Bahamas Hotel Sector Must Expand Room Inventory

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The Bahamas Hotel Association's (BHA) president yesterday said it was "critical" for the sector to grow its room inventory and absorb this nation's ever-expanding labour force, arguing that this had helped Jamaica and the Dominican Republic to increase US stopover arrivals at the same time as this nation experienced a 14 per cent decline.

Data supplied by the Caribbean Tourism Organisation (CTO), and obtained by Tribune Business, showed that for the first eight months of 2009, Jamaica had seen year-over-year growth in US stopover arrivals of 2.1 per cent, compared to 2008.

And the Dominican Republic, another major competitor to the Bahamas, saw US stopover arrivals for the nine months to end-September 2009 increase by 2.6 per cent to 912,068. In contrast, for the first seven months of 2009, the Bahamas saw US stopover arrivals decline by 14 per cent to 716,084.

Robert Sands, the BHA's president, when contacted by Tribune Business on why several key competitors appeared to be heading in the opposite direction to the Bahamas, said both Jamaica and the Dominican Republic had benefited from a major increase in hotel room inventory in recent months.

The new, fresh product had given both destinations a 'shot in the arm' from a marketing perspective, creating some excitement they could leverage to entice potential tourists to their islands.

And Mr Sands pointed out that both Jamaica and the Dominican Republic had a more diversified tourism base, having made greater inroads into the European market for the Bahamas, while both destinations had relatively cheaper input costs, aided by the fact they produced more goods domestically for consumption in the hotel industries.

"I think Jamaica and the Dominican Republic are totally different from us," Mr Sands told Tribune Business. "They've actually had growth in hotel room inventory in recent times, in particular the last 18 months, and that has given them greater marketing opportunities."

The increase in room inventory, making both Jamaica and the Dominican Republic more accessible to US and other visitors, made year-over-year arrivals comparisons with the Bahamas somewhat misleading, Mr Sands added, given that this destination had not experienced similar growth.

He said the collective occupancy levels being achieved by Bahamian, Jamaican and Dominican Republic hotels would provide a more meaningful comparison of their relative performance, adding: "Whenever you see new inventory in any destination, it realises a spike in the number of arrivals at the front end, notwithstanding the current economic condition we find ourselves in."

However, Mr Sands acknowledged that it was "critical" for the Bahamas to grow its own hotel industry room inventory, given that this has seen minimal growth since the mid-1980s - despite the arrival of high-end products such as Atlantis, Sandals and Superclubs Breezes.

Although Atlantis's arrival in the 1990s produced some room inventory growth, what expansion there has been has largely been negated by other hotels, or a portion of them, being taken off-line.

"I think that we've seen some growth in that area, and seen some additional rooms come on line two years ago, although we have lost ground," Mr Sands told Tribune Business.

"We're projecting to see some additional growth in the next two to three years, if everything goes according to plan."

That is likely to be a reference to Baha Mar's proposed $2.6 billion Cable Beach redevelopment, whose progress appears to hinge on the successful completion of negotiations with the two Chinese state-owned entities, China State Construction and China Export-Import Bank.

Mr Sands did not go into heavy detail about the status of the talks between the two and Baha Mar, although the latter was "certainly" working to complete negotiations by 2009 year-end.

On the need for the Bahamas to expand its hotel room inventory, Mr Sands said: "I think it's critical. It's the only way we're going to see real growth and viability to absorb labour.

"We need labour-intensive industries to absorb the large amounts of people looking for work at this point in time. The reality is that if the economic situation gets better, and the anticipated number of rooms comes on line, the timing could not be better."

Successive Bahamian governments had been keen to ensure continued economic expansion, especially if the country is to continue absorbing the annual 5,000 school leavers - some 3,000 (a perhaps conservative estimate) join the workforce.

"I can't say it's held us back," Mr Sands said of the relative lack of growth in the Bahamian hotel industry's room inventory. "It's caused a narrowing of our market share pie over the years."

While the Bahamas emphasised both stopover and cruise tourism, Jamaica and the Dominican Republic both had a different market mix, and benefited significantly from returning friends and family who lived abroad.

"I would say that both of those destinations have a high level of all-inclusive packages, and in this environment that tends to be a better choice for consumers. Hotels can price the product at very attractive rates," Mr Sands told Tribune Business.

Jamaica and the Dominican Republic also held "very distinct advantages over places like the Bahamas, as they have cheaper costs, like labour, much less than the Bahamas.

"They are also able to utilise more of what they produce in their tourism infrastructure as well. These are all mitigating factors that have to be viewed when analysing these particular points.

"But the Bahamas remains very competitive, and will continue to be competitive. There are issues we will continue to work on to help us maintain market share going forward."

Source: The Tribune