The Tribune

By NEIL HARTNELL

Tribune Business Editor

TOTAL room nights sold in April by Nassau/Paradise Island hotels exceeded projections by 5,000, Tribune Business was told yesterday, but the industry missed its room revenue targets because average daily rates (ADRs) were $10.11 below forecast.

Unveiling a mixed, but optimistic, assessment of the 14 Nassau/Paradise Island hotels' performance during a month that included the peak Easter period, Stuart Bowe, the Bahamas Hotel Association's (BHA) president, told this newspaper that the industry was "still considerably below recouping our room rates to pre-recession levels".

Ever-increasing competition was impeding the ability of Bahamian resorts to increase their ADRs, Mr Bowe explained, and this nation "simply cannot compete on price with the likes of the Dominican Republic, Cancun, Cuba -and to an extent, even Orlando and Jamaica" - due to their lower operating costs.

And the BHA president added that with the combined industry/Government investment in promotions to encourage tourists to come to the Bahamas, "the acquisition cost is higher than it's ever been".

The end result, Mr Bowe explained, was that hotel industry net incomes were, generally, "not yet" where they needed to be.

He was speaking after the BHA and Ministry of Tourism revealed performance data for the 14 major Nassau/Paradise Island hotels for April. The sector recorded an average 81.9 per cent occupancy rate, an improvement over April 2011's 74.1 per cent, with room revenues up 3.5 per cent despite a 10.8 per cent growth in room nights sold.

ADRs for April 2012, though, were $17.51 lower at $272.93 when compared to April 2011.

"We exceeded the April forecast for occupancy by 2.5 per cent," Mr Bowe told Tribune Business.

"However, ADR was $10.11 under forecast. Consequently, we were down on total room revenue projections. Total room nights sold were just above 5,000 over what we forecasted."

He added: "While we are encouraged to see the increases in room revenue, we are still considerably below recouping our room rates to pre-recession levels.

"At the same time, we are investing considerable dollars in marketing and promotional offers, which makes the acquisition cost higher than it's ever been. Add to this high operating costs, fuelled primarily by higher energy costs, and the bottom line is not yet where it needs to be."

Asked about the factors preventing an increase in Bahamian hotel industry ADR, Mr Bowe told Tribune Business: "It's very simple - competition.

"We simply cannot compete on price with the likes of the Dominican Republic, Cancun, Cuba and, to an extent, even Orlando and Jamaica.

"Our operating costs are much higher. But we also must be careful not to over price ourselves out of competition. It's a delicate line which must be driven by price that reflects exceptional value and customer service, and our ability to attract a sufficient volume of guests to make up the difference."

For April 2012, the BHA/Ministry of Tourism statement said 10 out of 14 Nassau/Paradise Island hotels generated revenue increases, four producing "double digit" increases.

Three of those generated increased revenues from rises in ADR and room nights sold, while others generated growth from room nights sold. Nine of the 14 hotels saw lower ADRs year-over-year for April.

And for the key indicator, revenue per available room (RevPAR), the Nassau/Paradise Island industry saw an April increase from $216.52 in 2011 to $223.66 this time around. For the four months to end-April 2012, RevPAR was up from $180.3 to $191.93.

"April's performance continues a positive trendline which started last fall," the BHA/Ministry of Tourism statement said.

"January to April ended with a 73.9 per cent occupancy rate compared to 68.5 per cent last year. The ADR was $259.77 compared to $263.39, with the room nights sold and room revenue increasing by 8.9 per cent and 7.4 per cent, respectively.

"The January to April performance finished with 11 properties registering increased revenues. Of the 11 properties with increased revenues, 10 saw these revenue surpluses generated through increases in room nights sold. Eight properties show lower ADRs through the end of April."

When it came to comparisons with the pre-recession 2008 performance, the BHA/Ministry of Tourism added: "Comparative figures for April 2008 show a 75.1 per cent occupancy and $286.56 ADR.

"Room nights sold, along with room revenue in April 2012, were 5.3 per cent and 0.3 per cent, about $150,000 above 2008. Comparative figures for January to April 2008 show a 66.2 per cent occupancy and $260.68 ADR.

"Room nights sold, along with room revenue for January to April 2012, were still 3.2 per cent and 11.2 per cent below 2008, but trending positive."

When it came to increasing ADRs, Mr Bowe said: "We hope that the global economy on the whole continues to rebound. A stronger global economy will result in more leisure and business travel.

"As this occurs, our competitors' room rates will increase, putting us in a position to raise ours as well. Meanwhile, we will continue to work with our partner Promotion Boards and the Ministry of Tourism to look at ways to offer value oriented packages and lower the cost of travelling here."

He pointed the industry's major challenges as "more affordable airlift, high energy costs, improving customer service levels across the board to all areas of our economy, and the need to reinvest in improving and upgrading our hotels and overall tourism product".