Optimism for continued economic recovery, investor interest in Caribbean tourism & hospitality highlights 16th Annual Investment Conference
Theresa M. Oakes / T.Oakes@KTCpr.com
Tricia Rapp / T.Rapp@KTCpr.com
SAN JUAN, Puerto Rico (May 3, 2012) - Optimism that economic recovery was moving forward and that the investment community was showing interest in the Caribbean again was evident in both the attendance and the presentations at the 16th Annual Caribbean Hotel & Tourism Investment Conference (CHTIC) here as 189 attendees including a half dozen Ministers of Tourism and one Chief Minister (equivalent to a Prime Minister) gathered to discuss how to reinvigorate tourism and hospitality growth in the region.
"The worst of the impact of the economic crisis is over, but the changes in economies have changed the meaning of normal," said Senator Richard "Ricky" Skerritt, Minister of Tourism & International Transport for St. Kitts & Nevis, adding: "Our tourism markets are moving in the direction of a new normal. Our assets must be developed for future generations and our major need for investment today is to sustain these resources for the new normal."
Skerritt added: "This conference comes at a time when investments are needed to design, build and even operate infrastructure. However, spending millions of dollars on concrete and too little on human resources is not good either."
Josef Forstmayr, Caribbean Hotel & Tourism Association President, urged Caribbean governments to rethink tax policies with an aim to remove or reduce consumption taxes on hotels and tourists. He said:
"There is no question that tourism is an export industry. Unfortunately in the Caribbean, tourism is still not treated as an export by many of our member countries. We hear of new policies that taxes not only the private sector, but also our visitors directly. These masquerade under such names as, 'Airport improvement taxes', 'Tourism enhancement fees' and by far the worst of all, the UK's Airline Passenger Duty (APD).
"Increased taxation is regressive. It will result in less revenue for the hotel and attraction sector. It will also negatively affect our countries' wider economies due to the significant domestic agricultural and manufacturing linkages that tourism provides.
"Our governments must make a serious effort to review their taxation policies on the tourism industry. Furthermore, we need tax incentives to attract the investment that is needed for the Caribbean to maintain its appeal and competitiveness as a world-class tourist region."
Hugh Riley, Secretary General of the Caribbean Tourism Organization said: "Resources are one of the challenges facing the Caribbean. Just as resources are a challenge it is our strength. There is no region that is more resourceful and has resilient people." He also urged that "it is time for all governments in the Caribbean to support regional air lift."
Charlene Lewis, Associate Director, KMPG Corporate Finance provided one of the many optimistic views when she said: "Debt service ratio is down, interest rate prices are up and lenders are bearish on the Caribbean." However, she added: "Growth will continue to be slow or flat until 2014 or beyond. Challenges include costs of getting to destinations and costs in construction."
She also noted that in a recent survey, an overwhelming 77% of the lenders questioned said they "do not see government support" for tourism in the Caribbean.
Carlos Vogeler, Regional Director of the World Tourism Organization said: "Key opportunities include product innovations such as multi-destination packages, improvement of intra-Caribbean air access and strengthening the brand."
He suggested that what was needed was "polices for business environment, infrastructure, facilitation, marketing and human resources."
Vogeler added: "Tourism can make a dent in unemployment. However, complicated entry and travel formalities make it extremely difficult for more travel and world leaders must look at travel facilitation as related to job creation. Unbalanced taxation is choking the long haul travel, in particular the UK with its ADP."
He concluded by urging "We need to innovate and seek new ways of doing things to cater to the more demanding tourist who is more experienced and better informed."
Liam Day, Managing Director, BCQS, a property development consultant said: "I think the market is coming back, but it will be a long time before it gets back to the halcyon days of the 90s and before that a lot of stalled projects need to be fixed and restarted."
Adam Sacks, President of Tourism Economics noted that consumer spending is at all time highs and predicts a 3.6% increase in stopover visitors for an average growth in the Caribbean.
Amanda Hite, President of Smith Travel Research (STR) gave the good news with "There are 2,125 hotels in the Caribbean with 231,278 rooms experiencing a 72.5% occupancy rate with a $205 ADR and total room revenue around $3 billion."
She added: "Supply growth has been outpaced by demand growth and is highest in 2011 since 2006. The most growth is in the luxury and upscale market and the independent market. Therefore, hotels are in a good position to drive higher revenues."
Taking a look at what developers, hoteliers and tourism officials can do to turn things around in the destinations and generate more investments, several speakers provided a variety of ideas.
Rob Webb, Partner, Baker Hostetler said: "While cost of construction hasn't dropped the value has and the developments are now all about repurposing. If it was planned as a hotel, we need more nimbleness to be able to be flexible to change the purpose of the plan."
Ron Sutherland, President, The Hemisphere Group said: "Many times the design is not proper for the destination, the team is not the right group for the project and there are a number of projects waiting to be finished. What was there a year ago probably won't work today."
Nikolas Eastwick-Field, Principal with efmHospitality, hotel development and management said: "There are three basic considerations when looking at a failing asset. First study why the asset is troubled or failing so as not to make the same mistakes twice. Question whether or not it has legal problems or real estate goals that didn't happen or is it in the wrong place or a poor market?
"Then prepare a realistic business and marketing plan and work out realistic costs. You can't just pick up an abandoned project. You then need to make sure you hire a seasoned hospitality professional to work on the project and you need the capital and marketing funds to make it work."
Jay DiGiulio, Boutique Club International said: "The most successful projects we have seen combines some sort of hospitality product with real estate."
Anthony Bowen, CEO, Sotheby's International Realty, St. Lucia, said: "We must have access to risk capital and the law of consumers tells you it will go up and we will have profits."
Bowen also complained that "Governments in the Caribbean have done very little to establish ideas to encourage real investment. I believe that this region can continue to attract investment in real estate and hospitality providing we can be equally competitive as those that are successful. The question is do we need to build a better mouse trap or just make it work."
Danny Hughes, Vice President, Caribbean, Mexico and Latin America for Hilton Hotels Corporation said: "We are always looking for where our loyalty members can spend their points, and assuming there is adequate air lift, then we can turn on a source of business."
David Callaghan, Vice President Sales & Service for Interval International said: "Any developer today that does not have a mixed use component is foolish. Developers need to show banks that there is an exit position because no lender today wants a long-term exposure.
Richard Corso, Chief Financial Officer for InnLink Central Reservations Services said: "If you are not accomplishing RevPar you can't be successful." He also noted that "Expedia has 50 million unique visitors each month and 40% of their guests will select a property on the basis of WiFi and by 2015 smart phone bookings will account for 55% of all bookings."
Ricardo Perez, General Manager, Oyster Bay Beach Resort, St. Maarten said: "The airlift problem continues to plague travelers. The internet and social media have a strong impact on our business. It is crucial to visit and monitor Trip Advisor. A bad comment on Trip Advisor can cost you thousands of dollars. You need to set the record straight."
Perez added: "The question of WiFi is to pay or not to pay. You need to put money in your budget to make sure that you are staying current with your clients. In this business perceptions are reality." But he cautioned, "even in these high tech days, we still need service and hospitality."
Mark Ozawa, Managing Director, Windjammer Landing, St. Lucia said: "Marketing and sales are crucial. You need to know which channel costs you more money. The best is booking through your website. While in the UK most bookings still come through tour operators."
Mark Durliat, CEO of Grace Bay Club said: "It's still the staff that makes the hotel the place that guests want to be. The Western world has been trained to get results. The Caribbean is all about relationships. I made it my cause to focus on our staff to take care of them because they take care of our guests."
Nik Eastwick-Field summed it up with "In the end, it is still all about hospitality."
Building on the momentum achieved in recent years with a growing interest in Caribbean tourism development, CHTIC is staged by two not-for-profit organizations – CHTA and the CTO. CHTA represents the regional hotel and tourism associations and CTO is the public sector tourism body which represents the countries of the region. All funds from the conference are reinvested in the region for the benefit of the Caribbean tourism industry. CHTIC was founded by CHTA and CTO in 1997 with the specific objectives of improving the tourism investment and operating climate in the Caribbean, raising awareness of development opportunities and stimulating a continuing flow of equity and loan capital into the region.
CHTIC 2012 sponsors include Host sponsors: Puerto Rico Tourism Company and Puerto Rico Hotel & Tourism Association; Patron sponsors: CIBC FirstCaribbean International Bank, Interval International, KPMG and MasterCard; Platinum Sponsor Tourism Development Company (TDC); Gold sponsor: Best Western International; Platinum Media sponsor: Perspective Magazine; Silver Media sponsor: Lodging Hospitality; and Media Supporters sponsors: Caribbean Developer; HSyndicate and Latin America Monitor and Supporter sponsor: American Airlines.
Caribbean Hotel & Tourism Association
The Caribbean Hotel & Tourism Association (CHTA) facilitates the full potential of the Caribbean hotel and tourism industry by serving members' needs and building partnerships in a socially responsible and sustainable manner. Celebrating its Golden Jubilee in 2012, CHTA is the voice of the Caribbean hospitality industry for the development of the region in the highly competitive and sophisticated environment of international tourism. Today, tourism is widely recognized as a pivotal industry in the economy of the region – and CHTA functions as the common denominator for this industry in a region of diverse nationalities, languages and styles, identifying mutual problems and marshalling the resources if the active and allied members to devise solutions. CHTA represents all facets of the hospitality industry with more than 725 member hotels and 375 allied members.
For more information, visit http://www.caribbeanhotelandtourism.com. Follow CHTA on Facebook www.Facebook.com/CaribbeanHotelandTourismAssociation and Twitter www.Twitter.com/CHTAFeeds.