The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Tourism suffered a “lacklustre” performance in February with total room revenues off 2.8 per cent, the Central Bank of the Bahamas attributing part of the decline to weather-related cancellations.

The regulator, in its monthly economic report for February, said domestic economic activity was “relatively mild” due to “softness in the key tourism sector” which offset the foreign direct investment-led growth in construction output.

“Preliminary data suggest a lacklustre outturn for the tourism sector, reflecting persistent sluggishness in the high value-added stopover visitor segment,” the Central Bank of the Bahamas said.

“Based on a sample of large hotels in New Providence and Paradise Island, total room revenues declined further in February, by 2.8 per cent, partly influenced by weather-related cancellations.

“This, combined with a modest reduction in available room inventory, led to a 30 basis point drop in the occupancy rate, to 65.6 per cent, with the average daily room rate (ADR) also lower by 0.4 per cent at $250.57.”

The Central Bank’s outlook for the Bahamian economy in 2014 remained relatively unchanged, with weak credit market conditions expected to continue holding back private sector demand.

The economy was expected to keep moving in a “mildly positive” direction, aided by foreign direct investment-driven projects on both New Providence and the Family Islands.

“The performance of the tourism sector is anticipated to show some improvement over the next few months, as the key stopover segment of the market recovers - although softness in some of the major source markets, combined with sustained regional competition could dampen this outlook,” the Central Bank said.

“In this environment, a gradual improvement in employment conditions is expected, with the majority of the job gains accruing to the services sector.”

The Central Bank added that Value-Added Tax (VAT) might lead to a “modest” increase in consumer prices, although it hinted this might be counterbalanced by a projected in international oil prices.

There was also “some improvement” in the Bahamian commercial banking industry’s bad loan portfolio in February, although this was by no means the start of a steady recovery, and did not include all institutions.

“ Total private sector loan arrears declined by $27.4 million (2 per cent) to $1.316 billion, and by 31 basis points to 21.5 per cent of total loans,” the Central Bank said.

“By average age of delinquencies, the short-term, 31-90 day segment contracted by $23.5 million (6.4 per cent) to $344.7 million, reducing the attendant ratio by 35 basis points to 5.6 per cent. Non-performing loans—arrears in excess of 90 days, and on which banks have stopped accruing interest—decreased marginally, by $4 million (0.4 per cent) to $971.4 million, although edging up by four basis points to 15.9 per cent of total loans.”

Breaking things down, the Central Bank said: “The improvement in total arrears was led by the mortgage component, which fell by $27.4 million (3.8 per cent) to $694.2 million, as both the short-term and non-performing components were reduced, by $26.8 million (13.3 per cent) and $0.6 million (0.1 per cent), respectively.

“The more moderate decline in the consumer category, by $2.3 million (0.9 per cent) to $261.3 million, reflected a $2.1 million (2.4 per cent) decrease in 31-90 day delinquencies and a $0.3 million (0.1 per cent) softening in non-accrual loans.

“In contrast, the commercial segment grew by $2.3 million (0.7 per cent) to $360.6 million, with a $5.4 million (7 per cent) rise in short-term arrears offsetting the $3.1 million (1.1 per cent) fall-off in non-performing balances.”