The Tribune

Tourism “softness” resulted in a 7 per cent year-over-year decline in peak winter room revenues for Nassau’s major hotels, with both occupancies and pricing coming under pressure.

The weaker performance by the Bahamas’ leading industry added to the economic gloom enveloping the country in the wake of Moody’s downgrade threat, with the Central Bank branding the sector’s performance as “relatively weak”.

The regulator, basing its analysis on data supplied by the Bahamas Hotel and Tourism Association (BHTA) from New Providence’s major hotels, said: “Total room revenues declined by an estimated 7 per cent during the first four months of 2016, relative to the corresponding period a year earlier, reflecting a 1.4 percentage point reduction in the average occupancy rate to 75.6 per cent, along with a 5.8 per cent ($16.83) decrease in the average daily room rate (ADR) to $270.91”

The Central Bank added that “modest gains” in airlift and hotel capacity should drive “some signs of improvement” in tourism later this year, but that will be too late for the peak winter period, which occurs over the four months to end-April.

Elsewhere, the Central Bank said $550.8 million in gross Value-Added Tax (VAT) collections had driven a $201.1 million, or 16.4 per cent, improvement in Government revenues to $1.424 billion for the 10 months to end-April 2016.

“Reflecting almost full fiscal year collections, VAT receipts stood at $550.8 million relative to the $143.9 million recorded over the four months of receipts in the comparative period last year, on a base which still excluded real estate and insurance transactions,” the Central Bank said.

“Concurrently, a reduction on several tariff rates to rebalance indirect taxes towards the VAT contributed to declines in levies on international trade (mainly import duties and Excise taxes) by $41.6 million (8.7 per cent) to $435.2 million.

“In addition, receipts from ‘other’ miscellaneous taxes contracted by $93.2 million (22.3 per cent) to $325.3 million, due predominantly to the shift from Stamp to VAT on real property transfers, as well as notable reductions in ‘unclassified’ taxes. The more than halving in tourism-related taxes to $22.2 million also reflected the compositional shift from the room occupancy tax to VAT, while gaming taxes also declined by $3.2 million (13.1 per cent) to $21.7 million.”

Adding all this up, it appears that the net revenue increase produced by VAT may be around $350-$400 million.

“Receipts from business and professional fees decreased by $31.0 million (21.2 per cent) to $114.9 million, amid some timing-related delays in collections. Meanwhile, non-tax revenues were relatively stable at $158.1 million,” the Central Bank added.

On the spending front, it added that the $318.3 million or 23.2 per cent increase in the Government’s fixed cost outlays were driven by the switch of numerous items, including subsidies to the public corporations, from the capital account.

And the $245.7 million, or 40.3 per cent expansion, in transfer payments to $855.9 million was boosted by the $30 million ‘bridging loan’ granted to Bahamasair for the purchase of its new fleet.

“Given growth in debt obligations, interest payments expanded by $31.8 million (15.9 per cent) to $231.3 million, with the bulk of the rise related to domestic currency obligations ($26.8 million),” the Central Bank said.

“Meanwhile, outlays for goods and services grew by $54 million (23.5 per cent) to $283.5 million, while wages and salaries payments increased by $18.6 million (3.5 per cent) to $553 million.”

The Central Bank said the “sell-off” of delinquent mortgage loans led to a “significant” improvement in the commercial banking sector’s credit arrears position in May.

Total loan arrears fell by $22.9 million or 2 per cent to $1.131 billion, their lowest level for some time, dropping this sum to the equivalent of 19 per cent of total credit outstanding.

“Non-performing loans (more than 90 days past due) declined by $30.1 million (3.5 per cent) to $843.4 million, resulting in the attendant ratio of total loans decreasing by 39 basis points to 14.2 per cent,” the Central Bank said.

“In contrast, the shorter term arrears of 31-90 days rose by $7.2 million (2.6 per cent) to $287.2 million, with the corresponding ratio to total loans higher by 16 basis points to 4.8 per cent.”

It added: “A breakdown by category showed that total mortgage arrears fell by $23.2 million (3.6 per cent) to $614 million, with the non-performing segment down by $27.3 million (5.7 per cent) to $455 million, while shorter term delinquencies were up by $4.1 million (2.7 per cent) to $159 million.

“Comparatively, consumer loan arrears were nearly stable at $276.3 million, with a $5.3 million (6.6 per cent) gain in short-term arrears to $86 million, eclipsing the $5.1 million (2.6 per cent) reduction in non-accrual loans to $190.3 million.

“In addition, the commercial component steadied at $240.3 million, as the $2.2 million (1.1 per cent) increase in the non-performing category negated an identical decline in the short-term segment.”