What’s Next for Caribbean Hotels?
By Fatima Thompson
While the Caribbean recovers from one of the busiest and most destructive hurricane seasons of the past several decades, many questions exist regarding the impact these tragic storms have had on recent hotel performance.
While one month’s worth of data does show obvious declines in regional performance, we must remember that several months of data are required before definitively defining trends and the long-term impact of Hurricane Irma and Hurricane Maria.
It should be noted that the vast majority of islands in the Caribbean were not affected by these devastating storms (see CJ’s recent feature on 30 Caribbean islands you can visit right now).
Caribbean occupancy for the month was down 16.9% in year-over-year comparisons, and with nearly flat average daily rate (ADR) performance, revenue per available room (RevPAR) dropped 16.6% to US$66.84. Historically, September and October are the slowest demand months in the region, but the 45.5% absolute occupancy level for September 2017 was the lowest for any month in the region since September 2010.
When looking at markets with a sufficient data reporting sample, we saw differences in performance based on area. In Puerto Rico, hit hardest by hurricanes this season, occupancy was 47.2% (-17.8% year over year). In the Dominican Republic, absolute occupancy was a bit higher at 54.0% (-16.7%).
In islands that were not affected at all by the storms, Barbados’ occupancy went above that (54.2%) with almost no change year over year (-0.2%). Aruba was well above its normal September levels at 70.5% (+8.2%), as was Jamaica at 50.1% (+9.2%).
Additional data points paint a positive picture for the Caribbean’s year-to-date performance. Even with a significant drop in September, demand (roomnights sold) is still up 1.9% year to date. That metric was trending at +3.6% through August. Additionally, ADR has increased year over year for six consecutive months, including September, due to currency exchange rates and comparisons with Zika-affected months last year.
This all comes with a fair amount of new projects in the development pipeline, specifically in the Dominican Republic and Jamaica.
As of September, there were five projects under construction in the Dominican Republic accounting for 1,202 new rooms. Another two projects in final planning would add 736 new rooms to the market. Jamaica reported just one in construction project at the end of August, but another four projects and 3,190 rooms in final planning.
The region has already absorbed 2.8% supply growth year to date.
STR will continue to monitor hotel performance and development in the Caribbean over the coming months. However, we may not have a full analysis of the hurricane impact until November and December data is available. Those months will be processed in December and January, respectively.
Fatima Thompson is associate director of business development – hotels at STR. For any questions regarding hotel data reporting in the Caribbean, please contact Thompson at firstname.lastname@example.org.