El Faro front cover - hotels closing in Playa Dorada

carina

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Mar 13, 2005
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When passing Tropical today I saw an article on the front cover of El Faro that the economical crisis of tourism will force hotels to close in Playa Dorada.
And of course the man before me bought the last copy...
Have anyone read this article, and if so what did it say?
 

Dolores1

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May 3, 2000
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carina said:
When passing Tropical today I saw an article on the front cover of El Faro that the economical crisis of tourism will force hotels to close in Playa Dorada.
And of course the man before me bought the last copy...
Have anyone read this article, and if so what did it say?

Maybe this is last week's edition, but the new one should soon be posted. The URL is http://www.periodicoelfaro.com.do/
 

carina

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Mar 13, 2005
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Got the paper

Dolores, I got the paper now from my farmacia.

It?s a long full page article about the less amount of tourists having arrived this season, the higher costs of products and electricity that have caused several of the hotels to have sold shares of their businesses, to be able to pay debts to the banks.
Some hotels have 15 days to pay off these debts.

I will post the full article when El Faro updates their website, it will most certainly be online too. The paper is from todays date.
 

Hillbilly

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Jan 1, 2002
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There could well be a few good reasons for this

1) This is the "slow " season, and reports from Cabarete are that it is a very solw one at that.
2) the Dominican economy is nearly at a standstill because of government restrictions on lending and the lower exchange rate. The word on the street is that "there is no money around."
3) Hotels are notorious a poor payers. They want the best rpoducts at the lowest prices and then take 6 months to pay off.
4) Hotels also get as much money out of the country as is possible and try to operate on the leanest of cash flows.

IF there are problems, and I suppose that these entities are suffering like the rest of Dominican industry, they were foreseeable. Higher wages when the dollar hit 40 then 50; fuel nearly 40% more expensive than this time last year because of the increased value of the peso; communication costs increased by 20%, things like garbage and water are up over 20% ( with no real increase in service or quality either!), and propane is up over 100%...All in all, facing the reality of the local economic situation, the pressures of the tour operators and the contraints within the sector, many of these hotels are lucky to be still open...

HB :(:(
 

carina

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Mar 13, 2005
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Hillbilly said:
1) This is the "slow " season, and reports from Cabarete are that it is a very solw one at that.
2) the Dominican economy is nearly at a standstill because of government restrictions on lending and the lower exchange rate. The word on the street is that "there is no money around."
3) Hotels are notorious a poor payers. They want the best rpoducts at the lowest prices and then take 6 months to pay off.
4) Hotels also get as much money out of the country as is possible and try to operate on the leanest of cash flows.

IF there are problems, and I suppose that these entities are suffering like the rest of Dominican industry, they were foreseeable. Higher wages when the dollar hit 40 then 50; fuel nearly 40% more expensive than this time last year because of the increased value of the peso; communication costs increased by 20%, things like garbage and water are up over 20% ( with no real increase in service or quality either!), and propane is up over 100%...All in all, facing the reality of the local economic situation, the pressures of the tour operators and the contraints within the sector, many of these hotels are lucky to be still open...

HB :(:(

Sure, and I agree.
And many tour companies chosed as well not to ad the new tax this year on top of their already set prices.
I spoke to one of my clients yesterday who have companies in both Puerto Plata and Punta Cana, offering tours to tourists and who is one of the major on the island. Their business is slightly less this season for Puerto Plata, but slightly over estimation in Punta Cana.

Yes hotels are poor payers! I have to, even for smaller amounts, go crazy some months to get my payments! :cross-eye

Of course everything is more expensive, from electricity to salaries, products and on.. But come on, how do they estimate their profits and their prospects for running a business?
There is much many need to learn in that field.

Still I think an article like this, that PD hotels will have to close is slightly
dramatized.
Yes, they have depts many of them, but I don?t see it happen that they would close down.

:tired:
 

planner

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Sep 23, 2002
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Add to that

High occupancies at the hotels over the winter went a long way to creating problems too.

Unfortunately many of these hotels have not re invested in their infrastructure. So, high occupancy means using marginal rooms, with plumbing problems, and air conditioner problems etc etc. It was crisis management a lot of the time.

And, to add more problems, tourists this year were cheap! They spent on average 1/2 of what they spent last year on tours outside the hotel! That means they stay inside the property eating, drinking and wanting to be entertained...

This year has been equally hard on the excursion operating companies. They receive payment in pesos in most of the cases! And they receive it at a lower then market exchange rate - most of the time. ANd they receive it from the hotels and tour operators very very late - most of the time!

Of course most of the costs for both the hotels and other companies connected to tourism have gone up, way up. They went up in reaction to a strengthening dollar and now have not gone down in reaction to a strenthening peso!

Other factors of course are at play and it will be interesting to watch the fall out.


Hillbilly you are right, from what I have seen the industry is very very slow. ANd it seems to be most of the country!
Yes hotels are notoriously poor payers, but, so are the tour operators. It is the little guys waiting for their money who are getting clobbered here. And yes again, the hotels like to get their money out of the country! they are operating on very lean budgets right now BUT I have not seen prices drop all that much at the hotels for the off season. I watched to see them to come down like last year and that is not happening! Quite frankly I thought they were too low in some cases last year.
 

carina

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This year has been equally hard on the excursion operating companies. They receive payment in pesos in most of the cases! And they receive it at a lower then market exchange rate - most of the time. ANd they receive it from the hotels and tour operators very very late - most of the time!

This is not true for most tour companies.
The major tour companies have prices set in US and this is what they get paid in.
The problems for the major companies have been the taxes and the fact as you write too, the tourist buy less... and also 60 days of non expecting rain around xmas!!
 

carina

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Hotels article

Here is the full article about the hotels:

Crisis econ?mica obligar?a el cierre hoteles Playa Dorada

PLAYA DORA.- Al punto de estallar se encuentra la crisis econ?mica que afecta a casi la totalidad de hoteles de este complejo tur?stico los que no han cerrado por las inyecciones monetaria que reciben mensualmente de parte de accionistas.
La preocupaci?n es del dominio p?blico para los inversionistas, accionistas en general, proyectando la imagen de sobrevivencia en medio de tensiones y preocupaciones constante por el alza que han experimentado los productos que adquieren y los suplidores han percibido la situaci?n y limitan a s?lo quince d?as los cr?ditos.
Los ?ltimos impuestos, as? como el alza de la electricidad es cotizada en d?lar, teniendo ellos que cambiar pesos para pagarla, as? como el aumento del Itebis y otros cargos, est?n forzando el cierre de algunos hoteles que con la bajo ocupaci?n que se registra podr?a estar cerca de materializarse lo que constituir?a uno de los golpes m?s fuertes de los ?ltimos a?os para la econom?a de Puerto Plata ya que miles de personas dependen directa e indirectamente de este complejo tur?stico incluso se ha planteado una reestructuraci?n corporativa en ara de evitar que los hoteles que se encuentran en peores condiciones colapsen.
La vulnerabilidad de los hoteles por la crisis econ?mica que los afectas sus accionistas y directores han sido obligados a efectuar un ejercicios constante de reestructuraci?n y dise?o de nuevas estrategias con el objetivo de manejar adecuadamente las crisis por las que atraviesan, revela una comunicaci?n de alarma enviada al l?der y presidente de la Asociaci?n se?or Ventura Serra.
Las previsiones que reciben los hoteleros son cuantiosas estando limitada para obtener los desempe?os hist?ricos de los hoteles en Playa Dorada, entre los cuales se citan competidores externos e internos producto de la globalizaci?n, tener que adquirir productos cada vez mas costosos, falta de liquidez para comprar, problema del entorno econ?mico en que se desarrolla una empresa, especialmente la problem?tica est? experimentado el sector tur?stico por la apreciaci?n del peso dominicano frente al d?lar y los altos costos operativos que no se adelantan a la tasa cambiar?a
Otro factor se atribuye a la crisis econ?mica de los hoteles en este complejo es el deterioro de los precios de la tarifas causado por la competencia y las condiciones del destino. Las autoridades del pasado gobierno no se dignaron en resolver los problemas demandados por los hoteles y en los nueve primeros meses del gobierno de Leonel Fern?ndez con el secretario de Turismo a la cabeza, se han limitado a planificar y ofrecer soluciones, sin que hayan dado el primer paso.
La intervenci?n de la pol?tica impuesta por el Fondo Monetario Internacional, es otro de los puntos que consideran los hoteles afecta su normal desarrollo. Se destaca el hecho de algunos hoteles permanecen abierto gracias a los aportes que hacen sus accionistas cada mes para cubrir los gastos regulares.
La Asociaci?n y sus dirigentes han guardado silencio y no han dado respuestas a sugerencias planteadas como plan estrat?gico para salir al frente a la crisis que afectas a varios hoteles. Dentro de los factores adversos a la permanencia en servicio de los hoteles se enumeran la propuesta eliminaci?n del subsidio del gas licuado con un incremento de un 100%, elevaci?n de un 25 % a los salarios de los empleados y trabajadores, alza de energ?a el?ctrica , Itbis en un 4% el impuesto selectivo a las bebidas alcoh?licas y seg?n los hoteleros todos los precios de los suministrados y limitaciones para hacer efectivo los mismos.
Aunque no habla de un cierre definitivo, impl?citamente los hoteles entienden que estos factores negativos traer?n consecuencias de crisis que presentar?a un deterioro en los indicadores financieros.
Se ha sugerido a la Asociaci?n de Propietarios de Hoteles la elaboraci?n de un enfoque estrat?gico que promueva una revisi?n de los objetivos y estrategias del proyecto como negocio, ajust?ndolos aspectos que induzcan a la generaci?n de valor. La realizaci?n de un cambio de cultura hacia una situaci?n de crisis, as? como la revisi?n de establecimientos de precios y reducci?n de costo con la implementaci?n en todos los niveles.
Finalmente se considera la reestructuraci?n corporativa es una alternativa de supervivencia para las empresas que se encuentran en una situaci?n financiera desfavorable. Es de importancia capital que se busquen soluciones en conjunto la situaci?n que se ha presentado con el objetivo y finalidad de mantener las operaciones de hoteles del complejo.
Se inform? que las autoridades tur?sticas nacionales est?n al tanto de lo que est? ocurriendo en este complejo, por las relaciones estrechas con algunos de los accionistas principales y ejecutivos de los hoteles y aunque existe inter?s de hacer, no hay dinero para comenzar los trabajos.
 

Robert

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It's the chicken and the egg...

In order to invest in making their product better, they need a better dollar yield per occupant. While the product is at the lower end of the scale, you're only "given" by the tour operators a certain class of tourist.

From the other side, you have the tour operators that control the business looking for a better yield per client. They couldn't careless if they sent their clients to Cuba, China or the DR, it's all about $$$. If they get a better yield in Cuba, then they will be pushing their clients and marketing in that direction.

Right now, tourism is not sustainable in the DR, especially as most of it revolves around the above model.

The DR needs to develop a national plan and diversify to survive.
This is happening on a small scale, but may not be enough...
 

Hillbilly

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Jan 1, 2002
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The article just added a political

factor to everything we all have just posted.

The fact that the roads in the area, as well as electricity and water are very poor, certainly influences tourism. A better infrastructure, as promised by the President, would certainly contribute to a better class of tourism.

I, as one of many that have commented on this, still maintain that POP and PD in particular made a major error in judgement when they went towards mass, low cost tourism, instead of the high end tourism offered by Punta Cana and B?varo...I also feel that all-inclusive model was the major factor in the terrible fall in the local economic levels.

HB :(
 

carina

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Robert said:
It's the chicken and the egg...

In order to invest in making their product better, they need a better dollar yield per occupant. While the product is at the lower end of the scale, you're only "given" by the tour operators a certain class of tourist.

From the other side, you have the tour operators that control the business looking for a better yield per client. They couldn't careless if they sent their clients to Cuba, China or the DR, it's all about $$$. If they get a better yield in Cuba, then they will be pushing their clients and marketing in that direction.

Right now, tourism is not sustainable in the DR, especially as most of it revolves around the above model.

The DR needs to develop a national plan and diversify to survive.
This is happening on a small scale, but may not be enough...

TRUE. TRUE.TRUE.
As you write above, or even worse - taking advantage of ANY - I mean ANY- situations.
After the tsunami for example - the Scandiavian tour operators ( Maybe from other countries too, but I know of only "my area" ) raised the prices on charter to DR with 46 %... Knowing people would rebook from the Tsunami areas to DR for instance!

We must remember that travelling here on a week or two from for example Scandinavia, UK is not a cheap trip. Many keep Canadian prices in their heads, and European prices for a vacation here is something else.
 

2dlight

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Jun 3, 2004
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I agree about the cost...

carina said:
TRUE. TRUE.TRUE.
As you write above, or even worse - taking advantage of ANY - I mean ANY- situations.
After the tsunami for example - the Scandiavian tour operators ( Maybe from other countries too, but I know of only "my area" ) raised the prices on charter to DR with 46 %... Knowing people would rebook from the Tsunami areas to DR for instance!

We must remember that travelling here on a week or two from for example Scandinavia, UK is not a cheap trip. Many keep Canadian prices in their heads, and European prices for a vacation here is something else.

of going from Europe to the DR. I have a friend who lives in Germany who would like to meet me in July in the DR. while I'm there looking into some business opportunities; she is not willing to pay $1,400US( the lowest fare she could find) just to get to SDQ.If there are cheaper fares please let me know...I'll bring another tourist to the DR.
 

Gringo

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Another factor to consider.....

In Playa Dorada 95% of the Hotels sell Time-Share, Its not Important if you like it or not, but its a fact of life here!

The reason the Hotels go along with this is because its BIG MONEY for them and all they have had to do is supply a sales room and split 50% Gross with the Marketing company that handles all the headaces.

A lot of these marketing company's had been spliting Two to $5.000.000 a year.

With this money the Hotels were paying off the Banks Etc.

With what has happend recently with the Influx of low class and cheep Vacationers the (Hot shots or Sales Pros) have left for Greener Pastures.

So what has happened now the Dominican Hotel owner's are trying to do it them selves and are finding out that Tourists are very reluctant to hand over thier Credit Card to a Dominican in a foreign Country.

Gringo
 

carina

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Gringo said:
In Playa Dorada 95% of the Hotels sell Time-Share, Its not Important if you like it or not, but its a fact of life here!

The reason the Hotels go along with this is because its BIG MONEY for them and all they have had to do is supply a sales room and split 50% Gross with the Marketing company that handles all the headaces.

A lot of these marketing company's had been spliting Two to $5.000.000 a year.

With this money the Hotels were paying off the Banks Etc.

With what has happend recently with the Influx of low class and cheep Vacationers the (Hot shots or Sales Pros) have left for Greener Pastures.

So what has happened now the Dominican Hotel owner's are trying to do it them selves and are finding out that Tourists are very reluctant to hand over thier Credit Card to a Dominican in a foreign Country.

Gringo

I?ve been thinking in those terms, wondering if this isn?t the actual situation, but never heard anyone talking about it.
It didn?t and doesn?t make sense to me to rent out the rooms to one target group and expect another to walk in to the vacation clubs..
Cause as the situation is now, there are different target groups.

:tired:
 

Ian W

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May 26, 2004
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Price rises in DR

I have read a lot of what is said here and tend to agree with a lot of it. As a tourist who is coming over from Europe in 3 weeks time I have to say that the reason that they are spending less is that the value of the Peso appears to have doubled in the last 12 months. This time last year, I was getting approx 80 Pesos to ?1 at the moment I am being quoted mid 40s. This means that unless the price of everything has halved then I will have less spending power. Timeshare reps are unlikely to get much business from europeans as we generally could not afford to visit often enough (plus I can get a flight & hotel package for less than the cost of booking my own flights). So all in all that probably explains why takings are down and please don't blame the "cheap tourists" as I for one never go home with any spare money when I visit and try to spend as much as I can with local businesses (as opposed to the american/european owned ones that my tour operator would prefer I use).

Ian W
 

carina

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Mar 13, 2005
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Ian W said:
I have read a lot of what is said here and tend to agree with a lot of it. As a tourist who is coming over from Europe in 3 weeks time I have to say that the reason that they are spending less is that the value of the Peso appears to have doubled in the last 12 months. This time last year, I was getting approx 80 Pesos to ?1 at the moment I am being quoted mid 40s. This means that unless the price of everything has halved then I will have less spending power. Timeshare reps are unlikely to get much business from europeans as we generally could not afford to visit often enough (plus I can get a flight & hotel package for less than the cost of booking my own flights). So all in all that probably explains why takings are down and please don't blame the "cheap tourists" as I for one never go home with any spare money when I visit and try to spend as much as I can with local businesses (as opposed to the american/european owned ones that my tour operator would prefer I use).

Ian W

Hi and welcome to the board!
I think we all mean "cheap tourists" in the meaning that Playa Dorada rent out their rooms to charter tourists, and that does not harmony well with the group of peope the vacation clubs needs.
Not only that deal does not harmony, as you know as being from Europe, those people who want to buy a hosue somewhere upon retirement or go for a vacationclub deal, and that are Europeans, most likely look towards Spain where many clubs and offers are being made.
It is a close location; meaning cheap tranportation, it is familiar; meaning you understand part of/or the culture and a homefeeling; meaning most of your neigbours comes from the same country as you do.
A charter tourist visiting Playa Dorada for 1-3 weeks, have already spent alots of money for the trip ( in comparence to the Greek Isles or Gran Canaria ) and an excursion of say 60-70 US and 3 persons is about what a family can handle in general. They are happy to relax and stay at the resort.
Less likely is that they will start thinking of joining a vacationclub.
 

carina

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Had a meeting with a man from the Playa Dorada Association today on other issues, but we came to speak about tourism and debts etc as well.

Generally over the island tourism have encreased with 6.6 % the first 3 months of 2005, compared to last year.
Hotel accommodation here has 1,2 % less occupancy the same period, compared to last year, while it grew 5,6% in Santo Domingo.

Further he said that the incomes itselfs are not the issue as they settle both prices and contracts in USD and one year in advance.
The problems are the higher costs for employees, electricity, food and drinks etc.
And he verified Gringos opinion as far as vacation clubs are concerned. There is a huge fall of "expected" income from that side, as the tourists arriving to the AI hotels are not the group that easily buy a vacation club package.
This has also ended up in that many really good sellers have left their positions and very few true salespersons are there to sell, something that makes the profit even smaller.

Just wanted to add some of the parts of this conversation.
;)
 

Berzin

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Nov 17, 2004
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For the person who blames the "cheap" tourist...

there is a group of travellers out there who do not want to go to a country where you get robbed at every turn by people who see tourists as cash cows. A country where the infrastructure is so pathetic that it is obvious where the tourism money goes-overseas.
When I am paying almost $20 US for a simple plate of rice, beans, chicken, salad and a couple of glasses of OJ because of the taxes and ridiculous tipping system(where there is a tip tax alloted that does not go to the people serving you) maybe you need to rethink your tourism model. Is this the way you want to go?