The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

New Providence hotels suffered a 7 per cent year-over-year revenue slump for the four months to end-April 2013, as room rate rises failed to offset occupancy declines.

The Central Bank of the Bahamas’ monthly report for May, released yesterday, said: “Indications are that tourism output fell over the first four months of the year as revenues from the properties surveyed fell by 7 per cent, owing to a contraction in the average occupancy rate by 4.9 percentage points to 69 per cent, which outweighed the 2.9 per cent rise in the average daily room rate to $267.23.”

Comparisons of the April performance by Nassau and Paradise Island hotels were made difficult by the fact Easter this year fell at the end of March, as opposed to the comparative month in 2012.

April revealed “a broad-based slump in room revenue by 19.4 per cent year-on-year, due to a 5.5 per cent reduction in the average daily room rate (ADR) to $257.82 per day, and a 9.9 percentage point fall-off in the average hotel occupancy rate to 72 per cent”, the Central Bank said.

Apart from Easter’s timing, it added that April 2013 was also impacted by a room inventory decline at two hotels it did not name.

The Central Bank report continued to paint a picture of sluggishness in both the tourism industry and wider Bahamian economy.”

“Banks’ credit quality indicators worsened over the review month, reflecting broad-based deteriorations in all loan categories,” the Central Bank said.

“Total private sector loan arrears increased by $29.4 million (2.3 per cent) to $1.285 billion, with the corresponding ratio of arrears to total loans firming by 48 basis points to 20.8 per cent.

“In terms of the average age of delinquencies, the short-term (31 to 90 days) category grew by $27.1 million (7.3 per cent) to $399.7 million, elevating the attendant ratio by 44 basis points to 6.5 per cent.

“Similarly, the non-performing component - arrears over 90 days and on which banks have stopped accruing interest - rose by $2.3 million (0.3 per cent) to $885.4 million, with the relevant ratio rising by 4 basis points to 14.3 per cent.”

The loan delinquency growth was concentrated in commercial and consumer loans, with mortgage loan defaults increasing by a smaller amount.

The Bahamian commercial banking industry wrote-off $10.1 million in bad loans during May 2013, and recovered another $3.4 million.

Describing the Bahamian economy as “relatively subdued” in May, the Central Bank added: “As a consequence, employment conditions remained challenging, while the downward trajectory in international oil prices contributed to a decline in local energy costs.

“In the monetary sector, bank liquidity remained buoyant, amid lacklustre private sector credit activity, while external reserves contracted, due to the sustained demand for foreign currency to facilitate current payments and relatively weak receipts from real sector activities.”

As to the Bahamas’ 2013 second half prospects, the Central Bank said they were “mildly positive”, depending on tourism, public sector work projects and construction activity fuelled by foreign direct investment (FDI).

“The outlook for the dominant tourism sector remains heavily dependent on developments in the key United States market, where consumer spending remains relatively subdued, as households continue to retreat from elevated debt levels. Against this backdrop, domestic employment conditions are likely to stay challenging until the economic recovery becomes more broad-based,” the Central Bank added.