CEO’s Letter

2015 YEAR IN REVIEW

Dear Stakeholder,

Despite tremendous efforts to turn around decades of tourism industry declines, growth was elusive in 2015 for the local tourism economy. However, the Bermuda Tourism Authority (BTA) and our stakeholders in the wider community are well positioned to soon see benefits for the past 18 months of hard work.

An observer of the tourism industry does not have to dig deep to find victories just below the surface of the top-line numbers. Between 2013 and 2014, vacation air arrivals fell by about 10,000 visitors. Between 2014 and 2015, the year-over-year decline was 1,500. This is a clear indication that, in the travel category the BTA has the most influence over, it is arresting the decline. Regrettably, the weakness of the Canadian dollar in 2015 was a contributing factor in preventing the air arrival performance from realising growth. Canadian air arrivals to Bermuda were down 17 percent in 2015 and down similarly to international destinations with price points at a level on par with ours. If Canada’s performance had just remained flat, we believe total air arrivals across the board would have been in positive territory for the year.

At the same time, reductions in airline seats to Bermuda proved to be a tremendous obstacle. In 2015, the numbers of seats flying to the island decreased in every quarter, down about nine percent year over year – that’s 51,090 fewer airline seats. In the end, a 9.2 percent decrease in airline seats resulted in a 1.2 percent decrease in vacation air arrivals.

In 2015, we led a private sector effort to assist the government’s airlift strategy team to lobby airlines for more capacity. Thankfully, in 2016, we project air capacity to be up sharply in the first and second quarters and expect it to be up by the end of the year as well. Therefore, the work we conducted in 2015 has us cautiously optimistic about our ability to increase air visitors, particularly in the first three months of the year.

For example, our Product & Experiences team has been swinging for the fences to grow sports tourism as an ongoing and sustainable business segment for our tourism economy. You will see Olympic-level swim teams, Ivy League collegiate rugby programmes and young soccer teams all coming to Bermuda in the first quarter of 2016 as a result of cultivating this market segment in 2015.

The same is true for a string of new sailing events happening on home turf in 2016 – the M32
Bermuda Winter Series, RC44 Bermuda Cup and the Viper North America Race are just three shoulder-season regattas scheduled in the year ahead. Of course, all of those race organisers want to be in Bermuda because it’s the home of the 2017 America’s Cup.

Along those same lines, the Louis Vuitton America’s Cup World Series was a milestone event for the resurrection of the country’s tourism product. It showed the world that Bermuda is a serious player in the arena of world-class sporting events. The World Series made up part of a bumper October. Total visitor arrivals for the month were up 44 percent year-over-year, including a 12 percent jump in vacation air arrivals, a 15 percent spike in total air arrivals and a 16 percent boost in hotel room occupancy during the event period. Tourism-related retail sales surged almost one-third.

In the area of hotel investment we have instigated a volume of activity not seen in Bermuda for almost a generation. Just as the Bermuda Business Development Agency does for the financial services sector, our Investment division has been the non-government organisation that investors need as they navigate the bureaucratic process of hotel development in Bermuda. The BTA has helped drive progress for the projects at Morgan’s Point, St. George’s and Pink Beach, which will open in early 2017.

Tie together our efforts in nautical and sports tourism, throw in the traction our team and partners are generating in the group travel segment, and mix in the pipeline of new hotel inventory and we believe we have a strong foundation for 2016. Even though there are clearly green shoots, we remain cautiously optimistic – unsure when Canadian visitation will recover and uncertain what is in store for the global economy in the year ahead. The one thing we can say without hesitation, however, is that we have worked tirelessly in 2015 to finally and convincingly reverse the trend of a contracting Bermuda tourism economy. The BTA will continue on our current path because we believe growth is near.

Bill Hanbury
CEO, Bermuda Tourism Authority

Tie together our efforts in nautical and sports tourism, throw in the traction our team and partners
are generating in the group travel segment, and mix in the pipeline of new hotel inventory and
we believe we have a strong foundation for 2016.