Increase in hotel beds critical to reviving air flights to Bermuda
The reopening of the Fairmont Southampton is key to an increase in airlift to Bermuda, which is crucial for the tourism industry’s recovery.
About a quarter of the island’s total hotel guest rooms, responsible for up to 30 per cent of air visitors, were taken out of commission when it closed for renovations in October 2020.
Skyport, the Bermuda Airport Authority and the Bermuda Tourism Authority explained how their joint efforts are driven towards boosting air passenger numbers.
Aaron Adderley, the Skyport president, said that since the onset of the Covid-19 pandemic, the collective focus has been on “maintaining relationships with our incumbent airlines” in efforts to recover seat capacity and demand first to 2019 levels then beyond.
He added: “We have invested in a new, modern, state-of-the-art terminal facility that is perfectly poised to facilitate growth.
“Central to that growth and recovery is the return of resident and business travel and, of course, the successful recovery of lost hotel room inventory.
“Hence, the vital importance of the Fairmont Southampton reopening.”
Mr Adderley said: “A loss in demand combined with limitations on crew availability and other resources has placed a tremendous amount of stress on airline scheduling for Bermuda.
“From month to month, we’re seeing adjustments to flight schedules that in some cases we’re limited in our ability to influence.
“However, the sooner each of our market segments for air travel — leisure, business and resident — recover, the sooner we can see seat capacity, flight schedules and, hopefully, rising airfares, become more stabilised.”
Lester Nelson, the chief executive officer of the BAA, said: “Our joint efforts include developing and agreeing on a common air service development strategy and execution of that strategy.
“This includes frequent communication and negotiations with airlines and monitoring the rapidly changing airline market and airline operating conditions.”
Mr Nelson said that Ailevon Pacific Aviation Consulting was “the main external, specialist consultant retained jointly by the BAA and BTA”.
Apac, which has headquarters in Atlanta, Georgia and also an office in Sydney, was first hired in 2019 to help to boost capacity in all air service needs to Bermuda.
Mr Nelson explained this month: “The initial Bermuda Air Service Development Strategy was aligned with the BTA’s strategy in regard to focus and nurture markets.
“Implementation of this strategy was hindered due to the Covid-19 pandemic and the strategy evolved into an air service recovery strategy.
“A 2022 update to the strategy was recently completed after consultation with a broad base of stakeholders and it is currently under review.
“Improvements over the period include the switch of British Airways’ London service from Gatwick airport to Heathrow airport and the introduction of direct service by Azores Airlines from Ponta Delgada, Azores.
“As demand for air travel to Bermuda continues to recover, it will be critical for hotel room inventory to also recover to pre-pandemic levels and this includes timely completion of the Fairmont Southampton redevelopment project.”
Karim Alibhai, the founder and principal of resort owners Gencom, said in April that the renovations would take between 14 and 17 months.
But details of a government guarantee of up to $75 million, representing 21 per cent of the $376 million project, have yet to be presented in the House of Assembly.
The Minister of Finance must inform the legislature as soon as is practicable after the execution of any guarantee.
A government spokeswoman said last month that “this will be done as required”.
Vance Campbell, the Minister of Tourism, told the House of Assembly on Friday that Bermuda was seeing “incremental growth” in visitor numbers, with 60,955 air visitors in the year to June, “which is 52 per cent below 2019 numbers, double the 2021 figure”.
He said: “Airlift and hotel capacity have not yet returned to pre-pandemic levels.
“We know that airlines' scheduling decisions are primarily driven by the combination of hotel inventory and visitor demand.”
Peter Everson, a businessman and former Bermuda Tourism Authority board member, highlighted earlier: “Airlift is the lifeblood of Bermuda’s economy. It is an essential resource for both international business and tourism.
“There is no tourism in Bermuda without airlift.
“Cruise ship passengers represent ‘surge sales’ for our tourism product providers. They are generally in for a few hours or a couple of days and providers have to staff to service that demand.
“However, staff have to be employed full time and therefore land-based customers are essential. Sometimes they are residents but the most valuable are land-based tourists.
“People sometimes compare hotels and cruise ships and say they both provide beds for tourists plus food and other services like spas. This misses the point.
“Hotels are part of our community. They employ our people, buy utilities — electricity, water, internet, trash — and help to spread the fixed costs across a larger base, which reduces the costs for each of us.”
Oliver Lamb, a managing director of Apac, said that with the BTA and BAA “we work to maximise sustainable air access to and from Bermuda”.
He added: “We do this within the overall framework of Bermuda’s air access strategy and cognisant of the fact that Bermuda’s air access doesn’t exist in isolation of global and industry-wide dynamics.“
Mr Lamb added that the air service development strategy was revised and adapted to make sure that the island remained relevant to current and potential airlines.
He said: “In particular, the Covid-19 pandemic, the attendant — and quite necessary — restrictions on visitors to Bermuda and significant impositions on Bermudians travelling abroad, the impacts on key sectors of Bermuda’s economy and the reduced hotel room inventory have changed the calculus for many airlines flying to Bermuda.
“Furthermore, Bermuda’s air access remains impacted by industrywide trends resulting from staffing shortages.
“Ensuring Bermuda’s air service recovery, and subsequent growth in air access, must be viewed in this context.”
Tracy Berkeley, the BTA interim chief executive officer, said: “Our collaborative approach with international airline partners and local stakeholders positions us for further expansion of the island’s airline capacity.
“This is a key part of our strategic recovery plan that will restore the industry for all of Bermuda.“
Erin Smith, the tourism authority’s chief operations officer, added: “Airlift along with hotel inventory are interdependent and are the top two factors responsible for driving air visitors to Bermuda.”
Ms Smith added: “Hotel inventory and visitor demand are the leading factors influencing airlines’ decisions.
“The global airline sector has been under much scrutiny and pressure during the travel industry’s recent Covid recovery period. Resources are scarce and schedules are being slashed.
“Bermuda will need additional hotel inventory, and continued growth in air visitation numbers to influence airlines to schedule additional service to the island.”
Advantageous changes highlighted by the organisations also included the expansion by American Airlines of its Charlotte, North Carolina hub to become the provider’s key gateway to Bermuda — increasing the options for one-stop travel in North America.