Bahamas Hotels Close To Recovery

THE Bahamian resort industry wants to see business levels comparable to 2008 numbers "sustained for two-three quarters" before declaring it has truly recovered, the Bahamas Hotel Association's (BHA) president telling Tribune Business that while July and August were unlikely to match June numbers, continued improvement upon 2009 comparatives was expected.

Robert Sands, who is also Baha Mar's senior vice-president of governmental and external affairs, said: "The trend for July and August remains cautious growth, certainly better than last year's levels, but not to levels achieved in June.

"If we get that, it will be a bonus for us, but we're looking for improvement upon last year going forward. I think we want to get a real year under our belts, because while there may be confidence levels growing in major markets, we want to get group business back to where it was. While improving, it's certainly lagging behind leisure traveller confidence levels."

On the industry's overall position compared to 2008 numbers prior to September, when the fallout from the Wall Street collapse and global recession first started to be felt, Mr Sands told Tribune Business: "We're quarters behind, not years behind. We want to achieve some of those levels sustained for two to three quarters, and are not there yet, but are headed in the right direction."

The 71.5 per cent average occupancy rate achieved by New Providence's 14 major hotels during June 2010 was just o.4 percentage points behind June 2008's 71.9 per cent showing, which occurred before the Lehman Brothers collapse and full effects of the global recession were felt.

However, June 2010's average daily room (ADR) rate of $225.55 was still some $10 or 4.3 per cent below the $235.77 June 2008 comparative, while last month's room nights sold and room revenues were also 4.8 per cent and 8.9 per cent respectively behind two years ago.

Still, the 2010 performance was comfortably ahead of June 2009 comparatives. The 2010 average occupancy rate was some 5.6 percentage points ahead of last year's 65.9 per cent, while a year-over-year $15.17 ADR increase generated a 16.3 per cent room revenue boost and an 8.5 per cent rise in room nights sold. ADR for 2009 was $210.38, compared to $225.55 this year.

Mr Sands described as "huge" the $50 million in room revenues and 255,702 visitor nights generated by the Companion Fly Free promotion, adding that talks between the Government and private sector were taking place on how to extend this in some form.

"Obviously, that has tremendous budgetary implications, but it's fair to say the industry has seen the value of such an arrangement, and is discussing the way forward," he added, although no decision had been taken yet.

"There is no question that the strategically placed promotions are reaping the dividends that the industry contemplated."

Acknowledging the "if it ain't broke, don't fix it" saying in the case of Companion Fly Free, Mr Sands said the hotel industry was focusing on "something that has really gotten teeth" and that, combined with other promotions, "continues to give equity to the Bahamas brand name".

The Bahamas' Companion Fly Free airfare promotion has generated up to $50 million in hotel room revenues for 2010 to-date, along with 138,000 visitors, and has been seen as a key factor behind the strong June 2010 showing by the New Providence resort industry.

"I think June was an extremely encouraging month for us as a sector," Mr Sands said. "The majority of hotels who participated in the performance study on a monthly basis, the overwhelming majority of them, saw in increase in rate and occupancy better than the 2009 position, and close to the 2008 position........

"We're very hopeful that this trend and stabilisation continues to hold. Hopefully, July and August will show similar positions, but this is the season where we have to be cautious."

That was a reference to hurricane season, and Mr Sands said Tropical Storm Bonnie last week "had some impact on business levels that we've not been able to ascertain".

In last week's joint statement, the BHA/Ministry of Tourism said: "Of the 14 properties, nine reported increases in their room revenue, with seven of them showing double-digit growth. While there was widespread increases in ADRs at these properties (eight of 14 properties), it was the surge in room nights sold that contributed the most to the growth in revenue.

"Of the nine reporting revenue increases, all showed increases in room nights sold, with five showing double-digit growth."

The joint statement said the 2010 second quarter "surpassed all measures of performance" for last year, adding: "It even surpassed room nights sold for the first quarter of this year, 2.6 per cent more room nights sold. However, it was still 6.8 per cent behind in room revenue due to a $23.87 higher ADR in the first quarter.

"The second quarter of 2010 ended with a 68.3 per cent occupancy rate and a $236.73 ADR, compared to 66.4 per cent and $232.41 last year, and 67.2 per cent and $260.60 in the first quarter of this year.

"To the end of June, occupancy stood at 67.7 per cent, ADR at $248.51 and room nights sold and room revenue 3.8 per cent and 5.9 per cent above 2009 levels. This compared to 65.2 per cent and $243.47 in 2009. Air arrivals to Nassau to the end of April were up 2.4 per cent."

Source: The Tribune