The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank yesterday described tourism’s performance as “buoyant” through April 2019, with “off-resort room nights” in the vacation rental sector up 31.7 percent that month.

The regulator, in its report on April’s monthly economic developments, added that data from Lynden Pindling International Airport’s (LPIA) operator showed that air arrivals maintained “positive momentum” during the Easter month via an 18.3 percent year-over-year expansion in foreign departures.

“Data from the Nassau Airport Development Company (NAD) showed an 18.3 percent expansion in total departures - net of domestic passengers - more than two times higher than the 7.9 percent gain recorded in the previous year, as growth in the US segment quickened to 21.3 percent from 6.8 percent,” the Central Bank said.

“However, the gains in the non-US international component slowed to 2.8 percent from 14.3 percent in the previous period. Similarly, over the first four months of the year, aggregate departures strengthened by 21 percent, outpacing 2018’s 12.1 percent improvement.

“This outturn reflected an increase in the US component by 23.1 percent, overshadowing the prior year’s 11.3 percent expansion. In contrast, gains in the non-US segment narrowed by 5.8 percentage points to 10.4 percent.”

Turning to the vacation rental market, which is already being subjected to the imposition of VAT, the Central Bank added: “The increase in air visitors fuelled growth in the non-hotel based vacation rental segment of the market. In this regard, data obtained from AirDNA showed that the total number of off-resort room nights sold firmed by 31.7 percent in April and by 18.7 percent for the year-to-date, with both hotel comparable and entire place listings firming over the four months by 22 percent and 18.3 percent, respectively.

“A breakdown by market showed that the cumulative growth in room bookings was underpinned by a 51.4 percent expansion in demand for accommodation in Exuma, while New Providence, Abaco and Grand Bahama accounted for smaller increases of 14.5 percent, 6.8 percent and 2.5 percent, respectively.

“In terms of pricing, the average daily room rate (ADR) of the entire place listings - which is generally more comparable across periods - firmed by 3.8 percent to $398.75, due mainly to gains in room rates in Exuma. However, the ADR for hotel comparable listings declined by 6.2 percent to $159.24, as average prices for accommodation in Grand Bahama and New Providence contracted.”

Elsewhere, the Central Bank said the effects associated with increased international oil prices and the “pass through” impact from last year’s VAT rate increase to 12 percent had resulted in inflation rising by 1.2 percentage points to 2.6 percent for the 12 months to February 2019 as measured by the All-Bahamas Retail Price Index.

“Domestic energy costs rose during April, with the average price of gasoline firming by 7.2 percent over the previous month, and by 8.7 percent vis-à-vis 2018 to $4.75 per gallon. Similarly, diesel prices were higher by 1.9 percent month-on-month at $4.35 per gallon, but were 3.8 percent lower when compared to the prior year,” the Central Bank said.

It added that an expanded labour force, resulting from the imminent release of high school leavers into the workforce as well as the return of previously discouraged workers, “could constrain” any reduction in the national 10.7 percent unemployment rate in response to improved economic growth prospects.

“The Bank remains sensitive to the underlying risks associated with the high levels of surplus liquidity in the banking system, which could have negative implications for reserves if the resources are deployed too rapidly to fund credit expansion,” the Central Bank continued.

“The Bank will therefore continue to sell-off its holdings of government securities to absorb excess liquidity from the system over time. Similarly, the implementation of a credit bureau will serve to boost lenders’ confidence around the screening of high-risk borrowers and appropriately extending new credit in less risky fashion.”