Occupancy Rise For Hotels During Peak Time

New Providence-based resorts are forecasting that average occupancies for the peak March-April period will be 4-5 per cent higher than last year, the Bahamas Hotel Association's (BHA) president said yesterday, with hotels expecting their profits to improve before witnessing any top line growth.

Robert Sands, speaking after the 14 major New Providence resorts saw room revenues increase during January 2010 by a tepid 1 per cent year-over-year, said the data provided further evidence that the industry acting as the Bahamas' largest private sector employer had "stabilised", with "increased levels of confidence" among hoteliers set to continue through the 2010 first quarter.

Still, with year-over-year average occupancy revenues flat at 60 per cent for January 2010, and average daily room rates (ADRs) up by $1.48, Mr Sands said the cost-cutting and efficiency exercises engaged in by Bahamian hotels post-September 2008 were likely to show up in bottom line profits before top-line revenues recovered.

The BHA president said that, on average, New Providence hotels were forecasting 4-5 per cent occupancy increases year-over-year for the peak March/April period, during which Easter falls.

Traditionally, the first quarter of every year, and up to and running through the Easter period, are critical for Bahamian resorts. This is when occupancy levels, room rates and revenues are at their highest, and hotels rely on the profits generated during this period to carry them through the remainder of the year - especially the second half, when losses are usually the norm for most.

"Hotels are forecasting occupancies higher than last year, and hopefully that manifests itself," Mr Sands said, saying the 2010 first quarter would "give us a fairly good indication" of where the New Providence resort industry was headed in 2010.

The BHA president said stabilisation was "the key word", and the January 2010 performance was further confirmation this had been achieved, adding to the upward trend witnessed during late 2009.

"For us, the industry is stabilised, and we're beginning to see increasing levels of confidence among hoteliers," Mr Sands said. "Certainly, this is a trend that will continue for the first quarter of this year, and if we look beyond that, there are signs, indicators that show year-over-year improvements over last year.

"We've had one month of 2010. Once we get through February, March and April, we will be in a very good position to say we are, in fact, on the rebound and seeing growth again. Certainly, every month there is an indication of a shining light for the industry.

"There is an expectation that we will be better during this period, and when we look at revenues for this period we haven't lost ground to January last year, which is a very good position to be in.

"We're looking at positive forecasts compared to last year. We should yield revenues better than we did last year. We are cautiously optimistic that we will see another positive trend in terms of February 2010."

Arguing that Bahamian hotels had been forced to "operate smarter, re-engineer their business, do more with less and become more creative in their marketing", Mr Sands said: "While we may not see the results in the top line as quickly as we would like, we will see better bottom lines for operators."

The BHA/Ministry of Tourism survey found that the $1.48 ADR increase was enough to boost the collective room revenues achieved by the 14 New Providence-based resorts by 1 per cent, compared to January 2009 levels. Hotel room nights sold, though, did not increase, as occupancy levels remained at 60 per cent.

Available room nights remained on par with 2009 levels, as the ADR increased from $239.60 to $241.43.

Mr Sands described room revenues as "the most important indicator", with how they were derived a secondary issue. "There are signs in the marketplace that we are beginning to see an increased interest in group bookings again," he added.

"There are reasonably positive indicators, and we're even getting requests for the latter part of this year, so that's positive as well." Group bookings are significant, since they provide a solid base around which hotels can arrange their leisure occupancies.

For January 2010, some 21 per cent of the 14 New Providence-based hotels saw an increase in room nights sold compared to 2009 and higher ADRs. Another 21 per cent saw a reduction in ADRs generate an increase in room nights sold, while 36 per cent also saw a rise in room nights sold.

Three resorts saw a reduction in both ADRs and room nights sold, yet 10 of the 14 properties - some 71 per cent - saw room revenue growth.

However, the January 2010 average occupancy level was more than 10 percentage points below the 70.2 per cent achieved in the same month for 2007. Still, the 2010 ADR was well ahead of the $202.85 achieved in 2007, with revenue per available room (RevPAR) standing at $144.82 in 2010 - slightly higher than the $142.25 achieved in 2007.

In addition, hotel room revenues for 2010 were 13.2 per cent above 2007 levels, but 16.8 per cent down on those achieved in January 2008.

"The industry has been somewhat resolute in holding ADRs, but obviously that is still driven by market forces," Mr Sands told Tribune Business. "I think the industry held the line on ADRs for the first part of the year, and we've not seen an erosion this year compared to last year, which was also very positive."

Source: The Tribune