2009 Year End Report and Look Ahead – Bermuda Tourism
February 11, 2010
Remarks by:
Dr. the Hon. Ewart F. Brown, JP, MP
Premier and Minister of Tourism and Transport
Good afternoon,
Today, I will speak about the state of tourism in Bermuda. My intent is to be frank and direct.
The global economy is still a real concern. Notwithstanding some signs of recovery, it has not turned around yet. This is by far the most serious recession since1929. We all have been touched by it in one way or another. We all know that tourism in Bermuda continues to face challenges to maintain its fair share of an increasingly competitive market.
I want to accomplish four things with you this afternoon. First, I want to give the highlights of the Fourth Quarter results. Second, I will give the highlights of all of 2009. Third, I will summarise the results of last summer’s Air Arrivals Exit Study, because they point to directions for future strategies. Finally, I will outline our 2010 outlook and objectives to ensure that tourism, this pillar of our economy, are increasingly strengthened.
Many of our assets, in combination, make our Island unique. We want to make sure that we maintain a laser focus on building on our assets to make tourism in Bermuda the very powerful pillar we know it can be.
NOW FOR THE HIGHLIGHTS OF THE FOURTH QUARTER 2009: OCTOBER TO DECEMBER.
October was the best performing month of the year. We had 22,000 arrivals by air, representing a modest increase of 2% over October 2008. Total arrivals were 56,875. It was also the month of three key events, the 2009 Bermuda Tattoo, the PGA Grand Slam of Golf and the Bermuda Music Festival.
There were 48,000 visitors by air in Quarter 4; a 3% decline compared to 2008’s Fourth Quarter. Total arrivals for the quarter: 101, 660.
Despite all of the challenges of 2009, Bermuda’s total visitor arrivals gained over the previous year. Fuelled by cruises, 559,000 visitors arrived. That is an increase of 1% over 2008.
Although the number of visitors who arrived by air last year did not increase over 2008 arrivals, over the year, the results got better and better. The results for each quarter of 2009 were better than the results for the one before. This trend of improvement continued into the last quarter, October to December.
235,000 visitors came to Bermuda by air, down by 10.6% compared to 2008. This is clearly disappointing. It is the lowest number of visitors to Bermuda in a very long time. It does, however, reflect a recovery from the depths of the first half of the year and showed a respectable recovery by year end.
It is important to note, however, this decline puts us roughly in the same place as many of our competitors, particularly the Caribbean.
Hotel occupancies, as reported by Bermuda Hotel Association (BHA) member properties, do reflect the poor overall performance of 2009. Average occupancy for 2009 was 51%, compared to 59% in 2008 and 67% in 2007.
These results are clearly not good and tell us that there is still much work to be done. Bermuda Tourism continues to support our hotel partners. Hoteliers have received an unprecedented $2.5 million in direct support for promotions. In addition to this direct financial support, the Government has assisted the hotels by deferring payroll taxes. We continue to believe that this continued support is necessary in the near term until we see a tangible turnaround in arrivals and in the economy.
Our digital marketing agency, iCrossing, has done a fantastic job in the past several months in driving increased traffic and awareness through BermudaTourism.com Total visits are up 82% and unique visitors are up 101%. The measure of how long a visitor stays on the site (the bounce rate) is down 34%. This is great news because it means visitors are not leaving the site right away, they are staying to see what we have to offer.
Major natural search initiatives have moved BermudaTourism.com to the number one results position in Google searches of the word ‘Bermuda’. The current website is a little over five years old and has been improved a few times, the most recent taking place in 2009. As I reported in the third quarter of 2009, plans are underway for the creation of a dynamic new website set to launch in 2010. Look out for more soon.
THE AIR ARRIVALS EXIT STUDY IS NEXT.
We recently released our Air Arrivals Exit Study for the 2009 summer season. It was based on a survey of 731 randomly selected visitors leaving the Island. In summary, travellers are highly satisfied with virtually all aspects of their visit to Bermuda. They would not only recommend the Island for a vacation to others, but they plan to return themselves.
We believe that the survey results validate Bermuda Tourism’s advertising, marketing and sales strategy.
Visitors are increasingly satisfied with both the affordability of Bermuda as a vacation spot and the cost of airfare, in stark contrast to mounting concerns that they expressed last summer.
Despite these high levels of visitor satisfaction, their expenditures have reached a historic low, a combined result of a decrease in visitor numbers and decreased spending per person. A number of factors have an impact on visitor spending, only one of which is the slow recovery of the global economy. Nonetheless, Bermuda Tourism must keep this reality of high satisfaction and relatively low spending in mind as it moves forward with strategies to increase the numbers of visitors and how much they spend.
People still visit Bermuda primarily for leisure. However, the proportion of travellers visiting and staying with friends and relatives has risen significantly. Incidentally, that fact is one likely explanation for the decline in visitor spending.
Use of commercial accommodations remains quite consistent, though declines in accommodations spending and total expenditures overall may be a result of the Island’s hotels lowered pricing strategy during the summer.
Business travel, though representing only 18% of visitors overall, remains integral to Bermuda’s economy, particularly given that their average per person expenditure far exceeds leisure spending. Of particular interest, most business travellers this summer were visiting the Island for the first time, and an increased proportion are working for a company that has operations on?Island.
Virtually all visitors take part in some form of activity, including evening entertainment. Once again, visiting the beach and swimming remain the most popular activities, despite somewhat decreased levels of satisfaction with the Island’s weather this summer. We didn’t like our summer all that much either. Shopping, though still actively enjoyed by most visitors, has experienced a notable decline in participation, reaching historic lows.
Advertising recall or how a visitor remembers how they heard about Bermuda, among leisure visitors has returned to highs previously recorded in the summer of 2003. Canadian visitors are the exception; their recall stands at a historic low. That is almost certainly because we cut our advertising budget in that market. We expect that to change with the introduction of WestJet this summer.
Most visitors recall Bermuda through our television ads. This is followed closely by print media, including newspapers and magazines. Bermuda’s official website continues to be used by a sizeable and growing majority of leisure visitors. Given the widespread use of the Internet as a travel planning and booking tool; our decision to enhance our use of this medium as a means of advertising stands us in good stead.
American Airlines, British Airways, Continental Airlines, Delta Airlines, JetBlue Airways and US Airways have maintained solid and consistent service out of New York, London, Newark, Boston, Atlanta, Philadelphia, and Washington. We will continue to provide support to keep those loads up.
NOW TO OUR OUTLOOK AND OBJECTIVES FOR 2010
The mandate of Bermuda Tourism is to promote awareness of Bermuda.
The key objectives for Bermuda Tourism remain:
• Concentrate our marketing and sales efforts on our core market: North East United States.
• Increase the focus on key secondary markets: UK, Canada and Italy.
• Continue our efforts to establish tertiary markets, particularly India and China.
Our key strategies are:
• Generate interest in immediate visitation to Bermuda among new and repeat visitors.
• Build the Bermuda brand through synergistic messaging with all communications media.
• Support hotel and niche market promotions.
• Continue our heightened digital marketing strategy.
• Continue efforts to have Bermuda make the important decision on gaming.
According to recent Pegasus research, there is no sign that hotel average daily rates will return to 2007 levels; at least not anytime soon. Nonetheless Pegasus’ analysis indicates that the market has bottomed out and bookings are returning to hotels.
The President and CEO of Starwood Hotels Worldwide delivered his company’s Quarterly Report on CNBC last Thursday. He stated that his company had its worst revenue per available room since the early 1930s. He continued that it will be necessary to experience a sustained period with lower rates before expecting rates to start climbing again.
His words are instructive for Bermuda’s hoteliers.
The Hospitality industry and Internet Marketing News also reported that many luxury properties in the United States are reporting increases in demand of 5 to 8% as the industry slowly emerges from this latest recession. Many eyes are on the luxury hoteliers who endured the largest drop in business during the downturn. The drop in bookings was exacerbated by the sharp decline in the MICE sector. MICE stands for Meetings, Incentives, Conferences and Exhibitions. You need to remember MICE. I will come back to it later.
The outlook for Bermuda’s hotel sector is very similar, although short-term first quarter projections are still lagging somewhat behind last year. The erratic weather that has been causing multiple airline cancellations since the beginning of the year is not helping our cause.
Eight months ago, Globalhue, our advertising agency, rolled out an excellent new campaign that will serve us well in the next twelve months. The exit survey results I mentioned earlier citing advertising recall back to 2003 levels is testament that we are on a right path. Globalhue is now developing an exciting mobile telephone strategy to be adopted in the first half of the year based on apps for smart phones like the iPhone and the BlackBerry.
The introduction of JetBlue’s service out of New York and Boston was a game changer. It caused fare reductions and made vacations from this region significantly more attractive. JetBlue has been encouraged to expand their service out of Boston and this is currently being discussed. We are very positive about JetBlue’s vision for Bermuda as a long term partner.
American Airlines established daily service from Miami in November 2009. They have recently introduced very aggressive first quarter pricing out of JFK and we welcome this news.
The launch of WestJet’s service out of Toronto on May 3, 2010 will be the most significant change in this market in the past 25 years. The number of available seats will be virtually doubled. This, too, will be a game changer. We have valued and appreciated Air Canada’s long service. I know that they will welcome the opportunity this new competition will provide.
We will increase our Canadian advertising and will be appointing a sales representative in this market in the coming weeks. We will be actively working with all partners to bring increased Canadian visitors this summer.
Bermuda Tourism’s team is poised therefore to aggressively tackle all opportunities for business in 2010. We will continue to work with, and support, major hotels to close deals on short term corporate or incentive group business.
We will continue to target business in special sports tourism niches, e.g. running and golf. A wonderful example of this is Bermuda Tourism’s recent agreement to be the featured destination in a half hour, fast paced, golf and travel show called Global Golf Adventure, hosted by NBC Sports Mark Rolfing. The show highlights a unique destination and its adventures for active golf travellers. The show will be broadcast nationally on NBC on Saturday May 8, prior to the third round coverage of the Players Championship.
We will also continue to leverage sponsorship partnerships in key gateways, for example Boston Red Sox and Deutsche Bank golf.
Bermuda has long been a very attractive destination for weddings and honeymoons. We will redouble efforts to capture an increased share of this niche in 2010. We want to known as the romance capital of the world. We are currently finalizing plans for a major destination wedding event in Bermuda this year. It will be unique, exciting and will create significant awareness for Bermuda for this particular niche.
There will be additional funding in the core North East market directed at increasing visitor awareness of Bermuda. Direct marketing, including reaching the target market through the internet and their mobile phones, will be a key part of the strategy.
Our mandate to increase awareness of Bermuda will also extend to the UK market in the next 12 months. I made this commitment to the CEO of British Airways on a recent visit there. An example of this will be 12 fully-liveried pink taxis, supplemented by 80 more in peak season, all branded with the Bermuda Shorts Feel the Love tag. This will surely get the type of attention that we need.
I am pleased to announce we have completed negotiations with cruise lines for the 2010 cruise ship season.
One of the significant changes to the 2010 season is that ships will be staying longer. We discovered that cruise visitors who stay for only one day often do not have enough time to experience all the Island has to offer. Retailers, restaurant owners and tour operators requested that we negotiate longer stays. I am pleased to say that this request was met with a positive response.
We are excited to have both the Holland America Line and Celebrity Cruises return to Bermuda after an absence of a few years. Holland America will make 24 cruises from New York to St. George’s and Hamilton. Celebrity Cruises will make 17 calls from New Jersey to Dockyard.
Royal Caribbean will return to Bermuda in 2010 and make 40 calls from New Jersey and Baltimore to Dockyard. Norwegian Cruise Line will return to make 45 calls from Boston and New York to Dockyard. Princess Cruises will make 10 calls sailing from New York to Dockyard.
In addition to the weekly callers, a number of premium cruise lines will call in Bermuda in 2010.
The number of cruise calls is projected to increase from 138 in 2009 to 154 in 2010. We also project that the number of cruise visitor arrivals will increase from just over 318,000 in 2009 to just shy of 337,000 in 2010. This represents a 6% increase!
The cruise market is anticipated to contribute over $70 million to Bermuda’s economy in 2010. Heritage Wharf alone will account for $34 million of that, including government fees, on-island spending by cruise visitors, crew and shore excursions taken by cruise visitors.
I am pleased to announce some more exciting news. Holland America Line’s cruise ship ‘Veendam’ will return to Bermuda in 2011. The ‘Veendam’ is scheduled to make 24 calls from New York, serving St. George’s and Hamilton.
This commitment by Holland America for 2011 tells me that although there have been a few people who have expressed concerns about tendering in St. George’s; this has not deterred Holland America.
Norwegian Cruise Lines also announced this week their commitment to Bermuda for 2011. I am more than pleased with this news as this solidifies our efforts to grow our cruise industry and shows confidence in Bermuda by the cruise lines.
NCL will sail two ships from the Northeast to Bermuda weekly from May through October, calling on Heritage Wharf. Norwegian Gem, one of Norwegian’s newest and largest Freestyle Cruising ships carrying 2,400 guests, will replace the Norwegian Dawn. It will sail from New York on Sundays to Bermuda, and stay for three full days. The 2,224-passenger Norwegian Dawn will replace the Norwegian Spirit which sailed from Boston for two years. The Dawn will depart on Fridays and spend three days in Bermuda.
We know that Bermuda’s biggest advantage comes from Bermudians themselves. It is important, therefore, that we focus on ensuring that Bermudians remain committed to seeing tourism move from strength to strength. The Bermuda Hospitality Institute (BHI) is a solid plank in our plan for attracting Bermudians into the hospitality industry. The Board of Directors will announce its Executive Director in a month. I look forward to seeing results from this new and important initiative.
In conclusion, I want to say that we all know that we have lots of challenges ahead. I am confident, however, that we have the will, the passion and the skills to make Bermuda’s economy rest on a solid and growing pillar.
Thank you.
