Madeira holiday prices - sustainable investments?

André Barreto, General Manager at Quintinha São João, which once again, won TripAdvisor´s Traveller´s Choice in 2014, questions in DNOTICIAS Madeira, the pricing structure of some holiday offers to Madeira and Porto Santo, starting as low as € 199 per week per person including "flight, hotel and breakfast" from some European capitals or € 325 from Lisbon or Porto, including a rent-a-car!

André Barreto in DNOTICIAS

Some argue that having only ever reached 60% occupancy, Madeira has an excess of accommodation offer for the visitors it can attract (or the airport has capacity for) whilst others defend that, considering the improved indicators in 2013 and maintained during the first 4 months of 2014 compared to the same period in 2013 (9,6% increase in hotel arrivals, 8,8% increase in bed nights and resulting 15.2% increase in total revenue - source DRE) - no doubt partially driven by the instability in and around the Mediterranean and North Africa -  that if Madeira were to better promote itself, the best of both worlds could be achieved: more visitors to Madeira and Porto Santo thus reducing seasonality, higher revenue for the destination and (more) profitable tourism investments and surrounding activities, including hotels, wine, food, attractions and outdoor holiday activities for which Madeira has an outstanding offer which can be done all year due to the island´s mild climate.

Madeira is currently highly dependent on Tour Operators to promote and distribute the destination as well as the their flight operations to bring visitors to the island. Hotel managers have to negotiate their rising costs against revenue, which is mostly generated through Tour Operators, who constantly negotiate to reduce price, request a discount mechanism or charge an additional marketing fee to resell and promote the destination and the hotel / tourism activity supplier.

I doubt there is one single silver bullet to address the challenges that face the tourism industry, not only in Madeira and Porto Santo, but here go some suggestions:

• trying a "tourism fair trade campaign" where holiday makers and visitors to destinations as asked if the price they paid for their holiday is "a fair price", bearing in mind the flight, the investment to build and maintain the accommodation, the hot water / food and above all the great staff that welcomed them during their stay
  
• more associative action between tourism investments and stakeholders to promote themselves and their offer
• strategic plan, developed and with "buy in" from all steak holders, with clear objectives and steps to achieve these objectives, similar to New Zealands 2015 plan with regular review points to adjust according to results achieved
• better, more effective and more selective promotion including less "dispersion" and more "concentration" on the destination and its offer, respecting the niche markets
• better understanding, transparency and clearer overview of the application of promotion support (from airline/route to Tour Operator and direct campaigns) to better apply the support
• quantitative analysis of the return on promotion support
• availability of tourism data, including airport statistics, as in the UK CAA
• comparison and benchmark for competing destination 
• better management of tourism investments, with sound financials and fair Return on Equity to investors, ongoing maintenance and improvements, adapting to client needs without losing your identify, differentiated products, etc
• etc

Not in any way a comprehensive list, but maybe enough to start a discussion.