By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas has been urged by the International Monetary Fund (IMF) to reduce its tourism industry costs, which are 50 per cent higher than Cuba and some Central American destinations.

The Fund, in its Western Hemisphere economic outlook, uses Travelocity’s ‘Week at the Beach Index’ as evidence to back its call for the Caribbean’s tourism-dependent economies to improve their product and tackle deep-rooted structural issues.

The Travelocity Index, which measures the cost of goods and services consumed by tourists during a typical week’s beach vacation, uses the Bahamas as the ‘benchmark’ or comparator jurisdiction against which to measure all other countries.

It ranks the Bahamas as the second most expensive jurisdiction in its core ‘sun, sand and sea’ market, behind only Antigua and Barbuda, in a finding that will again raise fears this nation is pricing itself out of reach of too many potential visitors.

“Tourism-based economies should take advantage of the current tourism upswing to push through structural measures that would improve the quality of the tourism product while lowering costs,” the IMF advised in its recently-published outlook.

“Consumers already pay a premium to holiday in the Caribbean when compared with beach-goers in other parts of the world.”

Basing this on the Travelocity Index, which employs a similar methodology to the popular ‘Big Mac Index’ used by The Economist magazine, the Fund added: “A typical basket of goods and services consumed during a one-week beach holiday costs about 50 per cent more in the Caribbean, on average, than in some destinations in Central America or Cuba.

“For some Caribbean countries classified as ‘high-end’ destinations, where consumer price elasticities are lower or negligible, efforts are needed to ensure that product and service quality remain commensurate with their high-end brand.”

Stuart Bowe, the Bahamas Hotel and Tourism Association’s (BHTA) president, told Tribune Business that resorts had increasingly turned to offering all-inclusive vacations over the past five years as a way to “add value” and control vacation costs.

Acknowledging that this nation was perceived as a “high-cost destination”, he said: “In today’s tourism industry, creating ‘Value for Money’ is the challenge for all destinations.

“The value must be in all phases of the vacation experience. This includes hotel booking systems, physical products, food and beverage operations and, most importantly, customer service.”

Mr Bowe, in an e-mailed reply to this newspaper’s questions, said the Bahamas’ relatively high “cost of doing business” - driven primarily by labour and utilities (energy) costs, plus air travel - was responsible for vacation pricing.

He added that the Nassau/Paradise Island Promotion Board and Ministry of Tourism had used various ‘air fare credit’ initiatives to reduce travel costs to the Bahamas, but warned that a “long-term solution was required.

“In the last five years, more hotels are offering all-inclusive vacation experiences to add value and reduce the cost of vacations to the Bahamas,” Mr Bowe said. “Therefore, it is a combination of initiatives that will change the ‘high cost’ perception of Bahamian vacation experiences.

“First, lower the cost of travel to the Bahamas by continuing the air credits, but the long term solution is ticket tax reduction strategies. Second, continue to train staff and measure service against international standards.

“Third, hotels should continue to upgrade the physical products with new concepts and rooms. Forth, energy reform initiatives must continue as they impact hotels differently based on size and product offerings. Finally, the ongoing collaboration between the private and public sector is critical to all tourism industry initiatives.”

Concerns that the Bahamas may be ‘pricing itself out of a large segment of the tourism market are nothing new.

The BHTA, in an April 3, 2014, presentation warned that the Bahamas has already ‘priced itself’ out of 65 per cent of the middle-aged couples market in its two key target areas - New York and South Florida .

The presentation drew on a survey of 500 New York and Miami/Fort Lauderdale residents, aged between 35 to 54 years, that was conducted by MMGY Global for the Nassau/Paradise Island Promotion Board.

The survey, focusing on respondents with an annual household income of $85,000, and who had not visited the Bahamas for two years but remained interested in doing so, was intended to measure consumer price sensitivity to price changes when it came to hotel, airline and ground transfer price changes.

Basing these on a couple staying for four nights in the Bahamas on an all-inclusive package, the survey found that the collective $2,097 cost was more than 65 per cent of those surveyed were willing to pay.