The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The 35 percent expansion in Nassau/Paradise Island airlift over the past 18 months has “debunked” a business model that “cost The Bahamas a fortune”, a Cabinet minister said yesterday.

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that the past year-and-a-half had shown The Bahamas needed to drive demand for this destination to attract increased flights and seat capacity instead of providing massive subsidies to the airlines as it has done in the past.

“Airlift has grown 35 percent over the past 18 months,” he said. “It’s all been grown organically, and not through any increased funding by the Ministry of Tourism. This debunks the theory that if you supply airlift support that makes a big difference.

“We have to drive the narrative that once you create demand for people to come, and once the airlines see the load factors and yields go up, they’re able to put airlift in without any incentives.

“It’s a far more strategic plan than trying to do it the old-fashioned way, which was to give credits, minimum revenue guarantees (MRGs) and support which cost a fortune. All these strategies are not necessary if you drive demand.”

Mr D’Aguilar said the “double digit” growth in Nassau/Paradise Island hotel room rates and pricing, despite the increased supply created by the full release of Baha Mar’s 2,300 net room growth, “speaks volumes” to the current strength of Bahamian tourism.

He pointed out that March’s results were “exceptionally strong” given that the month was up against a tough 2018 comparative that included Easter, whereas the holiday weekend occurred in April this year.

“It really has been exceptionally strong “ Mr D’Aguilar said of the 2019 first quarter performance. “You have to remember that in 2018 Easter fell in March, but this year Easter fell in April. The effects of Easter were not felt in this year’s first quarter, but we still did exceptionally well.

“The statistics were remarkably strong. Last year in the first quarter the average occupancies were about 64 percent, and this year they’re at 78 percent. The hotels have maintained their rates despite all the additional supply coming to the market, and the full effect of Baha Mar is being felt this year.

“Not only does that represent an increase in supply, but they did that without any degradation in rate. That speaks volumes and is quite remarkable.”

All performance indicators for major Nassau/Paradise Island hotels increased by double digit amounts every month in the 2019 first quarter, with room revenues ending the period up 37 percent.

Ministry of Tourism data confirmed that the resort industry maintained its soaring growth throughout the three months to end-March, with room revenues up 48 percent, 41 percent and 28 percent for January, February and March respectively.

Revenue per available room (RevPar), a key measure of hotel performance, was up 32.7 percent for the 2019 first quarter as a whole, standing at an average of $232.24 compared to $174.99 in 2018. The gap between 2019 and 2018 RevPar data was around $60 for each of the first three months.

Room nights sold were also ahead by 36 percent, 27 percent and 17 percent for January, February and March respectively, closing the quarter up by an average of 26 percent.

Mr D’Aguilar attributed the improved tourism performance to the surging US economy and improved consumer confidence, which was encouraging persons to travel, coupled with the increased marketing activities of Bahamian resorts as they strive to both maintain and grow occupancies.

He conceded, though, that the “double digit” growth in air arrivals and hotel performance indicators is unlikely to be sustained for the 2019 full-year, with expansion rates likely “tapering off” into the single digits.

“Clearly the rate of growth will taper off as we draw closer to the end of the year,” Mr D’Aguilar told Tribune Business. “You can’t sustain double digit growth rates indefinitely, and my prediction is that as we get closer to the end of the year double digit growth will go down to single digits.

“Demand has gone up to take advantage of the increase in supply, and I’ll be happy to maintain what we have and grow incrementally. When the Pointe and Wynn come on stream, and Hurricane Hole, all of these facilities will contribute to that growth.

“But the growth will not be sustained at double digits. We do expect it to taper off as we get closer to the end of the year. Air arrivals grew by 17.3 percent during the 2019 first quarter, and you can’t sustain that rate of growth indefinitely.”

Mr D’Aguilar, meanwhile, said he does “not anticipate” any new or upgraded crime advisories as a result of Wednesday night’s double murder at Potter’s Cay. That, together with a double murder in the Kemp Road area, meant that four murders had occurred in his Freetown constituency within 24 hours - a situation he acknowledged was “alarming”.

He added, though, that no tourist had been in danger, and reiterated that 99.99 percent of The Bahamas’ visitors left without seeing or being involved in any such incidents.