The Tribune

By NEIL HARTNELL

Tribune Business Editor

A 10 per cent increase in room demand over the past 12 months saw the Bahamas placed "near the top of the heap" in the Caribbean by a world-leading travel research firm, local hotel executives saying the findings "augur well for a good long-term future" for this nation.

A presentation on the Caribbean Hotel Outlook by Smith's Travel Research (STR) president, Amanda Hite, which has been obtained by Tribune Business, placed the Bahamas third behind Panama and the Dominican Republic when it came to tourist demand for hotel rooms.

But, while agreeing that this and a 10.6 per cent occupancy increase, calculated as a 12-month moving average to end-March 2012, was another reason for "cautious optimism", Robert Sands, Baha Mar's senior vice-president for government and external affairs, said the improvements were counterbalanced to some extent by STR's findings that the Bahamas' average daily room rate (ADR) and room supply declined slightly over the same period.

Urging that the Bahamas "had to continue to work to rebound to pre-recession ADR levels", Mr Sands said that while this nation might achieve this "faster than some of our competitors", the hotel industry wanted all key indicators to be heading in the right direction.

And, warning that the "true test" for the Bahamian hotel and tourism industry would be its 2012 second and third quarter performances, Mr Sands said the STR findings also highlighted the fact that this nation's room inventory had not changed much in the past 10-15 years.

Noting that the $2.6 billion Baha Mar expansion at Cable Beach would only add a net 1,500 room increase - equivalent to about 10 per cent of current inventory - when completed, Mr Sands also told Tribune Business that the Bahamas was still around 250,000-300,000 visitors away from its previous annual stopover record.

Nevertheless, he added that the room demand and occupancy increases noted by STR indicated that the Bahamas still had "growth opportunities" for its tourism and hotel industries.

This nation's 10 per cent room demand increase, calculated by STR as a 12-month moving average, was well ahead of most rival Caribbean destinations, only Panama's 14.3 per cent increase and the Dominican Republic's 13.4 per cent growth bettering the Bahamas. Jamaica, for instance, saw a 2.7 per cent reduction in room demand over the same period.

Yet, as a 12-month moving average for the year to end-March 2012, STR said the Bahamas experienced a 0.5 per cent decline in room supply - something that was likely induced by the Hurricane Irene-related closures of SuperClubs Breezes and Sandals Royal Bahamian resorts, plus other Family Island-based properties.

Still, only Barbados, with a 1.3 per cent reduction in room supply, and Jamaica with a 0.3 per cent drop, experienced similar declines to the Bahamas over the same period.

"Certainly, the performance of the Bahamas near the top of the heap in terms of demand over the last 12 months shows we're making small but positive steps in terms of occupancy," Mr Sands told Tribune Business, reacting to the STR findings.

However, he added that this was balanced, to some extent, by STR's finding that the Bahamas' ADR, as the same 12-month moving average, fell by 0.7 per cent. Only Mexico, with a 6 per cent drop, and Panama via a 4.2 per cent decline, also saw ADR drops, indicating the Bahamas is still having difficulty getting rate (pricing) and yield power back post-recession.

Emphasising that all hotel performance indicators, including occupancy and ADR, were important, Mr Sands told Tribune Business: "We have to continue to work to rebound to pre-recession ADR levels, and I think we may do it faster than some of our competitors, but we're certainly not there."

In fairness to the Bahamas, it held the line on ADRs more than its Caribbean rivals during the recession, realising it would be difficult to get them back up when the market return. As a result, it did not discount as deeply, and therefore has less ground to regain than its rivals - such as the Dominican Republic, which saw a 21 per cent ADR gain.

While the short-medium term outlook for the Bahamas would be a slow, steady move in the right direction, Mr Sands added: "The true test is going to be the second and third quarters; those are the most challenging parts of the year."

The third quarter is traditionally the slowest period for the Bahamian tourism industry, and Mr Sands said the STR data - with room demand well ahead of room supply - also underscored the fact that this nation's room inventory had largely remained static for the past 10-15 years.

The only increases, he suggested, had come in line with the various Atlantis expansion phases, and in the past five years there had been a loss of room inventory with property closures on New Providence and Grand Bahama.

"Our levels of room inventory mirror what we had 10-15 years ago," Mr Sands said. He told Tribune Business that based on an estimated 15,000 room inventory, the net 1,500 rooms being added by Baha Mar only represented a 10 per cent growth.

"That's not a huge increase at all," Mr Sands told Tribune Business. "The other issue is that while stopover visitors, certainly to Nassau, are growing, the overall comparative is affected by sluggishness in Grand Bahama.

"We are somewhere like 250,000-300,000 stopovers off the Bahamas' best year, and that is against the backdrop of where the hotel inventory continued at the same level.

"The opportunities for growth certainly exist, and I think this augurs well for a good long-term future for the destination."

The Bahamas' 10.6 per cent occupancy increase, as a 12-month rolling average to end-March 2012, was only bettered by the Dominican Republic's 13.4 per cent rise among Caribbean competitors. This, together with the 10 per cent room demand growth, indicates that the Bahamas' marketing and value-added promotions have been working in terms of driving visitor traffic to this nation.

This, to some extent, has affected ADR yields. "For us, we don't necessarily drop ADR in terms of the amount, but we've offered a significant amount of value-added elements," Mr Sands explained, pointing to the likes of 'Companion Fly Free' and 'fourth night' free promotions.

"What we see so much with the Bahamas is the value-added measures to attract that 10 per cent increase in occupancy."

The STR report also pegged the Bahamas as having, via Baha Mar, the largest resort development in the Caribbean under construction. It ignored the 1,000 room casino hotel scheduled for Cable Beach, instead putting the 733-room Grand Hyatt as the largest development in the region.

Even that was more than double the size of STR's second and third-largest projects, both in the Dominican Republic.