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Weekly UpdatesThe Quarterdeck Beachside Villas and Grill is a small property that faces an all too common set of challenges, most of them stemming from steep seasonality. Located on Nova Scotia's south shore, the Quarterdeck sells out during the summer months but is nearly empty during the winter. This case study examines the Quarterdeck's marketing approach and outlines strategies for driving off-season demand by focusing specifically on identifying guests' needs and desires to develop new product bundles and marketing communications. Although these ideas emerge from the Quarterdeck's particular circumstances, the strategies are applicable to many small hospitality companies that face seasonal demand.
Keywords: Nova Scotia; tourism demand generators; seasonal resorts
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It was a sunny October day following Canada's Thanksgiving, with temperatures along the Nova Scotia coast reaching 16 [degrees] Celsius (60 [degrees] Fahrenheit). Doug Fowler, managing partner of the Quarterdeck Beachside Villas and Grill of Summerville Beach, sipped coffee in the nearly empty restaurant overlooking the Atlantic Ocean and considered the past summer. Doug bought the Quarterdeck in 1990 with two partners, upgraded the property, and ran the resort. The past summer had been a success: strong occupancy meant lodging-revenue projections of $500,000 for the year, and the restaurant had increased sales for the fifth straight season. Yet the off-season was fast approaching, which meant the restaurant would close, room rates would be reduced, and occupancy would diminish. Doug considered it a shame that the business died in autumn and winter, and he wondered whether something could be done to boost nonpeak yields. He knew he was formnate to be able to keep the Quarterdeck open at all since most independent resorts in Nova Scotia shut down after Thanksgiving. However, Doug vowed to investigate ways to increase revenue during the off-season.
This case study examines a problem common to many hospitality companies that are located in geographic regions characterized by steep seasonality: how to develop market demand in shoulder and low-season periods. Difficulties associated with identifying target customers--both current and potential--and forecasting demand are endemic to small, independent operations that lack the resources, personnel, or training to conduct detailed market analysis. However, this research is critical for a business's long-term viability, especially if growth plans depend on uncertain sources of revenue. Moreover, the internet has provided research power that was once available only to larger firms with dedicated market-research departments. In the case that follows, we profile the Quarterdeck and highlight the marketing challenges this property faces. We next offer an analysis of the Quarterdeck's market situation and present a set of recommendations for enhancing demand in light of existing geographic, economic, and other constraints. We close by underscoring what hospitality managers can learn--and apply to their operations--from the case of the Quarterdeck. (1)
The Quarterdeck Experience
Guests staying at the Quarterdeck Beachside Villas and Grill can fall asleep to the sounds of the ocean. The Quarterdeck is situated on a mile-long, white-sand beach, two hours southwest of Halifax, the capital of Nova Scotia. The property offers 16 upscale units, including 2 one-bedroom, single-story units; 13 two-bedroom, multilevel units with two full baths; and 1 three-bedroom cottage fight on the sand (see Exhibit 1). All units face the ocean and have fireplaces, full kitchens, bathrooms with Jacuzzi tubs, televisions with DVD players, and high-speed wireless internet access--a luxurious amenity set relative to other resorts in the area. There is also an on-premises restaurant specializing in seafood that has been voted by guests as the number-one restaurant in Nova Scotia in the Taste of Nova Scotia poll. The villas were awarded four stars from Canada Select, an industry-led rating program intended to provide consistency of quality standards within categories of accommodation. (2)
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Doug believed that the Quarterdeck's major selling feature is its beachfront location. Many of the activities offered rely on the ocean, such as kayaks, body boards, and surfboards available for rent. Because of the Quarterdeck's remote coastal location, guests come for a retreat from the hustle and bustle of their daily lives. A typical day at the Quarterdeck starts with a walk along the beach in the cool morning air, followed by time relaxing in the sun or a day trip by car to one of many picturesque towns that dot the scenic Lighthouse Route for shopping and sightseeing (see the map in Exhibit 2). Families with young children enjoy trolling the beach for sand dollars and searching tide pools for starfish. Parents love that they can let their children play on the beach, while they can sit on their decks and relax with their children well within view. In the evening, guests can enjoy the specialty of the Grill, planked salmon.
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Business for towns along the south shore of Nova Scotia, from Halifax to Yarmouth, is strong during the summer. The Quarterdeck's occupancy for high season averages 90 percent (see Exhibit 3). Indeed, the property often turns away would-be guests during summer because the villas are full. In contrast, during the late fall, winter, and early spring, occupancy is low. Nearly all of the tourist-based businesses in the vicinity shut down due to minimal demand, including almost a dozen small lodging operations which close in mid-October, after Thanksgiving weekend.
The biggest hotel in the area, with 159 rooms, White Point Beach Resort, does stay open in winter. White Point offers some amenities, such as tennis courts and a swimming pool, that the Quarterdeck does not provide. Doug explained that he originally kept the Quarterdeck open to heat the villas in the winter so that the pipes would not freeze, although this offered the additional benefits of discouraging guests from trying White Point in the off-season and also main-rained staff loyalty when many lodging operations in the area simply lay off staff in the winter. The Quarterdeck did make some money in the off-season, even though Doug decided to close the three-bedroom cottage and the two one-bedroom units after Thanksgiving. The Grill had to close because the facility is not winterized, and making it winter-worthy would cost more than $20,000. Keeping the villas open without the restaurant is possible because they have kitchen facilities, and Liverpool's grocery stores are less than ten minutes away.
The main problems faced by the Quarterdeck and many other seasonal resorts in the area are twofold: first, how to estimate potential demand, and second, how to generate off-peak demand. Compounding this problem for Doug is an investment decision: located across the street from the Quarterdeck is a parcel that he is considering for development--perhaps as an RV park or as luxury villas similar to those on the beach--but only if the demand is strong enough to fill whatever would be built there.
Complicating Doug's decision is public perception. Nova Scotia evokes an image of sun and sand only in summer (and maybe not even then). In summer, it is, as the license plates say, "Canada's Ocean Playground." Typical temperatures range from an average of 70 [degrees] F during the summer to 16 [degrees] F during the winter. Tourism accounts for revenues of over C$1 billion--a sizable sum for an economically depressed province. (Nova Scotia is considered a "have-not province," which means it receives federal government payments to ensure provision of services to residents. (3)) The south shore area of the province accounts for one-tenth of the province's tourism revenue, at just over $100 million. (4) Queen's County, home to the Quarterdeck, relies heavily on tourism, especially during the summer. In 2002 tourism generated almost $21 million and employed nearly six hundred workers, all of this for a county that had only 11,723 residents. (5)
More than half of visitors to Nova Scotia come from other Maritime provinces, namely, Prince Edward Island, New Brunswick, and Newfoundland and Labrador. (6) Visitation in the century's first decade continues to increase from within Canada, while travel from the United States has yet to return to pre-9/11 levels. Doug and the hotel operators he knew said they were not seeing U.S. tourists for a variety of reasons, including the rising value of the Canadian dollar and the fact that the Scotia Prince ferry from Portland, Maine, to Yarmouth, Nova Scotia, was no longer running. That ferry annually brought more than 220,000 passengers and 38,000 vehicles to Nova Scotia until it ceased operation in 2004. In a typical year, one-third of all Americans visiting Nova Scotia had come on this ferry. (7) (The ferry service from Portland resumed in 2006 with a smaller, high-speed catamaran, cutting the travel time to 5.5 hours, as compared with an overnight crossing on the old Scotia Prince.) Moreover, catamaran service continued running from Bar Harbor, Maine, to Yarmouth, which helped lessen the impact of losing the Scotia Prince. Guests still need to drive to the hotel once they arrive on the ferry. If they reached Yarmouth or Halifax without a car, a staff member could pick them up at a cost. Once they reached the hotel they were essentially stranded, however, and so few guests took this approach.
Nova Scotia has considerable allure for travelers who enjoyed outdoor activities--hiking, nature observation, beachcombing--but its culture and history also invited guests to visit craft shops and museums. (8) Not surprisingly, Nova Scotia's provincial marketing campaign for tourism omitted mention of the winter months. (9) The province of Newfoundland and Labrador, on the other hand, spent more than C$5 million in the late 1990s to become the Maritimes' winter destination. (10) While Nova Scotia enjoys many demand drivers during the summer months, the absence of demand drivers in winter make it hard to market the province as a winter destination. There are, for instance, no provincial events or other attractions along the lines of Quebec City's successful winter carnival. (11) In short, hotels and restaurants in Nova Scotia that want to increase winter occupancy cannot rely on provincial help to make their operations year round.
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