February 5, 2004 - #15
Lots of tourists in spite of a weak dollar
The tourist season got off to a good start with enough visitors to keep everybody happy. Like every year for the Christmas and New Year’s holidays, hotels were overflowing and the villas were all rented. As for the month of January, things were as expected with occupancy rates averaging 60%. February looks even stronger, with 80% of the hotel rooms on the island already reserved. This is especially good news considered the weakness of the dollar. In fact, since the beginning of 2002, the American currency has lost close to 30% of its value against the Euro. This “tumble” has had a double effect in St Barths. First, it means a loss of 30% in the purchasing power of American visitors to the French West Indies. In fact, many store owners have announced a 10-20% drop in sales. And while restaurants and boutiques are obliged under French law to list all prices in Euros, most hotels and villa rentals have remained in dollars as the majority of their clientele comes from the United States. Surprised by the fall of the mighty dollar, they did not adjust prices in relation to the strong Euro. This turned out to be an expensive gesture as all staff and maintenance costs are paid in Euros. For the past two years, villa rentals have juggled between receipts in dollars and expenses in Euros. It has not always been a win-win situation.
But it is a double-edged sword. Those who made lots of money in the days when the dollar was worth as much as 10 francs, are making less today. On the other hand, those businesses that buy their goods in the United States are paying less than they did a few months ago, but they have not passed this savings on to the public, meaning they are enjoying a larger mark-up than in the past.
Certain villa owners are trying to find a solution that will allow them to adjust their prices in relation to the value of the Euro without shocking their American clients. The managers of the real estate offices on the island met recently to discuss the problem and try to find a solution that will work for everybody.
More to come