Bahamas Hotels Anticipate Small Improvements

Friday, 19 March 2010 00:00 News Editor
The Bahamian hotel industry is targeting "small baby steps" of 2-3 per cent monthly improvements in business levels to carry it back towards pre-recession status, Tribune Business has been told, and the sector would have been "further ahead" but for the negative impact February's bad weather had on US airlift.

Robert Sands, the Bahamas Hotel Association's (BHA) president, said most major Bahamian resort properties were meeting expectations on 2010 performance year-to-date, with March "showing very high levels of occupancy for our hotels".

He added that the sector was taking further encouragement from the fact that a 'stable' trend had emerged "in the absence of a solid group base", although warning that Bahamian hotels were not planning to re-hire the workers laid off in late 2008 and early 2009 any time soon.

"We don't see any further deterioration in our business," Mr Sands told Tribune Business. "March is a key month of the year, and we're at the half-way point. Most hotels have had a very strong week to date, and hopefully it holds for the rest of the month and we see some improvement over last year, establishing a trend."

Business for most hotels was showing "positive signs" compared to 2009 figures, the BHA president added, even though its group business - key to establishing the base around which leisure occupancies were built around - was "still absent".

The positive arrivals momentum established by the joint Ministry of Tourism/private sector Companion Fly Free initiative "has really begun to manifest itself in the latter part of February and March", Mr Sands said, adding: "I think it's fair to say the industry is making its plan, certainly the larger hotels.

"But the true test will be the end of this month, to see how much improvement has been made over last year. We're looking for small baby steps, 2-3 per cent improvements over last year, and if we can do that every month, that improvement will result in us beginning to get back t0 previous levels.'

"[Room] rate is holding; there's been no reduction for the sector compared to last year. Revenue per available room is holding with no erosion. Stabilisation, it remains."

And the BHA president added: "I think we would have been further ahead year-to-date in terms of business levels, but they were hampered in February by the very severe weather in the mid-west and north-east US, where there were unprecedented levels of airport closures and cancelled flights.

"For a whole week in that entire month, the opportunity to travel from the north and middle of America was hampered, and that had an impact on our ability to show an even better improvement and stabilisation in February."

Looking ahead to the climax of the winter season with Easter in early April, Mr Sands said it was "fair to say that we're looking for an improvement in the Easter period this year compared to last".

Yet the improved hotel industry performance does not mean that it will automatically be re-hiring the several thousand Bahamian workers released in late 2008, as the sector right-sized and moved to cut costs to bring them in line with reduced occupancies and revenues.

"There's no indicators to suggest that business has returned to those levels that will justify any large amount of hiring, although hotels are replacing staff on a regular basis as they leave, inclusive of hiring for new business opportunities as they come on stream," Mr Sands said.

Given the efficiency and productivity gains many Bahamian resort properties will have enjoyed as a result of being forced to do 'more with less', it is unlikely that the sector will ever re-hire all the staff they let go in late 2008.

For January 2010, a BHA/Ministry of Tourism survey found that a $1.48 average daily room rate (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.

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.

Source: The Tribune
Last Updated on Sunday, 21 March 2010 14:49