Building on the Power of the Past Robertico Croes Ph.d. Kelly Semrad Ph.d. Manuel Rivera Ph.d. Rosen College of Hospitality Management, University of Central June 29, 2015

Main approach: Demand Focus

Perishable setting

Crucial to understand tourists’ needs and wants

Market Alignment

Demand Performance 18.5% of the economy 20% labor force 26% Foreign Exchange

Challenges facing Curacao Financial sector 2019 Refinery 2019 Debt repayment 2019 Unemployment Youth unemployment

The BIG concern

Historical Turning Points? Lost 37% of cruise visitors

Lost 28% of tourist market

Lost 30% of room nights

Are we optimally performing? Nearly 50% of tourists do not stay in hotels

•$0.43 per dollar goes to hotels •1.92 multiplier effect •33.8% more $$$ by hotel tourists

VISION:

To make Curacao the most desirable destination in the Caribbean

First

Optimization

Second

Small wins

Third

Inclusive System

Fourth

Strategic Principles

Data Driven

Job Creation

Premier Hospitality

Data Driven

Second

Economic Growth Third

First

Strategic Goals

Strategies Refocus demand structure

Airlift and inventory optimization

Sustainable financial resources

Punda & Otrobanda “rendezvous“

Oostpunt as a “wild card”

First

Stay in Hotels

Second

Third

Accessible

Fourth

Focus on the American Market Spend More

Preference Compatibility

USA Target Profile Income: Medium income ($75K) Education: 40% College Degree 36% Masters Degree

Age: Status: Region:

Approx. 50 year Married with kids Mid Atlantic

Quality Market Maven

❶

• • • • •

Satisfied Low brand loyalty Quality seekers Innovative Big on WOM

Innovative Traveler

❷

• • • •

Satisfied Low brand loyalty Low price sensitivity Seeking new experiences

“A different Dutch Caribbean” • Aggressively promote in Mid-Atlantic • Increase the airlift capacity

• Increase airlift from other regions that have good connectivity

Your competitive set is…….. Destination Aruba Bahamas Barbados Bermuda Cayman Islands Cuba Dominican Republic Guadeloupe Haiti Jamaica Martinique Mexico’s Caribbean coast Puerto Rico Saint Lucia Saint Martin/St. Maarten Trinidad and Tobago Turks and Caicos Islands US Virgin Islands

Beaches No-Diff No-Diff Low-Med High-Med No-Diff Low-Med High-Med No-Diff No-Diff No-Diff No-Diff No-Diff No-Diff No-Diff High-Med Low High No-Diff

Duty Free Shop High High High High High Low High High High High High High High High High High High High

Hospitality High-Med No-Diff Low High No-Diff Low-Med No-Diff No-Diff Low-Med No-Diff No-Diff High-Med No-Diff No-Diff No-Diff No-Diff No-Diff No-Diff

Demand Focus (Years 1-2) “Traction Phase”

Demand Focus (Years 3-4) “Solidification Phase” Tourists

Product Development Combine image and staging to create new products. • Diversify Shopping Portfolio • Duty free shopping • Store brands • Diversify Hotel Portfolio • High end accommodation (luxury brand) • Diversify Activities Portfolio • Experience design (bundling & packaging)

Demand Focus (Year 5) “New Horizons Phase” Tourists

Assessment and evaluation: • • • •

Volume of arrivals Spending Satisfaction levels Evaluate position within competitive set

Supply Orientation Balancing demand with supply

Traction Phase Years 1-2

Managing the Supply ❶

Room Inventory • •

Room Optimization Increase RevPAR

❷

Service Quality • •

Airlift •

❸

•

Airlift Optimization (load factor) Airlift Connectivity (new markets)

❹

Service Capability Performance Standards

Competitive environment • •

Business Climate Stakeholder confidence (public and private)

Solidifcation Phase Years 3-4

Managing the Supply Experiential Clusters

Product Image •

❶

• • • •

Physical attributes (maintenance) Hotel/Restaurant Facilities Attractions Services

❷

• •

Human Capital

❸

• • • •

All stakeholders Employees Residents Public education

Tourist Cruise Passengers

Cultural Pride

❹

• •

Cultural cohesion Acceptance across all subculture and social reference groups

New Horizons Phase Year 5

Managing the Supply Strategic Partnerships •

❶

Partnership Identification

Product Development •

❷

Quality of Life

Capital Investment •

❸

• •

Reporting business intelligence Organizational structure (accountability) Incentive structure

•

Tourism specialization Geographic diversification

•

❹

• • •

Social & economic benefits Job quality Resident well-being Youngsters participation

The plan objectives Performance Benchmarks

Performance Objectives Traction Phase Years 1-2 Room Inventory 80% Occupancy by year 2 Increase RevPAR by 15% by year 2

Objectives

• •

Service Quality • • •

Airlift •

Establish Airlift Connectivity to: • with 5 flights/week year 1 •

with 6 flights/week year 2

•

Additional 5 flight after year 3

Repeat visitation Increase spending Increase positive comments in travel blogs and social media

Competitive Environment • • • • •

Secure US$40 million for implementation Increase hotel margins to at least 10% Inclusive participation in DMO Eliminate the 80/20 rule (management) Ease of market entry

Performance Objectives Solidification Phase Years 3-4 Product Image

Objectives

•

Increase investment in product enhancement by US$30 million via import duty free incentives between years 3 and 4. Tourist Investment Program (TIP)

Experiential Clusters •

Human Capital • • •

Certify 5,000 Service employees Increase public perception of tourism’s value to 70% of the population Placement of 70% of graduates from Professional and University programs

Balanced product mix composition for Punda consisting of : • Retail, Food & Beverage • Entertainment & Urban regeneration

Cultural Pride • • •

Improve overall safety Reduce attrition and increase graduation rates (youth) Decrease unemployment among the youth

Performance Objectives New Horizons Phase Year 5

Objectives

Strategic Partnerships Secure the following: • 1 major airline carrier • 1 major luxury hotel brand • Mitigate the low season by 30% in cruise business

Product Development Approve regulation to develop Oostpunt by: • Determining the highest green development standards • Define value expectations for supporting products (hotels, restaurants, retail, residential, etc)

Capital Investment • • •

Secure funding for business intelligence that assesses the market alignment within the competitive set Integrate non traditional actors in the funding system Create 1 incentive window for refurbishing of any existing facility within the tourism system

Quality of Life • • • •

Achieve real economic growth of at least 2% by year 5 Create at least 2,000 jobs (direct and indirect) Allocate 30% of new jobs to youth Increase benefits to most vulnerable sector

What are the economic benefits?

Demand Forecast

Year 2016 2017 2018 2019 2020 Total

USA 33,589 33,589 11,484 11,403 11,724 101,790

Increase in Tourists (all) Netherlands Venezuela 4,638 8,641 3,479 6,481 769 1,705 513 1,137 256 568 9,656 18,531

Others 3,898 5,847 1,737 2,210 2,421 16,113

Total 50,766 49,395 15,695 15,263 14,970 146,089

New demand structure

Economic Impact Figures Changes with respect to the baseline

2016

2017

2018

2019

2020

Real GDP growth

2.2%

2.2%

0.7%

0.5%

0.5%

Employment by enterprises/year

1,400

1,300

400

300

400

Total Taxes (US millions)

15.8

34.1

43.1

51

58.5

Indirect taxes (US millions)

12.4

26.8

34.1

40.5

46.7

3.4

7.3

9

10.5

11.8

Direct taxes enterprises

(US millions)

Can this be done?

Yes, we Can! Clear alignment of •what residents want • 54% local population believes in the tourism promise

•what the tourists want • Leave Curacao satisfied with product

CTB $40 mil

Expected Outcomes Residents:

Tourists:

• Quality of Life • Opportunities

• Satisfaction • Higher Spending • Repeat Visitation

Tourism as Strategic Spearhead “Above partisan politics”

Thank you! Robertico Croes Ph.d. Kelly Semrad Ph.d. Manuel Rivera Ph.d. Rosen College of Hospitality Management, University of Central June 29, 2015