Hotels Struggle With Slower Than Expected September

Wednesday, 30 September 2009 00:00 News Editor
There "is no question" that September, traditionally the softest month of the tourism season, was "weaker than expected" for the resort industry, the Bahamas Hotel Association's president said yesterday, who has written to banks and utility companies urging them to work with resort properties experiencing increasing cash flow difficulties.

Robert Sands said that even accounting for the impact of the global recession, September had "not been as buoyant as expected" by Bahamian resorts, and the softness experienced by some hotel properties during the first six months of 2009 - the period they rely on for profits to carry them through to year-end - meant "many of the cost saving measures which have been put in place by businesses may simply not be enough".

"There's no question that it's been weaker than expected, taking into account closed hotel room inventory that is off line, weaker group bookings and the fact we've had no threat of hurricanes per se," Mr Sands told Tribune Business.

"There's no question in my mind that it's been weaker than expected from a stopover visitor perspective. There's certainly been some growth on the cruise side, but stopovers have not been as buoyant as expected. That is true."

Prime Minister Hubert Ingraham yesterday confirmed that while total visitor arrivals to July 2009 were up year-over-year by 4.2 per cent, the higher spending stopover segment, which generates the bulk of tourist spending, was down by 13.7 per cent.

And, with many Bahamas-based hotel properties having failed to produce the profits and cash flow during the first half of the year that they traditionally rely on to carry them through the softer latter half, Mr Sands confirmed he had written on his members' behalf to utility firms and banks, urging them to work with troubled properties to keep their doors open.

Calling on Bahamian hotels to work out payment plans with banks, utility companies and their vendors, the BHA president said: "Many of the cost-savings measures which have been put in place by businesses may simply not be enough. Typically, our hotels and tourism-related businesses rely on a healthy core six months of stronger business activity to carry them through the lean months, particularly September, October and November.

"Visitor arrivals, occupancies and revenues during our traditionally stronger months was far below the normal. As a consequence, many of our members find themselves in a position of significantly reduced cash flow over these coming months."

On average, room revenues for the year-to-date have been down 20 per cent on 2008 comparatives, and Mr Sands said he had written to the Bahamas Telecommunications Company (BTC), Bahamas Electricity Corporation (BEC), Water & Sewerage Corporation, Grand Bahama Power Company, Cable Bahamas and the banks to appraise them of the situation.


In his September 22, 2008, letter to Kevin Basden, BEC's general manager, the BHA president wrote: "While we recognise fully the responsibility which every business has in meeting their financial obligations, we recognise that hard decisions must be made by hotels and tourism-related businesses through the end of the year with regard to expenditures and managing operating costs.

"Concurrently, we know that it is only good business on your part to work with businesses during these difficult times to help see them through."

Mr Sands asked BEC to work with BHA members on "payment plans and other arrangements as many go through an unprecedented period of depleted cash flow. Of course, this assumes a good faith effort on the part of the business in recognising their obligations to you".

And the BHA president added that while the Bahamas' competitive data indicated that this nation was "holding up well" compared to many rivals in the world and the Caribbean, "hotels and tourism-related businesses are in a highly vulnerable state".

"We are all in this together and, by working together, we will help to minimise business closures and position ourselves to take advantage of the opportunities which the future will certainly present," the BHA president wrote.

Mr Sands told Tribune Business that the BHA had been urged, especially by some of its medium-sized and small member properties, to write to the utility companies, government corporations and banks to ensure these entities were fully appraised of the sector's concerns as it went through "some distressing times".

He added that the utilities and banks were prepared to meet with BHA member resorts on an individual, "case-by-case" basis to work out arrangements if they were needed.

While the Bahamian tourism industry's recovery, and that of the wider economy, depended on US economic indicators such as unemployment and consumer confidence, Mr Sands said the sector, in conjunction with the Ministry of Tourism, had embarked on "aggressive" marketing strategies to ensure "the Bahamas is still beating the drum in the marketplace".

There had been "tremendous growth" in tourism arrivals from Canada, Mr Sands added, the Bahamas' main problem being that its core market, the US, which accounted for 85 per cent of visitors, "is the one hurting the most".

"This is cyclical, it will not last for ever and we have to weather the storm," Mr Sands said, adding that the 2009 fourth quarter would be "a challenge" with group bookings down anywhere between 25-30 per cent.

"I think the only thing we can say is that we see the level of the decline diminishing," the BHA president added.

Source: The Tribune