The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas suffered a 40.6 per cent fall in UK stopover arrivals in the six years to 2013, with a senior hotel executive expressing hope that London’s aviation tax cuts will have an “overarching positive impact” in reversing this trend.

Stuart Bowe, the Bahamas Hotel and Tourism Association’s (BHTA) president, said the UK’s decision to place the Bahamas on a “level playing field” with the US on Air Passenger Duty (APD) rates would cut travel costs for a family of four by close to $100.

“Reforming the duty structure will be less expensive for the traveller and more equitable,” he told Tribune Business in a series of e-mailed responses.

“The APD for economy class travel to the Bahamas has jumped from $66 per passenger in 2007 to the current rate of $140.26. Other classes of travel saw an even greater increase. With the banding change coming into effect next year, a family of four will see a reduction in their ticket price of just under $100.”

Reforming the APD’s existing ‘four band’ system into one with just two bands, which will take effect from April 1, 2015, touches so many issues for the Bahamian tourism industry when it comes to price competitiveness.

It lowers ‘access costs’ to the Bahamas at a time when the industry is fearing that Value-Added Tax (VAT) will make it uncompetitive on price. And it also boosts the Bahamas’ ambitions to diversify, and grow, new tourist source markets just when Baha Mar’s $2.6 billion expansion will grow this nation’s room inventory 10 per cent.

Mr Bowe, too, expressed hope that the reduction in APD, and airlift costs, would help reverse the rapid decline in UK stopover visitor numbers witnessed since the recession struck.

“This will have an overarching positive impact on visitor arrivals from both the UK and other European countries who transit through the UK, as ticket prices will be reduced,” he told Tribune Business of the APD reforms.

“This has been one of the factors contributing to the significant decline in arrivals from the UK market over the last six years. In 2007, stopover visitor arrival figures from the UK were 40,261, which has declined to 23,979 in 2013.

“Any stimulation of this sector of the market will bolster the private/public sectors’ efforts to enhance and diversify stopover visits to the Bahamas,” Mr Bowe added.

“This is a high priority item for the hotel sector throughout the nation. It is particularly important with the added thrust needed to diversify the national base of tourists in general, and Baha Mar adding inventory.

“This seemingly small change in price changed European consumer travel behaviour. For that reason, BHTA is concerned about the potential impact of VAT and various tax reform issues.”

Mr Bowe is, in effect, suggesting that any price increases stemming from VAT could have the same impact as the APD-induced airline ticket price rises - a reduction in stopover visitor arrivals, as the Bahamas potentially prices itself out of the market.

Recalling the inherent unfairness in the original APD structure, and its negative consequences, the BHTA president said: “The UK Air Passenger Duty (APD) reform will place the Bahamas and Caribbean on a level playing field with the US as it pertains to the APD rate, effective April 1, 2015. It is a considerable achievement which will have a positive impact on the tourism industry.

“Under the current ‘four band’ system, the cost of the APD for a passenger flying from London to Nassau is greater than that for a passenger flying from London to Hawaii, which is a greater distance.

“This disparity has placed the region at a disadvantage when compared with the US, and resulted in a measureable loss of market share and decline in visitor arrivals from the region, due to the price point.”

Mr Bowe’s comments echo those of fellow tourism executive Robert Sands, who told Tribune Business last week that the UK’s air tax reforms “play right into the Bahamas’ diversification and international markets” growth strategy, boosting connectivity via British Airways’ London hub.

Baha Mar’s senior vice-president of governmental and external affairs said the APD reduction could act as a “stimulus”, and dovetailed with this nation’s target of increasing inbound airlift capacity by 400,000 seats per annum by next year.

“This plays right into our diversification and growth of international markets, and reducing dependency on North America,” Mr Sands told Tribune Business. “This will act as a stimulus and incentive for traffic to continue transiting through the UK, which acts as a hub for Europe.”

Apart from the direct airlift that could be facilitated from the UK to the Bahamas, Mr Sands said: “It’s also about connectivity; having this connectivity through London as a gateway to Europe and Asia.

“This is a welcome incentive for travel to transit through the UK.”