The Future of Caribbean Tourism Is in the U.S.

Caribbean News Digital got this opinion from Javier Coll, Executive Vice President of Apple Leisure Group (ALG), the first leisure travel outbound company from the United States to set up shop in Mexico and the Caribbean. Mr. Coll outlined challenges and prospects in the region in terms of the industry’s complex scene on the road ahead. If such a destination as Cuba is definitively open to American tourists, the present numbers could double. Furthermore, ALG contacted potential Spanish companies interested in joining its expansion investment plan on the Caribbean lands.

How is ALG structured and what’s its share of the American tourism market?

ALG is a vertically integrated business with six different companied ranging from Apple Vacations, the world leading tour operator for Mexico and the Dominican Republic; CaribeCheapCaribbean.com, a popular online travel agency specialized in luxury vacation packages in Mexico and the Caribbean, to Travel IMPRESSIONS, which is in charge of the traveling division for American Express and AAA. ALG has a payroll of 23,000 employees, plus 2 tour operators, 1 online agency, 6 hotel brands for different market segments – from the most luxurious hotel to the cheapest one – 1 inbound transfer company and 1 Vacations Club. Nowadays, nearly two out of ten American tourists traveling to the region are ALG’s customers. This estimate could grow even more is destination Cuba is definitively opened to the American travel market.

Is there any explanation for the fact that NH joined you in a Dominican Republic-based hotel?

I think NH executives are doing the best for their company and sometimes the decisions you make might not seem to be logical from a business point of view, but they are the right thing to do. NH is present in the property. We’re doing “brand management”, our concepts and brands are there and we work on operational aspects related to the brands; but NH, as the owner, and even the Martinón Group, have to do with the daily work in the property and they are not out of business at all. On the other hand, they changed the brand because, in terms of beach tourism, NH is not that strong. In a smart move, NH analyzed that we spend millions on the American market and they don’t, so they took this step. They did it and the three groups are smoothly working, with spectacular results.

Are you planning to manage other hotels in the Dominican Republic?

We have different projects. We’re going to build another hotel along with the Martinón Group in the same area of Ubero Alto; we’ll have another one in Cap Cana, right at the development zone in Juanillo; we’re studying the operation of an existing hotel that is going to be restructured and we’re negotiating with the owners, targeting that overhaul and the revamping of brand. The company is presently studying three hotels in Punta Cana, one in La Romana and tow in Puerto Plata.

What do you make of the Dominican government’s aim of receiving 10 million tourists in a 5-10-year term?

I believe that both the current Tourism Minister and the President have done a great job. When we go to international conferences and we’re joined by Tourism Ministers and Presidents of Caribbean countries, we mention the DR as an example of how to make things right in the travel industry, since political discourse and actions are different things. The Dominican Republic has undertaken precise actions, signed agreements to have foreign investment in the country and I’m sure that they will keep on working to get the job done. That government is totally committed, as you see, to the outcome. I don’t see any reason why they wouldn’t be able to reel in 10 million visitors.

What’s the infrastructural growth needed in the Dominican Republic to have a more-open tourism segment, not only related to resorts and All Inclusive hotels?

They have worked hard on the infrastructure issue. Roads are very important and they have excellent roads from Santo Domingo, La Romana, to Punta Cana, Boulevard. These actions have significantly reduced transportation time to the hotel areas. Obviously, when a country grows and communities do it too, there are projects on water infrastructure and energy. In the DR we pay three times more per kilowatt than what we are charged in Mexico, that’s a huge challenge for investment and hotel owners. I would point out water infrastructure and energy as two important aspects when it comes to reaching those levels.

How about rates?

The Dominican Republic ranks third in terms of rates. At least in our product, Jamaica stands as the number 1, Mexico comes second, depending on the area because Los Cabos is more expensive than Cancun, and the Dominican Republic would be in the third position. However, rates have gone up, nearly a two-digit increase over the past year, which is complemented by infrastructures, better hotels, so prices can be higher. I think that they will be near Mexico’s levels a few years from now.

Is the development of golf courses and marinas in the Dominican Republic directly important to you when it comes to working with the American market?

I think that it’s somehow important because it raises the destination’s quality. The golf and marina tourism segment is a relatively small niche, but you know how it works, people would rather choose a place where there are 12 marinas than go to an area where there is none, because it gives quality perception. It’s all about perception, but a country with several golf courses and marinas and fine restaurants is the most attractive destination if compared to another one that has none of those elements.

How important is gastronomy when customers are handpicking their hotel?

Generally, the quality of the food is a key element. We’re talking about an All Inclusive and, obviously, there is a series of critical aspects when you have already paid for food and drink. The most complex task is making yourself known by means of the food, and that’s when travel agents play the leading role because they have stayed in those hotels, they have lived them and their opinion is very important.

Do you think that the certification of such gastronomy academies as the Spanish or French ones would be important to the Caribbean or the Americas?

I think so. It’s happening in Mexico: they have spectacular chefs and you see that movement. In the English-speaking Caribbean there are meetings, forums headed by acclaimed chefs, but perhaps the Dominican Republic should do more about it.
The Gastronomy Academy was established on August 18, 2014, in the Dominican Republic, and it joined the Latin American Gastronomy Academy.

That’s great news.

As for Cuba, what would ALG really need to offer its customers quality standards under the country’s present conditions and limitations?

We need to have the proper infrastructure, especially the hotel one, rooms with the amenities we provide and well-assorted restaurants, because we are to meet quality standards, as most of our hotels are associated to the AAA, with 5 and 4 diamonds. On the other hand, it would be necessary to have access to the products. We’re not operating in Cuba, but we have partners that do and we are aware of the lack of resources. I understand that now you must have a license or the possibility to import products depending on the type of company, and that would be a key element to us because we could establish a United States-Mexico connection to import what we need and guarantee the service.

So, you wouldn’t be able to work in Cuba without having that possibility.

That’d be impossible. We wouldn’t do it because we’re not willing to sacrifice our brands if we cannot deliver a product with our quality level.

Would the case of RIU be an example of this?

I know nothing about Riu’s decisions or reasons. I speak for our company and we are not willing to damage our brands just to have another hotel.  

If you go to Cuba, Would you do it as owners? Would you try to buy any group that is currently on the field? Would you look for investors willing to build? Would you have the opportunity to take State-run hotels, refurbish them and adapt them to your standards?

That’s a matter of opportunities. As long as we are able to have access and provide an adequate product, we can either go for the restructuration, with an existing investor or we can take State-run hotels if they are ready to give us the product we want. We’ve done it many times and we have no problem with any of these alternatives.

How many tourists do you estimate you could send from the Unites States?

I believe that we could easily take, in a short term, 300 to 400 thousand guests.

Do you think that you could count on airlines to move those tourists?

We owned an airline some time ago: we had a fleet made up of 14 Airbus 320. But there was a time when it wasn’t worthy due to the way airlines work in the United States, and the competition. We’re now working with both charter and regular flights. We prepare our packages with charter companies and regular flights if we don’t have charters flying to our destinations. We intensively work with both systems and in the case of Cuba we could do the same: preparing packages with charter and regular flights.

How many days do American tourists stay in your hotels in the Caribbean? How do you think that would fare for Cuba?

I don’t think it might change: 5.5 days average. It could be even less in Cuba because of the tourism segment from South Florida that aims at weekend-tourism, just like in the case of Bahamas. But if there are visitors coming from the northeast or middle west, the average would probably be the same.

Do you believe that Cuba would no longer have off-peak seasons due to the Havana-Washington opening?

It’s likely. What happens with such destinations as Cancun or Punta Cana is that they have many summer customers, because of the vacation time in Europe, and that’s the allegedly low season. Then they have many customers in wintertime, which is the high season in the United States as temperatures are too low and people go south. That fosters the de-seasonability process. Over the past years, with occupancy levels over 80 percent, high or low seasons have no longer to do with occupancy, but rates. Occupancy levels are high throughout the year, but there are seasons when fares are lower or higher.

In the case of Cuba, if there is high demand because tourists want to visit that destination and there are no rooms in critical seasons, such as August – November or April - July, would they have a growing number of visitors?

It would be a problem in short term, but I think that it would later be stabilized just as it has happened in other Caribbean countries.

Would American tourists be really interested in visiting the Island or it would be just another destination?

No, absolutely, the desire is beating there. Cuba is a different case because it had a close relation with the United States before the Revolution and it’s not like some Central Countries that suffered from civil wars for many years and that’s reflected in the mind of many American travelers. Nowadays, those places are great destinations, but they are not very successful because the average American has that perception. Cuba is different and I think that there will be a significant demand from the American market as soon as the Island has the proper infrastructure.

Do you think that traveler safety can be a positive element for Cuba?

Absolutely. For American tourists Cuba is not labeled an unsafe country.

According to the talks you held with Cuba’s Tourism Ministry in FITUR, what are the prospects?

Our perception is very positive. There is a lot of work to do. There are restrictions applied by the US administration ad they need to be solved out. We would never go there without being totally sure that we’re allowed, but we believe that they are very optimistic, positive and willing to work with the American market. We’d love doing it.

What are the challenges to be faced by the Caribbean in terms of American tourism?

I see few challenges and many advantages. I’m very optimistic. The challenges I can see are the crisis in Europe and exchange rates, because people used to say that visiting the Caribe is very expensive. During the worst crisis travellers have kept on traveling, perhaps they spend less, but the travel. On the other hand, the American market has huge potential, it’s a very strong market and the economy is going through a positive moment.  

What Caribbean destination could be affected by the opening of the Cuban market?

It might affect all destinations in a short term because, if 300 - 500 thousand passengers suddenly go to a new tourism destination, that movement would have an impact in other countries. That’s for the short term; I think it would be good for everybody in the medium term. The Dominican Republic and Mexico have a series of infrastructures and hotels that don’t presently exist in Cuba. Therefore, it will be a gradual process. I don’t think that there is going to be a crisis in any place and we’re going to see a progressive growth in Cuba, if it’s actually opened.

Could the presence of Cuba in the American market be boosting element for the Caribbean?

I think so. Many people that haven’t traveled to the Caribbean are going to do it, and those who already visit the Caribbean will be interested in trying Cuba.

What do you think about Haiti to be developed as a destination?

I see Haiti as a 20-year-ago Dominican Republic. A good opportunity, low land prices, it was a total success. Haiti is similar: gorgeous beaches, friendly people, it’s like an empty canvas to paint on. The government offers full cooperation, the Tourism Minister is doing a great job, we know and appreciate her, and we’re talking about Haiti especially thanks to her. It’s a great opportunity, near the American market and the aim is looking for investment to build in that country.

How about Panama?

It’s like Costa Rica, but with more connection. Costa Rica did a magnificent job to position the country with a green image and Panama focused it actions on the financial line. But the airlift is amazing and we want to make the most of it in order to develop the leisure tourism segment.

What are going to be your hotels in Panama, and where?

We’ll be opening a property in 2016 or 17 in Buenaventura, which is probably the most luxurious development in Panama, a wonderful place, a beach where Riu and Sheraton have already built hotel, and we’re working on the project and the plans. That is going to be our first hotel designed and built in Panama. We’re also studying beach opportunities near the city and talking to some owners, since having a beach hotel near the city would be a fantastic complement.

Central America, Salvador, Guatemala, Honduras?

We don’t have them in our plans. The safety aspect is very important and we don’t believe that those places could be successful with the American market in the short term, because of the perception matter we’ve previously mentioned.

Belize?

We might think about it. We’ve done nothing yet, but we could think about it.

Aruba is a very special country in the Caribbean. I guess that your independent bet on the DR is somehow related to Aruba’s market. Do you have any project there?

It’s a priority. Over the years, we’ve had passengers traveling to Aruba for years and we have no hotel there. There are some important barriers and we’re working on it. We have already designed a plan and, God willing, we’ll open doors in 2017.

Colombia?

It’s an option, especially the Cartagena area. Colombia is a stable country, economically strong. It’s a long flight, but we have been developing both Latin American and European tourism markets to target that kind of destination.

Would that be the longest destination to be covered?

We have even traveled to north Brazil. If we’re interested in the product, we go there.

What has meant to your Group the presence of Sunwing in the market with all its vertical integration?

It has not directly affected us. Sunwing will eventually increase the production in its hotels and we, as hotel owners, and other groups are going to see Sunwing’s contribution reduced, so we’ll have to compensate it with other Canadian tour operators; but the impact has not been important so far, because Sunwing has not taken radical measures on this matter.

Would the strong presence of Sunwing in the Cuban market be an obstacle for you?

I hope it isn’t because most of the decisions of who does what or who operates what are taken by the government and its tourism agencies. I’m sure that the government understands the need of having different products for the travel industry to succeed in Cuba. Sunwing is an option, we’re another one and Spanish groups are there too. When all is said and done, it’s all about variety.

Do you think that, in the case of Cuba, hotel rates could go up in the light of this opening, not only for American tourists but for Europeans?

The prices are going to be higher, there is no doubt about it, but it obviously has to be complemented by improved infrastructure.