The Tribune

By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

With hotel occupancies slowly returning to pre-recession levels, a top industry executive believes the sector could start to “wean itself off” promotions such as the Air Fare credit, agreeing that the $14 million pumped annually into the initiative was unsustainable.

Robert Sands, Baha Mar’s senior vice-president of external and government affairs, told Tribune Business: “The reality is that business levels are slowly getting back to pre-recession occupancy levels, which is a very good thing, and therefore you can begin to wean yourself off this type of promotion over a period of time.”

Agreeing with sentiments expressed by Kerzner International (Bahamas) president and managing director, George Markantonis, over the sustainability of the airfare credit promotion, Mr Sands noted that the initiative, a 50/50 promotional venture between the Ministry of Tourism and The Nassau/Paradise Island Promotion Board, had been key to helping the industry preserve room rate integrity.

“I agree with what Mr Markantonis said about it not being sustainable. It was introduced as a very creative marketing initiative at a time when the economy was shrinking,” Mr Sands said.

“The reality is that we are continuing to do it because it has been quite successful. It begs the question whether had we not done it, how much worse off would we have been? The reality is that we did it, we were proactive and it caused the generation of a significant amount of travellers to the Bahamas.”

Mr Sands added: “This initiative allowed us to keep rate integrity. Room rate integrity is very important because it’s so difficult once you begin reducing room rates to get back to the levels that you would like them to be.

“This value-added initiative in terms of the air fare allowed us to keep the value of our room rate integrity intact, which is very important.”

Mr Sands said the industry would have to find a way to slowly reduce its dependency on the promotion, which was launched in 2010, but not eliminate it completely.

“We can’t continue to have that level of expenditure in just one specific area. From that perspective we are going to have to find a way to slowly reduce the dependency on that sustained, ongoing type of initiative. It doesn’t mean that from time to time you may not have to do this type of initiative, but it cannot be a part of the daily menu of the way we continue to do business,” said Mr Sands.

Mr Markantonis told last week’s Business Outlookconference that the Air Fare Credit plan was “unsustainable”, with the hotel industry looking at dipping into “anticipated 2014 funding” by March to continue supporting it.

Warning that the sector could be using 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.

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].”