Mentawai bookings hit hard by global recession

With official recession status established in the US and looming in Australia, anecdotal evidence indicates the Sumatran surf industry has been hit hard by slow bookings and last-minute cancellations in Q1 2009.  Q1 is normally be a peak time for bookings for travel during the May-September high season.

The industry consists of 40+ charter boats and over a dozen land-based camps and resorts scattered from North Pagai Island in the Mentawai chain to Simeulue and the Banyak islands north of Nias.  With 6-12 surfers per trip spending between USD2500 and USD5000 each, one week in peak season could see over USD100,000 in tourism dollars flowing through companies based in Padang, the capital of Western Sumatra province.  Obviously not all this money is spent locally.  Commissions on these trips paid to booking agents range from 10-30%.  Boat owners and guides are generally not in the business for the money, most being surfers themselves they are willing to cut their own profits to low levels to cover their capital costs, stay in the water, and enjoy personal relationships with long-time return guests.   Still, around half the revenue coming in is likely spent locally on fuel, food, salaries, tips, maintenance, lodging, and government taxes.

The recent news is not all bad.  For the 2007 and 2008 seasons fuel costs soared, causing charter price increases and fuel surcharges, especially for more fuel-intensive trips from Padang heading north to Nias and beyond.  However recently fuel costs have decreased with the drop in oil prices, and those fuel surcharges are generally a thing of the past.  

Another side effect of reduced fuel prices is that it gives charter operators with half-filled trips some latitude to discount prices or leave port half-empty.  With fuel prices sky-high during 2008, many boats would not leave port less than 80%+ of available spots filled.  In a good economy, this was a way to keep per-person prices down while leaving some margin.  But with today's fuel prices and slow bookings, many operators are choosing to guarantee sailings of half- or mostly-empty charters to incent new bookings and bring in needed revenue to offset the fixed costs of boat ownership and off-season maintenance.

Finally, boat captains and booking agents may be more willing to accomodate individuals rather than holding out for a low-hassle, full-boat booking that puts the responsibility to fill the boat on whoever puts up the money for the booking.

As evidence, I got a promo email from wavehunters.com on February 20 with a lot of half-empty, discouted peak-season trips.  This sample is only 4 boats of 40, but since wavehunters makes frequent updates regarding availability and discounts I looked at their site to sort of "update" their promotion and see how things are going right now for peak season trips in May-July.

Apr 28 - May 09: (Nusantara) 4 spots *$2800pp (Guaranteed to sail) 
May 02 - May 14: (Addiction) 10 spots * Highly discounted 
May 12 - May 23: (Nusantara) 7 spots *$2800pp (2 more minimum to sail) 
May 22 - Jun 02: (Bintang) 12 spots *$2100pp 11 night trip / $2290pp 12 night trip (6 minimum to sail) 
Jun 05 - Jun 16: (Bintang) 5 spots *$2100pp 11 night trip / $2290pp 12 night trip (Guranteed to sail) 
Jun 09 - Jun 20: (Nusantara) 3 spots *$2800pp (Guaranteed to sail) 
Jun 18 - Jun 30: (Navistar) 7 spots *$2580pp individual / $2313pp 8 person full boat booking (4 minimum to sail) 
Jun 19 - Jun 30: (Bintang) 12 spots *$2100pp 11 night trip / $2290pp 12 night trip (6 minimum to sail) 
Jun 23 - Jul 04: (Nusantara) 6 spots *$2800pp (Guaranteed to sail)

Jun 27 - Jul 09 (Addiction) 6 spots * Discounted

Jul 21 - Aug 01: (Nusantara) 10 spots *$2800pp

Jul 17 - Jul 28: (Bintang) 12 spots *$2100pp 11 night trip / $2290pp 12 night trip (6 minimum to sail)

It looks like Navistar will guarantee sailing at half full and Nusantara will sail at 40% full.  Addiction was not really discouting in February but they are now, and sail with 6 of 10 bunks filled.  Two Navistar trips promoted in the earlier email have now booked out.  Going beyond July, Bintang only has 4 of 11 peak season May-September trips booked, so they are clearly hurting.  Bintang was saying minimun 6 surfers to sail in February but now they are saying minimum of 4, this on a large boat that holds 12 surfers.

Elsewhere, the ultra-luxe Midas has reduced peak season rates by 20% to get new bookings, and 6 of their 11 sailings for the May-Sept period are unbooked.