HAMILTON, Bermuda—2017 was a difficult year for several Caribbean islands, as hurricanes and related weather caused damage, resulting in disruption and closed hotels and resorts. But 2018 data showing strong performance across the Caribbean points to a resilient regional industry, according to speakers at the recent HVS Caribbean Hotel Investment Conference and Operations Summit.
“Demand for the region is incredible—it’s grown every year for the past seven years,” said Parris Jordan, VP with HVS New York and Managing Director of HVS Bahamas. “That demand helps drive investments.”
Year to date through September, the Caribbean (minus Cuba) experienced 3.8% revenue per available room growth, according to STR, Hotel News Now’s parent company, driven by average daily rate growth of 3.1% and occupancy of 0.6% growth.
“There was a relatively quick recovery for the market post-2017 hurricanes, so we’ve seen stability in rate and occupancy,” Jordan said. “Operators have become very lean, and they operate more efficiently. After the hurricanes, they held average rate. In prior downturns, operators panicked and dropped rate, but after the hurricanes last year, they kept the rate and didn’t skip a beat. Rate actually increased.”
Island-specific highlights
Jordan and Kristina D’Amico, director, HVS Miami, shared some island-specific highlights, particularly related to the strongest-performing islands and island clusters, as well as those hit hardest by 2017 hurricanes:
- Aruba: “The Aruba market has been very strong for the past decade, it’s had ADR growth seven of the last eight years and RevPAR has been driven by ADR,” Jordan said, citing the island’s year-over-year 13% RevPAR growth to $240.23, underlined by “limited new supply entering the market.”
- Anguilla: Following damage sustained from Hurricane Irma, D’Amico said “things are looking great in Anguilla right now. The airport and ferry are open and major hotels are open.”
- British Virgin Islands: Hit by both Irma and Hurricane Maria, this island cluster is “looking good,” D’Amico said, citing the fact that most hotels have reopened, airlift has returned and most support systems are available.
- St. Barts: Following “catastrophic damage” after Irma, D’Amico called the island’s recovery effort “incredible.” “The airport is open at normal capacity. Ninety-five percent of villa rentals are open. Many signature resorts have reopened but some won’t open until next peak season,” she said.
- Cayman Islands: RevPAR in the Cayman Islands is up 27% year to date, Jordan said, driven by notable ADR increases.
- Dominica: Devastated by Hurricane Maria, “what there was in hotel supply was destroyed,” D’Amico said. “Before the hurricane, they had less than 1,000 rooms. Now it’s much less.”
- Dominican Republic: Jordan pointed out that the Dominican Republic, located on the island of Hispaniola, has notched ADR increases for the past consecutive 12 years and continued strong visitor demand, largely from the United States and Canada. “That’s why we’re seeing all the new supply coming into this market, but beware of new supply here,” he said.
- St. Martin: D’Amico said St. Martin “has a long recovery road ahead,” following devastation from Hurricane Irma, which severely damaged the airport. Rebuilding is underway, D’Amico said, adding that the airport is going through a full reconstruction. “It’s estimated only 50% of hotel and timeshare inventory is available, and in the next six months, it’s estimated 75% will be available. It’s unknown about how many hotels will reopen in the future.”
- Puerto Rico: D’Amico said that most airport and ferry services are available in Puerto Rico and “about 80% of the rooms are open and upgraded.” Puerto Rico’s success story is its robust pipeline, she said, citing 3,000 – 4,000 rooms in the pipeline expected to reopen. Puerto Rico’s ADR has grown in seven of the last eight years, Jordan said, and year to date RevPAR is up 16.8%. “Hotels that have opened have performed very well, and lots of inventory is re-entering the market every day.”
- U.S. Virgin Islands: Comprised mainly of St. Croix, St. John and St. Thomas, the USVI were hit hard by Hurricane Irma, with “only about 50% of hotel rooms available,” D’Amico said. Notable resorts on the islands still don’t have a reopening date, she said, including Frenchman’s Reef & Morning Star Marriott Beach Resort, the Westin St. John Resort Villas, Caneel Bay resort and others.
Feeder market trends
For a region so heavily reliant on tourism and airlift, Jordan said continued strong visitor arrivals numbers have boded well for the region.
“During the past eight years it’s increased every year,” he said. “Last year after the hurricanes, people expected (arrivals) to decrease, but the number was still positive. It was great the region could hit over 30 million (arrivals).”
The U.S. remains the No. 1 source market for the overall Caribbean region. Of last year’s 30 million visitors, Jordan said roughly half are from the U.S., followed by Europe and Canada.
While the U.S. is posting slightly lower arrivals numbers year to date, which Jordan attributed to hurricane-related rooms still out of inventory, the number will still grow this year.
“We’re also seeing the Canadian market grow quite a bit, driven by the strength of the Canadian dollar and Canadian economy,” he said.
In 2017, the island nations receiving the most tourists were Dominican Republic, followed by Cuba, Jamaica, Puerto Rico and the Bahamas.
Jordan pointed in particular to some island nations like Dominican Republic, Barbados and St. Lucia, which don’t rely on one source market.
Pipeline and renovations
As of September, the Caribbean had 11,100 rooms in construction, a nearly 95% jump from last year, which STR senior director, consulting and analytics Ali Hoyt called “a substantial increase” driven by the Dominican Republic (6,664 rooms under construction), Cuba (3,257 rooms) and Jamaica (3,246 rooms). The majority of that pipeline sits in the upscale segment, followed by luxury and upper upscale.
Continued high demand for the region, despite last year’s weather issues, bodes well, Jordan said, though with so many hotels coming back online and new ones under development, the region “has to be careful about new supply,” he said. “We need to market the destination to absorb those rooms as they enter.”
Editor’s note: The Bermuda Tourism Authority paid for travel expenses and accommodations. Complete editorial control was at the discretion of the Hotel News Now editorial team; the BTA had no influence on the coverage provided.