CJ Invest, CJI Conversations, News

JLL Hotels’ Andrew Dickey on the State of the Caribbean Hotel Market

What’s the state of the Caribbean hotel market in the age of the pandemic? To learn more, Caribbean Journal Invest caught up with Andrew Dickey, Executive Vice President at JLL Hotels and Hospitality in Miami. Here’s what he had to say. 

Where was the market before the pandemic hit? 

Given the Caribbean is very diversified by country, laws, culture, geography (among many other factors), various regions were in different places prior to the pandemic largely due to natural disasters. Markets outside the hurricane belt, like Aruba or less impacted by storms like Cayman, continued to be very stable, while other markets were still recovering from Irma/Maria (2017) and Dorian (2019).  Puerto Rico is a market that faced several challenges in sequential fashion (Zika, Maria, government disruption, and earthquakes for the first time in 100-years). However, when looking at San Juan as a lodging market, it remains one of the most stable lodging markets in the United States. Anguilla had significant damage from Irma/Maria, but with institutional ownership, recovered very well. The Dominican Republic is another great success story as a lodging market over the last decade but was unfortunately impacted by the “tainted alcohol” stigma and like most successful lodging markets globally, was more recently affected by the amount of new supply entering the market. 

How would you describe the state of the market right now?

In the Caribbean, it is very similar to the rest of the world, although some countries will have more governmental support than others going forward. We are only several weeks into the COVID-19 pandemic; therefore, the long-term outlook is unknown for most of the world at this point, including the Caribbean. 

Are deals still happening?

Deals that were in “pre-marketing” (those yet to hit the market) are on hold, while active deals are getting delayed, but progressing. The biggest issue in the Caribbean has always been sourcing attractive debt, so with most lenders on the sidelines, this will impact the ability for deals to get done in the near future, particular larger transactions. 

Andrew Dickey, Executive Vice President at JLL Hotels and Hospitality.

What will happen to properties that shut down permanently?

It is too early to tell, as it truly depends on how long it takes for travelers to return. As travel rebounds, hotels will re-open with employment levels alongside occupancy levels, but very few institutional assets are likely to shut permanently. The Caribbean was generally performing very well prior to the pandemic. According to STR, the Caribbean hotel industry was enjoying record-breaking average daily rate and revenue per available room in 2019. 

What advice would you have for owners who are struggling and considering selling?

Our recommendation would be to hold on as long as you can, work with your lender and be upfront with them about the situation. We would also recommend reviewing your insurance policies to understand business interruption and what government support systems are in-place (or potentially going into place) for support. 

Are there any markets that will have the toughest time recovering?

Markets that had supply issues going into COVID-19 , will surely have a longer recovery. For instance, according to STR, the Dominican Republic saw the steepest declines in the region, with 11.2% RevPAR decline in 2019 , as the market was impacted by 2.6% supply growth in addition to lost demand of 5.6%, along with a significant pipeline of construction projects, many of which will likely be put on hold. 

Are there any markets that are primed to rebound best?

It is hard to pinpoint the best performing markets, as it will all come down to airlift and how the airline industries continue their routes to certain markets. Furthermore, if there are limitations on international travel by governments, US territories and markets like San Juan, where over 90% of room nights are driven by the mainland US, could see significant impact from US tourists looking to travel after the quarantine, while staying in-country. 

What’s your outlook for the hotel market in the medium and long term?

The Caribbean is largely transient driven and therefore, does not have a large amount of group/convention business as a percentage of room nights. The convention business will likely take more time to recover, so this will surely help the region in the short term. Additionally, the cruise industry could take some time to recover. This is unfortunate for the cruise lines and retailers surrounding the ports, but likely very beneficial for the Caribbean lodging market in the near term, as room nights historically taken up on cruise ships will now be distributed within the region and have a real impact, which could induce record breaking demand.

Subscribe or Log in to read.

Sprocket Set

San Salvador Beach Villas List for $4.1 Million

CJ Invest, Listings, News

This story is part of Caribbean Journal Invest, the authority on Caribbean hotel, real estate and tourism business news. Join to access this and other great features, including our biweekly newsletter. Subscribe to Read More.

Sprocket Set

St Regis Is Opening Another New Caribbean Resort

CJ Invest, News, Projects

This story is part of Caribbean Journal Invest, the authority on Caribbean hotel, real estate and tourism business news. Join to access this and other great features, including our biweekly newsletter. Subscribe to Read More.

Sprocket Set

How to Buy Your Own Caribbean Overwater Bungalow

CJ Invest, News, Real Estate News

This story is part of Caribbean Journal Invest, the authority on Caribbean hotel, real estate and tourism business news. Join to access this and other great features, including our biweekly newsletter. Subscribe to Read More.