Bahamas Hotel Rate Cuts Lowest in Region

Friday, 15 January 2010 00:00 News Editor
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The Bahamas was unable to cut hotel room rates as deeply as other Caribbean destinations in response to the recession because to have done so would have left the industry mired in "deeper unprofitability" due to high operating costs, the minister of tourism and aviation said yesterday.

Vincent Vanderpool-Wallace told the Bahamas Business Outlook Conference that this nation had to accept it would be unable to convert any cruise ship passengers to stopover visitors simply because land-based stays in this nation were out of their price range.

Visitor per capita spending in the Bahamas was "one of the highest in the world" when compared to other nations, Mr Vanderpool-Wallace said, adding that while it was "very close to the top" on this indicator it was also one of the highest operating cost destinations on the planet.

The main factors influencing these costs were labour and utilities and, as a result of this high operating cost base, the Bahamas "had one of the smallest reductions in room rates in the entire region" in response to the recession.

Mr Vanderpool-Wallace said these costs meant Bahamian hotels "had no choice" but to implement relatively minimal discounts, because "if they had reduced rates to the level of their competitors they would have fallen into deeper levels of unprofitability".

Per capita hotel room costs had grown by a $100 average in the Bahamas in recent years, and Mr Vanderpool-Wallace said this nation's relatively high room rates and operating costs meant it had to pitch for the high-end, premium travel market.

The Bahamas, he added, was unable to compete with rival destinations that offered Canadians travelling from Toronto a one-week, all-inclusive stay including airfare for just $400.

"That is not our business. This is not the business we're competing in. We could never compete in that business," Mr Vanderpool-Wallace said. While Canada had been the only growth market for Caribbean tourism in recent times, the minister added that it was also one of the most price sensitive.

Mr Vanderpool-Wallace said there were also "a large number of people coming on cruise ships to the Bahamas that can't be converted", explaining that while cruise arrivals were up by 15 per cent year-over-year in 2009, this nation's hotels could not hope to attract the many passengers enjoying a $199 three-day cruise.

Higher spending stopover visitors to the Bahamas declined by more than 10 per cent in 2009, but there had been a "steady increase" in those tourist numbers in the four months between September and December 2009, a trend that had continued into January. Mr Vanderpool-Wallace said March was also looking good, and February not as promising, but pointed out that the shortened booking window made trends very difficult to predict.

The minister of tourism and aviation said the Bahamas had "an asset utilisation problem" in that it had focused on just one destination, Nassau/Paradise Island, to the detriment of all other islands. While stopover visitor numbers to Grand Bahama and the Family Islands had largely remained stagnant over the past 20 years, only Nassau/Paradise Island had shown a marked increase.

This had driven the Ministry of Tourism's quest to brand and differentiate all islands of the Bahamas, Mr Vanderpool-Wallace admitting that this nation's US proximity advantage had been negated because it was more expensive and, in the case of the Family Islands, more time consuming to fly to this nation from New York when compared to European destinations like Paris, London and Rome.

Source: The Tribune