Hotels Target 'Modest Increase' For 2012 Q1

The Nassau/Paradise Island hotel industry is hoping to enjoy "a modest increase in all key metrics" for January and the 2012 first quarter, the Bahamas Hotel Association's (BHA) president last night pointing out that this nation's average daily room rate (ADR) climb back was "not as challenging" compared to rival destinations.

Explaining that this was because Bahamian hotels, in general, had not dropped their ADRs as heavily as rival destinations when the recession struck, Stuart Bowe nevertheless warned that "the pockets of guests who pay higher rates" - especially important for this nation, given its relatively high pricing - were reducing.

Acknowledging that the Nassau/PI hotel industry had expected to be further ahead of where it finished in 2011, having been thrown off course by Hurricane Irene and the January snowstorms that hit core US east coast markets, Mr Bowe said the Bahamas was facing increased hotel competition from properties that opened prior to the recession in emerging tourist markets.

Warning that some offered superior "cultural experiences" to the Bahamas, the BHA president suggested that to alleviate some of the marketing costs associated with finding new customers, the hotel and wider tourism industry focus on increasing repeat visitor numbers.

Adding that it was "anybody's guess" as to when the Bahamian hotel industry would return to pre-recession levels, Mr Bowe told Tribune Business: "We are hoping to see a modest increase in all key metrics in January and through the first quarter, but are cognisant that anything can happen to change those projections - the most obvious being extreme weather conditions affecting travel, and higher fuel costs.

"While we are encouraged with the progress made in 2011, particularly during the last quarter, we were hopeful at the beginning of the year to be slightly ahead of where we ended up. Bad weather was the primary reason for not achieving overall targets, particularly in January and August/September."

Hurricane Irene impacted both August overall occupancies and available rooms at the likes of Sandals and SuperClubs Breezes, Mr Bowe said. He added that the increased global competition meant it was vital for Bahamian hotels to continually invest in refreshing and upgrading their product.

"Prior to the recession, a large number of new properties opened around the world in emerging markets, particularly in southeast Asia and the Indian Ocean," Mr Bowe told Tribune Business.

"Many of these properties offer similar or lower price points than Bahamian hotels, with more cultural experiences in some cases. The consumer has more choices. Therefore, we must continually maintain and renew our properties in order to compete."

And the BHA president added: "There comes a point where capital investments cannot be deferred. If they are, the property falls into a self-defeating cycle and, ultimately, could find its very survival in question.

"To be successful today we must use all the promotional tools available, maintain costs, offer exceptional service and continually invest in our product and people. With this approach, we stand the best chance of generating the revenues necessary to support our capital investment plans. Simply stated: We must get customers to return. It relieves some of the burden of finding new customers."

Nassau/Paradise Island hotels are aiming to "hoist" ADR rates in 2012, viewing increase here as the best route to boosting room revenues and the overall top line.

While pointing out that the average ADR was $5 higher in 2011 compared to 2010, Mr Bowe told Tribune Business: "While we wish it was higher, it is close to the industry average rate of increase. It should also be pointed out that the Bahamas did not drop its ADR to the extent to which many of our competitors did during the recession.

"Thus our climb back, while difficult, is not as challenging as it is for many of our competitors."

Mr Bowe said the increase in group and convention business for 2012 would be "a start" when it came to raising ADRs, adding: "If market forces allow for us to raise our rates we will do so.

"We operate in a very competitive environment. The challenges we are facing in the Bahamas are the same as those in many other destinations; the pockets of guests who pay higher rates are getting smaller."

Neil Hartnell,
The Tribune
Published: February 1, 2012