Downturn Opportunities
How Bay Islands’ Businesses are Dealing with Dwindling Number of Tourists

November 1st, 2009
by Jennifer Mathews Photos by Angela Agnew

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Worker makes renovations and improvements to Cannibal Café.

Worker makes renovations and improvements to Cannibal Café.

The tourist dependent economy in the Bay Islands has had to deal with a growing list of hardships: world economic downturn, swine flu, earthquake, June coup and political crisis, spike in crime and resulting negative press. Any one of these events would have caused a significant decrease in tourism revenues. Most business owners agree that this is the slowest they have ever seen, even slower then after Hurricane Mitch in 1998. Bay Islands Voice interviewed many business owners to find out how they are coping. These interviews revealed prevailing attitudes and creative business survival tactics.

Some ask weather you can, or even should, market a tourist destination that is engulfed in a political conflict. US, Canada and EU countries all have travel warnings for Honduras, and carving out of Honduras areas that are “just fine” is a tricky strategy.

At an October Central American Travel Market convention in San Salvador, Ricardo Martinez, Zelaya Minister of Tourism, was quoted by Time Magazine saying: “I’d like to tell everyone to come to Honduras and that it’s a tranquil place and everything is beautiful, but you think I’d be successful with that message? Of course not.”

According to Martínez, Honduras’ tourism industry, which grew by a 9% in 2008, has gone into a freefall and is down 70% this year. According to Martinez, the 155,000 Hondurans in the tourism industry are barely surviving if they have a job at all.

Martinez presented his views accompanied by a video of Honduran protesters clashing with riot police. “I’m not saying I am encouraging travel to Honduras, because I have shown you that the situation [for tourism] does not exist,” Martínez told the journalists in El Salvador. “But what I am saying is, Please don’t forget us, because we are going to solve this crisis. And once we do, we are really going to need your help.”

Some argue that last year, the Bay Islands were actually benefiting from the world economic downturn as an economical destination, thus making the perceived tourist drop more dramatic. Yearly figures calculated by Coconut Tree Divers show a 66% drop from last year. With 2008 being a record breaking year in revenues, numbers in comparison to 2007 reveal a 50% drop.

Compounding the downturn are other problems: high unemployment and spike in crime. Reports of multiple robberies, usually petty theft, in excess of five break-ins a month have been reported from the neighborhood behind Pura Vida. Kevin Braun, member of the West End Patronato and owner of Seabreeze hotel and Cannibal cafe, has been working to raise funds for the new police station in West End, and for crucial supplies such as gasoline and flashlights for the increased number of officers.

The rising cost of electricity makes it even more difficult for businesses to stay open and some business owners have decided that it is simply not worth it. They have either sold their business, gone bankrupt, or closed for a period of time, working elsewhere to make money and ride out the slow season.

Every business interviewed indicated they are spending their savings, financial cushion, or personal funds just to stay afloat. Throughout the Bay Islands, the dive shops seem to be the most affected. “The reality is,” said PJ Rowntree, Coconut Tree owner, “we’re really just barely scraping by, just like everyone else.” Many businesses reported not knowing how they will make rent this month: “we’re hoping things will pick up by the end of the year.”

Despite all the hardships, Bay Islands business owners are in remarkably good spirits, thinking positive, and are utilizing creative survival tactics. “We’re too stubborn to go under,” laughed Akel. Some Utilians even point to the downturn as a positive situation, saying that development was out of control on the island, and this has slowed the process.

Some businesses are taking the opportunity to invest in their locales, upgrade their service offer, and prepare for the return of high season numbers. Romeo’s Restaurant in French Harbour, used three weeks of the summer to refit their location. “It’s the first time we shut the restaurant, ever,” said Romeo Silvestri, restaurant’s manager. Cannibal Cafe also closed for three weeks for renovations and improvements. The Shark Cave is sticking to its five year plan of expansion. “When tourism comes back, we’ll be ready and in prime position,” said Roland Brooks, Shark Cave manager. Local fruit and vegetable truck vendor, Victor Antonio Cruz is looking to get in on the ground floor of a supplemental business opportunity to expand his earning potential.

The empty main road in West End on a Saturday afternoon.

The empty main road in West End on a Saturday afternoon.

Fearful of the unstable situation in which Honduras is portrayed, potential tourists are canceling their trips. Business owners are making attempts to create positive associations with tourism in the Bay Islands, sometimes contrary to what might be read by potential tourists in their home town newspapers. Rowntree has been working actively with PADI on publishing articles promoting Honduras. Tyll’s Dive Shop has been giving stacks of brochures and information to any travelers going through Central America to leave at hotels. Several businesses are active on Facebook, MySpace, Trip Advisor and blogs, and are encouraging their clients to post that it is safe to visit. It seems to be working. Most dive shops and hotels reported that inquiries are beginning again for the end of the year and beyond.

Several businesses have been using national tour operators to promote Bay Islands to mainland Honduran clients and stay afloat. Palmetto Bay Plantation, Fantasy Island, Turquoise Bay, Henry Morgan, Paradise Beach Club, and Infinity Bay have advertised special promotions dropping prices as much as 50% and sometime offering all inclusive packages for ads low as $40 a day. “We’re not making a lot of money, but it’s paying the bills,” said Cecilia Mendez-Chamer, Palmetto administrative manager. “When things start getting better, we’ll make more adjustments.”

While de facto Tourism Minister Abarca claims that Hondurans coming to Roatan do so as a show of support for Micheletti government, Martinez said that they do it because its cheap enough where they can finally afford it.

Utilians, in even deeper dire straits that Roatan businesses, has been employing the same strategy. In October, Ana Abarca, Minister of Tourism, met with several Utila businesses in to draft economical packages that promote Utila to mainland travelers. “On the weekends we’re definitely seeing more Hondurans vacationing here,” said Julia Centero-Keller, owner of Jade Seahorse.

Bay Islands industries not necessarily related to tourism have also been negatively affected. Martin Midence, Roatan electrician, had to drop prices to ensure that people can afford to employ him. “I can’t afford to go anywhere,” he said. “So I’ll do what I can to help people out. At the very least, I can work. And if it doesn’t help the economy, it helps in self-esteem.” On Utila, according to Centero-Keller, prices have been cut to 60% for carpentry and maintenance services to ensure continued work.

Employee cutbacks have been a necessary strategy for some in the slow season. Coconut Tree Divers is down from seven to four instructors, which is reported as normal for this time of year, but wages and commissions are down for those they have retained. Tyll’s Dive Shop is down from their normal two instructors and one dive master to one captain and one instructor. To compensate, they employ freelance dive professionals from the other dive shops that have closed. Restaurants have had the highest firing rate. Douglas Greene, manager of the Beach House Restaurant, has had to let all of his employees go, handling everything himself. His employees work on daily, as needed basis. “They actually make more money that way,” reported Greene. Some restaurants, such as Pinocchio’s, have cut their opening hours to a couple days a week, or to open upon request. One Roatan gallery owner will only open on cruise ship days. Employees at Chillies hotel were given the option of keeping their position, but with pay cuts. They will gain bonuses when busy.

For many, personal spending cutbacks have also been necessary. Business owners are canceling annual vacations and postponing planned purchases, even considering taking their children out of local private schools. Some are finding ways to be penny-wise in meals. The dive community is meeting regularly for group dinners and potlucks. “I’ve been having fun finding ways to keep meals to under Lps. 200 per person. If you can get it down to Lps 50- 60 per person you’re doing well,” said Rowntree. Many are also looking to their own natural resources. “We’re lucky we still have a forest with food,” said Centero-Keller. “I can go to my land and get avocados, crab and breadfruit.” “It’s financially hard right now, but we live on the island,” said Brooks. “We fish, we farm, and we work.”

In some cases, the downturn has created a sense of community cooperation. With a group of DMT’s and no students to train, Gaynor Pook, owner of Coconut Tree Divers, offered open water classes to the local community, snorkel guides, islanders and teachers. “It helps my DMT’s and helps the community,” said Pook. Perry Wintle with the Reef Glider floating bar plans to offer specialized packages for events, weddings, and school occasions, that include water taxis and restaurants for transport and catering. “I want to do anything I can to include other businesses and help people out,” said Wintle. Dorte Bockwoldt of Tyll’s Dive Shop has enlisted her international community of friends, inviting them down for a dive vacation.

Fighting boredom is on the top of most people’s minds. When morale started to drop at Coconut Tree, Gaynor Pook tried to keep the atmosphere light with activities such as BBQ’s and wakeboarding. Kevin is re-opening Cannibal Café because “the employees are so bored, they’re asking me to open.” Midence reported. “I’m spending more time with my family and friends. The slow season is giving me extra time to enjoy it.” Others are focusing on time at home, working on economical home repairs.

Roatan business owners are hopeful about the increase in tourism from the upcoming cruise ship season, particularly with the opening of the Carnival Cruise Ship terminal in November. “The cruise shippers who are coming are the ones who are paying the bills right now,” said Bockwoldt. “Once more people come, there will be more and more exposure that Roatan is safe and calm,” said Braun. The cruise ship business supports local jobs such as gift shops, clothing, massage, and braiding. The new Carnival Cruise Ship Terminal dock is expected to employ up to 500 locals directly or through tenants, with up to 1,000 more jobs created indirectly through taxis, tours, and other related business.

Tyll's dive masters play cards to pass the time.

Tyll's dive masters play cards to pass the time.

Utilian business owners are looking to national traffic to carry them through the hard times. This gives a different timeline for recovery in Utila, where business owners anticipate Semana Santa for the next high season. “Ultimately, however, we depend on international traffic for our economy,” said Centero-Keller. “It’s the way people are invested here and the way the island is set up.”

While the Bay Islands remain dependent on the tourist industry, all business owners speculate about the recovery cycle. Factors that will indicate how the tourist market might behave in the upcoming years are the upcoming elections, the holiday season, and the world economic market. “We won’t know what will happen until after November,” said Governor Arli Thompson “It’s basically a waiting game right now and just about everyone is holding their breath,” said Braun. “We’re holding our breath for sooner than later,” said Mish. “When it does come back, I hope that makes it into the news.” The question is not whether the tourists will come back, but when. [/private]

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