Hotel Occupancy Exceeded New Year Expectations

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The New Year holiday "exceeded expectations" for many Bahamian hotels as average occupancy rates soared into the 90 per cent range with some days sold out, although the Bahamas Hotel Association's (BHA) president yesterday cautioned that the sector had to make up considerable ground to return to pre-credit crunch business levels.

Robert Sands told Tribune Business that while the industry felt "the worst is behind us", indicating there were unlikely to be further mass lay-offs, room rates remained "depressed" and the sector needed to beat or equal its early 2008 numbers "before we can comfortably say we're on the rebound".

Compared to pre-recession levels, Mr Sands said average hotel occupancy rates for 2009 were down by around 8-10 per cent, standing at around 60-62 per cent, while room rates were off by 10-15 per cent. Together, those two indicators showed how much the Bahamian resort industry lost in terms of top-line revenues in 2009 and, ultimately, in terms of profitability and increased losses.

"I think it is fair to say that for the large hotels, the casino-based hotels, the New Year period in particular was strong and occupancies exceeded expectations," Mr Sands told Tribune Business said.

"We don't have the exact figures, and we think the rates were somewhat depressed, but the occupancies were in the 90 per cents and we had some sold out days."

The BHA president said that the December figures for the Nassau/Paradise Island hotels would not be available for another week, "but certainly the New Year period exceeded expectations".

Mr Sands, who is also Baha Mar's senior vice-president of external and governmental affairs, said the Bahamian resort industry believed it had benefited from the way the New Year's holiday fell in terms of dates. With New Year's Day falling on a Friday this year, visitors were able to enjoy the luxury of a long weekend stay.

Adding that the combined marketing efforts of the Ministry of Tourism and the industry may also have had a positive impact on holiday stopover visitors, Mr Sands said that while the New Year's performance had come "as a pleasant surprise", he added: "We should not use that performance as any long-term indicator of what business will be like.

"We need a sustained level of high occupancies and increased rates to see a turnaround taking place. We are satisfied that the worst is behind us, and will have to see if we get back to 2008 levels before we can confidently state we're on the rebound. It will not be satisfactory to beat 2009 levels, because that was not a good year."

While year-over-year occupancy comparisons were difficult due to various room inventory having been taken off-line for refurbishment, the BHA president said of 2009: "I would say on aggregate that most of the hotels have achieved anywhere between 60-62 per cent occupancy, which may be about 8-10 per cent behind where we were in 2008.

"In terms of the average rate, we were at least 10-15 per cent off. Put all those together, and you can see the kind of revenues not realised in 2009. We have a lot of work to do this year."

Mr Sands said the main challenge facing the Bahamian hotel industry was the soft group business, the conventions and conferences market remaining weak due to the reluctance of companies to invest, and their preference to control expenses and not be seen spending 'lavishly'.

Group business is a bedrock for major operators such as Kerzner International and Baha Mar, plus the likes of the British Colonial Hilton, as it represents large block bookings of their room inventory. They can then plan leisure business and rates around this.

"The challenge remains the softness of the group market, which is important to a number of hotels in New Providence, and we will not see that improve here until later this year or early 2011," Mr Sands told Tribune Business. "The industry has challenged itself to do everything possible to stimulate business during this period."

Promotions such as a Companion Fly Free Programme, designed to provide a couple with free air travel for one of them, were "beginning to see some take up", and were designed to "take us through the end of winter".

"We will see how it manifests itself in terms of bodies in beds over the next few weeks," Mr Sands told Tribune Business. "Everything is a wait and see, but we're being as aggressive as we can in the marketplace."

He added that the hotel industry was also hoping the cold weather in the US, Canada and Europe would result in increased travel to the Bahamas, as visitors sought warmer destinations.

Source: The Tribune