2007 will herald the opening of a 190 bedroom Radisson Hotel on Jersey's Waterfront along with a rebuilt Royal Yacht Hotel and a refurbished Grand Hotel. These join the recently refurbished Hotel de France, Pomme d'Or Hotel and Club Hotel & Spa to compete in the 4 & 5 star market. By the end of next year nearly a quarter of the island's beds will be in this range and the key question is will there be enough business to go around? The hotels are going to compete in 3 key markets - business, short break, meetings & conference. So let's look at each of these markets in turn.
1. Business visitors. Following 9/11 corporate organisations dramatically cut back on business travel & in the four years following 2001, business visitors to Jersey fell by a total of 24% to 56,640 in 2005. After an initial reduction due to the terrorist threat, businesses realised that in many cases travel had become unnecessary as modern systems allowed more cost-effective communication. At the same time the average length of stay for those still making a business trip to the island fell by almost 13% to just over 2 nights in 2005. This trend appears to have flattened out in 2006, but nonetheless these figures must be of some concern to the new hotels seeking to carve out a share of an at best flat market. The business visitor market is created to a large degree by the Finance industry. A downturn in this sector could spell disaster.
2. Leisure visitors. The leisure market has also declined sharply, but much of this has been at the 1 & 2 star end of the market. As consumer expectations have risen, so 4 & 5 star properties have benefited. There is no doubt that this is where the future growth for leisure breaks is going to be focused, as the so-called 'Cosmopolitans' seek modern & comfortable higher-end accommodation providers. The problem is that the market is predominantly for short breaks, travels at weekends & acts on impulse booking within a few days or weeks of departure . Anyone who has tried booking an air seat in or out of Jersey on a Friday & Sunday will know that the cost is prohibitive and with so many other short break destinations available, Jersey will find it very hard to compete, unless more capacity is added at weekends on key routes.
3. Meetings & Conference. Again a market that has seen decline in recent years, although this was partially due to the temporary closure of the island's key conference hotel - the de France. However the lack of a modern, attractive conference centre (Fort Regent is no longer acceptable) the opportunity to attract larger association events is virtually nil. There is also the on-going issue of access - the airport's location dictates that on a certain number of days a year fog prevents any aircraft movements. Organisers of large conferences simply cannot afford to have the risk of a major event being completely written-off due to weather. There is evidence that conferences are getting smaller & certainly the new properties are well placed to take advantage of this market.
So the huge investment (c. £140 million) in high-end hotels, entirely undertaken with private investment is seen as testament to the industry''s belief in the future of tourism in Jersey. With almost 1000 additional beds entering the 4 & 5 star market next year, investors will be holding their breath to see whether their dream turns into a nightmare.
Oversupply in Jersey's 4 & 5 star hotel market?
Subscribe to:
Post Comments (Atom)
12 comments:
Robert: this is a great concept, and promises to be very useful. I'll be adding you to be newsreader.
Interesting view on the current investment into the hotel sector, Jersey customers are becoming more “4 Star” with 38% of all visitors being profiled as scio-economic group A which, include some of the richest families in the UK. So is it over supply in the hotel sector or is it undersupply in the transport sector? If the Airport fulfils its plans to increase airline capacity, and frequency, in turn will improve the opportunity to keep these beds full. I note that Jersey Airport currently has a full-page ad in Travel Weekly for expressions of interest for new routes. Good timing; perhaps we will see the fruits of this effort just as the ribbon is cut at the Radisson?
Robert - you make a very valid point about all the investment - yes it is all private. The States have spent nothing on cap ex. You mention the Fort Regent which the States seem scared to make a decisision about.Why this has not been turned into an international events centre is madness. Look at the leisure markets real competitors (which are not Monaco, Prague, Barcelona) but UK seaside towns like Bournemouth and Torquay and look what is central to their tourism growth and sustainability. A decent centre to attract large events.
Robert - a very good idea and one which I hope will spark debate. The fact is that Jersey needs to be competitve in the Global market and is severely restricting itself in that goal with the simply enormously high costs of entry and exit.
Why go to Jersey when, frankly for the same cost on the airline I could get to New York? let alone Spain, France etc
I think there needs to be some radical thinking in Jersey about this subject. Basic economics and common sence would point to lowereing the taxes on flights (whether that should be subsidised by the States is the question I suppose). Therefore if the cost to get to Jersey is lower - it becomes a more attractive proposition to vist and the income from the increased visitors benefits the whole economy, as whereever it is spent, it will still get redistributed within the island's economy.
David Cammeron has taken the plunge and rewritten rules for the Conservative party which would have been unthinkable until relatively recently. Should we not be open to a revision of many fundamentals as well? Let's make the pie bigger for everyone rather than just try and get a larger slice of a ever shrinking pie individually.
Interesting - all comments are about flight costs and non are about accomodation costs regading quality. In my view, it is also about accomodation costs, they need to be reviewed - just compare prices to Relais and Chateau's etc. I believed Jersey should do more upmarket and it is not all about flight costs
Landing charges (which are the only element of Jersey imposed levy) at the airport if reduced to nothing would perhaps make the cost of a 3 day break 2% cheaper which is hardly the issue. Perhaps the hotels are too expensive in Jersey for the product they are offerring.
Reference the response above - maybe the seasonality of Jersey limits hotels trying to make a return on their investment in a shorter period than in other places. Also the cost of operating hotels in Jersey is far higher especially in relation to utilities, payroll, food, liquor, etc. Unfortunately the lack of competition and the fact that much has to be imported in providing the basics makes the cost base very high. Low cost flights are one issue, high cost hotels are another - giving value is paramount - creating demand is critical!
Great article! Thanks.
Thanks for interesting article.
Nice! Nice site! Good resources here. I will bookmark!
I see first time your site guys. I like you :)
Excellent website. Good work. Very useful. I will bookmark!
Post a Comment