CaribWorldNews, ATLANTA, GA, Tues. Aug. 11, 2009: Tourist travel to the Caribbean decreased by some four percent in 2008 even as many regional hotels saw profits dip by 16 percent.
That`s the word from PKF Hospitality Research, which on Monday, released its 2009 edition of `Caribbean Trends in the Hotel Industry.`
`Even though Caribbean hotel managers were able to cut expenses by 1.1 percent in 2008, it was still not enough to offset the 4.5 percent decrease in total revenue,` said Scott Smith, MAI, senior vice president of PKF Consulting. `The net result was an average 16.0 percent decline in unit-level profits for the typical Caribbean hotel in 2008.`
Additionally, PKF said Caribbean hotel construction was also a victim of the recession, since it forced planned hotels to either delay or stop construction while several proposed Caribbean hotels have not been able to obtain the financing they need in order to proceed with construction.
According to the Latin America Q1 2009 Construction Pipeline Summary from Lodging Econometrics, there are 105 projects (22,136 rooms) under development in the Caribbean so far in 2009. Of the 105 projects, 54 projects (51.4 percent) are under construction. It is suspected that the remaining 51 projects will be delayed until the economic situation improves.
`Deposits from residential buyers are no longer sufficient enough to cover the financing of hotels. This business model is no longer viable,` Smith added.
In addition to proposed projects, the solvency of existing hotels also has been impacted. For example, the Four Seasons Great Exuma has been forced to close due to the economic downturn.
The report blames the global economic recession and said given the current 2009 recession, further profit deterioration is expected this year.