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2004-02-10 22:38:18

Bay Street Stores Blacklisted

Some Bay Street merchants are expressing outrage over an advertising practice of the cruise ship industry which effectively blacklists stores refusing to pay hefty fees to promote their goods and services.

Over the years, cruise line officials have reportedly raked in millions of dollars in ads secured from some downtown business operators.

Merchants who do not advertise, for whatever reason, say they have suffered as a result of ship personnel telling cruise ship passengers where to shop.

On Wednesday, a top tourism official expressed amazement over the practice.

"I'm surprised that business people would allow themselves to be in that position without approaching the government," said Director General of Tourism Vincent Vanderpool-Wallace. "It baffles me that they would not lobby against it and make a formal address to the government about it."

Mr. Vanderpool-Wallace said tourism officials wrote to cruise lines about the issue two years ago but they denied it.

He said the Ministry made two suggestions regarding any advertising initiatives of Nassau stores on cruise lines. One, he said, involved playing a general ad on television screens aboard the ships to counteract the negativity that may have emerged from the selective advertising. The other effort would involve the Ministry of Tourism being provided with the transcripts of the "port lecturer's" presentation to tourists.

But Mr. Vanderpool-Wallace admitted that the latter effort may be too difficult to monitor.

Speaking to the Bahama Journal from her office in Florida, Michelle Page, a spokesperson for the Florida Caribbean Cruise Association, said the cruise lines did not deny that the practice exists.

"We welcome suggestions to the cruise lines about how [the practice] can be changed," Ms. Page said. "But [whatever accusations are being made] should be factual."

She added that in advertising for certain stores, the cruise lines are in fact saying to the passengers that there are certain stores that the ships can guarantee that if there is any problem "we would take care of it."

Advertising is apparently too big a business for cruise lines to give it up.

Merchants say the practice is bad for the tourism industry and they believe that government officials should do more to discourage the scheme.

"This type of activity hurts," said Tim Lightbourn, general manager of the Beauty Spot.

Officials of the Nassau Tourism Development Board agree.

Frank Comito, the organization's executive chairman, told the Bahama Journal that last November the Board got a tape and transcript of a port lecturer's presentation in which it was implied that cruise ship passengers were vulnerable if they shopped at stores that did not advertise with the cruise lines.

"We presented it to the cruise ship officials and they admitted that the information presented was not acceptable and was not the endorsed practice of the cruise lines," he said.

Mr. Lightbourn, who was also aware of the presentation to the cruise ship officials, was sceptical about the response from the cruise lines mentioned by Mr. Comito. He said the cruise ship officials "were surprised or acted surprised."

Mr. Lighbourn believes that the advertising initiative unfairly portrays stores, just because they are not paying to be promoted. He believes that the scheme also leaves a negative impression about the quality of shopping along some sections of Bay Street.

"There have been cases where it is alleged that guests have been told that they could not buy Rolex watches in Nassau or that the Gucci products are knock off," Mr. Lightbourn said.

He suggested that if it were the reverse with a Bahamian cruise ship docking in New York and the port lecturer telling the passengers that they could not guarantee shopping at Bloomingdale's or Sacks there would be a big uproar.

"John Bull is not on the list of recommended stores and [our family business] has been in business for 90 years," said Mr. Lightbourn, "longer than the cruise companies but they have the gall to tell the cruise passenger where to shop?"

Some merchants actually see wisdom in paying for the advertising; others feel they have no choice if they want to get a reasonable share of the millions of dollars cruise passengers spend in Nassau every year.

PricewaterhouseCoopers, which completed an economic impact study in 2001 for the Florida Caribbean Cruise Association, found that cruise visitors to The Bahamas spend approximately $78 each. This amounts to about $234 million annually.

Fifty percent or $117 million of the $234 million is spent on watches and jewellery; 17 percent or approximately $40 million is spent on clothing; souvenirs goggle up $20 million and the remainder, just over $42 million, goes to everything else from surrey and taxi rides to food, cigars, liquor and perfumes.

The advertising becomes crucial for some merchants, given the fierce competition on Bay Street and streets off the main strip.

"There are too many jewellery stores opening on Bay Street," said one merchant, speaking on condition of anonymity. "The landlords charge high rents, $15,000 to $16,000 per month, so you have to have high ticket items, like jewellery, to make the sales."

Some business operators believe that if the cruise business were to collapse it would drag Bay Street along with it.

Mr. Comito recognized that while the advertising efforts on cruise ships is legal, the practice is hurting some businesses.

"The cruise ships hire a company to do the in-port promotion," he explained. "The port lecturer tells the guests that these stores are recommended stores in which to shop."

Passengers aboard some ships reportedly receive pep talks before stepping foot on Nassau soil. In some instances, if their cabin numbers are displayed in some stores, they get a gift for going into a particular store.

For this kind of promotion, some merchants say they pay handsomely.

Merchants speaking anonymously said that each day a ship docks, they have to pay between $250 and $350.

"Every time the boat docks a port lecturer goes to the stores and picks up the flat fee," said one merchant. "We figure that every time the boats dock they take out between $10,000 and $15,000. And that is just the fee for each boat that every store has to pay."

So if there are four boats in port and there are at least 10 stores that are using the service, then each store has to pay $1,000 for the four cruise ships and 10 stores would earn the ships $10,000.

Mr. Lightbourn said that his family-owned company had never availed itself of the cruise promotional programme but he had heard from others that there was a flat fee and then a percentage of sales.

"When Treasure Traders was around they contacted one of the cruise ships to find out how much they should pay for the promotion," he said, "and they were told that someone would have to come and look at the business before they could quote them a price."

Another merchant more familiar with the practice said, "You pay the flat fee of $250 to $350 plus anywhere from seven to 12 percent of sales."

As mentioned, some merchants see the advertising as necessary and beneficial.

"We use it (the ship promotion) and it helps us because we are not a large store and do not carry name brands," one business operator told the Journal.

He confirmed the formula of a flat fee and a percentage of sales but declined to discuss specific figures.

"You have to send in an affidavit of your sales," he said. "If you cheat on the sales figures, you are fined and dropped from the programme."

One merchant estimated that the new Diamonds International could easily gross $8 million in annual sales at its various outlets and, at 10 percent, the cruise ships would make $800,000 from that single merchant.

According to the PricewaterhouseCoopers study, the cruise ships are taking in at least $5 million each year from Bay Street merchants' sales plus another $1.5 million in flat fees.

Critics of the practice have referred to it as a shakedown of local businesses.

Merchants who do not advertise believe that port lecturers should make it clear to passengers that stores mentioned are only being mentioned because they have paid for ads. They say it should be made clear to tourists that the stores who do not advertise are not inferior to participating stores.

Peter Mousis, who says his business depends on cruise passengers, added that he does not promote his restaurant, Athena Café.

"I get 60 percent [of my business] from the cruise ships and 40 percent from Bahamians and hotel guests," Mr. Mousis said. "They come and I give them service."

Mr. Mousis, who has been in the restaurant business for over 35 years, said he still gets guests who first visited on their honeymoon who come back years and say 'I remember you."

"I depend on word of mouth," he said.

C. E. Huggins, The Bahama Journal 

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