REPORT FROM THE U.S. VIRGIN ISLANDS— Hotels on St. Croix, St. Thomas and St. John, the three islands which make up the United States Virgin Islands, are experiencing a welcome uptick in performance this year.
Occupancy, average daily rate, revenue per available room and demand are on the upswing, according STR data. The 8% increase in demand comes on the heels of a 2.6% decline in overnight visitor arrivals and a 9% drop in cruise visitors during 2009, according to Beverly Nicholson-Doty, the USVI commissioner of tourism.
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Frenchman's Reef & Morningstar Marriott Beach Resort |
While the numbers are encouraging, they are below previous-year highs. Andrew Houghton, Marriott International’s area VP of the Caribbean and Brazil, said it has still been a challenging year for the U.S. Virgin Islands and the company. Marriott has three properties on St. Thomas: Marriott's Frenchman's Cove, The Ritz-Carlton, St. Thomas and Frenchman's Reef & Morning Star Marriott Beach Resort. The company also is scheduled to open the converted Renaissance St. Croix Carambola Beach Resort & Spa this month. “RevPAR index fell approximately 9% in 2009 compared to 2008,” he said. “At this time, we are estimating (2010) to be flat to 2009. At this time, ADR is down year over year 2008-09, as we expect a small increase over 2009 by the end of this year.” The company expects to see positive changes in late 2011 and 2012, and hopes to see group business show signs of picking up, he said.
“Year to date, we’ve seen ADR recovering,” Nicholson-Doty said. “Occupancy and visitor arrivals are still lagging slightly in the hotel sector. The meeting and incentive segments are still a bit behind.
“We’ve seen the best numbers year over year in St. Croix with growth both in the overnight and cruise markets,” she added. “The Department of Tourism has dedicated significant resources to building brand equity for St. Croix.”
Several factors helped lessen the recessionary blow and are playing a part in the recovery.
“Being a U.S. territory helps encourage travel to the destination,” Houghton said. “We also benefit from direct flights from the major source markets on the East Coast. We are also very proud of the government efforts toward tourism.”
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Beverly Nicholson-Doty, U.S. Virgins Islands commissioner of tourism |
Nicholson-Doty also cited location and the U.S. tie. “Given the recent price hike on passports, the fact that U.S. citizens don’t need a passport to travel to the USVI is a great advantage,” she said. “We also have direct flights from many gateways, so there’s ease of access.”
Houghton said the Marriott name has helped the company’s properties.
“We are a recognized brand as well, with a loyal customer base,” he said. “This is demonstrated through our Marriott Vacation Club especially, where we have consistent occupancy in the 90% range, which is also good for the island.”
“We’ve been here before and we’ve recovered,” Nicholson-Doty said. “We understand that the economy impacts visitor arrivals and it will turn around. The efforts are being made now to improve our product, so when the full recovery comes we are ready.”
Hotel on the Cay is an example of that. The hotel is rebranding itself as an ecotourism destination. It works to protect several endangered species found in the area and is building a walking path around the cay for guests to view the wildlife, according to general manager Lindsay Houston. In addition, the property is undergoing an infrastructure renovation and technology upgrade that began in the spring. A room renovation that includes sustainable textiles and furnishings and energy-saving appliances is scheduled to begin in 2011.
Challenges
Performance in other markets remains the greatest challenge to hotels in the U.S. Virgin Islands.
“Much will depend on the strength of the U.S. economy,” Houghton said. “We are hopeful that recent positive news about economic growth is a sign of things to come.”
Nicholson-Doty shared similar thoughts.
“Economic challenges in some of our key markets continue to affect us,” she said. “This includes one of our strongest international markets, Italy, which is down year over year.”
Houston said an active storm season, which runs from 1 June through 30 November, affects her property because of its location on a cay off the main island of St. Croix. The hotel was evacuated earlier in September because of Hurricane Earl.
“Although the ferry ride is only a couple of minutes, the Coast Guard closes the harbor during severe weather conditions for safety reasons,” she said. “This time of year is typically slow and the reason we focus on local businesses who understand ever-changing tropical weather issues.”
Rate cutting is an issue in the USVI, as it is around the globe, but is lessening, she said.
“We’ve seen less rate cutting this year than we did in 2009,” she said. “However, timed promotions are still a favored method of moving inventory at the last minute.”
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| Lindsay Houston, GM, Hotel on the Cay |
Houston has seen dramatic cuts on St. Croix. “We have seen significant rate reduction in our competitors but HOTC rates have remained stable as they are already low, reflective of the age and condition of the hotel,” she said. “We are not now nor have we ever been a luxury property.”
Houghton said Marriott is seeing a difference in rate across the board—within its own hotels on the islands and with competitors, as well.
Supply
With no change in supply in 2010 so far and in 2009, a 1% increase in 2008 and a 1.3% drop in 2007, according to STR numbers, supply overgrowth is not an issue for the USVI.
“The USVI has not increased overall inventory in many years,” Nicholson-Doty said. “Certainly, we look forward to the economic recovery, which will reopen financing and help to get some existing projects off the ground.”
Service matters
Sources agreed the future success of the area depends on customer service.
“At Hotel on the Cay, we are dedicated to creating a customized experience that fits the needs of each traveler,” Houston said. “We are small enough and personal enough to deliver that level of service. We believe it is critical to our return business and the continued success of Hotel on the Cay.”
Nicholson-Doty said the Caribbean as a whole must enhance customer service.
“We’re competing against the world,” she said. “This is the reason the USVI is placing a major emphasis on service standards across the territory. It is the only element that will truly ensure positive growth.”