Aug 25, 2009

Appleton Temptation Isle (ATI) Falls Short by $14 million to Break Even

Appleton Temptation Isle (ATI) sold more season bands in 2009 than last year, but is struggling to break even as promoters sift through the finances of the independence week parties, said ATI founder Alex Chin. Competition from Red Stripe Dream Weekend, and an unprecedented marketing bill were cited as the principal reasons for the shortfall.

"Financially, I can tell you I don't think it was a huge success. For the economy it was a huge success," said Chin, noting all the peripheral businesses that benefit from the influx of partygoers to Jamaica and Negril over the course of the week.

ATI sold 3,500 season bands and an average of 600 gate entries at each of its 11 parties during independence week, said Chin, noting an additional 1,000 season passes were given complementary to press and guests. With a price range of $8,000 to $10,000 per season pass, depending on how close to the date of the events passes were purchased, and an average cost of $2,500 for tickets purchased at the gate, ATI grossed some $30 million on season passes and $16 to $17 million at the gates for a total of around $46 million, $14 million short of its $60 million investment, said Chin. He noted the company was now working through its sponsorship deals, which brought a mix of cash and product, to attempt to make up the difference and "hopefully break even".

Chin said ATI spent around $20 million on hotel rooms for sponsors, DJs, production staff and media persons, $10 million on its marketing campaign, around $15 million on the venues, stages, lighting, security and local selectors, $10 million on liquor and food, $3 million to the Negril Event Planning Committee for shuttle buses, police presence, tow trucks and car park lighting, and $2 million for selectors brought in from overseas.

In terms of attendance, 2009 was one of the best years yet, said Chin, noting there was only one year, 2007, that saw more revellers flocking to ATI. This year the competition spent heavily promoting Red Stripe Dream Weekend, surmised Chin, which also forced ATI to offer season bands at a discount far under the $15,000 that they should have cost. Last year the basic season pass was priced at $11,000, while all the production costs have gone up, he added. "Out of an average of 4,000 people at the parties, 88 per cent of your crowd came with a discounted band," said Chin, who added that any profit margin depends on a small number of patrons pushing revenue over the break-even point.

Asked how ATI could be made more profitable in coming years, Chin joked that not having it would be the most business-savvy decision. Jokes aside, he said an even more aggressive approach with sponsors could put ATI over the break-even point. The best way to guarantee profitability, however, would be to join forces with the competition, he added. Nonetheless, the proposition is not well received at Appleton and Red Stripe, given their apparent mission in sponsoring such events is to convert drinkers to their products rather than meet an existing demand, Chin said. "It would make more sense not to have the competition. If there was a way to have 13 or 14 parties with one band, it would be profitable, we wouldn't be fighting, marketing against each other," he said.

"I'm pretty sure Red Stripe's marketing budget was much higher, there are people who benefit from it, but the patrons don't benefit form it. If we put that money into infrastructure we could tackle the traffic problem and give patrons even better parties," he suggested. Nonetheless, he was sceptical that Appleton and Red Stripe could come together to be on the same ticket. Having been on both sides, what they (Red Stripe) are saying, if Appleton is at the party in abundance, then people might not want to drink Red Stripe - same thing Appleton will say - they're not going on the fact that if you're a beer drinker, you'll drink beer. They're there to convert drinkers, and that's one of the problems. If they accept that they are going to provide alcohol, it would be a different story," maintained Chin before asserting, "It has been proven that whichever liquor brand we're with, we get the bigger crowd."

"If you take a typical party with 2,000 patrons being the break even point, for example," Chin said, "if you get 2,200 patrons, the profit margin comes from just 200 people, or around 10 per cent. Take away 16.5 per cent and now you're in the negative - these are real numbers, not numbers I'm making up to make it sound good."

Asked about the other Independence week parties that have sprung up around Jamaica, from The Weekend in Montego Bay to San San Bambaroo in Port Antonio, Chin said, "Some of them are good, if you're targeting a completely different crowd, I have no problem. If you're targeting the same crowd, it's the crab in the barrel thing."

SOURCE: Jamaica Observer


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