The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau/Paradise Island hotels suffered a 90 percent year-over-year decline in January room revenues to highlight just how slow the initial post-COVID rebound actually was.

While that revival now seems to be gaining some momentum as the industry heads into its traditional Easter peak, the Central Bank’s report on February’s monthly economic developments exposed just how dire the post-New Year performance was by revealing that total visitor arrivals for the prior month were down 96.6 percent - a year-over-year fall of 663,000.

“Tourism metrics for the month of January revealed that the sector’s output remained contracted, as globally imposed travel restrictions associated with COVID-19 resulted in air traffic recording historically low levels of visitors and with sea arrivals largely eliminated,” the Central Bank said in something of an understatement.

“Official data provided by the Ministry of Tourism showed that total foreign arrivals by first port of entry fell to 23,619 visitors during the month, markedly lower than the 687,200 arrivals in the same period last year. In particular, sea arrivals were virtually absent, relative to the 10.8 percent gain in 2020, while air arrivals reduced considerably by 83.4 percent, extending the 3.5 percent decline in the previous year.

“A disaggregation by major islands indicated that in New Providence total arrivals corresponded to a mere 3.8 percent of the 2020 volumes, reflective of decreases in both sea (99.7 percent) and air (88 percent) traffic,” it continued.

“Further, arrivals to Grand Bahama were only 2.8 percent of the prior year’s outturn, as air arrivals reached 23.9 percent of the previous year’s level. Similarly, visitors to the Family Islands corresponded to 3.1 percent of the previous year’s volumes.”

This, not surprisingly, was reflected in the hotel industry’s January performance. “Data from The Bahamas Hotel & Tourism Association (BHTA) and the Ministry of Tourism, which covers a sample of large hotels in New Providence and Paradise Island, confirmed the deterioration in the hotel sector performance.”

“Specifically, in January, estimated room revenue contracted by 90.4 percent from the previous year as the occupancy rate settled at just 7.5 percent from 69.3 percent a year earlier, while the number of room nights sold reduced considerably by 92.4 percent. However, the average daily room rate (ADR) rose by 25.6 percent to $327.83.”

Turning to an Airbnb market that was again bolstered by domestic demand, as Bahamians sought escapes from COVID-19 restrictions, the Central Bank added: “With regard to the short-term rental market, data provided by AirDNA showed positive activity within the market throughout February supported by domestic demand.

“Specifically, total room nights sold grew by 24 percent compared to 9.9 percent in the prior year, while bookings for entire place listings and hotel comparable listings increased by 26.2 percent and by 8 percent, respectively.

“Pricing indicator outcomes for both entire place listings and hotel comparable listings revealed a rise in the average daily room rate (ADR) of 6.5 percent and 3.8 percent, to $449.49 and $157.53, respectively, contrasting with decreases of 2 percent and 4.1 percent in 2020,” it continued.

“The most recent data provided by the Nassau Airport Development Company (NAD) showed that total departures, less domestic traffic, reduced to 16,098 in February vis-à-vis a 7.5 percent increase during the same period in 2020.

“Underpinning this outturn, the dominant US component fell by 86.9 percent, a reversal from the previous year’s 7.5 percent gain. Likewise, non-US departures declined significantly by 95.3 percent following a 7.6 percent growth a year earlier.”

The Central Bank projected that the Bahamian economy will “register marginal growth” in 2021 with tourism’s revival - which is taking place after the winter season peak - subject to progress in defeating the COVID-19 pandemic.

“With regard to the labour market, the elevation in the unemployment rate is expected to persist over the near-term with any job gains concentrated mostly in the construction sector, and in limited re-engagement of tourism sector employees,” the report said.

“In the fiscal sector, revenue losses, combined with increased disbursements for health and social welfare associated with COVID-19, and outlays still related to the restoration of key infrastructure following [Dorian], are expected to weigh heavily on the Government’s fiscal position.

“Projected revenue shortfalls should continue, with expectations that taxable economic activity remains below capacity in 2021, improving mostly in line with the tourism recovery. The resulting budgetary gap will be financed with important use of external credit, but with a likely increased ratio of the total funding from domestic sources.”

The Central Bank said that while the external reserves are likely to decline due to a drop-off in foreign currency inflows, they “remain adequate” to sustain the fixed exchange rate regime and one:one parity with the US dollar.