Fear & Loathing in Barbados’ Economy

Fear & Loathing in Barbados’ Economy

economy

Ummm, which image to use to illustrate this blog post?  Hey, things are bleak enough to warrant either ... or both.

Ummm, which image to use to illustrate this blog post? Hey, things are bleak enough to warrant either … or both.

Aqua, one of my favorite restaurants (and site of Greg’s and my wedding in January) closed last Friday.  On that day, employees were called in for a 5 p.m. meeting and told the beautiful seaside gourmet Hastings restaurant along the new boardwalk would no longer be serving, effective immediately.

I spoke with one of the owners on Saturday (a brother-in-law of mine). He said that he saw signs of a slowdown last April, a year ago.  A few months ago he stopped serving lunch to shore up his dinner business.  Sadly, it wasn’t enough.

I’ve been lucky in my holiday rental business.  Here at St Lawrence Beach Condominiums, I let a holiday rental that I own and another six owned by others.  Throughout 2008 and this year through April, the places have been occupied by happy travelers over 90% of the time.

This month is different.  Bookings dropped faster in May than George Bush’s popularity. Some apartments have no more than a week’s booking this month.  Yes, it’s “low season,” but last year we were fat with guests who came to take advantage of the attractive low-season rates.

This year, low-season rates aren’t attractive enough.  I receive around two queries a day offering to pay around $875US for a week’s rental.  This is $125 a day, nearly a 40% discount off the usual $200 rental price.

You might argue that a night in which we have no booking is lost forever and even $5 would have been more than zero. I can see this logic, of course, but still I don’t entertain these offers.  I’m not talking here about offering a night free when someone books a week or giving a 10% discount if at least five nights are booked; those are rewards and I offer both of these frequently. I’m talking here about prices that are so out of sync with what’s offered as to be laughable. I’m talking about Hyatt accommodations at Motel 6 prices.

Here’s why I don’t slash prices in Barbados’ current economy:  First, perception of a product or service is critical to marketing. I used to market a large regional symphony orchestra in the US;  in my market research of concert-goers I learned that audience members who paid full- or very nearly full-price for their tickets perceived the orchestra as being higher quality than audience members who bought tickets at a steep discount.

Translate this to holiday rental accommodations: The person who pays the stated price has a perception that the accommodation is a higher quality (and more valuable) than the person who pays a budget price.  Also, it’s human nature to treat things we value more better than things we don’t.  I very much value what I sell – and want our guests to as well. When you were a kid and saved your lawn-mowing or baby-sitting money to buy a bike, didn’t you prize your new bike more highly than if you were given one?

Suite #8, "One Love," at St Lawrence Beach Condos

Suite #8, "One Love," at St Lawrence Beach Condos

Second, I hold my price because once we’ve gone “budget” we no longer have the “value” proposition to sell.  The value we offer is stunning and it’s a niche I am committed to developing:  for $200US nightly, our guests receive a beachside spacious/clean/nicely decorated apartment with two bedrooms, two bathrooms, brand new kitchens, and, of course, and a view that would knock the socks off even the most jaded traveler.  I’ve seen people wound tighter than a $2 watch melt when they first take in the beauty and fresh smell of the sea; five days here and our guests look a decade younger.

Look at this photo: it’s of heaven on earth and is at our guests’ fingertips.  I’d be interested in your opinions on pricing during an economic slump.  My gut and past marketing experience tell me to hold onto the integrity of our current pricing.  Even if it means a very long and lonely summer.

Our guests awaken to this. I mean, really. It's magic.  I took this from Suite #11, "Deja View."

Our guests awaken to this. I mean, really. It's magic. I took this from Suite #11, "Deja Blue."



21 Responses to “Fear & Loathing in Barbados’ Economy”

  1. Stephen says:

    I’d suggest accepting the offers. While the concept of price is right, being able to eat is essential and getting any bread in is vital. You can always refuse the offers when business goes back up. US$200 is steep for a night ( I haven’t seen inside your excellent apartments, just the photots so I can’t really judge) – it’s the market for $200 that’s moved to $150 or less. It’s just market economics. Surely you don’t pay the price posted in most shops in Barbados; you always offer at least 30% lower. Most will take it. Take the cash while it’s there…

  2. Greg says:

    Actually, Stephen, shops in Barbados do NOT haggle over their prices. And the best marketing decisions are frequently the toughest in hindsight. I’d support Jane’s position for as long as she reckons she can afford it.

  3. Diane says:

    Jane
    Our holiday in Apt 11 in March / April ’09 was simply beautiful. The views are exactly as in your photo’s – the camera never lies!!
    Obviously we would have loved to have paid less but I think the price is part of what made the holiday so special. We will be back again – just as soon as we have saved up and we can return to watch the England cricket team again!!
    You can’t put a price on a little piece of heaven.
    Love Di & Malc

  4. Z says:

    Jane, I had dinner on my 5th wedding anniversary with my husband at AQUA, it was also my 1st visit to Barbados– it was lovely. I commented to my husband on a walk down the boardwalk last Saturday that it appeared shuttered.

    I will only say this, although the food is good AQUA is good, it is incredibly overpriced, and not worth the expense. When I see restaurants on the South Coast like Bellini and Pisces, etc. packed…well they are doing something right. BTW I was at Bellini last Thursday night, and it was full. As they say you cannot put all of your eggs in one basket, with the new boardwalk in place there is no reason for AQUA to be closed. I was standing out in front of AQUA saying to myself I could go for a glass of wine and bite to eat right now…to no avail!

    Even in my own industry, construction, people are waking up and realizing that you have to diversify, small, big, whatever we will take the job. Now as for your rates, I think you should hold them but get creative– maybe add in a comp. tour, or bring in a chef to cook a private dinner one night, just a small touch, an added bonus, to set you apart.

    Love your blog, your are honest and forthright, excellent job!

  5. Mark Gale says:

    Jane,
    I must agree that if you reduce your prices too much you are in danger of degrading the product. I was asked by one of our rental agents who deals with our villa Bruadair to be one of the first to offer 2 for 1 (certain times apply) as an attempt to channel more booking enquiries. This ran for 6 weeks and did not bring a single enquiry to our door, we asked the agent to revert to the original rates and guess what more interest from them and their partners!

  6. Greg says:

    Jane sure gets an intelligent and thoughtful group of people giving their comments! What great comments! What an enjoyable read!

  7. X says:

    Get on the staycation bandwagon in these lean times with discounted prices for locals. Target locals for long weekends or those that want a holiday but don’t want to pay for flights, etc. I would do one of these in the Gap, but certainly not for B$400 per night.

    And I don’t know where you shop Greg but there are plenty places in Bim to haggle. Maybe not Dwellings or Cave Shepherd but pretty much everywhere else.

  8. Stephen says:

    Actually, Greg, I haggle all over Brabados and get good results 99% of the time, even in Cave Shepherd!
    I understand your principal, I’m all for principals, but do your good lady’s clients want their properties rented or empty? Once the prices revert back, no-one will be any the wiser that a good deal back in 2009 doesn’t exist in 2011.

  9. Stephen, thanks for this input. I actually haven’t bargained in the local stores! How about Big B … will they take 30% less for their $20 strawberries??

    I agree that the price of something is ultimately what the market will pay. Hmm … let me hear what everyone says and then let’s look at this again. Thanks!

  10. Interesting little side discussion. As I mentioned to Stephen, I have never haggled over prices in Barbados. But I understand now that people do …. Last night I talked with a young woman who’s a sales clerk at a local clothing store. She said that there are signed posted in all the dressing rooms and behind the counter where payment is made saying that the store will NOT bargain on prices. But, this sales clerk said that almost everyone tries to! I asked if the store’s owner ever caves in; she said NO – they stick to their prices.

  11. Good morning, Diane! Lovely to hear from you. You were here during “high season,” the magical period between Dec 15 and April 15 when everyone wants to visit Barbados. I am having no trouble at all booking next winter – no one tries to bargain on the price. My place, #11 (now called “Deja Blue”) where you and Malcolm stayed, is already booked from Christmas through January, February, and most of March. Which leads me to believe that travelers are generally optimistic about the economy, longer-term.

    I was really happy for you that England won one of those test matches!

  12. Z, greetings! I love-love your suggestion of adding a complimentary tour or bringing in a chef one night … those are fabulous suggestions and beat the usual complimentary bottle of wine hands-down!

    You are right about diversifying and staying nimble. Yes, Bellini and PIsces are generally full. Last night Greg and I were at Cafe Sol and it was packed, too. I think people are very value-conscious these days. The fine dining experience offered at Aqua is perhaps not what people want right now.

    By the way … I suggested to the owners of Aqua that in order to capture the boardwalk traffic they set up a coffee-and-pastry kiosk in the Aqua parking lot or, alternatively, they open just the very front of Aqua where the bar is — which happens to have a first-class espresso machine on it. Serving morning and midday coffee and croissants would be a fabulous concept along the boardwalk — and who better to do it than Aqua, which is positioned so perfectly? After a bracing walk/swim along the boardwalk, wouldn’t it be great to enjoy a cup of delicious coffee while watching the waves and enjoying the paradise? I loved this idea so much I volunteered to staff it on weekend mornings for free, just to get it going …. Plus, as an aside, I thought it would be a social opportunity as well, with people coming up and talking with each other, literally breaking bread and saying howdy. I still love this idea. It’s not done anywhere in Barbados and would be a smash hit, imo.

  13. Yessss! I’m so glad you wrote, Mark. Your original prices convey a perception of quality .. and I wonder if this perception has something to do with the fact that you do better when you maintain your higher prices. I’m a person who demands quality and when I see a place with sharp discounts I’m very wary indeed. Thanks for writing and sharing this experience.

  14. Yes, I’m delighted! I’m receiving excellent marketing advice. My marketing wheels are churning ….

  15. Brilliant idea. I haven’t marketed to locals and it’s a stupid oversight of mine. Greg and I enjoy our “staycations” at Round House on the east coast every once in awhile, so it’s not a concept with which I’m unfamiliar. Also, marketing to locals has another benefit: they know who we are and what we’re about and can tell friends who come in from elsewhere. Thanks.

  16. Thanks, Stephen. I like your last line: a good deal “back in 2009″ needn’t extend to 2011.

    Based on the exceptional input from everyone, I’m going to purchase two “feature” ads on two different rental sites. On http://www.HomeAway.com, I’m going to purchase an ad offering a $50US/nt discount for the period of May 20 to July 20. On http://www.VRBO.com, I’m going to purchase an ad offering a catamaran cruise for two with the purchase of a minimum of five nights at my standard price. I’ll keep you apprised and let you know what results. I’m very curious to see …….

    Thank you all.

  17. Z says:

    Jane this is full of such interesting comments/ideas…I would go in for a mini mommy get away, say 2 nights in one of your lovely suites…a stay-cation for mommies!

  18. Z,

    You’re on! When would you like to visit? Name a 2-day weekend (either a Friday/Saturday or a Saturday/Sunday) between May 22 and July 17 and it’s yours. I will have two offers running, as you know from reading these comments, but since you’re local you’ll likely prefer the reduction in price to the cat cruise. If so, this brings the rental for the two nights to $300US ($600Bds) total, including taxes. Write me at PlanetBarbados@gmail.com or call me at 246-230-8594 to arrange details. As the mother of two grown daughters, I know how renewing a two-day mommy getaway can be.

    You’ll love it. You really will.

  19. Stephen says:

    Your idea for a coffee shop on the boardwalk is first rate. Let’s hope though, at Coffee Italia prices and not Starbucks. Those Big B strawberries are not very good; not worth $5! I’ve recently had deals with a car, a computer shop (10%) and Cave Shep. That last one was a surprise; deals are usually where the owner of the shop is there, not a chain like Super(oldfruitandveg)centre.
    Good luck with your adverts. I think people just want to see lower prices, not a discount offer, but maybe that’s just me.

  20. David Yourtz says:

    ane, I just read you article and as a business owner I think you have to have a happy medium because you can’t take integrity to the bank…My rule of thumb is am I making a profit at the price the customer is willing to pay? Or is cash flow needed and the product has been in the case a long time that I should cut bait and move on…You can always raise the price when things turn around (and they will) but why give the business to a competitor that has a similar product at a better price.

  21. Sunniebgi says:

    through this site, actually linked from another, I’ve found out that Aqua closed. I had only eaten there once (at a marketing lunch hosted by Mr. H – we talked banking if I remember correctly). It was great.. but I have to agree that, as with many restaurants in Barbados, the prices were more than I or my hubby, could have or would have even spent except for maybe one special night out a year.
    Having said that, they are in a perfect spot (or were since I don’t no if they are “still in the building”) for a morning coffee/brunch bistro for boardwalkers.. and even an afternoon, stop and rest or evening quick meal.. limited menu’s but specific to those who want to grab a bite as they walk, or sit and enjoy the view with a nice cup of coffee and a resonably prices piece of quiche. I’m game.. and I agree, as long as prices are more along the lines of Italia and not what I fear will be Starbucks, if they actually come to LimeGrove.

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