By Neil Hartnell
Tribune Business Editor
Nassau/Paradise Island hotels have seemingly shrugged off the arrival of Baha Mar’s extra 2,000 rooms as average daily rates (ADRs) rose by 35 percent for the year to October 2018.
Data in the Central Bank of The Bahamas’ monthly report for November suggested that the sector has retained its pricing power despite the Cable Beach mega resort’s completion, although average occupancy rates were down slightly.
Drawing on Ministry of Tourism and Bahamas Hotel and Tourism Association (BHTA) data, the Central Bank said: “A survey of large hotels showed a 34 percent gain in room revenue during October. This outturn reflected a $5.43 (3.1 percent) advance in the average daily room (ADR) rate to $179.48, and a 30 percent increase in the number of room nights sold, while the average occupancy rate steadied at 45.1 percent.
“Similarly, on a year-to-date basis, total room revenue expanded by 31 percent, underpinned by a 27 percent uptick in room nights sold combined with a $60.36 (34.7 percent) increase in the ADR to $234.41, which overshadowed a slight 40 basis point fall in the average occupancy rate to 61.5 percent.”
Meanwhile, the Central Bank said Ministry of Tourism data showed the extent of Hurricane Irma’s impact on the Caribbean - even on nations such as The Bahamas, whose major tourism plant was spared a direct hit.
“The latest official data from the Ministry of Tourism for the month of September revealed that total visitor arrivals improved by 62.4 percent, relative to a 34.9 percent reduction in the prior year, when the October passage of Hurricane Irma through the region significantly disrupted travel itineraries,” it added.
Similar, although more muted, trends were noted over the nine-month period, as the total number of visitors rose by 8.5 percent, a reversal from a 5.3 percent decline a year earlier. This outcome was underpinned by growth of 16.5 percent and 6.1 percent in the air and sea components, respectively, vis-a-vis contractions of 8.4 percent and 4.3 percent during the same period in 2017.”
The Central Bank said initial indicators suggested the momentum from September and October carried over into November’s tourism performance. “Specifically, the number of passenger departures from the country’s largest airport - as reported by the Nassau Airport Development Company (NAD) - firmed by 15.7 percent, outpacing the 4.9 percent advance recorded a year earlier,” it added.
“In particular, the gains in both non-US international and US traffic quickened, by 11.6 and 10.6 percentage points to 16.8 percent and 15.5 percent, respectively. Likewise, over the 11-month period, total departures strengthened by 14 percent vis-à-vis a 1.3 percent reduction in the prior year.
“In the underlying movements, non-US international passengers rose by 18.6 percent, a reversal from the year earlier decline of 3.4 percent, while US passengers increased by 13.2 percent, contrasting with the 1 percent softening in 2017.”
Maintaining its expectation that the Bahamian economy will maintain “modest growth” in the near-term, aided by “positive trends” in the tourism sector, the Central Bank said the arrival of the Credit Bureau and selling-off its government debt holdings are designed to provide a gentle landing for the country’s near $1.66bn in excess commercial banking liquidity.
“Expectations are that the current monetary policy stance will be maintained over the near-term,” it added. “However, downside risks remain prevalent, including the potential impact of a prolonged US-China trade war on the global economy and its spillover effects to the domestic market.
“In addition, the significant bank liquidity overhang could place added pressure on external reserve balances over the medium-term if utilised to support excessive consumer credit demand.
“In light of the latter, the implementation of the Credit Bureau should address issues relating to information asymmetries on the part of potential lenders, while the Central Bank’s efforts to gradually reduce its holdings of Government debt should lead to a reduction in liquidity.”