The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian resorts “could not wait any longer to raise rates” if they were to meet budget, the Bahamas Hotel and Tourism Association’s (BHTA) president yesterday explaining this is why 2013 occupancies are expected to be down year-over-year.

Suggesting that most New Providence hotels are having to sacrifice, or ‘trade off’ occupancy for improved room rates, Stuart Bowe told Tribune Business that the Bahamas and wider Caribbean were “lagging” the rest of the world when it came to prices.

“While expenses have increased over the past five years, in order to remain competitive we have been reluctant to drive up rates to pre-recession levels,” Mr Bowe told Tribune Business.

“Many of our hotels simply could not wait any longer to raise rates in order to meet budgets. Globally, rates have rebounded, but the Bahamas and the Caribbean have lagged the global pace.”

Mr Bowe’s comments explain the Nassau/Paradise Island hotel industry’s performance for the first four months of 2013, with occupancy rates down 4.9 percentage points to 69 per cent.

This outweighed the 2.9 per cent rise in the average daily room rate to $267.23, resulting in industry revenues dropping by an average 7 per cent.

Looking ahead for the 2013 second half, Mr Bowe added: “We expect more of the same. Coming off a better than expected 2012, as 2013 continues we expect a slight decline in room occupancy and a slight increase in our average daily rates.”

Explaining the 2013 first quarter revenue drop, the BHTA chief added: “A number of destinations throughout the region experienced a decline in occupancies during the first four months of 2013.

“We believe it is a combination of the return of the recession in Europe and what we hope is a temporary shifting of consumer spending and saving patterns in the US.

“While we experienced two consecutive years of occupancy growth in 2011 and 2012, much of this could be attributed to the release of pent-up demand following several years of deep recession.”

Mr Bowe suggested that US travellers were more concerned with paying down debt and shoring up their household balance sheets, putting off discretionary spending if they could.

“We’re hoping to see a return to greater discretionary spending on travel soon,” the BHTA president confirmed. “It should be noted that while Nassau/Paradise Island and Grand Bahama have been flat or seen a decline this year in occupancies, the Family Islands, which did not on the whole show improvements in 2012, have on average seen increases this year.”

Mr Bowe said the Nassau/Paradise Island room inventory declined by 2 per cent in April largely due to one of the Wyndham’s towers being taken out of commission for the $2.6 billion Baha Mar project.

This had reduced the Wyndham’s room inventory from 559 available rooms to 415 rooms.

Meanwhile, the hotel industry is continuing to offer special promotions and value-added packages to stimulate demand, and Mr Bowe said: “While the group business this fall is expected to be softer than last year, we continue to aggressively pursue last minute group and leisure business.”

The sector was also working “aggressively” to increase airlift in preparation for the extra 400,000 seats Baha Mar will require, and Mr Bowe said the new casino Gaming Bill’s passage into law “remains a high priority”.

He added: “The Government understands its importance, not only to our competitiveness but also towards helping to drive up visitor traffic, spending and government revenue as well.”