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Taking Tourism To The Next Level
Former hotelier and newly designated Tourism Co. Executive Director Milton Segarra plans marketing strategies to double the islands hotel-room inventory to 25,000 in 10 years.
By EVELYN GUADALUPE-FAJARDO
August 30, 2001
Segarra builds on the foundation: Designated Tourism head outlines his ambitious plans for an industry in need of excitement to keep pace with the competition
Good things come to those who persevere.
Island hoteliers in need of a leader at the Tourism Co. have been on an emotional roller coaster ride since the Calderon administration took over.
First, they were pleased with the governors initial candidate, Jorge Pesquera, only to have their bubble burst when the Senate refused to confirm him. Then, they felt as if they were being ignored when Economic Development and Commerce Secretary Ramon Cantero Frau was named interim director, a move which most saw as a political bluff on the part of Gov. Sila Calderon because of Cantero Fraus numerous other responsibilities.
Now, the hoteliers are once again elated as one of their ownMilton Segarra, former director of revenue and business development at the Caribe Hiltonhas been nominated executive director of the Puerto Rico Tourism Co.
Segarra, who awaits confirmation by the Senates nominations committee, does not appear to be worried about his appointment. He has already met with a number of Senators who have expressed interest in his ambitious plan to transform Puerto Ricos tourism industry into a world-class travel destination. If confirmed, Segarra will be at the helm of an agency with a $89 million budget and 524 employees.
He has expressed his desire to eliminate politics from the day-to-day operations of the Tourism Co.--a view shared by Pesquera and the governor--saying that he wants the agency to become a collective organization in which everyone is conscious that common objectives must supersede political agendas.
To start with, Segarra envisions an industry that would require a hotel-room inventory of at least 25,000 rooms within the next decade. To help fill those rooms, he plans to visit corporate entertainment giants like MGM and Disney to encourage their investment in the entertainment business in Puerto Rico.
Besides introducing family-oriented entertainment destinations, some of Segarras other visionary ideas include diversifying Puerto Ricos product by developing an institutional tourism marketing campaign with the flexibility to be adapted to different markets, and attracting investorswith new financial structuresto increase room inventory and create a momentum to keep Puerto Rico at top of mind awareness among potential visitors.
CARIBBEAN BUSINESS sat down with Segarra for his first in-depth interview since his nomination to find out what this former hotelier with more than a decade of experience in the tourism field plans to do to help the islands growing but struggling industry build up its image.
CB: What are your plans for turning Puerto Rico into a prime tourism destination?
MS: Im bringing a plan to the Tourism Co. based on a scorecard system (an administrative model) that will focus on four different areasinternal management & finance of the Tourism Co., development, internal tourism, and marketing.
Internal management refers to the way we run the Tourism Co., and there are several areas which we really need to improve. One of these is the return on investment analysis. The Tourism Co. will make sure it analyzes each and every one of our investments as a united quasi-public marketing agency. We must be certain that we allocate necessary resources to important efforts to achieve effective, immediate, and powerful results.
CB: What about development?
MS: If we really want to compete and take this destination to the next level, we will have to invest and define our strategy in terms of development. When I say development, one of the things Ill try to implement as soon as I take office is to establish a new unit for research & development at the Tourism Co. It would have the responsibility to analyze new trends in every market. Our marketing plan has to stay current for all our diverse audiences. We will be checking new marketing approaches, marketing models, and financing structures in order to be more effective.
CB: How do you plan to carry out this development?
MS: We need to look into how we diversify our product. Right now, that diversification includes two elements. First, theres the Convention Center that will open a new door to an arena in which Puerto Rico has never been able to compete because it lacked the infrastructure. The Convention Center will allow us to dramatically change the way we do business and the way we position and market our destination.
Another way we need to diversify our product is to provide new family-oriented entertainment locations. We have excellent hotels and incredible natural resources, but we need to bring our product to what people are looking for right now. It may come in the form of well-organized eco-tourism explorations, or perhaps initiatives towards developing theme parks or amusement parks.
CB: What do you think about the recent changes that have been made to the Tourism Development Fund (TDF)?
MS: The governor announced several initiatives to stimulate tourism on the island. In the next few months, about 2,072 hotel rooms will be inaugurated at a cost of $465 million. Another 2,258 rooms will be built at an investment of $515 million. Another bill would exempt income received by banks for fees charged to guarantee hotel financing from taxes, an attempt to free up the TDF.
I recently met with Cantero Frau and [Government Development Bank President] Juan Agosto Alicea. We briefly touched on the subject of tourism incentives and guarantees, but well be meeting again this week to work on that issue.
All I know is that the governor said the TDF would receive enough capital to guarantee a debt of $500 million. Although TDF had funds, its capacity to guarantee debt was almost exceeded. So, new capital has to be infused. As projects arise, the government will find funds from different sources, not just from legislative appropriations.
CB: So a source hasnt been identified to capitalize the TDF?
MS: We have a meeting this week about this subject. Its a matter of looking at what hotels are in the pipeline and offering assurances to the private sector that there will be capital available for good hotel projects. We want to look into each project and make sure the government will be flexible enough to lure appropriate investors. Our approach is to become partners with any investor. But the bulk of the risk will have to be absorbed by investors.
CB: Are there any elements you foresee that could affect your plans adversely?
MS: One of the problems that I have witnessed is that the existing entertainment venues in Puerto Rico do not necessarily understand the way their operations should be run in order to fulfill the needs of the tourists. Sometimes you see important tourist attractions that are closed at noon and dont open on the days they should to attract more tourists. We need to redefine the way we operate those existing venues and also bring more. I told Cantero Frau that I plan to pay some visits to major companies in the States such as MGM and Disney to try to explore the possibility of them looking at Puerto Rico as a investment opportunity.
For instance, look at the example of Fomento Nacional de Turismo (Fonatur) in Mexico, the creators of Cancun and Puerto Vallarta. Twenty years ago, Cancun was an isolated beach area. Fonatur identified the resources and private investors and in a step-by-step, 20-year plan, they developed Cancun. Its changed from an isolated beach strip and a few rustic native homes to a 25,000-room, No.1 destination for U.S. college kids spring break. I believe we can emulate that model. I dont have precise details on how we are going to do it, but certainly it will include key government agencies and legislation to develop areas like those mentioned four months ago at the Multisectoral Tourism Summit for the West.
A model like this could work in the western region effort to initiate and develop possible expansion programs. The good thing about this type of model is that were not only talking about hotels, but infrastructure, airlift, and entertainment destinationsits the whole package.
CB: What about internal tourism?
MS: Internal tourism is a very important area that we will be working on. We have a productknown as <I>paradores or country innsthat not many other destinations have, especially on an island with infrastructure that allows visitors to drive from Fajardo to Mayaguez in less than three hours and drive from San Juan to Rincon in less than two hours. No destination is too far away for a weekend getaway.
At the Tourism Co., we are going to devote appropriate resources to make sure we position the <I>paradores in the right markets. As we progress in that area, we must also make sure that the product is kept in constant evolution so the level of sophistication and the amenities offered are what the target audience wants. We have to be sure they remain competitive. In the specific case of <I>paradores, a program belonging to the Tourism Co., we must be the force that makes sure there is a unified, consistent, and efficient system to assist in the marketing and keep up the standards of the product.
But returning to your original question, my plan includes one more element. Throughout the years many marketing campaigns have been developed by the Tourism Co., all of them with different results. But now, with the aforementioned components and the development of the Convention Center and the Condado Triowhich is in the heart of the tourism industry [see related story]we really need to come up with a new marketing campaign for the destination.
CB: So, what would you consider an effective marketing campaign?
MS: A critical element is the development of a destination campaign, and we have taken that first step (the campaign will be unveiled Sept. 25). The campaign must be flexible so that it can be adapted to the needs of different markets. The message you want to deliver to the east coast of the U.S. is not necessarily the same one you want to convey in the west coast. The right message must be transmitted to the right audience. One goal is to regain the market share we lost on the east coast of the U.S.
CB: Besides more tourist attractions, what else is needed to create tourism demand?
MS: As far as the evolution of the destination, we need to look at and develop new demand generators. New hotels and resorts can co-join efforts in advertising and sales sponsored by both the lodging company and the Tourism Co. Those kinds of things can create an instant momentum for Puerto Rico that is necessary to keep the destination at top of mind awareness.
I would like to see more than 25,000 rooms in Puerto Rico within the next five to 10 years. But that is a long-term goal. Right now, we need to ensure that what we have in the pipeline, which will take the destination up to 17,000 rooms, can move forward to completion.
CB: What else can be done to secure the success of the destination?
MS: For many years, the Tourism Co. has been trying to decentralize tourism. I believe thats not the way to go. We need to integrate the industry. San Juan will always be San Juanthats the hub of our industry and almost everyone will visit the capital of Puerto Rico. But our rate of success will be based on how well we can integrate the whole package and roundup our other offerings to make a complete experience, one that makes this destination a place that people want to return to, over and over again.
CB: For months, there have been reports about the need to improve the islands statistics. Why is it so important?
MS: The Tourism Co. has been dependent for too long on hotel registrations, which is not wrong, but we are at a point in time where we need to compile more accurate information. We need a truer picture of what kinds of visitors we are attracting in order to analyze our decisions. For that reason we should expand the research & development unit to validate our efforts through feedback along with reliable information on how hotels are doing. We need demographic and psychographic information about the people visiting Puerto Rico. We also need to know how much they are spending and what type of vacation they are looking for. As we progress in that area, our marketing campaigns and approaches can be fine-tuned to be more successful.
CB: Is Puerto Rico ready to host major conventions?
MS: I believe the Convention Center will be the cornerstone of Puerto Ricos new era as a world-class tourism destination. We need to redefine our competition and position our destination to compete. Obviously, the Center will make us a leading destination in the Caribbean and it will give us a competitive edge in the convention business.
That brings us to our ability to host big conventions. If you ask me if were ready now, my answer would be no. But we have three years [construction time to complete the Convention Center] to prepare ourselves and put in place the necessary changes to serve the needs of those guestsrooms, food & beverage, service, and transportation.
CB: Do you think were getting the most out of cruise ships visiting Puerto Rico?
MS: We need to come up with an incentives plan for the cruise lines and airlines (a major component of the cruise industry) so we can present Puerto Rico and its variety of hotels as an option for the pre- and post-cruise packages and not just settle for one-night stays.
I think the cruise industry is important and it has brought hundreds of thousands of visitors to Puerto Rico, tourists who would come back if we do a good job at showing them--in one to three days--what we have to offer. The pre- and post-cruise packages will be more like cooperative agreements with the cruise lines. We need to meet with representatives from the cruise companies and explore the possibility of developing packages that will include ground transportation, hotels, entertainment venues, and tours.
This Caribbean Business article appears courtesy of Casiano Communications.