The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $14 million spent annually on the Air Fare Credit initiative is “unsustainable”, Atlantis’s senior executive warned yesterday, with the hotel industry looking at dipping into “anticipated 2014 funding” by March to continue supporting it.

Warning that the sector could be funds it gets “two years from now” to finance the present, George Markantonis, Kerzner International (Bahamas) president and managing director, acknowledged that it would be difficult for the industry to “wean” itself off the promotion.

Acknowledging that a significant percentage of stopover visitors were taking advantage of the offering, which shaves several hundred dollars off air fare costs, Mr Markantonis said, for example, that a 40 per cent drop in bookings would send hotels “running back” to the promotion.

And, pushing for greater product diversity in the Bahamian tourism industry’s wider product offering, Mr Markantonis said “it drives me crazy” to see that the shops first seen by cruise passengers arriving in Nassau Harbour were those supplying duty-free alcohol.

Given that “every rinky dink port” in the Caribbean was doing similar, Mr Markantonis said it was no surprise that “half” the cruise passengers docking in Nassau remained on board.

Recalling a tour he took of the Oasis of the Seas with Sir Sol Kerzner, Mr Markantonis said the ship’s captain told them that some 1,700 passengers then on board the 6,000 capacity vessel had elected not to disembark in Nassau.

Arguing that the Bahamas “needs something to replace the Air Fare Credit”, which was first launched in 2010, Mr Markantonis told the Bahamas Business Outlook conference: “The problem with that is, it’s unsustainable.

“It’s paid for 50 per cent by the Ministry of Tourism, and 50 per cent by the Nassau/Paradise Island Promotion Board. Between the two, we’re spending $14 million on Air Fare Credit.

“By March, we will have to start going into anticipated funding from 2014.... we will be spending money we will only get two years out.”

Mr Markantonis said the Promotion Board’s funding came from levies on hotel room rates, and he acknowledged: “I’m not quite sure how we will wean ourselves off this [Air Fare Credits].”

Other observers, including former minister of state for finance, James Smith, had previously questioned whether the Bahamas could sustain the Air Fare Credit initiative. They pointed out that it effectively represented a hotel industry subsidy, and a promotional discount that impacted stopover yields.

Meanwhile, Mr Markantonis also effectively called for Bay Street and downtown Nassau to ‘up its game’, and develop more unique product offerings and attractions to entice cruise ship passengers off their vessels.

“When the cruise ship passengers come off, it drives me crazy about the first shop they see; duty-free alcohol,” he said.

Pointing out that cruise passengers had access to plenty liquor on board, and that it was included in their ticket price, Mr Markantonis added: “That’s what we do, and so does every rinky dink port across the Caribbean. They’ve been there, seen it, done it.

“No wonder half those people don’t go off the ship, and they don’t if they’re not going on an excursion.”

Referring to the Oasis of the Sea’s 1,700 ‘stay on boards’, Mr Markantonis said: “Imagine if we had some far-fetched, innovative, not done in any other port before, attractions.

“I’m optimistic we’ll get there one day. It’ll take time, but we’ll do our bit to help.”