The Tribune

• Occupancies up 10-15%, room rates rise 8-12%

• Room inventory drop still ‘greatest opportunity’

• Quicker to beat pre-COVID if gap can be filled

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior hotelier yesterday asserted that the industry’s “greatest growth opportunity” lies in increasing room inventory with summer rates and occupancies ahead of 2022 comparatives by double digits.

Robert Sands, the Bahamas Hotel and Tourism Association’s (BHTA) president, told Tribune Business the industry will be able to surpass pre-COVID performance in “a shorter period of time” if it can increase its capacity to accommodate more visitors given ongoing pent-up demand for the destination.

Describing the Government’s target of attracting eight million total visitors to The Bahamas in 2023 as “very achievable”, provided there are “no bumps in the road” such as hurricanes, he added that the hotel industry is “very, very close” to matching its pre-COVID record performance from 2019.

Mr Sands suggested to this newspaper that hotel room revenues may now be beating 2019 levels, and added that the launch of direct airlift to this nation from the US west coast via Jet Blue and Alaska Airlines will help further diversify the sector’s source markets and “ensure growth can be continued and sustained over a longer period”.

“If we’re comparing this year to last year, we’re seeing in terms of rate increases anywhere from 10-15 percent in occupancy and, on average daily room rates (ADR), a similar 8-12 percent increase,” the BHTA president said. “It’s very strong, especially in light of reduced capacity.”

That shrinkage in room inventory stems from the fact that major resorts such as the Melia Nassau Beach, Atlantis’ Beach Towers and downtown Nassau’s British Colonial remain offline and shuttered. The latter property is supposed to re-open before year-end 2023, while Atlantis’ 400-room Beach Towers is awaiting redevelopment into Somewhere Else by Grammy Award-winning musician and producer, Pharrell Williams, and his business partner David Grutman.

Graeme Davis, Baha Mar’s president, told the BHTA’s last directors meeting towards the end of April 2023 that plans for the 694-room Melia Nassau Beach were also set to be disclosed imminently. This has yet to occur, but the loss - albeit temporarily - of these three properties means that close to 1,500 rooms have been taken out of Nassau/Paradise Island’s room inventory levels compared to pre-COVID.

The room supply shortage has thus helped drive occupancies and room rates, and meant it has been difficult for Nassau/Paradise Island resorts to accommodate all the pent-up travel demand post-COVID. Vacation rentals, though, have helped to at least partially fill the void.

Mr Sands told Tribune Business the summer months are “much stronger than they have been in the past, and certainly all the metrics are up. We see increases in airlift arrivals, we see increases in cruise arrivals, we see increases in the average length of stay, we see increases in average rates. All the metrics are going in the right direction.

“It’s not totally apples with apples because we are coming out of COVID and there is still some pent-up demand,” he added. “Capacity is increasing, perhaps not at the level of increase we would like to see, and that remains the biggest opportunity for The Bahamas for growth. We’re getting back close to the peak in terms of stopovers, and should exceed 2019 levels. If we have an excellent third quarter that will come sooner than later.

“Summer travel is up. The booking window is certainly shorter for the islands of The Bahamas, but all forward bookings are ahead for the islands of The Bahamas. Speaking to member hotels, and members of the BHTA, summer numbers for the large hotels are looking very, very positive, and for the not-so-large hotels it’s increasing.

“We’re not just looking at occupancy. We’re also looking at average length of stay, spending and average rates. These are all up. Coming out of COVID, and going into our second stabilised year, we are seeing some growth in terms of average rates and occupancy exceeding 2019 levels taking place now.”

However, Mr Sands reiterated that The Bahamas’ ability to fully maximise the economic benefits from tourism’s post-COVID rebound remains constrained by the fact a significant amount of room inventory remains offline. “That will be impacted by available rooms,” he added of other improving indicators. “That remains the biggest positive opportunity for The Bahamas.

“Certainly, if we have those rooms at a minimum back in place that would create significant additional supply for hotels, The Bahamas would be well on its way to exceeding, in a shorter period of time, the record numbers achieved in 2019 for stopover visitors.”

Mr Sands added that there is “absolutely no question” that the tourism industry will beat 2019’s record pre-COVID performance this year, but said this target would be achieved more rapidly if more hotel rooms are available. “I think we’re very, very close,” he said of matching pre-COVID numbers. “If we want to look at year-to-date figures, we’re already pretty close.

“I think that room revenues for the year-to-date may have exceeded 2019’s position. That is what it’s all about.” Asked how likely it is that The Bahamas will achieve the Government’s eight million visitor target for 2023, Mr Sands said much depends on whether the country avoids any external shocks such as hurricanes.

“If we continue on the track we are doing, and there are no bumps in the road for the rest of the year, that is very achievable,” he said of the eight million figure. And, with Jet Blue and Alaska Airlines set to begun direct service to Nassau from the US west coast just prior to Christmas 2023, the BHTA president added: “The bottom line is that air transportation access greatly impacts a market’s room occupancies. You cannot grow without it.

“It diversifies the markets from which we receive business, and spreads risk by reducing our dependence on the US east coast. Spreading it over multiple US states puts The Bahamas in a position to ensure growth can be continued and sustained over a long period of time.”

Mr Sands said the Bahamian resort industry is also seeing higher occupancy levels than it traditionally enjoys during the September-October period, which is typically the slowest part of the tourism calendar due to it coinciding with the hurricane season peak and the return to school in the US.

Michael Halkitis, minister of economic affairs, yesterday told the Senate during the 2023-2024 Budget debate that average hotel occupancies for the nine-month period to end-March 2023 stood at 65 percent, which represented a 10 percentage point rise over the prior year’s 55 percent.

AirDNA, which provides vacation rental industry data on Airbnb-listed properties, said the average occupancy rate for entire place listings jumped to 69.8 percent from 61 percent over the same nine-month period.