TourismToday

Courtesy of The Tribune – By NEIL HARTNELL – Tribune Business Editor.

BAHAMIAN HOTELS are “better positioned” than their Caribbean counterparts to raise room rates when recovery comes, a leading hotel consultant said yesterday, with revenue per available room (RevPAR) for this nation’s industry up 8 per cent year-over-year to September 2010 – more than two percentage points better than the Caribbean average.

Parris Jordan, managing director of HVS Bahamas, a major consultant to the global hotel and tourism industry, said that because Bahamian hotels did not drop room rates in 2009 as much as their Caribbean counterparts in a bid to stimulate occupancy, they would be better placed to raise them when recovery came and market confidence returned.

He pointed out that while RevPAR for Bahamian hotels fell by 15.8 per cent year-over-year in 2009, in response to reduced travel demand, average room rates in the industry dropped by just 6.8 per cent.
The rest of the RevPAR decline for Bahamian hotels came from lower occupancies, Mr Jordan explained, but he pointed out that Caribbean hotels suffered an average 17.5 per cent room rate decline in 2009 – far worse than the Bahamas – as resorts desperately slashed rates to try and stimulate occupancy and visitor numbers.
Given that it was extremely difficult, if not impossible, to raise rates once they had been cut, Mr Jordan said that by holding firm, the Bahamian hotel industry – chiefly Atlantis – was set to reap the potential rewards once US travel demand recovered.

“The Caribbean is up 5.7 per cent in terms of RevPAR through September 2010 compared to September 2009,” Mr Jordan told Tribune Business. “Year-to-date, the Bahamas is up 8 per cent on RevPAR.”

While the Caribbean and Bahamian sample sizes were based on just 10 per cent of their hotel population, given that relatively few reported their data to Smith’s Travel Research (STR), the data gleaned was “still reflective of what’s happening the market”.

Referring to the 2010 data, and the Bahamas outpacing the Caribbean’s performance, Mr Jordan told Tribune Business: “To put that into perspective, last year the Caribbean was down 17.1 per cent on RevPAR, and the Bahamas was down 15.8 per cent.

“What’s positive, however, here in the Bahamas is that it’s up 4 per cent in occupancy and 4 per cent in room rates.” In contrast, while room rates in the Caribbean had risen 4.3 per cent, occupancies were ahead by just 1 per cent on 2009 comparatives.

Mr Jordan said that especially “favourable” for the Bahamas was the fact that while its hotel industry RevPAR slid down just 15.8 per cent in 2009, room rates slipped just 6.8 per cent, compared to 17.5 per cent for the wider Caribbean.

“What is positive about the Bahamas is that it has not dropped its rates as much as the rest of the Caribbean, and the main factor behind that is Atlantis maintaining its rates,” Mr Jordan told Tribune Business. “When the market recovers, it’s difficult to raise rates significantly if you have dropped them.

“The Caribbean has dropped them, but the Bahamas has not dropped them as significantly.

“When the market recovers, it will be less difficult for the Bahamas to increase its rates going forward. That’s a positive sign for the Bahamas.

“It’s positioned better than the rest of the Caribbean market.”

Yet while the Bahamas’ RevPAR increase was ahead of both the Caribbean and US averages, it trails the increases of around 35 per cent and 15 per cent enjoyed by St Lucia and the US Virgin Islands respectively.
The HVS Bahamas managing director told Tribune Business that many hotels and their yield managers had learned their lessons from the post-September 11, 2001, experience, when the slashing of hotel room rates to induce travel and higher occupancy levels failed to work because tourists were too frightened to travel by air.