Return on AC35 not adding up, says Riley
A statistician suggested that return from the America’s Cup was less than a third of the $272 million indicated in official figures.
Cordell Riley calculated the net revenue from the sailing regatta to be $75 million when he carried out an “independent evaluation” of the Bermuda Tourism Authority.
He delivered his findings last week at a ThinkFest event, where he aired concerns about the ratio of air arrivals and cruise ship passengers visiting the island.
The BTA responded that its achievements included tourism growth that offset a drop in resident and business travel and the Government said it was focused on making the most of the island to boost both the air and cruise markets.
Mr Riley said after his presentation that he wanted to consider the authority’s performance since its inception in 2014.
He explained it was important to be “leery of what is promised and what is delivered” in terms of major events such as the 35th America’s Cup.
Mr Riley added: “These things are definitely of benefit, but they tend to over promise, when I don’t think they really need to.”
PricewaterhouseCoopers found in its assessment of the Economic, Environmental and Social Impact of the 35th America’s Cup in Bermuda that the yacht race in 2017 generated $336.4 million with expenditures of $64.1 million, which indicated a net return of $272.3million.
Mr Riley made deductions for revenue said to have been generated in advertising equivalent value, which he claimed was an “unscientific” measure, and leakages that would have occurred through the importation of goods.
He subtracted money to factor in lost taxes, work permit fees and other government costs.
Mr Riley added to the event’s expenses as he claimed Cross Island — the reclaimed land used for the America’s Cup Village — was included as a “legacy outcome”, but not in the costs.
The PwC report showed that site was owned by the West End Development Corporation and financed through a bank loan guaranteed by the Government.
It explained: “The costs of developing the infill have not been included in the cost of the event and neither have the economic impacts from that expenditure.”
Mr Riley said his “back of the napkin” estimation resulted in a net return for the event of $75 million. He highlighted the gap between air visitor arrivals and cruise ship passengers, and was “startled” by figures that showed more than 540,000 cruise visitors were expected this year.
The BTA’s 2018 year-end visitors report showed increases in cruise passengers every year since 340,000 in 2013, reaching 484,000 last year.
Air visitor arrival numbers went from 236,000, dipped to 220,000 in 2015 and climbed again to 282,000 in 2018 over the same period.
Mr Riley explained that a key issue to consider was contribution to the economy.
The BTA’s 2018 figures showed estimated average spending by air visitors was about $1,400 compared to about $230 for cruise passengers.
Mr Riley said he was concerned that more than 500,000 cruise ship passenger arrivals would create “a real carrying capacity challenge”.
Kevin Dallas, the BTA chief executive, said he welcomed “public discourse” on tourism.
He added: “While Cordell’s presentation was interesting, it failed to take into account some key facts and statistics that underscore the value of what the BTA has accomplished.
“Between 2015 and 2018, for example, growth in tourism succeeded in offsetting declines in resident and business travel, as well as providing employment and supporting Bermudian entrepreneurs.”
Mr Dallas said: “Leisure air spending rose 67 per cent, leisure arrivals went up 46 per cent, and cruise arrivals grew by 28 per cent.
“With half the former Department of Tourism’s peak budget, BTA generates four times the grant we receive in government revenue — and for every $1 spent, we return $17 to Bermuda.”
A spokesman for the Ministry of Tourism and Transport added: “This government’s priority is making the best use of Bermuda’s infrastructure to increase the number of visitors via both markets, because both are important.”
The spokesman added that 98 per cent of the 2018 increase in cruise ship arrivals was outside of summer months — a move designed to “extend the economic viability of our visitor experiences to more months of the year, benefiting visitors, Bermudian workers and entrepreneurs”.
The spokesman added: “The BTA, Airport Authority, Skyport and the ministry are working with a consultant on a new air services development plan to address the needs of the leisure, business and resident traveller.”
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