The bottom line of improving tourism isn’t just more visitors, it’s also more spending. Much of the focus and energy tourism evangelists and practitioners place into improving tourism is improving visitor numbers and not nearly enough goes to improving visitor spending. It serves as an injustice to the true picture we should be caring about most: how much money ends up in our pockets.
Sadly Bermudians have been trained to measure success in tourism by visitor arrivals. This is a flawed approach, likened to measuring the success of a retail shop by how many people come in to browse. Now certainly, a shop which is always empty is no hallmark of success. Neither though is a shop that is always full of people who never buy anything. In this analogy, Bermuda represents a small boutique shop competing against mega retailers. We need to tailor our strategy accordingly. If we fill our shop with non-spenders we will drive away premium shoppers who hate crowds. If we don’t offer quality products then our shop will sit empty as no one wants to spend more for things of less value. Thus it is critical that we find a balance where we can maximize revenues.
If you look at the latest tourism statistics you can see a focus on visitor arrival numbers front and center on the first page after the title page. Sadly we aren’t helping ourselves disrupt the stigma here. We can see that as of the end of Q2 this year there were over 210,000 visitors and we’ve seen a decline from 2014 of 1%. By this measure the new Bermuda Tourism Authority, despite all their funding and pizazz, is failing.
However, arrival numbers shouldn’t be what we care about. We need to focus on what visitors to our shop are spending, not how many come into it. In more recent statistics visitor spending now dominates a much more prominent position and in this report sits on the 4th page. This is a very welcome change as expenditure is what should be highlighted. The visitor spending numbers paint a very different picture thus far for 2015.
The average visitor spent $41 dollars more in the year up to Q2 in 2015 vs. 2014. This is a very good improvement of 7%. If we take the “Estimated Economic Impact” numbers at face value (no justification for the calculation used to generate this number was provided), we see an estimated impact of $74.4 million, $3.4 million more than 2014 and representative of a moderate 5% growth.
Spending over Arrivals should be the focus of our attention. By measure of arrivals, the new Tourism Authority is decried for not improving the picture, however by measure of expenditure an entirely different story is told. Quite sadly the Tourism Authority, the government and the local media are not doing enough to focus the populace on the correct part of the story. Visitor spending is up, revenue numbers are up and this means we’re generating more money for less people in our little boutique shop. This is a good thing which should be celebrated and sadly it is not.
Visitor spending must be our focus not arrivals. Bermuda cannot and will not ever be able to compete with the discount megastores of tourism. We shouldn’t even try. Bermuda can and should reposition itself to improve the quality of its product and offerings so that it can maximize the revenue it gets from a smaller number of people.