Room Revenues Decline For Nassau Hotels

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New Providence's major hotels suffered a 7.4 per cent room revenue drop in October 2009, due to an average $18 daily room rate (ADR) drop, confirming the industry's current pricing weakness despite signs of occupancy stabilisation.

A joint release from the Ministry of Tourism & Aviation and Bahamas Hotel Association (BHA) said that while the average occupancy rate for the New Providence hotels had increased from 43.2 per cent the year before to 50.2 per cent in 2009, a seven percentage point rise, the figure was "distorted" by the absence of RIU Paradise Island's 379 rooms from the calculations.

"Exclude RIU from the 2008 figures and the 2008 September occupancy rate falls to 41.5 per cent," the statement said. "The closure of RIU also distorts the room nights sold picture even more.

"Room nights sold increased by 2.7 per cent overall, 12.7 per cent when excluding RIU from 2008. However, an $18 decrease in the average daily room rate (ADR) wiped out any gain in hotel room revenue expected from such an increase in room nights sold. In fact, room revenue fell 7.4 per cent in October, - 5.3 per cent, excluding RIU from the mix."

The New Providence hotel industry's ADR was $167.25 for October 2009, compared to $185.59 last year. October saw available room nights decrease by 11.6 per cent.

The BHA/Ministry of Tourism and Aviation said that nine of the 13 reporting hotels saw October room revenue increases that ranged from slight to solid growth. But where decreases in room revenue occurred, it was in the double digits.

"Despite the mixed results, the October performance indicators demonstrate a second consecutive month of either marginal improvements or single digit declines," the statement said.

"While this is a welcome change of course, any small improvements in occupancy and arrivals continue to be significantly offset by low ADR and RevPAR as a result of a strong push by hotels to increase market share through value-added promotions. This suggests that with a gradual global recovery, as is now being widely predicted, hotels will continue to be challenged, needing to pay close attention to maintaining operational efficiency while aggressively marketing themselves and the destination to maximise revenue."

For 2009 to-date, New Providence hotel occupancy stood at 62.3 per cent compared to 66.2 per cent last year. The ADR was $225.44, compared to $249.82 for the first 10 months in 2008. Hotel revenue fell 20.4 per cent, with 12 of the 14 hotels reporting losses for the year so far. Hotel room nights sold decreased by 11.8 per cent.

Source: The Tribune