Hoteliers back Stewart’s call for overhaul of JTB
SUPPORT widened yesterday for Gordon “Butch” Stewart’s call for a major overhaul of the Jamaica Tourist Board (JTB) so that more of its US$32-million budget can go towards advertising Jamaica to potential visitors rather than what tourism interests see as propping up a top-heavy bureaucracy.
“Mr Stewart is not one of my favourite people but I back him 100 per cent on this issue,” said Hugh Maitland-Walker, CEO, Shaw Park hotel in Ocho Rios. “The ineptitude of the tourist board is monumental.”
Maitland-Walker’s comment — echoing a broad range of voices across the industry — came even as the tourism board insisted on its efficiency.
In fact, the JTB argued, the recent halt to advertising promoting Jamaica was not its fault, but because of the failure of the finance ministry to provide it with the agreed budget from which to pay its American advertising agency, Foote Cone Belding.
“Over the years, the advertising agency has extended a considerable level of credit to the JTB,” the agency’s executive director, Fay Pickersgill, said in a statement Friday. “It continued to place advertisements during the critically important periods, even when payments could not be made because of delays in the receipt of funds from the Ministry of Finance.”
At the end of the last fiscal year in March, the tourist board owed FCB US$5 million, leading, according to the JTB, to the suspension of destination advertising. The finance ministry has said it will release US$3.2 million to allow advertising to restart.
But for the JTB’s critics, while specific budgetary constraints, as alluded to by Pickersgill, may affect its short-term advertising programme, the board had a more fundamental problem: it allocates far too much of its budget to administration rather than direct advertising.
Which was the major point of Stewart’s sharp criticism of the operation of the JTB in his statement on Wednesday, in which he urged a freeze on new advertising money to the agency “unless a committee of senior industry players is formed to approve and monitor the expenditure of every single tax dollar that is allocated to the Tourist Board”.
“It is full-time that all stakeholders in the industry have some input in the management and expenditure of the hard dollars which the industry earns and which the JTB continues to spend recklessly,” Stewart argued.
Stewart, the chairman of the Observer, is, as owner of the Sandals chain of all-inclusive resorts, the English-speaking Caribbean’s most influential hotelier.
He has consistently argued for a restructuring of the JTB’s operations, but his latest salvo was triggered by recent data showing a 22.6 per cent decline in stop-over visitor arrivals for April.
The drop in arrivals, Stewart said — when combined with discounts by hoteliers to help compensate for a soft market after last July’s violence in Kingston and the September 11 terrorist attacks in the United States — could lead to a 30 per cent drop in revenues for the industry.
The government projects that the industry this year will earn US$1.29 billion, up 11 per cent on the last fiscal year and suggesting recovery in the post-September 11 environment.
But industry players like Maitland-Walker seriously doubt that performance, given the dearth of advertising and what he sees as a lack of imagination and energy at the JTB.
In fact, he fears that summer visitor arrivals could be down by as much as 25 per cent.
“In 30 years of my career in Jamaica, I have never seen it so bad,” said Maitland-Walker.
Maitland-Walker, believes that Jamaica needs to allocate more to promoting itself as a tourism destination — the JTB’s overall budget is about US$32 million a year — but he, and others, say that far more can be squeezed out of what is now available.
Danny Melville, the former government backbencher who also has tourism investments, is among those who believe that the JTB is top-heavy and that cash more cash can be released for advertising. In fact, about three years ago, Melville called in Parliament for a serious look at the structure of the tourist board, but failed to get much traction.
“The fact is that the need restructuring,” Melville told the Sunday Observer.
Melville’s rule of thumb is that “75 per cent of the money allocated should go to hard-core advertising”.
“You have to rip down the bureaucracy,” he said.
The members of the South Coast Chapter of the Jamaica Hotel and Tourist Association (JHTA) were less caustic than Melville, but a statement after a meeting on Friday said they supported “fully the main thrust” of Stewart’s remarks.
“In particular, members feel that the apparent disconnectedness within this industry should be mended urgently and everyone refocused on the building and growth of the vital sector,” said a statement by the area chairman, Judy Schoenbein.
The JHTA president, Josef Forstmayr, who is a director of the JTB was clearly reticent about publicly criticising the organisation, suggesting that efforts at change was being directed from within.
Nonetheless, he betrayed a concern that it has been a slow, uphill effort.
“We have not been as successful as we had hoped at refocusing the board,” Forstmayr said.
Bill Clarke, the CEO of Scotiabank Jamaica, who was named chairman of the JTB late last year, has remained quiet in the face of the controversy.
But Pickersgill insisted that the JTB was a relevant and effective organisation, whose worth has been recognised by being voted at the World Travel Awards as the Caribbean’s best tourism bureau.
The director of tourism also dismissed the idea that too much of its resources went to support an unnecessary bureaucracy. Indeed, it has not, in recent years, not filled vacant positions and had “voluntarily reduced staff” so that more money could be spent on advertising.
“The JTB has been consistently found to spend under 10 per cent of its budget on administration,” she said. “There is no masking of the bureaucracy in the JTB’s budget.”
She also lectured the critics that advertising was only one element, and the most costly, “of the marketing mix”.
“Effectiveness can only be achieved with a combination of sales, public relations, promotions and advertising,” she said.
In its current budget of J$1.555 billion, the JTB has earmarked $445 million or nearly 29 per cent, to what it refers to as direction and administration.
Another 18 per cent of the budget, or $280 million has been allocated for overseas representation and regional offices, while 52 per cent, or $812.522 million is to go to overseas marketing.
Pickersgill’s statement notwithstanding, critics say that the broad budget headings hide much, and call for greater transparency on how the board spends its money. Moreover, some say, past restructuring at the JTB has been, at best, only cosmetic.
The same PriceWaterhouseCoopers study on which Pickersgill relies for support of her argument of low JTB spending on administration also pointed to a disturbing trend in the board’s expenditure, the critics say.
For instance, in 1996/97 the JTB spent 56 per cent of its marketing budget on things that would have a real and direct impact on bringing visitors to Jamaica — the analysts who did the study called it marketing outcome.
Three years later, the JTB spent 45 per cent of the budget on marketing outcome, that is, the nitty-gritty of getting the tourists to Jamaica, such as direct advertising. Over the same period, spending on what is called marketing support, which includes bureaucracy, spiralled from 36 per cent to 45 per cent.
In other words, less was spent on the things which had a more direct impact on tourists coming to Jamaica, and more was spent on the things which ostensibly supported the effort.
Yesterday Stewart challenged Pickersgill’s assertion that only 10 per cent of the JTB’s budget was spent on administration and warned against believing “their own propaganda”.
“When the numbers are disaggregated, the figure is closer to 75 per cent,” Stewart said, adding that the JTB should release an itemised breakdown of its budget.
Jeannie Dixon, the secretary of the U-Drive Association, who also has other interests in the tourist resort town in Ocho Rios, is among those who do not believe that the JTB has performed well and supports the call for transparency.
“It can’t be business as usual,” she said.
According to Dixon, the inability of the tourist board to advertise hurts the small players in the sector, rather than the big chain’s like Stewart’s Sandals or John Issa’s SuperClubs, whose advertising budgets rival, or even surpass, the JTB’s.
While supporting the call for greater budgetary allocation to the industry, Dixon argued that part of the solution would be to shift some of the spending from offices and staff to advertising.
“I don’t think there is any other country that has a tourist board with so many top officials,” she said. “The serious business of the tourist board is advertising. We need transparency on how the money is spent. It is not transparent.”
It is a viewpoint that finds favour with Dan Brookes, the owner of Relax Resorts in Montego Bay as well a working farm at John’s Hall that doubles as a tourist attraction.
“I think they are wasting money on administration,” said Brookes. “I think they have a lot of dead-beat and non-productive people in the JTB, who have long lost focus.”
Brookes points to simple things which he sees as a waste of money and manpower by the JTB.
“Not long ago, the JTB held its product exchange, JAPEX, and its top officials abroad came to Jamaica accompanying travel agents, wholesale buyers, travel writers and so on.
“A few weeks later there was the ASTRA (the umbrella body for travel agents) convention in Jamaica and the same people came back, at a cost to the JTB,” he said. “Why couldn’t they be met and hosted by the staff in Jamaica. I have a brand new attraction and I am yet to see one of the persons who came to Jamaica.”
Daniel Grizzle, of the Charela Inn in Negril, agrees with the argument that the JTB has to find ways to become more efficient and to squeeze more out of each budgeted dollar so that it has more to spend on hard advertising.
“I am not convinced that we are doing the best with what we have,” said Grizzle.
According to Grizzle, the small players in the industry have over the past three years “done wonders” to keep their businesses afloat, but it was critical now that they had a tourist board that was responsive to the needs “of those who invest in the industry”.
Their immediate demand is destination advertising.
“There has to be a proper review so as to find the efficiencies,” said Grizzle. “…Where there is dead wood it has to be cut off.”
In her Friday statement Pickersgill said that the JTB board had earlier this year instructed that “external consultations should be commissioned to undertake an efficiency and effectiveness review of the organisation and recommend changes to the structure and operations where necessary”.
This process, she said, was now underway, although it was unclear whether consultants had been hired and work actually started. There was also an internal programme “to effect drastic cuts in the budget”.
The agency, though, needs to act with urgency, according to Godfrey Dyer, the principal of the Wexford Court hotel in Montego Bay.
“Time is of the essence,” he said. “With advertising you can measure the results. When the TV and newspaper advertising are running your phone starts ringing. So, I share the view that the board needs to spend more on advertising and less on administration.”
Like Dyer, Paul Pennycooke, president and CEO, Couples Resorts, believes that the restructuring “must be proceeded with haste”.
Pennycooke, in fact, sits on the JTB’s board as its chairman of the marketing committee and is known to consistently argue for the organisation to tighten its operations and free cash for advertising.
But while the studies take place, he said, “all available funds must now be used in advertising.”
In any reorganisation planned for the JTB the challenge, Pickersgill stressed, was to ensure that it continued to fulfil its mandate of marketing Jamaica in a cost-effective and efficient manner.
Marc Redt, the CEO of Jamaica Grand in Ocho Rios, believes that gaining that efficiency may require the JTB to do business in a different manner than that to which it is accustomed, given modern technology and the manner in which customers engage suppliers.
“Do you need the same infrastructure of the past and do you need to deploy the same manpower?” he asked.
Noel Sloley who runs a tour operation business in Montego Bay and is a member of the JTB’s board, believes that the organisation needs to openly engage its critics less defensively and with an appreciation that it is unlikely to get much more money from the government.
“The calls for the re-organisation have been consistent over many years,” he said. “What the JTB needs to do is to be less defensive and more responsive. Secondly, it must stop budgeting under the false premise that they may be getting more money from the government and deal with the reality of the day.”