By LISA S. KING

FN Asst. Editor

lisa@nasguard.com

A mid-year survey analyzing the state of the hotel industry of The Bahamas shows 43 percent of hoteliers indicating a negative outlook for the remainder of the year as high cost of operations mixed with low occupancy rates continue to impact the industry.

The survey, which was conducted by the Bahamas Hotel Association (BHA), came about after a need by the organization to better 'gauge' the current and anticipated tourism climate in the country. After sampling about 21 member hotels in July, the results provide a fair representation of the properties with a balance of large, medium and small sized hotels from Nassau, Paradise Island, Grand Bahama and other Family Islands.

According to the BHA report, the state of the United States economy combined with higher travel costs associated primarily with fuel costs is taking a toll on hotels in The Bahamas with more than seven out of every 10 hotels or 71 percent saying they do not expect to make a net profit in 2008.

Survey results note a second quarter reduction in total sales as reported by more than two-thirds of the nation's hotels based upon a similar period in 2007.

The BHA mid-year assessment also states that 57 percent of hotels rated the second quarter as weak, with 29 percent characterizing it as moderate and 14 percent indicating it was strong.

Seventy-one percent reported that total sales (room revenue and other revenue) for the second quarter were down for the second quarter from the same period last year. Twenty-one percent said they were down significantly and 34 percent reported an increase in sales, with seven percent stating they were up significantly.

Seventy-one percent of respondents reported a decline in second quarter room occupancies against projections, with 31 percent indicating they were on target with projections and seven percent above projections.

Some of the key factors impacting the second quarter performance, as told by 71 percent of the hoteliers, were the slump in the U.S. economy, higher cost of air travel and the hype of the upcoming American elections discouraging travel.

Confidence in the outlook for 2008 has dampened a great deal with such results as the majority of hoteliers state they do not foresee making any profits for the rest of the year. Some even said they believe the 2008 forecast for tourism on the whole is very bleak.

The survey also points out that since the completion of the study, with the exception of the large number of Family Island hotels that close during September, hotels have experienced added impact of weather-induced reduced sales and occupancy in September, adding to the anticipated reduction in activity during that time.

Despite these unfavourable results of the survey, the BHA was quick to state that hoteliers are implementing a number of strategies to mitigate the impact of the decline in sales and higher operating costs.

These include on the revenue side, revved up sales and marketing initiatives; expense reductions through new energy saving measures; seasonal adjustments in opening and staffing; and better management of inventory and operating costs.

The survey shows how half of the responding hotels have in place an energy surcharge to mitigate the impact of high energy costs. The most common assessment is a fixed amount per person, per room, per night, followed by a fixed amount per room per night.

The majority of hoteliers also report that they have implemented cost control measures and are considering longer closing periods than in previous years; partial closing of property, offering less rooms; reduced and staggered working hours and staff realignments.

Some of the ways they intend to increase sales and marketing efforts during this time is to offer value packages and rebates; improve partnership with airlines and tour operators with the aim to give more attractive packages; offering last minute deals; and adding amenities to the offer including bar and restaurant specials.

It was also revealed that a number of hotels are also placing emphasis during this 'slow period' on property renovations and training.