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Fabian?s effect

Another disastrous year for the tourism industry is looming, and it is lucky for the Government that Hurricane Fabian can be blamed.

Lucky? How can a hurricane be lucky? It is if it is a useful excuse for what was shaping up to be a poor year anyway.

Before Fabian, Tourism Minister Ren?e Webb was trumpeting the fact that August was shaping up to be a strong month for tourism. Hotels were enjoying good occupancies and arrivals looked like they would be ahead.

That turned out to be true, at least up to a point.

Air arrivals in August rose by 4.6 percent compared to 2002 and helped to narrow the gap for year to date arrivals, which were lagging just 2.8 percent behind the same period in 2002 by by the end of the month.

Then Fabian struck, and the bottom fell out of the tourism industry for the second time in three years.

Air arrivals slumped by 48 percent for the month and 7.1 percent for the year to date, meaning that it is impossible that 2003 will turn out to be a better year than 2002, which was nothing to write home about either.

On the bright side cruise ship arrivals improved in August and were only marginally down in September, in spite of the loss of a week of calls immediately after Fabian. For the year, cruise ship arrivals are up 15.1 percent.

So, it would be tempting to argue that were it not for Fabian, Bermuda would have been able to continue the recovery from the historic low reached in 2001 when tourism slumped after the September 11 terrorist attacks.

But a closer examination of the figures suggests that this may not be the case.

As the Tourism Minister has stated, the key figure for gauging the health of tourism is not the number of arrivals, but how how much those visitors spend, with one key exception which is the money collected in air departure and cruise passenger taxes which are collected on a per head basis.

In very rough terms, the tourism sector does better if one person spends 11 nights on the Island than if two people spend five days each here because hotels get 11 nights worth of hotel bills, 11 days worth of meals in restaurants and so on while they only get ten days worth from the two visitors.

That?s why total bednights are a more important figure than total arrivals. And in August, total bednights were down by 7.3 percent, even though arrivals were up 4.6 percent. When private homes are taken out of the equation, the picture improves slightly. Bednights for the month were down 4.4 percent, although the number of people staying rose by 6.5 percent.

Part of the reason for the decline in bednights is attributed to an increase in business travellers to the Island. According to the Tourism Ministry, business travellers spend far more per day than leisure travellers (a remarkable $412 per day compared to $187 per vacation-maker), which means that business travellers spend far more in the 3.8 nights they spend on the Island ($1,565) than the vacationer does in the 5.9 nights they come for for ($1,103).

To some extent, this reduces the importance of bednights as a measure of tourism?s strength, although the spending estimates come from surveys and it is difficult to imagine that vacationers staying in hotels are spending just $187 per day.

The Tourism Department estimates that air travellers spent between $40 million and $42 million in August, but no comparable figures are provided for 2002. Nor are there figures on how many of the visitors were business travellers and how many were vacationers.

Still, if a growing proportion of visitors to the Island are coming for business, that means they are not coming as a result of the Ministry of Tourism?s efforts. And that should raise questions about just how effective the Ministry?s marketing efforts really are.