The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas is better-positioned than the rest of the Caribbean to attract inward investment and financing for resort development, a leading accountant yesterday telling Tribune Business projects such as Baha Mar's would be "a waste of time" without supporting infrastructure "capacity".

Simon Townend, a Bahamas-based KPMG partner and managing director of its corporate finance arm in the Caribbean, said upgrades such as Lynden Pindling International Airport's $409.5 million redevelopment and $80 million Airport Gateway were vital to giving the Bahamas the "capacity to handle" the extra several hundred thousand visitors Baha Mar was seeking to attract to New Providence, with these and other infrastructure investments leaving the nation "well positioned" for future growth.

Telling Tribune Business that the Bahamas was "absolutely" among those Caribbean economies set to be the first to recover, Mr Townend said this nation had positioned itself "ahead of the pack" to attract increased tourist numbers and investment in its hotel industry.

And, praising the Ministry of Tourism for attempting to diversify the Bahamas' stopover source markets, Mr Townend suggested that Latin America could become "a big market" for this nation, describing Copa Airlines' existing service from Panama as akin to "a foot in the door".

"The Bahamas is extremely well-positioned for inward investment compared to the Caribbean, particularly with all the infrastructure improvements that have taken place," Mr Townend told this newspaper.

"There's a lot of people looking - we've got this new airport, new roads, a lot of development opportunities that have emerged in downtown Nassau, that people are already taking advantage of.....

"Coming out of recession, the Bahamas is going to be an extremely popular location for development, and lenders will continue to lend to the Bahamas.

"One of the big criteria is airlift, transportation. The building that's gone on in the last several years to get infrastructure up to speed places us in very good stead, but before lenders become aggressive there's still a way to go."

Mr Townend was speaking after KPMG released its eighth annual Caribbean Region Financing survey, which measures the willingness of regional and multinational institutions to lend to the hotel/tourism sector.

The overall message coming from the survey was continued conservatism and caution on the part of lenders, with the Caribbean Financier Confidence Barometer - a measurement of their confidence over the next 12 months - tilted slightly towards the 'bullish' end of KPMG's 1-10 scale. Yet the Barometer only reached 5.18 for 2012, the smallest of increases over 2011's 5.17.

"Lenders are still very cautious, and there are some problem accounts they have to work through," Mr Townend added. "While there's some liquidity with the lenders, there are fundamentals that have to be addressed. They're being very cautious, although that doesn't mean the money is not available if there's the right project."

Among the main criteria sought by potential lenders to the Bahamian/Caribbean resort industry, he said, were a "solid management" team at the subject property and "a history of good performance".

The "austerity" measures embraced by many resorts during the recession, which saw them took a hard look at their cost bases and operational efficiencies, had served many properties well. And the Bahamas' focus on increasing airlift and upgrading infrastructure that supported the tourism industry would further enhance this nation's attractiveness in the eyes of lenders, Mr Townend said.

Emphasising that "the right project in the Bahamas" would attract lender interest, the KPMG Corporate Finance managing director added: "We're extremely well positioned with all the work that has been done to accommodate and provide high quality access to tourists.

"Everything done transportation wise in terms of infrastructure is extremely important to promote economic growth. What's been done here will put us ahead of the pack."

And Mr Townend explained: "With most places, their problem is not just attracting the airlift, but the capacity to attract the airlift. We have the airport now to attract that capacity, and at a high level, which is critical.

"In other places, passengers are queuing out the door. It's all very well building a new resort, but if you don't have the capacity to handle the airlift, it's a waste of time."

Explaining that investments such as the LPIA redevelopment and Airport Gateway road "all tie together" in providing the platform for tourism and economic growth, Mr Townend added: "If someone came to lenders today and said they wanted to build a new hotel in Nassau, that would be a major consideration for them - that Nassau has the capacity to deal with the additional rooms."

Responses to KPMG's survey were received from financial institutions covering 20 Caribbean markets, and who collectively hold more than $3 billion in exposure to their real estate and tourism industry.

The survey found that 73 per cent of institutions felt Caribbean tourism's major challenge in 2012 would be the global economy's performance, given that this directly impacted their stopover source markets. Increased travel costs were cited as a key concern by another 18 per cent of respondents.

Lending institution opinion was more divided when it came to projecting when 'meaning growth' would return to Caribbean tourism. The biggest proportion, 46 per cent of them, forecast that this would happen in 2014, with 36 projecting 2015 or later. Only 18 per cent projected that major growth would resume in 2013.

Acknowledging that the Bahamian tourism industry's success was inevitably linked to that of the US economy and other key markets, Mr Townend told Tribune Business: "It's great to have more diversification, particularly with Copa and Panama.

"What tourism's done in that regard is great for diversification. The more routes we bring in from other countries, the better. With the economic growth seen in South America over the last few years, the middle class is growing exponentially. That could turn out to be a very big market for us. Copa is just like a foot in the door."

Mr Townend added that the Bahamas would "absolutely" be among the Caribbean leaders in tourism recovery, emphasising that this nation might see "some good growth" in 2013 barring any major economic shocks.

With stopover visitor numbers up 11.2 per cent year-over-year for the 2012 first quarter, and Atlantis reporting a major rebound in group business, Mr Townend said the way to recovery was being paved.