Tough Caribbean, Bahamian Negotiating Climate Softens

<B>Tough Caribbean, Bahamian Negotiating Climate Softens</B>

By Chris Davis

The presence of new, popular properties has made some Caribbean and Bahamian resort competitors slightly more willing to leave a few doors open for corporate meeting and group incentive buyers in the negotiation process.

Even so, buyers shouldn't expect the market to shift completely in their favor, as healthy demand, increasing resort rates and expensive airfares continue to contribute to a tough negotiating scene that has defined the attendee-friendly islands.

"There's always a reason for companies to go to the Caribbean," said Jerry Janove, vice president of sales and marketing for the Resort Meetings Consortium of Cherry Hill, N.J. "There's always some incentive component, whether it's a pure incentive or a mix of business meetings and incentive. But, with that, companies aren't blindly spending. They're still looking for value, and I think you can find it."

Other buyers echoed that claim, to a point. None have suggested that a buyer's market exists in the islands, or that the pendulum will swing back from the suppliers. But as traffic to the islands has increased, so has the number of resorts looking for a piece of that market.

"The Caribbean is doing very well right now, but the prices are actually quite competitive," said Audrey Bird, managing director of New York City-based International Meeting Planners Ltd. "There are new properties, including the Ritz-Carlton in Montego Bay, Jamaica, that certainly are formidable competitors. But for the most part, it's still very much a seller's market in most areas."

Despite the market dynamic, Janove said buyers, even those who face shrinking budgets for such island excursions, can find some leeway in negotiations because of the pressure from the prominent new players.

"Many think these resorts are inflexible, but I've found them to be extremely flexible once you get your foot in the door," said Janove. "They will lower the price if you have the appropriate food and beverage and room night expenses."

One of most potent island players is the Atlantis Paradise Island Hotel & Casino in the Bahamas, which was sold and completely renovated in 1998, and reopened as a major attraction for tourists and large corporate meetings and incentives.

"We're drawing lots of large technological, insurance, financial services and automotive group incentives and meetings," said Ted Adderley, director of sales of the Nassau-based Atlantis. "It's a market segment that's always been around but just not at this particular destination. The perceived value of this product has increased drastically, and now we get the top guns and the highest-end corporations." As such, the resort doesn't see its competitors as nearby resorts, but "we look at Hawaii, Disney World and Europe as our competitors for corporate group incentive business," Adderley said.

The Atlantis's popularity has prompted nearby Bahamian resorts to negotiate creatively to keep their share of corporate meetings, said Leslie Bethel, director of group sales at the Radisson Cable Beach Resort in Nassau, which has implemented an all-inclusive, per-head pricing strategy for nearly 85 percent of corporate group events.

"There's tremendous, renewed interest in the Bahamas and steady growth in corporate meetings," Bethel said. "But the flat per-head rate certainly helps draw them here."

There are several advantages to the all-inclusive price structure, Bethel said. It not only helps meeting buyers set their budgets far in advance and aids in reconciling the post-meeting master account, but also eases concerns some buyers may have about the vagaries of international pricing. "That comes into play especially with additional meals, audiovisual costs and transportation," Bethel said.

Bethel promotes the all-inclusive rate as an option to the Atlantis, though he added that the rival resort has led to increased bookings throughout the area.

"Our rates and bookings are up," Bethel said. "It's been positive all around because of the renewed corporate interest. Part of that is due to the Atlantis, as it led the way. But we get many meetings that can't afford the Atlantis or don't want to go there due to its size. There's certainly enough of that business for all."

Bird, for one, also likes to see the all-inclusive pricing strategy. "Many of these resorts have very good food, especially at breakfast, which makes it easier for attendees to stay on site," she said.

The immediate future still looks strong, Bethel said. "We have no concerns right now, because our corporate bookings are strong for the rest of this year and 2001," he said. "We always pay close attention to the market, but as long as the economy stays strong, we don't have anything to be afraid of."

Farther south, there also doesn't appear to be a drop off in corporate group booking in Puerto Rico, said Yvette Gonzalez, director of sales and marketing for Hyatt Hotels and Resorts Puerto Rico, which has sunk $55 million in renovations into its two properties--the Hyatt Regency Cerromar Beach Resort and the Hyatt Dorado Beach Resort.

"We haven't seen any slowdown or drop off," Gonzalez said, pointing to the renovation as a major attraction for corporate groups. "We're still getting six or seven site inspections from corporate meeting planners per week and strong bookings throughout 2001, and we've had no decrease in rates at all."

Contributing greatly to the allure of her island is the number of flights daily into San Juan, where American Airlines operates a Caribbean hub.

"We have more air lifts than any other island in the Caribbean or the Bahamas, and it makes it very easy for American attendees to get here," Gonzalez said. "It separates us locally, and from Hawaii."

The Atlantis's Adderley agreed: "The cost of doing this kind of business is due to air cost. We can compare ours to any other destination, and with our proximity to the States, it becomes a non-issue between the price and time spent in the air."

Although resort operators like to tout the number of flights to their islands, Bird said the situation isn't quite so simple. "You have to be able to get space on the planes, because they can be very crowded," she said. "It can be very difficult to find seat availability, particularly in the short term. There are times you have to pay close to full fare."

It is also not easy to convince corporate executives or shareholders, even in the robust domestic economy, that the benefits of a corporate event at an island resort can be worth the additional cost, particularly if the event is not a pure group incentive. "You have to justify everything you do and every place you go," International Meeting Planners' Bird said. These perceptions are important, and there is a perception that taking a meeting to a Caribbean resort is all fun and games. But that's not my experience. It can be an excellent environment in which to work, since you're in a pleasant but remote location with few interruptions."

More Biz In Mix

Despite the fact that many corporations are reducing their budgets for these types of events, a trend that has been ongoing for years, there are some creative methods employed to retain the Caribbean and Bahamas on the destination lists of major corporations. While corporate meetings without any incentive component at all are rare at the islands--otherwise, there's less reason to leave the mainland--many corporations are continuing to add more business into the mix. The pure group incentive is by no means dead, but its viability in a bottom-line oriented marketplace isn't secure.

The Radisson's Bethel is seeing more mixed incentive and business meetings, particularly if the trip is rewarding salespeople. "The pure incentive is still out there, but there's more combined incentive and sales meetings and incentive and product launches." That said, a particularly strong market for Gonzalez's properties is pure group incentives. "We've been increasing our business both from incentive houses and directly from corporations," she said. "We don't see that slowing down either. Regardless of the market, you have to incentivize your people."

That contention is bolstered by Dianne Der Bogosian, president of Alexandria, Va.-based Corporate Incentive Travel Inc. "We're not seeing cuts in corporate incentive budgets," she said. "We're seeing slightly more quality in the programs that are held in the Caribbean."

Despite Der Bogosian's experience, the trend toward smaller budgets for these types of events has drawn the eye of The Atlantis's Adderley. "We're concerned, but not worried. We've still met or exceeded all our booking goals.