advisor listing is Tru Bahamian Food Tours, with Islandz Tours following closely behind in the number four spot. As far as Trip Advisor is concerned Majestic Tours is essentially a nobody, despite their relative operational size and level of business experience. Old school business minds with an analogue outlook would not understand the significance of such a ranking. They miss how the Internet acts as a great democratic equalizer in this digital world, particularly for those with Rocky-style ambition and fight.

 

These young entrepreneurs are attempting to solve long-standing problems that the industry has been incapable of solving. The Downtown Nassau Partnership has doled out big dollars to revitalise downtown, focusing in large part on upgrading infrastructure. Their efforts are all well and good, but the creation of new businesses that add value and enhance the downtown Nassau experience could do just as well in the revitalisation efforts.

 

That is what Tru Bahamian Food Tours and Islandz Tours have proven, with Islandz also operating in the merchandising side of the business, with authentic Bahamian souvenirs.

 

Innovation and the expansion of existing products and business services are critical for the revitalisation of the Bahamas as a destination, which is on the decline. Sometimes it seems as though leaders in the business sector are either comfortable or complacent. Either way, it is leading to a lack of improvement and modernisation in our tourism offerings.

 

As far as downtown goes, our city centre is a stale, dry place at night, notwithstanding the few bars and clubs that make an effort. Why haven’t existing businesses figured out a way to make downtown vibrant at night? Why haven’t entrepreneurs seen this need as an opportunity to create new businesses? When the Downtown Nassau Partnership ran its successful bar crawl promotion on the Heineken bus, I immediately wondered why a private group hadn’t made a successful business out of a Nassau at night bar hop.

 

Why haven’t downtown businesses figured out a way to bring more Bahamians downtown? Not all of them are convinced that central to downtown’s success is bringing the city back to life for Bahamians. In fact, there is a night spot off Bay Street that has a notorious reputation for being racist and discriminatory towards black Bahamians. During the recent Goombay Summer festival in Pompey Square, I heard a tourism official say, “It was good, except, not many tourists came out.” Meanwhile, the square was jam-packed with Bahamians, starved for outlets to enjoy downtown.

If businesses are supposed to solve problems, fill needs, serve markets, it seems we are going year to year without innovating solutions and creating products to plug the market gaps; without solving problems and keeping pace with the under-served and emerging markets.

 

The startup BahamaGo is doing just that. It is attempting to solve two critical problems that the Ministry of Tourism with its $80 million annual budget has been unable to do in its more than five decades. So far BahamaGo has had success, not because it has the financial resources to do so, but because it has financial accountability; it has the business motivation combined with passion and drive; and most importantly, it does not have an analogue mind.

 

The reality is most hotels in the Bahamas are in fact small hotels, strung amongst the Family Islands; they are using outdated hotel management tools with no access to the large online travel agencies (OTAs) such as Travelocity and Expedia. This lack of access to OTAs is a major challenge for small hotels, which cannot accept online bookings for their properties, and have no way of offering booking packages that pair airfare and accommodation.

 

Many hotels are using manual ledgers or telepathic room inventory management systems. BahamaGo is an niche OTA created by Bahamian entrepreneurs with technology and finance backgrounds who understand the specific demands and challenges of the local market and are centrally focused on meeting the local needs.

 

Unfortunately, BahamaGo is not only competing against the large OTAs, it is also competing against the Ministry of Tourism (MOT). The MOT is simultaneously pursuing a strategy to solve the same problem, investing big bucks to contract an international company. It is not that the MOT is oblivious to the problems; even though they often take a while, they do act. But it is their action that often undermines entrepreneurial opportunity. And in the long run, the bureaucracy often underserves the market.

 

Small startup businesses in the tourism sector quickly come to learn that the tourism market is not free and open; it has a gate keeper known as the MOT. Large developments, particularly that bring foreign direct investment, need not worry, because the political leadership which sets the tone in tourism always has time for that.

 

A business’ size, bank balance, credit history, experience and level of connections correlate to level of trust that is inherently granted by the gate keeper. The problem for small startups, particularly those put forward by young entrepreneurs, is obvious. They suffer the most having to navigate their own way around the bureaucratic gate keeper.

 

I don’t believe it is intentional, but the MOT is a large bureaucracy that in some instances undermines economic opportunities for small businesses and innovation in the tourism sector. Whereas business is about taking risks, the bureaucracy is about playing it safe (routine processes aimed at protecting the country’s resources and not screwing things up; utilizing public funds in low risk investments); the different modes of being naturally conflict with each other, particularly when it comes to dealing with small businesses.

 

A small business might offer a service that the MOT is willing to pay for, but the MOT will always defer to the company that is perceived to present fewer risks. From a public sector management point of view it makes sense, but we must acknowledge how and when it creates an unsupportive, even anti-competitive environment for small Bahamian businesses.

 

A group of artists and photographers were having a conversation online the other day about Bahamian photographers joining together to create an online stock images website. The discussion was lively and interesting, and when I made my contribution I threw a wrench in the mix. If the MOT operates a free stock images website in partnership with an international stock images company, how could a local company compete? Wouldn’t the MOT’s free service undermine the business efforts of the private group?

 

The MOT has its fingers in many pots, and it often has a possessive like sense of ownership over anything that it is involved in. This posture inevitably becomes the elephant in the room when a private business tries to enter the market.

 

For large players the point is not so relevant, but for young entrepreneurs and small businesses it is critical. At some point, there will have to be a negotiation, whether spoken or unspoken, or some sort of mediation, with the MOT, before the gates of opportunity are fully opened. In the meantime, these businesses are forced to work in spite of the MOT.

 

The events market is a classic area. The MOT is committed to events. However, when the MOT stages an event, it often undermines the capacity of a private business to operate or manage an event in the same market place. On the flip side, if a private individual or company has an event it will not be legitimized as a marketable event to the tourist market unless it has the stamp of approval of the gate keeper.

 

The People to People programme is another example. People to People is a signature MOT programme that pairs visitors with a volunteer Bahamian host to experience Bahamian life and culture. The People to People programme is a successful MOT programme. But, it could also be a great business. The MOT innovated a great product for an important niche sector, but might it not be the time for a Bahamian to pursue it as a private business venture?

 

We must ask the question, what is the MOT really about? Justifying its own existence – its $80 million budget – or supporting a local business market? Shouldn’t we encourage and celebrate the creation of businesses to service areas previously subsided by the MOT? In a thriving tourism market, shouldn’t the MOT theoretically become more and more specialized, because the needs of the market would create viable businesses opportunities that are filled by Bahamian businesses.

 

I am not certain our thinking has reached that level of consciousness. More than likely, if a Bahamian saw an opportunity to create a People to People like business, it would attract resistance from those in tourism responsible for People to People, particularly its founders. And if the MOT was so inclined, it could undermine the business efforts of the private individual.

 

In this respect I sympathise with the civil servants who work at the MOT, because their public service often means missing out on business opportunities. However, their experience in the MOT also creates for them a wealth of knowledge and networks that would be vital assets in business. Instead of normalising career service, I think civil servants should be encouraged to take their experience into the public sector, where they can step out and take on the risks of entrepreneurship.

For all of its shortcomings, there is no question, the MOT has over the years plugged important market gaps with its own innovations, not only in marketing, but also product development. The civil servants who work for the MOT do mean well and they work hard to fulfil the mission of the organisation. In many respects the public/private sector relationship that exists in the tourism industry is something to be celebrated and modelled.

 

But we must not let our pride and good intentions make us blind to our own weaknesses or limitations. From some angles, the enviable relationship between the MOT and the private sector looks incestuous.

 

As the need for product expansion and innovation becomes more and more critical and young entrepreneurs mature, Bahamians are not going to just pass up emerging opportunities. They are going to take risks and start new businesses that defy the logic of the analogue mind. The MOT must examine its role and function in light of this approaching wave.

 

Fundamentally, the MOT has a delicate balance to strike: it must act like a business (for marketing is a core business strategy aimed at achieving business objectives), but it should not be in business. And if its service to the business community is justified in support of big business, then it should also be justified in support of small businesses.

 

I am encouraged by young Bahamian entrepreneurs and I know they will do what is necessary despite the MOT or the wider business environment. There is no question, tourism in the Bahamas is badly in need of product development and modernization and it is the innovators, the young entrepreneurs, small and niche businesses that are the hope for the future.

 

As for the MOT, it if wants to do right by the future, it needs to engage in self-examination and create a way forward that reshapes its relationship with innovators, startups and small businesses, who possess different needs to established and large businesses.

 

The MOT’s challenge is to value and support small and niche businesses; facilitate modernisation in the small business sector; encourage product development, especially through diversification into non-traditional areas of the business; recognize and nourish the talents of true innovators. Fundamentally, the MOT is called to be a facilitator not a gatekeeper; be a partner not a competitor; and to truly support the business of tourism, not merely justify its own existence.

 

• (Noelle Khalila Nicolls is The Tribune’s Features Editor. Follow her on Twitter @explorebahamas. For questions or comments, email nnicolls@tribunemedia.net).

 

September 23, 2013

 

Tribune 242

 

Bahamas Blog International

 

Bahamian tourism is “starving” in The Bahamas

Tourism 'Starving': The Shop Is Bare

By NEIL: HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net
Nassau, The bahamas

Bahamian tourism is “starving” because it has both failed to develop a unique product, a well-known architect believes, and not invested in creating key “attractions”.

 

Pat Rahming, of Pat Rahming & Associates, told Tribune Business that while the Bahamas had potential tourism product “coming out of its ears”, much of it was “locked away in a warehouse with three padlocks on it”.

 

And he explained that rather than focus on developing one-of-a-kind ‘attractions’, the Bahamas had instead concentrated the bulk of its tourism investments in the infrastructure that supported them - accommodation (hotels) and transportation.

 

Pointing to the “dilapidated” state of Nassau’s few land-based attractions, such as the forts and Water Tower, Mr Rahming likened Bahamian tourism to a shop with little inventory on its shelves.

 

Arguing that ‘attractions’ were the equivalent of tourism’s “cash register”, Mr Rahming said of these shortcomings: “That’s why we’re losing our shirts, and other people are eating our lunch.”

 

His thoughts offer a new perspective on why some believe the Bahamas’ tourism competitiveness is slip-sliding away, a perception reinforced by a Tribune Business report last week.

 

This newspaper reported that stopover visitors’ share of total foreign arrivals to the Bahamas had slipped from around 31-32 per cent pre-recession to around 24-25 per cent for the past four years. In raw terms, this means that high yielding stopover visitors (spending over $1,000 per head) have declined from one out of every three visitors to one out of every four.

 

Recalling how he arrived at his conclusions, Mr Rahming said he first began attending the annual American Parks and Attractions convention some 17-18 years ago.

 

Becoming a regular attendee every November, he explained: “The key was that I learned through that organisation that the business of tourism, the members of that organisation were the people that drove the business of tourism globally.

 

“At the various seminars and workshops, I came to understand why our business was floundering, what we were doing and perhaps ought not to be doing.”

 

Although he failed to convince Ministry of Tourism officials to accompany him to that convention, Mr Rahming said he learnt that all tourists - wherever they were in the world - were seeking unique Place-specific Experiences.

 

This, he told Tribune Business, could be delivered through a variety of products - place, history, mythology and lifestyle. New York and Miami were lifestyle destinations; London was a historical destination; Athens was steeped in ancient mythology; and unique places included the likes of Niagara Falls and the Grand Canyon.

 

Downtown Nassau was once, Mr Rahming said, the place-specific destination that Spanish Wells, Hope Town and Green Turtle Cay were now. Yet the fundamental flaw was that the Bahamas still had to properly define its tourism product (Place-specific experience).

 

Noting that the Bahamas represented Christopher Columbus’s first port of call in the Western Hemisphere in 1492, Mr Rahming told Tribune Business: “Someone looking for a warm weather destination, sun, sand and sea, has half the world available to him, but the guy looking for the spot where contemporary civilisation started has only one choice.

 

“We are the genesis of all contemporary Americans, the Bahamas. Isn’t that incredible? This is why it becomes so important to the business of tourism. We have product coming out of our ears, but it’s all locked away with three padlocks on it.”

 

In contrast, Mr Rahming said the Dominican Republic had chosen in 1991 to focus on Columbus as an attraction, changing the focus of its tourism product.

 

It had also concentrated on golf, these two moves explaining why its stopover visitor numbers had increased by 109.8 per cent in the nine years up to 2000. Cuba’s growth over the same period was 318.4 per cent, yet the Bahamas’ growth remained in low double digits.

 

Unlike New Orleans with its ‘Voodo’ aura, Mr Rahming said the Bahamas had never exploited its ‘Obeah’ mythology. “This is one of the few places you can go where there isn’t a church tour,” he added.

 

And, while aspects of the Bahamian diet and lifestyle were unique, this nation paid “so little attention to it” as part of the tourism product.

 

“The position is that we have product coming out of our ears, but we are losing business because we have no product,” Mr Rahming told Tribune Business. “This is why we are losing our shirts, people are eating our lunch.”

 

This, he added, was exacerbated by the Bahamas misunderstanding where the tourism ‘Point of Sale’ or cash register was located. It was not located in hotels, transportation or hospitality, which were supporting infrastructure, but attractions.

 

Mr Rahming said there were five types of attraction - traditional tours; retail (the Straw Market); events (the Super Bowl); infrastructure; and resorts.

 

He described the latter as “the most misunderstood in our neck of the woods”. Bahamians generally believed resorts were a hotel with a few facilities, but Mr Rahming argued it was the other way around - a resort was an attraction with accommodation as the supporting facility.

 

Pointing to Atlantis as a water-based theme park attraction, Mr Rahming told Tribune Business: “Atlantis is an attraction, but it has accommodation.

 

“They understand that, and you never hear an Atlantis executive call Atlantis a hotel. But you’ll hear us call it a hotel because we don’t understand.”

 

The result of this misunderstanding, Mr Rahming said, was that “the only investment for the tourism business is on accommodation, and this isn’t helping us.

 

“If you look at New Providence, you will see all our attractions are in trouble. We have few tours, and by any definition of tourism we have very few land-based attractions. What we have are dilapidated or in bad shape,” he told Tribune Business.

 

“That’s the product we are selling. We have the Ministry of Tourism going out to bring customers in, but we have very little inventory on the shelves, and what is on the shelves is not selling. That’s why our lunch is being eaten by other people.”

 

Focusing on Freeport, Mr Rahming said the strategy of concentrating on casino and hotel operators was entirely misplaced. “In their case there is absolutely nothing on the shelf, nothing whatsoever,” he told Tribune Business.

 

“We have product coming out of our ears. This destination, the Bahamas, is the most gifted community on the planet, 350,000 people. You put us against any other community in the world, we have more champions per capita. Why are we starving?

 

“It’s about the fact the shop is open and there’s very little on the shelf. You can’t make money without stuff on the shelf.”

 

Going back to the retail analogy, Mr Rahming said the industry’s ‘first rule’ was that if there was something to sell, it had to be easy to buy. The second was that if you were selling something the competition could sell, price would inevitably drive sales.

 

This was the situation Bahamian tourism now found itself in, a price-driven competition, due to the absence of a unique product and associated attractions.

 

June 03, 2013

 

Tribune 242

 

Bahamas Blog International