The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday voiced concern that declining vacation rental prices and occupancies could “dampen new investments” in the sector if this drop-off becomes a sustaining trend.

John Rolle, speaking at the regulator’s 2024 third quarter economic briefing, said that while the number of Bahamian vacation rental properties on the market continues to increase there were “incremental declines” in key performance indicators compared to the first nine months of last year.

Acknowledging that the sector’s growth has helped to offset reduced hotel room accommodation, he added: “While, as a buffer, the vacation rental inventory continued to increase, in 2024 these properties experienced incremental declines in both average prices and average occupancy compared to the first three quarters of 2023.

“This shift, if it is maintained over an extended period, could begin to dampen new investments targeted at this segment.” Data unveiled by the Central Bank yesterday revealed that the average occupancy rate for ‘entire place listing’ vacation rentals fell from 32.7 percent during the first nine months in 2023 to 29.1 percent for the same period this year.

And, when it came to ‘hotel comparable’ listings, the average occupancy rate dropped year-over-year from 36 percent to 34 percent for the three quarters to end-September 2024. There were some 3,808 vacation rental listings at the end of that period.

“Listings for Abaco, Grand Bahama and New Providence advanced by 21.3 percent, 23.4 percent and 9.7 percent, respectively, in September, relative to the comparative period last year. However, Exuma listings fell by 17.8 percent,” the Central Bank said.

Any slowdown in vacation rental popularity or demand would negatively impact hundreds of Bahamian entrepreneurs who have invested in a sector viewed as critical in enhancing local ownership of the country’s largest industry as well as spreading the wealth from tourism.

“As it relates to the short-term vacation rental market, data provided by AirDNA showed that in September, total room nights sold fell by 1.3 percent to 24,921 when compared to the same period last year,” the Central Bank said.

“Correspondingly, occupancy rates for entire place listings decreased to 29.1 percent from 32.7 percent in the comparative period last year, and for hotel comparable listings to 34 percent from 36 percent in 2023. Meanwhile, price indicators revealed that the average daily room rate (ADR) for entire place listings declined by 5.1 percent to $588.53, and for hotel comparable listings by 9.2 percent to $157.17.

“On a year-to-date basis, total room nights sold rose by 6.2 percent, supported by gains in both entire place bookings (5.8 percent) and hotel comparable bookings (7.3 percent). Meanwhile, occupancy levels for entire place and hotel comparable listings moderated by 5.5 percent and by 3.2 percent, respectively. Despite lower occupancy levels, the ADR for entire place listings edged up by 1.2 percent and for hotel comparable listings by 1 percent.”

Mr Rolle, meanwhile, reiterated that the 16.3 percent growth in The Bahamas’ total tourism arrivals for the first nine months of 2024 was driven almost entirely by lower-spending cruise passengers with stopover or air arrivals up be less than 1 percent compared to 2023. And he also acknowledged that the arrivals growth rate for the period to end-September was “less than half” that of the prior year.

“As to tourism’s impact, over the first nine months of the year visitor arrivals rose by a healthy 16.3 percent, but it was less than half of the rate of growth experienced in 2023 and very closely anchored on a nearly 20 percent boost in sea arrivals,” the Governor said.

“Air arrivals, which capture high-yielding stopover visitors, increased by less than 1 percent over the first three quarters of the year compared to a recovery-driven expansion of just exceeding 20 percent in the same period last year.

“Since the recovery to pre-pandemic volumes, the sector has experienced constrained hotel room capacity, with the average pricing of accommodation, which contributed to some of the more recent period gains, only marginally appreciated in 2024.”

Mr Rolle said the outlook for stopover tourism “remains stable to positive on balance” given that “the extreme likelihood of a recession has been avoided for now, which would have been even more damaging for consumer confidence and travel spending”.

However, to fully exploit this momentum, Mr Rolle said The Bahamas needs to invest in expanding its hotel room capacity and enticing more passengers off the cruise ships through providing them with innovative attractions and experiences. A recent Florida-Caribbean Cruise Association (FCCA) survey said 19 percent of passengers, almost one in five, remain on board when the ship is docked in Nassau and Freeport.

“This highlights the importance of efforts from within The Bahamas around marketing, strengthening airlift and increasing hotel rooms, which could contribute to more supply-side industry growth,” Mr Rolle added.

“Meanwhile, The Bahamas’ cruise market outlook remains favoured by the significant investment in private destinations throughout the archipelago. This segment also has a significant captive market from which earnings can be boosted, if a larger share of existing passengers were enticed to disembark and if more local products and experiences were supplied to these visitors....

“Though positive, on balance, a range of factors affect tourism. Cruise capacity has the potential to expand further if local supply side conditions continue to strengthen. Meanwhile, demand side forecasts are less uncertain for stopover visitors given the averted risk of a recession in the United States and other major economies.”