Hotels Eager For Third Quarter Improvements

Monday, 16 November 2009 00:00 News Editor
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The Bahamian resort industry is "hoping and praying" that a sustained business recovery will come "no later than the third quarter next year", with occupancy and room yields under sustained pressure due to the weakness in group business.

Robert Sands, the Bahamas Hotel Association's (BHA) president, told Tribune Business that while the industry responsible for most private sector employment in this nation was cautiously optimistic that there had been a "bottoming out" in the rate of revenue and yield decreases, based on September 2009 results, it wanted to see successive months of improvement before determining the worst was behind it.

Mr Sands said the return of room and occupancy rates to their pre-recession levels "will depend largely on how quickly our major market rebounds in demand for travel to the islands of the Bahamas.

"We simply hope and pray it's some time sooner rather than later, that it's some time next year and no later than the third quarter next year."

A recovery by the 2010 third quarter may be something of a stretch, given that Atlantis and others have predicted that their key group/convention business is unlikely to rebound until 2011, but the BHA president said the hotel industry needed to see how the tentatively improving economic environment in the US impacted its member properties in New Providence and the Family Islands.

The upcoming Thanksgiving holiday period later this month may provide some indication of where US consumer and vacation confidence currently is, but Mr Sands said this holiday should not be looked at "in isolation" from the remainder of November.

"We have to look at a collective month of improvement," he explained. "Thanksgiving represents one snippet of a time period in one month, but we would certainly welcome a strong Thanksgiving.

"We need to see that stay solid for a given period before we make the determination that we have reached the turnaround."

And Mr Sands added: "With the absence of a solid group base, there's tremendous pressure on individual business at this time. We're not seeing the level of growth in yields that we'd like to see, coupled with downward pressures on occupancy.

"There seems to be some bottoming out in the rate of decreases more than anything else, and then we can maybe start to look forward to building on monthly improvements going forward."

A joint BHA/Ministry of Tourism statement last week said that 12 New Providence hotels surveyed had seen a collective 7.9 per cent year-over-year increase in room revenues for September 2009, while occupancy levels rose from 31 per cent to 38.9 per cent.

The resulting 4.8 per cent increase in hotel room nights sold, combined with an increase in average daily room rate (ADR) of almost $5, generated a 7.9 per cent room revenue gain.

The Ministry of Tourism and BHA said that for September 2009, the ADR was $164.44 compared to $159.75 last year. Available room nights decreased by 16.5 per cent, reflecting the closure of rooms at Baha Mar's Wyndham property on August 17 and the RIU property in September.

However, Mr Sands warned that one month's performance "does not create a trend, so we have to take it one month at a time and build on that going forward. We remain cautiously optimistic about the future, and don't want to read anything into one month's performance. We want to see a string of months before we make a determination that things have bottomed out and continue to improve."

The hotel industry was up against weak comparatives for September, given that this month last year was when Lehman Brothers collapsed into bankruptcy, triggering the worst recession in living memory.

Mr Sands added that the Bahamas had "been blessed" and was "eternally grateful" that the resort and tourism industries had been spared a hurricane, describing September as "a funny month" due to the impact these storms had on confidence in travelling.

He said the BHA and its members were "going to do everything in our power to promote the destination and Bahamian tourism", with marketing efforts to date having enabled this nation to "get a hook into" those Americans still travelling.

"The Bahamas could have been in a much worse position" without this, Mr Sands suggested, with the BHA also working with the Government on increasing airlift to drive tourist traffic to this nation.

While 10 of the 12 reporting properties recorded a modest September increase in room revenue, the Ministry of Tourism and BHA said: "However, September's positive performance did little to reverse the third quarter performance, and reflects primarily a year-over-year comparison with September 2008, the starting point for the worst tourism cycle since 1991 and the first Iraq War.

"The third quarter occupancy was 60.1 per cent compared to 61.9 per cent in 2008. Room nights sold and room revenue were 11.8 per cent and 20.6 per cent below last year's third quarter levels. The ADR recorded was $200.51 compared to $222.94 in 2008."

For the first nine months to end-September 2009, the Ministry of Tourism and BHA said hotel occupancy stood at 63.5 per cent compared to 68.9 per cent last year.

The ADR was $230.35, while January to September last year was $254.42. Hotel revenue fell 21 per cent, with 12 of the 14 hotels reporting losses for the year so far. Hotel room nights sold decreased by 12.8 per cent.

The latest preliminary air arrivals to the end of August for New Providence showed a 9.3 per cent decrease or 71,812 fewer foreign air arrivals than in 2008.

Source: The Tribune