Archive Entry: Bermuda as a business

This entry comes from a post made on my now defunct former blog back in June of 2006.

I read an article on heartbeatnews.com on Bermuda tourism the other day that contained a few very interesting statistics.  Apparently, in 2005, we had the highest level of visitors in 2005 with a total of 521,043 arrivals by air and sea.  Air arrivals reached 269,587, down marginally.  Cruise arrivals rose by 20% to 247,259.  Tourism earned a total of $448 million with an estimated $39 million in revenues coming from cruise visitors.  It then pointed out that this is less then 10 percent of overall spending.

Let’s take a moment to think about this for a second.  Cruise arrivals accounted for nearly HALF of incoming visitors yet earned us less then 10 PERCENT!?!  Looking at Bermuda as purely a business, I'd have to say I really don't like those numbers; this venture doesn't seem profitable at all.

Let’s compare Air earnings to Cruise shall we?

 

Cruise:

$39 million / 250,000 = $156 a person approximately

 

Air:

$409 million / 270,000 = $1515 a person approximately

 

So using these numbers, let’s assume we invest $50 million into tourism hoping to revitalize it.  I’ll suggest a couple projects which that money could be used to boost numbers on one side or the other.   For Cruise, let’s assume we use it to construct new docks and for Air, say a conference center.

So let’s figure out how many more people we need to bring in to recoup that cost for our people.

 

Cruise:

            $50 million / $156 = 320,000 people approximately

 

Air:

            $50 million / $1515 = 33,000 people approximately

So, if we wanted to recoup our investment, how much of a gain in each industry will we need to see?

Cruise:

            Over 1 year:  (320,000 / 250,000) x 100 = 128% increase

            Over 5 years:  (320,000 / (250,000 x 5)) x 100 = 26% increase

 

Air:

            Over 1 year:  (33,000 / 270,000) = 12% increase

            Over 5 years:  (33,000 / (270,000 x 5)) x 100 = 2.4% increase

I’m no rocket scientist, nor am I a CEO of a super rich reinsurance company, but to me, if Bermuda were my business, it would seem that it would be a hell of a lot better to invest my money in Air and not even bother with Cruise.  That’s not even considering the costs in terms of the people that flood our beaches, our roads, contribute to waste and take up spots in valuable activities that should instead be going to air visitors who earn us a good deal more?

If someone would be so kind, please explain to me why we’re even remotely considering building new docks for super ships as part of the waterfront revitalization plan?  Why are we also planning to destroy our heritage so that town cut can be widened?

Hell, if you can tell me that, perhaps you can also tell me why we’re even bothering to compete with the sun and fun tourism industry in the first place?  Our peak season is the Caribbean’s off season and frankly 4 months of sun worthy weather just doesn’t cut it in terms of competition.

If it were up to me, I’d be chasing the business rewards, international conferences, trade shows and incentive planning industries instead.  We are after all an international business center.  We also happen to be a short hop from the east coast, and businesses just happen to have the money to spend where “discount tourism” just doesn’t cut the mustard in comparison.  On top of that we’d get free advertising in terms of inviting more business to locate here, if we so desired to let them, that is.

Why is targeting business an easier sell?  Businesses give expense accounts to their traveling employees.  Foreign companies are taxed on profit so if you can write off expenses and lower your profit; you don’t get taxed on it, and happier employee’s too boot.  What better way to reward your workers then sending them to a conference in beautiful Bermuda?

I just don’t understand it why Vegas needs to be the only place where all the big conferences go.  Wouldn’t people enjoy coming to a destination like Bermuda?  Perhaps if we build a conference center or two, pandered to the industry a little, and capitalized more on our location, location, location… tourism wouldn’t be such a dead industry and we’d actually be running a profitable business.

Comments

[Sal]

El Duce controls the numbers,not even the Accountant General knows the true extend of the waste and looting of the publics money,they kicked him out of his office to shut him up.

The past 9 years proves Tourism nor Education,Health care ,law & order,the justice system, cannot be run by a gang of thugs representing a bunch of reprobates and bullies.

Damned Lies and Statistics
Untangling Numbers from the Media, Politicians, and Activists

http://www.ucpress.edu/books/pages/9358/9358.intro.html

[Paul]

WOW, sounds like a no brainer to me! Although I will be visiting on a ship, I thought it would be easier, as I had heard it was very expensive to lodge there. I guess the package deal that NCL offers is what is alluring. Maybe next time I will try to book a flight from ATL and "do it on our own", and put more money in the local economy than in the pockets of cruise liners.

[De Onion]

Value per square foot.

Conventions don't do a very good job in this respect - and indeed the Vegas convention centres work because they take advantage of either being one of only a very small number of global locations that can house a conference or else, or by filling large numbers of hotel rooms in otherwise quiet periods.

Bermuda is indeed a business, one which provides tourism and legal products to foreigners and then (hopefully) makes a profit through local wages, rents, taxes, and other payments. This "profit" is then reflected as a current account surplus and by higher disposable incomes, rising asset prices for limited resources like Bermudian real estate, and by growing reserves of foreign assets (stocks, bonds, mutual funds, real estate, etc.)

Now for fun, capitalize the cost of some of the proposed renovations to local docks, or perhaps the wealth transfer of Bermudian owned real estate to foreign hotel developers, and then figure out how much those would have to return (and would return) to the local economy to compete with international business.

We need a tourism product, but a 5-Star one convenient to the City so that people who can afford Bermuda can come, have a nice time, and leave lots of hard currency in our hands.

[De Onion]

Oh yeah, and don't sell yourself short. You can do math, think, learn. The only thing that many of the high-level executives have that you don't is 20+ years of experience and growth.