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Commentary: Tourism Matters: Implications of proposed huge price hikes
Published on June 19, 2017Email To Friend    Print Version

By Adrian Loveridge

I just wonder if, prior to the announcement of the last budget, the minister of finance sat down with the minister of tourism and discussed how the possible implications of the proposed huge price hikes would affect the average visitor, their length of stay and spend?

Adrian Loveridge has spent 46 years in the tourism industry across 67 countries, as a travel agent, tour director, tour operator and for the last 24 years as a small hotel owner on Barbados. He served as a director of the Barbados Hotel and Tourism Association, and as chairman of the Marketing Committee. He also served as a director of the Barbados Tourism Authority and is a frequent writer on tourism
This follows the recent TUI chairman’s pronouncement warning of a ‘two-fold’ holiday price increases for UK originating travellers.
According to Klaus Mangold, British holidaymakers are being hit by both the fall in the value of sterling and resulting rising prices across the majority of the more popular destinations.

He said that "the company had already noticed Brits taking shorter holidays as a result of rising inflation, with vacations cut down by two or three days on average".
Adding at a Press Association meeting in St Petersburg that "despite attempts to hold costs steady, pressures on margins will mean prices for British customers are likely to rise’ and ‘we are trying to avoid this, but sometimes we cannot avoid it".

Much has been made of the increased arrival figures into Barbados, with a great deal of speculation, whether it has resulted in decreased spend or not.

Sadly, the vast majority of us are left second guessing at what the facts really are, but it is reasonable to assume that a lower value of sterling when directly compared to US dollar currency-pegged destinations and higher than originally anticipated domestic (UK) inflation will negatively impact on the average holiday spend. 

Compound these two components with dramatically increased destination prices, which after 1st July will be inevitable, and we could soon feel the effect sooner in reduced arrival numbers than anticipated, during the most challenging time of our long summer season.

What should we read into the comments of the travel group chairman?

TUI Group describes itself as "the world’s number one tourism business" boasting many of the leading tour operator brands, 1,600 travel agencies, six in-house airlines with over 150 aircraft, 300 owned/managed hotels with 214,000 beds and 16 cruise liners. According to their website they "proudly offer 20 million customers with an unmatched holiday experience".

While the company posted a 3.3 percent rise in revenue for the last six months trading to 31st March 2017, an increase to Euro 6.38 billion, they also declared half-year losses of Euro 308.6 million.  So clearly they will have to either further drive down costs, including possibly re-negotiating hotel contract prices or pass the increased costs onto the consumer.

You only have to follow the various social media outlets to see that even the most loyal visitor to Barbados is increasingly questioning the perceived value for money they are getting here. Has government really thought through the implications of yet higher prices and the overall net revenue generated in the tourism sector?

Our peak winter season is often thought to be less price sensitive, but no one can seriously doubt that with the myriad of summer destination choices, that our British visitors already have. And it would be absolute irresponsible folly to think many are not considering where they can get the biggest bang for their buck?

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