The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas is among the “most favoured” Caribbean jurisdictions for non-bank hotel industry financiers, with lenders expressing some concern that the $2.6 billion Baha Mar project may create room inventory over-capacity.

KPMG, in its 10th annual Caribbean Hospitality Financing Survey, which found that confidence among resort industry lenders was at its highest level since 2008, noted, though, that the Bahamas was not among regional nations that traditional bank lenders were most optimistic about.

“When looking at which locations in the Caribbean banks are most bullish about in terms of lending and the reasons for their choices, a cautious theme is again prevalent,” the KPMG report said.

“Aruba featured heavily because it is considered to be stable with a government that has a vision. Cayman received honourable mentions for similar reasons. The Turks and Caicos Islands and the Dominican Republic also scored heavily because of strong airlift.”

The Bahamas, though, fared better with non-bank resort industry lenders such as private equity funds, due largely to its US proximity.

“For the non-bank community, the Bahamas joined Aruba and the Turks and Caicos Islands as favoured jurisdictions, with proximity to the US cited as one of the attractions,” the KPMG survey said.

KPMG executives did not return Tribune Business e-mails and phone calls seeking comment yesterday, but their report said lenders surveyed had expressed some concerns about the new room inventory set to hit the market in 2014.

Prominent among these projects is Baha Mar’s $2.6 billion Cable Beach redevelopment, and the KPMG report said: “Little concern was expressed concerning the significant new inventory that will be introduced to the market in late 2014/early 2015, most notably with the opening of the Baha Mar project in the Bahamas.

“Other than a comment that existing inventory in the Bahamas may be negatively impacted, the consensus appears to be that this is a positive development for the region, raising its profile and bringing economic benefits.”

KPMG said that based on lender responses, while financiers remained cautious, confidence had continued in a five-year upswing from the ‘low point’ achieved in 2009.

“We reiterate that cautious optimism appears to be the prevailing sentiment,” the accounting firm said.

“We cannot rely on winning the lottery, but the lending environment continues to improve. Fingers crossed, we appear to be over the worst and can look forward positively to the future.”

And KPMG added: “Lenders are more confident than they have been for nearly a decade and most believe that meaningful growth will return to the Caribbean as early as 2015.

“Non-banks are even more confident than banks, although they believe that it will be 2016 before meaningful growth returns. Either way it seems that growth is close at hand.”