Biz As Usual In Aruba, Despite Demise Of Ntl. Carrier - 2001-01-29

<B>Biz As Usual In Aruba, Despite Demise Of Ntl. Carrier</B>

By Chris Davis

Despite the cessation of operations of its national airline in October, resorts on the island of Aruba are seeing corporate meeting interest hold steady, primarily due to the renovation of several resorts, meaning meeting buyers are likely to find higher service levels but no increased negotiating power.

Given Aruba's distance from the mainland United States, compared with other Caribbean islands, airfares can be expensive, leading to high cost for corporate incentive and group travel. However, with the renovations, resorts have repositioned themselves as upscale and four-star properties, offering more value for the prices charged.

After Air Aruba was shut down, several major carriers moved in to fill the void, including Continental Airlines (from Newark), Delta Air Lines (from New York JFK), US Airways (from Philadelphia) and United Airlines (from Chicago), adding to routes already operated by Delta and Trans World Airlines.

While the loss of Air Aruba has to be considered a major blow to competition for island attendees, some suppliers feel corporate buyers will be more inclined to hold events on the island with a major carrier providing transportation.

"Though Air Aruba is out of business, corporate groups may prefer the comfort zone and the name recognition offered by the major carriers that have taken its place," said Constance Hoffman, director of business development for Marriott and Renaissance offshore resorts, which includes the Aruba Marriott Resort and Stellaris Casino in Palm Beach.

The demise of the national airline came at a time when many of Aruba's newly upscale resorts were ramping up operations. Despite the tumult in the skies, most report solid business projections about corporate meeting business.

"We're seeing an increase in corporate meetings and incentives, especially from the Northeast," said Kathleen Ciati, associate director of sales at the Wyndham Aruba Beach Resort and casino in Palm Beach, which recently underwent a significant renovation. Ciati said groups account for about 30 percent of the Wyndham's bookings, about half of which is corporate.

Despite the renovation, the Wyndham is sensitive to price due to the cost of an Aruban meeting or incentive as a whole. "We have been able to raise our rates due to the renovation," Ciati said. "But we have to be very careful, due to the high cost of airfare. However, somebody's always willing to pay it."

Buyers are willing to pay, in part, because of the service upgrades and the feeling of exploration that many companies infuse into their major incentives. Some buyers, particularly for incentive group travel, prefer to take each group to a new destination and Aruba often fills the bill. "Demand is very strong for 2001, in part, because renovations have positioned several resorts as upmarket properties," said Adriaan Arends, director of convention and business development at the Aruba Convention Bureau.

"We do have a government policy that manages the growth of properties on the island, so we're not looking for a high quantity of resorts, but we encourage quality," the CVB's Arends said. "It is true that other destinations cost less, in part because we have to import all goods to Aruba. We don't grow much on our own, so production costs are higher."

The service upgrades have led some buyers to consider Aruba a destination suitable for top management and the highest level of incentive travel. "There's definitely a trend toward more upper management-style meetings," said Leslie Schatzer, director of incentive sales at The Radisson Aruba Caribbean Resort in Palm Beach, which in 1999 reopened after a two-year, $55 million renovation that repositioned the property as a four-star resort. "We'll get the groups that like to go to upscale hotels, particularly medical groups and others that are willing to spend."

That marks a significant departure from the days before the renovation, when the Radisson would attract primarily middle-management corporate groups or fraternal organizations. "We've been able to book corporate groups at a decent rate in December when the Caribbean needs the business," Schatzer said.

While the 358 rooms the Radisson added to Aruba's supply of guest rooms probably negated any increase in group demand, Schatzer said, occupancy is nonetheless up islandwide, for which she credited the trend toward increased service levels through renovation.

Typically, in an island region where several resorts renovate and new supply is added, resorts feel some price pressure, especially in the offseason. But this doesn't appear to be the case in Aruba. Some resort operators said that talk of low tourism levels in the Caribbean of late, and interest in the new major resorts in the Bahamas, have led buyers to consider other islands and resorts in the area

"The competition is always welcome, since it serves as advertising for the island," Hoffman said. "When there's new products that attract people, that's great for all of us." Hoffman said interest in the Marriott's Aruba resort has maintained a steady rate of about 90 percent occupancy, and she still sees the corporate group and incentive market as largely untapped. "We've been able to maintain occupancy because our name goes a long way in terms of comfort and services, so we don't have to decrease our rates in the face of competition.