Sources: Value must meet price in Caribbean

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18 June 2012
By Stephanie Wharton
Reporter
swharton@hotelnewsnow.com

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Story Highlights

• Incoming MasterCard accounts to the Caribbean decreased 2.1% from April 2012 to April 2011, according to data from MasterCard Worldwide.
• In the Maldives, hoteliers are adapting to the shift in demand, which has been brought on by the struggling economy in Europe.
• People will pay the premium to get exactly what they want, said MMGY Global’s Peter Yesawich.

Panelists at the Caribbean Tourism Summit & Outlook Summit said staying competitive in today’s market requires meeting customers’ expectations of value.

MONTEGO BAY, Jamaica—The widespread use of the Internet to research and book travel has made for a smarter consumer in recent years. And as technology continues to evolve, it will become even more important for hoteliers to understand travelers’ expectations and match them to reality.
This case is especially true in the Caribbean, according to panelists during the Caribbean Hotel and Tourism Association’s Caribbean Tourism Summit & Outlook Seminar.


The number of international travelers visiting the Caribbean and carrying a MasterCard decreased 2.1% from April 2012 to April 2011, which Andrew Mantis, senior VP and group head of information services for MasterCard Advisors, said is indicative of an overall decrease in travel to the islands. The good news for the region is that incoming spend increased by 7.5% within the same period.


“Declining accounts are coming in, but we do see growing accounts in the Indian Ocean,” Mantis said. “The message of globalization is coming in loud and clear as a real trend.”


The top three feeder markets to the Caribbean—the United States, United Kingdom and Canada—account for 81% of incoming spend, which could be a sign hoteliers should invest more time trying to attract guests from other markets, Mantis said.


Brazil currently accounts for just 1% of incoming spend to the Caribbean, but the year-over-year growth from the market is astounding, he said.
In the Maldives, hoteliers are adapting to the shift in demand, which has been brought on by the struggling economy in Europe, according to Ahmed Salih, permanent secretary of the Ministry of Tourism, Arts & Culture for the Government of Republic of Maldives.


The overwhelming majority of visitors to the Maldives in the past 40 years have come from the U.K, Italy and France. Those numbers are down, Salih said.


The demand is shifting over to the Chinese consumer, he said. “If you don’t (work with) Chinese marketers today, you will be left out,” he said.
Operators are still working to gain back their share of European consumers as they tend to stay for weeks at a time, thus spending more at properties, while Chinese travelers tend to stay an average of three nights, Salih said.


Meeting consumers’ value expectationsAlthough it is crucial to attract guests from emerging markets, hoteliers should not give up on marketing to the top incoming markets.


In a recent survey conducted by MMGY Global, 54% of all leisure travelers reported they are interested in taking a vacation to the Caribbean. That said, only one out of five U.S. leisure travelers will travel outside the country this year, said Peter Yesawich, vice chairman of MMGY Global.
Affluent U.S. leisure travelers—those who are members of households with incomes of more than $120,000—are the target, Yesawich said, and 59% of affluent leisure travelers surveyed said they are interested in vacationing in the Caribbean.


That puts hoteliers in a really good position as there is higher interest among affluent travelers, he said.



The thing to remember, according to Yesawich, is “the more affluent you are, the higher expectations you have in terms of the quality of the hotel.” Affluent travelers are people with higher standards, and they come with higher travel expectations.


The majority of demand will still remain in the 3-star hotel range, he said. “But the people that fall in that category will continue to want more because the price continues to rise,” he said.
Those expectations are going to come in two ways: the physical product and the service.


Many hoteliers have the desire to charge more, but a lot of properties have yet to put the necessary capital into renovating the physical product, Yesawich said. “That is a very difficult thing to solve because of the requirements of capital.”


Because many properties have not invested in updating their products, what some people have now in their homes is more luxurious than what they can find in a hotel.


The bar also has been raised in terms of service. “If you’re going to charge $500 a night for a room, you better have a $500 a night ambience,” Yesawich said.


“We now know that 62% of travelers will consult TripAdvisor before they do a lodging booking. We all know there’s no way of controlling what’s posted on there … but there’s no way to hide from that,” he continued.


Understand the consumerMonitoring trends at a local, hyper-local and global level will allow hoteliers to create better informed marketing campaigns, Mantis said.


Understanding where customers are coming from also is necessary to remain competitive. Hoteliers need to find out what guests enjoy doing when they are not on vacation and what they like to eat, among other things, he said. “Take that information and establish connections so they are leaving with the best experience possible,” he said.


Giving guests exactly what they want in this environment will be crucial, Yesawich said.


The concept of personalization is what people expect to find, especially younger travelers who have little tolerance of not getting what they want out of a travel experience, he said.
People will pay the premium to get exactly what they want, Yesawich said. “Price is the single best predictor of the expectation of quality,” he said.