Monthly Economic and Financial Developments (MEFD) July 2021
Published: Monday August 30th, 2021
Domestic Economic Developments
Domestic economic activity during the month of July continued to be largely impacted by the spread of the Novel Coronavirus (COVID-19) pandemic. Nonetheless, tourism output showed signs of a gradual recovery, underpinned by ongoing gains in the high value-added air segment and the modest resumption in sea traffic, reflecting sustained progress in vaccination efforts, both locally and internationally. Further, several varied scale foreign investment-led projects, combined with post-hurricane rebuilding works, provided support to the construction sector. Monetary trends in July revealed a contraction in bank liquidity, as the increase in domestic credit offset the rise in the deposit base. However, external reserves grew, bolstered an uptick in net foreign currency inflows through the private sector and further proceeds from Government’s external borrowings.
Tourism metrics for the month of July revealed that the sector’s output showed signs of a slow recovery, although challenges persisted, as ongoing globally imposed travel restrictions related to the COVID-19 pandemic continued to hamper a return to pre-pandemic levels. Nevertheless, domestic demand undergirded gains in the vacation rental market.
Official data provided by the Ministry of Tourism (MOT) revealed that total foreign arrivals by first port of entry recovered to 135,092 during the month of June, from just 3,935 in the corresponding period in 2020, when international border closures and lockdowns remained in effect. Contributing to this outturn, air arrivals improved notably to 113,189 from 1,705 in the previous year—67.2% of 2019 air traffic—reflective of the complete reopening of international borders to travellers; albeit with some restrictions. Similarly, sea traffic expanded to 21,903, relative to a volume of 2,230 a year earlier. A breakdown by major market revealed that total visitors to New Providence advanced to 83,314 from a mere 1,032 in the comparative period of the prior year. Underlying this outcome, the air and sea segments measured 81,931 and 1,383, respectively. Likewise, foreign arrivals to Grand Bahama rose to 7,235, surpassing the 544 visitors recorded in 2020, as sea and air arrivals amounted to respective 4,811 and 2,424. In addition, total traffic to the Family Islands rebounded to 44,543 vis-à-vis 2,359 in the same period of the preceding year, as air and sea passengers recovered to 28,834 and 15,709, respectively.
Given the delayed restart of cruise activity and comparisons with the first quarter of 2020 that was only minimally impacted by the pandemic, tourism output was still substantially reduced over the first half of 2021. Total arrivals contracted by 75.7%, extending the 56.1% drop-off recorded in the same period last year. Cruise activity remained depressed, with the loss in sea traffic extended to 95.9% from 53.3% in the prior year. In contrast, air arrivals rose by 2.2%, contrasting with the 64.4% falloff posted in 2020. The substantially moderated declines in New Providence and Grand Bahama, occurred alongside a robust recovery in Family Island visitors.
Data from the Nassau Airport Development Company Limited (NAD) revealed that total departures—net of domestic passengers—rebounded to 114,548 in July from just 8,933 in the same period last year, underpinned by the country re-opening its borders. Underlying to this development, U.S. departures recovered to 109,454 from 8,145 a year earlier. In addition, non-U.S. departures totaled 5,094 exceeding 788 in the prior year. On a year-to-date basis, the decrease in outward bound traffic moderated to just 2.0% from 63.7% last year. Underpinning this outturn, U.S. departures grew by 12.1%, contrasting with the 64.8% falloff in the previous year. Conversely, non-U.S. departures declined by 74.7%, extending the 56.3% reduction in the comparative period in 2020.
Pandemic travel preferences continue to favour heathy growth in vacation rental activity for both domestic and foreign tourists. Nevertheless data provided by AirDNA revealed a moderation in the gains for the month of July. In particular, the growth in total room nights sold tapered notably to 13.2%, from 53.3% in the corresponding period of the preceding year when domestic vacations were more elevated. Reflective of this outcome, gains in bookings for hotel comparable listings and entire place listings eased to 16.4% and 12.8%, from 31.6% and 56.0%, respectively, a year earlier. As depicted in Graph 1, pricing indicators varied, with the average daily room rate (ADR) for hotel comparable listings increased by 1.5% to $180.89, while the ADR for entire place listings edged down by 0.1% to $499.66.
On a year-to-date basis, total room nights sold firmed by 29.6%, as bookings for entire place listings and private room listings registered respective increases of 31.8% and 12.7%. Pricing data revealed that the ADR for both entire place listings and hotel comparable listings rose by 15.7% and by 9.9%, to $477.37 and $169.65, respectively.
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