The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank is warning that the booming vacation rental market could threaten tourism's foreign exchange earnings without proper quality assurance mechanisms in place.

The regulator, while acknowledging the sector's importance in its monthly economic report for May, said: "Although the tourism industry continues to benefit from decentralised residential rentals, this could pose heightened downside risks to the foreign exchange earnings potential of the sector unless co-ordinated mechanisms assure product quality and safety."

The Central Bank's warning is likely to cause consternation among the many Bahamians and residents whose properties are already registered with the likes of Airbnb and other vacation rental websites, given that the sector is seen as a vital mechanism to boosting local tourism industry ownership and "spreading the wealth" beyond the foreign-owned hotels.

Revealing the sector's continued strong growth, the Central Bank said data from AirDNA, a company that analyses information provided by Airbnb, suggested there was a 51.3 percent increase in bookings through the latter's platform in May compared to the prior year, with available listings up 34.3 percent.

"This development reflected higher bookings in four of the largest markets, Exuma, Abaco, New Providence and Grand Bahama, which rose by 68.3 percent, 47.6 percent, 47.4 percent and 42.9 percent, respectively," the Central Bank said.

"Similarly, the number of room nights sold advanced by 50.6 percent for hotel comparable bookings - which include studio and one-bedroom entire dwelling rentals - and by 52.1 percent for listings of entire homes.

"In addition, estimates of the average daily room rate (ADR) for the entire Bahamas market firmed by 7.7 percent to $338.40 for entire homes, and by eight percent to $146.57 per night for hotel comparable listings over the prior year."

Elsewhere, the Central Bank revealed that a major hurricane impacting The Bahamas could result in "a near-term reassessment" of its monetary policy stance. With excess liquid assets in the commercial banking system now exceeding $2bn, it acknowledged that the proposed Credit Bureau was vital to "effectively managing" its drawdown.

"On the domestic front, the adverse effects of a significant weather-related event could lead to a reassessment of the policy stance over the near-term," the Central Bank revealed, "while the potential for an increase in credit supply, fuelled by the high level of liquidity, will need to be managed effectively via measures such as the implementation of a Credit Bureau."

Private sector credit contracted by $15m during May, highlighting continued weakness in the business community, although total commercial bank loan arrears continued to fall to hit $845m at month's end.

"The corresponding ratio of arrears to total private sector loans fell by 14 basis points to 14.8 percent," the Central Bank said. "In particular, non-performing loans (NPLs)--arrears over 90 days--contracted by $8.2m (1.4 percent) to $551.5m, resulting in the attendant ratio declining by 12 basis points to 9.7 percent.

"Similarly, short-term (31-90 day) delinquencies declined by $1.8m (0.6 percent) to $293.3m, with the relevant ratio slightly lower by two basis points to 5.1 percent."