Sunwing Casts a Wide Net in an Even Wider Market!
Paxnouvelles.com – André Désiront – September 8th, 2014
Interview with Colin Hunter and Sam Char
A 10% increase in capacity, two new destinations departing from Quebec where regional offerings are expanding, a growing resort hotel chain now sporting four brand banners, and the conquest of the U.S. market: Sunwing is cutting an increasingly wide path in southern sun destinations. While in Montreal, Colin Hunter, Chairman of the Board of Directors, made it clear that expanding its activities to Europe was not an option — at least for the time being! — and, along with the Executive Director for Quebec, Sam Char, answered PAXnouvelles’ questions.
Will you be increasing capacity to be marketed to the Quebec market this winter?
CH: Not by much. We intend to market between 400,000 and 425,000 seats in Quebec, which means about a 10% increase over last winter.
10%: That’s a huge increase in a context that borders on overcapacity!
CH: For us, this is a modest increase. Obviously, it’s more than our main competitors, but we are accustomed to a more sustained rate of growth. Don’t forget that we began with one airplane in 2005 and, this winter, we will be operating 40. We clearly need to consider the arrival of a new player: CanJet, which will be marketing 100,000 seats in Ontario. But we will adjust. Our goal is not to expand at all cost, but to continue to be profitable, just as we have been every year since Sunwing was founded, except for 2004. That year we had to deal with the repercussions of Jetsgo’s bankruptcy, which was our air carrier supplier before we launched Sunwing Airlines. Overall, we will be marketing 1.7 million seats departing from 45 Canadian cities.
SC: In Quebec, with the introduction of a new connection to Panama, we will be offering five daily departures from Bagotville, which is one more than last year. We are programming two flights per week departing from Val d’Or, one from Sept-Îles, 43 from Montréal and 25 from Quebec City, where we will be the only ones flying in September and October. As we’ve been saying for the past few weeks, we will also be serving two new destinations departing from Montreal: Cayo Largo and St-Lucia.
So, by the same token, you’ll also be expanding your air carrier fleet? Sunwing Airlines was operating 34 crafts last year. You are now talking about 40…
CH: We need 40 aircrafts to ensure all our planned programme departures. Out of the 40 aircrafts, there are about fifteen from Europe. That’s why we are waiting for approval from Transport Canada. As you very well know, it’s all a question of how legal texts are interpreted…
No jumbo jets? You have already alluded to the possibility of acquiring some Boeing 787 Dreamliners to orchestrate a sound European programme…
CH: This is no longer part of our agenda. We realized that focusing on sun destinations enables us to enjoy interesting benefits year after year. For example, the arrival of a new player, such as Rouge, which now serves key European destinations, reduces the perspectives of a profitable European programme. Naturally, we are not closing that door completely, as they say: Never say never!
SC: In fact, we already have a major partner that allows us to offer a European programme: Corsair operates seven weekly flights to Paris in the peak season. As for Toronto, we are working with a subsidiary of our partner, TUI: Arkefly. It is a Dutch company serving the Toronto/Amsterdam route in the summer. The fact that we remain focused on sun destinations is a strategic choice that is very lucrative. In short, we are focusing on a single niche market: southern sun destinations. But this is a wide market and we cast a wide net.
Your resort-hotel group, Blue Diamond, will have 14 properties at its disposal this winter for a combined total of 7,500 rooms. Other than the opening of the Royalton Riviera Cancun, planned for 2015, do you intend to pursue your hotel acquisitions?
CH: Absolutely. How many and with how many rooms? We have not set any specific objectives in this respect. Since launching Blue Diamond, we are taking advantage of opportunities, as they present themselves, to acquire properties that we deem interesting for the Canadian market. There’s no question of buying if we think the price is too high! In fact, we only buy when we see a deal. My son Stephen, the company president, is in charge of that. When I see how he works, I believe that within the next five years we will have at least doubled our current capacity.
You are launching new brands. At the beginning, there was only Memories and Royalton. You have since bought the Grand Lido in Negril and you’ve launched the Chic, in Punta Cana. Do you intend to develop these brands?
CH: Absolutely! Chic is an ‘adults only’ brand targeting a refined clientele with an unparalleled level of services and care. These hotels will be smaller, with a maximum of 300 rooms, and we fully intend to launch others. As for the Grand Lido, we bought the one in Negril because it was a great deal. We refurbished it to be a luxury property. Since it is a well-known brand and it enjoys a good reputation, we intend to keep it, but we also want to develop it by opening other establishments under the same banner.
Do you own all of these properties or are you simply managing them?
CH: We own all of these hotels with the exception of Cuba, where we are only the managers of the property.
SC: We are, first and foremost, tour operators, but in our industry, everybody knows that Quebec and Canadian consumers buy a hotel before buying a destination. In other words, the hotel has become more important than the destination. It needs to meet our clients’ expectations in both benefits and price. Circumstances dictated that we become hoteliers. It will be increasingly difficult for wholesalers that do not have control over their hotel offerings. There are more and more Europeans travelling to the Caribbean Islands and Canadian tour operators that do not have preferred access to hotels are inclined to see more and more “stop sales” before being able to fill the seats assigned to these hotel rooms. Large tour operators, like ourselves or Transat, founded their own airlines to avoid being at the mercy of carriers that could let them down, either due to bankruptcy or because they chose to launch their own tour operations. The same risks now exists with hotels because they’re diversifying their markets. For tour operators, the need to control their hotel offering is increasingly important. Once the airline was founded in 2005, launching the resort-hotel chain was one of the best decisions Sunwing ever made.
In 2009, you purchased an Atlanta tour operator: Vacation Express. What’s happening with your American expansion?
CH: It’s the third largest American tour operator in the all-included market. Since the purchase, Vacation Express programed departures from two new airports to grow its market, such was the case with Cincinnati. They now offer departures from fifteen American airports and we intend to develop other regional markets. We are working gradually because the U.S. market is very different from Canada. Travel agents are wary of ‘leisure’ companies, such as tour operators like Vacation Express that charter planes. There have been a lot of bankruptcies and a lot of Americans vacation in the southern states rather than in the Caribbean or Mexico. But we are making progress. The U.S. has 10 times the population of Canada. If we can fly 1.7 million Canadians each year, there’s no reason why we can’t some day fly 17 million Americans.