Hurricane Irene Sparks Seven Point Occupancy Decline

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"All indicators" for the Nassau/Paradise Island hotel industry would have shown year-over-year improvement for August had it not been for a "seven point" occupancy decline sparked by Hurricane Irene, the Bahamas Hotel Association's (BHA) president said yesterday.

Stuart Bowe said the resort sector, this nation's largest private sector employer, had been encouraged by the ability of the 14 Nassau/Paradise Island resorts to "marginally increase" average daily room rates (ADRs) in August, continuing a trend begun in April 2011.

But, while the Nassau/Paradise Island resort industry was "optimistic" that 2011 would be an improved year compared to 2010, it remained concerned about the 2012 outlook - having originally hoped it would be a year when it would "be close to pre-recession performance".

The data for August indicates the Bahamian hotel industry still has some way to go before matching pre-Lehman Brothers crash levels.

August 2008, the last month before that seismic event, saw Nassau/Paradise Island hotels generate average occupancies and ADRs of 75.3 per cent and $229.61, respectively, compared to 64.9 per cent and $220.08 for 2011.

"Room nights sold along with room revenue in August 2011 were 17 per cent and 20.4 per cent below 2008 levels," a BHA statement said.

For 2011 to end-August, occupancies and ADRs stand at 68.2 per cent and $248, compared to 73.6 per cent and $259.38 for the first eight months of 2008.

"Room nights sold along with room revenue for January to August 2011 were 11.9 per cent and 14.6 per cent below 2008 levels," the BHA added.

Responding to Tribune Business's questions, Mr Bowe said the fall in average Nassau/Paradise Island occupancy rates year-over-year, from 69.2 per cent last year to 64.9 per cent this August, stemmed largely from Hurricane Irene's impact.

This, he added, mirrored the effects of weather-related booking cancellations from the US earlier in the year and, together, both events were responsible for Nassau/Paradise Island average hotel occupancies for the year-to-date dropping to 68.2 per cent from 69.3 per cent last year.

"You'll recall the weather-related cancellations and lost bookings we experienced early in the year, when the Northeast experienced several airport closings and there was gridlock," Mr Bowe told Tribune Business.

"Again, in August we saw about a seven point drop in room occupancy as a result of Hurricane Irene. Without these occurrences, we would be looking at all indicators showing year-on-year improvement. We are encouraged by the advanced bookings we are seeing to the end of the year, and are optimistic that overall 2011 will show some improvement over 2010."

For August, a $9.2 increase in ADR year-over-year to $220.08, compared to $210.56 the year before, produced a 0.7 per cent room revenue increase, more than offsetting the occupancy fall and 3.6 per cent decrease in room nights sold.

"Globally we have been seeing a slow increase in room rates, so we are encouraged that competitively we are in a position to marginally increase our rates," Mr Bowe said.

"It remains a highly competitive market, and while we are seeing an increase in group and business travel, the leisure market is not improving as quickly."

And the BHA president added: "While we're pleased that the revenue side has increased, this is somewhat countered by the higher promotional cost to generate that revenue and higher operating costs, particularly for utilities.

"The uncertainty of the glsobal economy continues to make it difficult to project. While we are encouraged by the return of the group business, we are discouraged by the rise in airfares. To counter this, industry and the Ministry of Tourism have extended the travel incentive programmes."

Looking further ahead, Mr Bowe told Tribune Business: "Before the threat of a longer recovery period or a double dip recession, we were hoping to see 2012 as a year where we would be close to pre-recession performance.

"The uncertainty of the economy, the fact that 2012 is a US election year when travel traditionally is slower, higher airfares and utility costs, these all concern us."

For 2011 to end-August, the BHA said the average ADR for the Nassau/Paradise Island resort industry was $248, compared to $241.06. Room nights sold were down 1.2 per cent year-over-year, with room revenue up 1.7 per cent.

"Six of the 14 hotels ended January to August with higher room revenues, mostly built on higher room nights sold," the BHA added.

It said the Nassau/Paradise Island resort industry's performance was mixed, some properties doing well, others not so well.

"Six of the 14 hotels experienced revenue increases in August, five of which showed increases above 10 per cent," the BHA said.

"Five of these six saw their improved revenue picture generated by increases in room nights sold, with all but one showing double digit increases.

"Six of the eight properties with impoverished revenues showed decreases above 10 per cent. Four of the eight recorded declines in both ADR and room nights sold."

The Tribune
Published On:Tuesday, October 04, 2011
Last Updated on Tuesday, 25 October 2011 18:37