Several recent articles in the local newspapers have lamented the fall-off in spending by cruise tourists in the Bahamas, while reinforcing its value to the region as a $2 Billion contributor. One article, however, may have finally peeked behind the curtain when it lamented the lack of contact between the people of the destination, their cultural offerings, their products etc. and the cruise visitors. Together, the articles point to a business that is extremely successful, but of minimal benefit to the destinations that support its offerings.
This discussion suggests that the cruise business, while of some value to a small part of the business community, has been destructive to the development of the tourism business in the Bahamas. It has been destructive in two ways. First, it has convinced the policy-makers to pursue policies detrimental to the development of their own economy, and secondly, it has forced crucial businesses out of business in their attempt to “partner” with cruise operators.
Let’s begin by putting their economic contribution into context. According to the Nassau Guardian, the contribution to Caribbean economies – all of them – is in the area of $2 Billion annually. That is what the Bahamas’ income from tourism was in 2005, according to the Ministry of Tourism. Cuba reported an income of $2.2 Billion from just 2.2 million visitors in 2008. In fact, in the 2005 figures, cruise visitors accounted for just under $180 Million, just 9% of our National tourism income.
When these numbers are quoted, the most impressive response is something called “conversion rate” – how many people who first come on a cruise come back as a stopover visitor. The Tribune article suggested a figure of 63%. There are two reasons this statistic makes no sense. The first comes from our own personal experience. Of those of you who have been on a cruise, how many have returned to ANY of the ports at which your ship stopped? The answer is most likely less than 5%. And even those would most likely be to the home port. The second is logic. If the number of cruise tourists is always increasing and the majority was returning as stopover visitors, then the count of stopover visitors would see a healthy growth. Instead, the Ministry of Tourism reported that at the most successful cruise destination in the Caribbean, the Bahamas, the growth of stopover visitors was next to the worst. Between 1991 and 2000, while the Bahamas recorded an increase in stopover visitors of 16.9%, Jamaica, with its reputation as a crime-filled destination, increased some 36%. The Dominican Republic and Cuba saw increases of 164% and 234% respectively. The reality is that in the drunken stupor of a fun-filled cruise, most people may well say they will return. The vast majority do not. So, while the numbers may be impressive, most businesses measure success by income, not volume. The contribution of the cruise industry to the economy of the Bahamas is minimal, at best.
Yet Bahamian governments have, for over four decades, allocated over 80% of their capital development funding to this peripheral contributor! The most recent example was the deepening of the harbor, an expenditure of some $50 Million, to secure someone else’s customer.
To be fair, however, since there has been no significant discussion about the stopover visitor – the destination’s real customer – and what it takes to secure and satisfy him, it is not surprising that we have come to measure our success only by the number of visitors and are impressed by the cruise numbers. What is surprising is that our tourism professionals have not warned us that by ignoring our core customer, we would lose our business. Instead they have fed us encouraging statistics from our competitor’s business, and pretended that they were ours. Let us be quite clear. The cruise passenger is not our customer. He is the customer of the cruise operator. The large numbers benefit him, not us. Our customer is the visitor in search of an experience we have offered – the stopover visitor.
You see, the way a tourist destination makes money is this: the customer visits the destination anticipating a particular experience. The destination makes money by offering that experience for a price in one of the many forms of the attraction, the tour, the retail experience, the event attraction or the resort attraction, by operating and supporting the attractions, and by hosting the visitor during his stay. The destination’s branding and marketing must convince the potential customers of the availability of those place-specific experiences, then capitalize on the success of their message.
But the cruise industry, and successive governments over the past four decades, have convinced us that there is a better way to do business – let the cruise ships bring us ready-made customers by the millions, without the need to define, promote, woo or even host them. We are beginning to understand that the cruise ship is itself a destination, operated in competition with us. So our neglect of our own customer is what has eroded our business. You might find that destinations like Cuba, who have no cruise visitors, are doing better than us in both stopover visitors and visitor spend.
Every on-shore attraction on New Providence is in need of attention. There are fewer and fewer of them. What attractions remain are operated on schedules and within parameters defined by the shore-time of cruise passengers. There is no night life to talk about, except that provided inside the resorts. We have starved our real customer to death, and now find that the promise of large cruise numbers was empty, because we are neither operating, providing paid support for or owning the attractions for which those customers pay, and we are certainly not earning anything hosting them. In fact, at the rate of spending recorded, it would take 17 times the number of cruise tourists to replace the stopover visitors. We are currently at less than two times. Clearly, our neglect of our customer, due entirely to our commitment to the cruise industry, has been detrimental to our own economic development.
But there is an even more sinister pattern involving the cruise industry. The operation of the tour business aboard ship has led to the demise of both the nightclub business and much of the tour business. Using its promise of big numbers, the cruise ship tour officials have driven local operators to reduce their margins until their businesses are no longer viable. Several of the most popular nightclubs and tours have closed because the operators found that they had committed to unrealistic prices to the ships in the effort to secure larger, guaranteed volumes. Nightclubs shortened their shows, reduced the variety and eliminated costly presentations, until their shows were no longer of interest to their regular customers and the “guaranteed” volumes were no longer there.
The cruise industry has destroyed the tourism business in the Bahamas – and I suspect throughout the Caribbean – because it has caused the governments of the Bahamas to neglect their own business and support the business of the cruise lines. Their contribution to the economy is minimal, at less than 10% of our income, but it commands the lion’s share of our attention and our public funding. There is an urgent need to place the cruise industry into perspective and, as we are advised by Robert Kyosaki, we must again begin to mind our own business.
Thank you.