As a result, the Ministry of Tourism has been advised by North American consultants Ettenberg & Company Inc. that Bermuda's marketing efforts urgently need to undergo a major shift in focus.

And, noting that Tourism is spending $1 million less on Advertising & Promotion in 2003/2004 than it did in 1999/2000, while the Ministry's Salaries & Wages increased by $1.1 million over that period, the consultants comment that "we are fortifying a bureaucracy at the expense of spending against tourists."

In a major report on the state of Bermuda's tourism industry dated September 23, 2003, which was acquired by the and described as a Marketing Audit of the Bermuda Department of Tourism, the consultants paint a grim picture of the state of Bermuda's hospitality industry marketing.

The report takes special aim at the Tourism Department's long-standing preference for marketing through travel agents.

The report said only 31 per cent of visitors used a travel agent in 2002, down from 52 per cent in 1998. And only 12 per cent of first-time visitors in 2002, describing "visitation influencers", cited "travel agent recommendation".

Ettenberg warned: "We have an entire Tourism infrastructure chasing down about one-third of all (those) visitors who book through travel agents.

"In fact, repeat visitors use travel agents only 29 per cent of the time. We must understand more about how and why travellers make their own arrangements."

Indeed, the report highlights the fact that, in a comparison of first-time versus repeat visitors in 2002, 44 percent of first-timers and 53 percent of repeat visitors made their own travel arrangements.

While the comparative cost of marketing Bermuda is approximately three times the cost per room available of marketing the Cayman Islands, Barbados and Bahamas, it is almost five times the cost of marketing Aruba, eight times the cost of marketing Jamaica and St. Maarten, and ten times the cost of Trinidad & Tobago and Turks & Caicos.

The report uses a pre-Hurricane Fabian estimate of 3,500 rooms in Bermuda as a proportion of the 77,400 total rooms available in the Caribbean area (according to the 2002 Caribbean Tourism Statistical Report).

It summarises: "Compared to other island destinations, Bermuda has a mere four percent of total 'island' rooms. At this market share, the economy and general economic indications are less important than the impact of our programmes. Perhaps of greater interest is that we are spending three times the cost per room in marketing than our major Caribbean counterparts."

Only the Bahamas, with a marketing budget of $53.9 million, spends more in total marketing dollars than Bermuda, whose estimated 2003/2004 marketing expenditure is budgeted at $36.9 million. But the Bahamas has 15,195 rooms available, giving a cost per room of $3,547, compared to Bermuda's $10,514 per room, assuming 3,500 rooms are available.

The preamble to the "findings" of the report states that the purpose of the marketing audit is to "provide an objective evaluation of the people, processes and marketing strategy of the Bermuda Department of Tourism".

And it sets out "The Parameters ? for the most part, the implications, conclusions and recommendations are the result of a series of face-to-face interviews and a zero-based evaluation of the marketing data available to us in early 2003."

After describing extensive source documentation and the names of those interviewed, the preamble concludes that "a total of 50 recommendations have been presented for Ministerial approval as a result of this audit.

"Those approved will form the basis of work going forward. Progress on each will be documented monthly in a status report, until all approved recommendations have been successfully implemented."

The "implications" of the "findings" contain some very blunt commentary. In comparing the actual expenditures in 1999/2000 of $35.6 million against proposed 2003/2004 costs of $36.9 million, the report notes that "while the budgets have remained fairly stable, the distribution of the budget has been changed. Advertising & Promotions have been slashed 5.4 per cent while Salaries & Wages have increased 36 per cent. We are fortifying a bureaucracy at the expense of spending against tourists."

In commenting on the projected expenditures by programme, Ettenberg concluded that: "It is not a question of whether enough money is being invested in Tourism. It's more a question of how it is being spent.

"While we allocate $22 million to Marketing, the media portion of expenditure is about $7.3 million of which only $3.3 million or 9.2 per cent of the total budget is allocated to gateway cities. This make no sense whatsoever. We need to zero-base our budgets based upon effectiveness, not history."

In what is perhaps a more damning comparison than the marketing cost per room, Ettenberg points up comparative "conversion costs", the cost of landing a tourist on-island, whether by air or sea. Bermuda's 2002 marketing costs of $36.8 million, when visitor numbers totalled 470,000, gives a "CPV", cost per visitor, of $78.30.

Bahamas marketing costs of $53.9 million, when visitors totalled 4,092,000, of whom 1,290,000 arrived by air, produced a CPV of $13.17. Jamaica's efforts were almost exactly as effective: with a total budget of only $30.4 million and 2,131,000 visitors, of whom 1,266,000 arrived by air, its CPV was a similarly modest $14.26.

UNSURPRISINGLY, Ettenberg concludes that: "Bermuda is by far the least effective in the use of marketing dollars to achieve conversion. It costs us $78.30 per visitor versus other destinations in the (dollar) teens. We need a more effective spending strategy."

In a table headed "Major Influence in Decision Making", exit interviews of Bermuda air travellers in 2002 reported that, given multiple choices, 42 per cent cited "Friends/Family recommendations", 40 per cent because they "visited before", 27 per cent because they just "wanted to come", and 25 per cent because Bermuda was "easy to get to".

Only ten per cent "got information via Internet" and eight per cent ticked "Travel Agent recommendation". A mere three per cent mentioned "Price" as a major influence, and a miniscule two per cent had been influenced by "advertising".

Bermuda cruise ship travellers reported broadly similar influences ? except that 15 per cent were influenced by travel agents and ten per cent by price.

Commenting on the implications of those findings, Ettenberg suggested that "we need to develop a Friends and Family Bermuda 'Ambassador' concept where we acknowledge people who refer others or bring others to the island. We need to reconsider what the sales force should be focused upon in terms of influencing the influencers."

While only ten per cent chose "got information via Internet" as a major influence in decision making, a research study headed "Bermuda Visitation ? Media Consulted Prior to Booking ? Non-Business Travellers 2002" paints a very different picture.

Of North American visitors, 53 per cent "visited a web site", 12 per cent read a "newspaper/magazine article about Bermuda", eight per cent "received mail about Bermuda", four per cent called "1-800-Bermuda" and two per cent saw or heard a "TV or radio ad". Thirty-one per cent, perhaps those most influenced by friends or family, consulted "None of these".

Referring to those findings, and an identical "Media Consulted Prior to Decision to Visit" table, Ettenberg advised that "the data highlights the need to become more aggressive in our communications, particularly concerning the 1-800-Bermuda number. The web continues to prove itself as an effective medium for gathering information" and that "the effectiveness of the communications strategy has to be cause for attention if the current campaign cannot move these figures forward significantly. It is more a problem of frequency than message."

The effectiveness of the entire Department of Tourism North American sales force is seriously questioned by two reports. Despite findings that only eight per cent of visitors are influenced by travel agents, the report on "North American Sales Activity 2002-2003" lists 6,240 visits, being four visits a year to 1,560 "Preferred Travel Agencies".

Even the sales teams expressed reservations about the wisdom of continuing practices that no longer appeared productive. In a note appended to a report titled "North American Sales/Marketing Objectives ? 03/04", the consultants report that "the regional managers have expressed concern about the effort it takes to personally call on 1,450 agents four times per year. They believe this time would be better spent on Seminars, Family Trips and Workshops where the effort is scaleable. To do this we would have to reduce the number of visits from four to two."

SOME frustration with bureaucratic inertia surfaces in a comment added to a report on "Trade Show Strategy". Noting that there were 88 visits to trade shows, compared to the 74 planned, Ettenberg comments that "despite previous recommendations to cut back on trade show activities, the sales force in fact increased attendance by 19 per cent over plan for 2002".

In spite of evidence pointing clearly to the declining use and effectiveness of travel agents, 75 visits to trade shows are planned for the 2003/2004 year.

In another report that appeared to underline that travel agents were not worth the time and expense lavished on them, Ettenberg reported that "of those visitors using travel agents, the vast majority (88 per cent total, 83 per cent of first-timers, 94 per cent of repeat visitors) knew exactly where they wanted to go".

Apparently contradicting their own evidence that only two per cent of visitors cited advertising as a major influence on their decision to visit, they recommend that "the data suggests that since most people have chosen the destination prior to contacting the agent, advertising and viral marketing are critical to our success.

It seems that a serious review of advertising is required. In that only five per cent of "US Population by Household Income 2002" has income in excess of $150,000, the consultants recommend that, "given our target market (household income) is $150,000+, we must reconsider the media mix given that 95 per cent of all mass media is wasted".

In a comment appended to a report of "Total Spent (by visitors) on Specific Expenses ? 2002", referring to the finding that visitors only spent an average of $82.65 per day on non-hotel on-island activities, defined as Shopping, Meals, Bars and Nightclubs, Transportation, and Sports, the consultants note, almost plaintively, that "overall, spending $82 per day is not, in our judgment, a large investment".

They go on to suggest, in consulting jargon, that, "This talks to a lack of a broader, more diversified evening offering", which means that there isn't much night life. In what could be characterised as cautious under-statement, they suggest that, "To spend $7 a night on bars and entertainment is not typical of most vacations."

Given that our US visitors spent an average $85.81 per day, and our Canadian visitors only $67.25, this report will give comfort to those who disparage our Canadian visitors as innately parsimonious, but not to disparagers from the European Union, because European visitors spent only $52.86 per day.

In a broad-ranging discussion with the , Minister of Tourism Ren?e Webb commented on the Ettenberg report and its implications for tourism.

"The Ettenberg report has been adopted by Government, and is currently being implemented. It called for a restructuring of the way we deliver our services, and also looked at how we position ourselves in the market, and how we can market ourselves more efficiently, and where we spend our marketing dollars.

"Basically, the Government no longer wanted to spend money all over the place. We wanted to be much more focused on where we spend the money.

"We wanted to look more closely at the gateway markets. So the report came back and said, 'This is what you need to do'. We had to restructure our sales people, close down an office or two, move people from satellite offices to different offices, so that's been done.

"My background is finance and marketing. I am used to pressing a button and getting information. How many tourists come out of New York? How much money do we spend there? What gets delivered? What advertising is working?

"None of that was available. So, basically, the systems are being put in place so that Tourism operates, in a very real sense, like a business, with systems that are accountable.

"We are putting in an MIS (management information) system, so that people have targets for the first time ever, in terms of numbers that they are expected to try to deliver. There are targets in terms of North America as a whole, targets based on cities, and even down to zip codes. That is how accurate it is.

"What that has meant for tourism is a whole restructuring of how we do things at home and overseas, and it is being successfully implemented. As of April 1, which is officially when we think our tourism season starts, all of it kicks in. The sales people know their targets, they've been trained, they had presentations, all of that.

"So, what does it mean? It means that we are going to be doing things differently than Tourism has done in the past. And it means a major change. Of course, we had some resistance to the change initially, but I think that the more people have been made aware of what is happening, and had more information, the resistance was reduced. It's about people understanding how their lives are affected.

"I think that we are definitely going to be successful, and we have done everything to make it a success. Our agencies have been put on targets.

"For example, our agency in London is expected to increase their numbers by seven per cent. The agency in New York, an advertising and marketing agency, has a quota. We have put everybody on quotas,".

SHE went on: "We have moved away from the focus on agencies. The focus was totally on agencies, to tell you the truth. And the way our performance was measured was based on how many trade shows you went to. All of that has been changed.

"Basically, what we have found is 40 per cent of all people who come to Bermuda access the Internet prior to coming. They don't necessarily book online, but they do access the Internet in the first instance. So we have had to reflect that. We have had to improve our Internet presence.

"I mean this is cutting-edge, modern stuff that we are moving towards, but we are also coming from a basically manual system where there was no information stored electronically so that you could have access to it.

"We have moved away from travel agents, but travel agents still have a key role to play. Those who actually book their bookings online to Bermuda is only ten per cent, but 40 per cent go online. So there is a very real need to have a strong online presence. The wholesalers are important as well.

"We are doubling the budget for gateway cities, basically just by re-allocating the existing budget. We didn't have a budget increase, nor did I want one. There is enough money to do what we have to do.

"About 40 per cent of all of our tourists come from New York, but that is not reflected in what we spend, which is only about 23 per cent of the budget. New York is a real growth market, so we are targeting that, all of the gateway cities, anywhere with a direct flight, we are supporting that market.

"We have been implementing since September. The Ettenberg report was not just another report. This was actually done with a view to changing how we do business.