2024 Growth Not On Par With Last Year

The Bahamas has “much work to do” in the 2024 second half with the resort industry “not seeing” the growth it enjoyed during the same period in 2023, a senior hotelier warned yesterday.

Robert Sands, the Bahamas Hotel and Tourism Association’s (BHTA) president, told Tribune Business that the drop-off in group visitor business compared to an unusually strong 2023 third quarter was likely playing “a pivotal role” in this year’s softening although he cautioned against writing-off the year’s final six months just yet.

With the industry’s leisure bookings holding steady against the prior year, he reiterated that Bahamian hotels and the wider tourism industry will no longer enjoy the explosive growth rates enjoyed in the immediate post-COVID years with the industry having “stabilised” following pandemic-related turbulence.

Although providing no figures, Mr Sands told this newspaper it remains to early to determine whether US stock market jitters – which resulted in a sharp share sell-off earlier this week – will negatively impact tourism and the wider Bahamian economy.

Wall Street recovered some of the losses yesterday after improved US labour market data boosted investor confidence. The stock market’s health is key to US consumer spending and travel confidence given that so many Americans have wealth tied up in shares, and pensions/mutual funds that own them, while The Bahamas’ key US north-east visitor market is heavily dependent on Wall Street activity.

While unease over prospects of a US economic recession continues to circulate, Mr Sands said Wall Street’s turbulence and the potential fall-out for travel and tourism have “had no impact on us at this point in time”.

And he added that any effects will be “difficult to determine especially as we are entering our shoulder season, hurricane season and the traditional slower season that sees the softening of business”. However, the BHTA chief conceded: “It’s certainly something the industry is closely monitoring. Any time there’s a slowing economy, especially in our main markets, we have to pay attention.”

And he acknowledged that other factors may already be impacting The Bahamas’ 2024 second half tourism prospects. “I think we have a lot of work to do for the last two quarters of this year but I’m not one to be dismissive of what the results may be,” Mr Sands told Tribune Business.

“Certainly, at this point in time, we’re not seeing the level of growth for the last two quarters as we did last year. I think the level of groups is playing a pivotal role. There’s indications of a slowing down in the marketplace and that may have some impact on us going forward.

“There are a number of indicators at this point in time that speak to a slowed market at least compared to last year. We’re now working in an environment where we are stabilised. We are not going to see the levels of growth we have seen post-COVID. We’re going to see minimal increases,” the BHTA president continued.

“For some hotels they are tracking behind for the third quarter, and for others it’s about the same. I think there’s no question that transient [leisure] business is holding in terms of numbers. But for the third quarter last year we had major groups in the destination. Certainly we didn’t see that level of comparison for the third quarter this year. That has also had some impact on volumes and rates.

“I wouldn’t say that was an outlier, but don’t forget that we’re coming off the worst position we could be in coming off COVID, which gave the opportunity for growth a significant runway. Most properties had more or less stabilised in 2023, so you are operating on those very successful results to at least meet them or exceed them by a reasonable percentage. That is the challenge, that is the challenge.”

Mr. Sands, though, said he was not writing off the resort industry’s 2024 third quarter and second half prospects just yet. “Once we complete the month of August we will be in a better place to give a review of this quarter,” he added. “It wouldn’t be fair to give an indication until we have the results.”

The hotel and wider tourism industry were also “very satisfied” with the 2024 first half through to end-June which “tracked ahead” of the same period last year. Mr Sands said weather in major US visitor source markets, as well as climate change, are also factors impacting the industry while increasing hotel room capacity will “not make much difference if we cannot grow what we have”.

Meanwhile, Julian Francis, Commonwealth Brewery’s chairman, told shareholders in the company’s 2023 annual report that cruise tourism’s increasingly dominant share of visitor arrivals likely means that the “marginal spending benefit” from tourism has declined during the post-COVID years.

“The Bahamas’ tourism sector has been experiencing unprecedented levels of growth according to the most widely-accepted measure – the arrival count,” the former Central Bank governor wrote. “The seven million tourist arrivals in 2022 expanded further to 9.6m in 2023, a 38 percent increase.

“It is noteworthy, though, that as a percentage of total arrivals, stopover visitors to The Bahamas have declined in relation to cruise visitors – from an average of 25 percent per annum over the 2015-2019 period to an average of 21 percent per annum between 2022 and 2023. This shift points to a likely decline in the marginal spending benefit to the economy of the increases in arrival numbers since 2022.”

This was echoed by Daphne DeGregory-Miaoulis, the Abaco Chamber of Commerce president, who told Tribune Business: “Tourism numbers are up but, when you add up all the cruise ship bodies who don’t spend too much of anything, but we are bragging about the number of heads coming into the country.

“We need to be looking at more long-term stays, three to five day stays, not coming off the cruise ships, walking around town and maybe buying a snack and t-short before going back on the cruise ship and going to their private islands where they don’t buy the t-shirt; they buy from the same people that brought them there.

“The cruise ships don’t encourage them to come and spend their money on the island. They encourage them to spend money on the cruise ship and their cays which they own, and which is not sustainable for the country in the long-run. We are facilitating their growth, not ours.”

By NEIL HARTNELL
The Tribune
August 12, 2024