The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must give all visitors “the best bang for their dollar and ‘A’-plus customer service” as the most effective counter to inflation and continuing US interest rate hikes, a senior tourism official said yesterday.

Kerry Fountain, the Bahamas Out Island Promotion Board’s executive director, told Tribune Business that this nation must focus on only “what we can control” after the US Federal Reserve hiked its base interest rate by 0.75 percentage points in a bid to rein in soaring inflation that has also hit this country via its imports.

Voicing optimism that pent-up travel demand will still offset the impact of higher prices and borrowing costs in the US, which will combine to further squeeze disposable income and vacation spending, he added: “The good thing about what’s going on right now is that it’s happening on the tail-end of COVID-19.

“From mid-March 2020, Americans, our primary target audience, have not been able to travel like they’ve been accustomed to. Generally speaking, there’s pent-up demand and a lot of people have a lot of money to spend.” The Bahamas’ proximity to the US, its main source market for around 90 percent of its tourists, has served the country’s post-COVID rebound well as persons opt to vacation close to home.

And the Family Islands, with their wide spaces and sparse populations, have been seen as an ideal for the socially-distanced, eco-conscious tourism many travellers prefer in the pandemic’s aftermath. Nevertheless, this could soon be put to the test after the US central bank yesterday increased short-term interest rates to a range between 3 percent and 3.25 percent, with the prospect of more to come as it seeks to cool the economy down.

The increase in borrowing costs, and debt service payments, will hit the price of credit card debt, mortgages and company financing. And the US Federal Reserve signalled more rises to come, predicting rates would reach 4.4 percent by the end of 2022 and not start coming down until 2024.

Conceding that interest rate hikes will hit the US jobs market and increase unemployment, Jerome Powell, the Federal Reserve chairman, said: “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.

“We have always understood that restoring price stability while achieving a relatively modest increase in unemployment and a soft landing would be very challenging. And we don’t know. No one knows whether this process will lead to a recession or if so, how significant that recession would be.”

Faced with this grim outlook, Mr Fountain told Tribune Business: “As far as how we react to it, again, we can only control what we can control. As prices go up in the US, it will have a trickle down effect in The Bahamas. What we really need to focus on is when guests come to our shores, they get the best bang for their dollar and A-plus customer service. That’s what we can control.

“We can’t control what happens with the prices. What we can focus on is when someone comes to our shores or arrives at our airports, they leave with a wow-type experience. They leave wanting to recommend. They leave wanting to come back. We saw this coming at our Board, which is why we decided to invest in customer service training, especially for our front-line staff at member properties.

“It’s not good news in terms of the cost of doing business, the cost of goods and services, but it’s coming on the heels of COVID-19 when there is tremendous demand for travel and a lot of people have a lot of discretionary income to spend.”

Asserting that The Bahamas has failed to exploit the Family Islands’ proximity to the US, Mr Fountain said the Promotion Board and its member properties are reintroducing the $250 air fare credit for persons who book between October 17, 2022, and November 16-18, 2022, “all the way through to April” next year.

European travellers who stay for four nights in member hotel, and have to transit through Nassau, will receive a free round-trip flight to and from their Family Island destination. Those staying for seven nights or more will receive two free round-trip flights to Nassau, with the promotion designed to tie-in with increased service from London via Virgin and British Airways.