Hot Hotel Trends In The Caribbean
By Hazel Heyer
BRIDGETOWN, Barbados (eTurboNews) -- Condo-hotels, mixed-use, spas, privacy and relaxation, suites, multiple dining options and connectivity are definitely in.At the 9th Annual Caribbean Hotel and Tourism Investment Conference, Caribbean industry leaders, public and private sector practitioners, senior Caribbean and international officials, and lending groups all agree that these trends are currently riding the crest of tourism wave in the CARICOM (Caribbean Community) countries.
Condo-hotels, mixed-use developments and time share, and fractionals are today’s emerging trends in the Caribbean. Still in infancy in the financing landscape, fractionals are small, upscale accommodation, a step up from time-share (condo-units the owners split into parts) and a step-down from the full-fledged condo-ownership. Such is the scene the First Caribbean International Bank, the largest financial institution in the region, has been noticing across the region.
Executive director for Corporate Banking Horace Cobham said the drivers for the emerging vehicles came about as a reaction to the 9/11 market dip. “Reason for the condo-villa type developments has a lot to do with visitors enjoying top-class products in the Far East next to nothing; thereby, setting a standard for their hotel experience. The Caribbean, over the years, has had to uplift its product for which we see currently a great demand.”
Today, a huge preference for 4-5 star quality, leisure product takes center-stage. As a consequence, rising development costs of $300-400K per room key are expected despite a regional economy going robust. An average 250-room hotel, for instance, requires $90-120 M in construction budget – an amount no investor is willing to wait another 10-15 years to get his return on investment. Thus, the mixed-use and condo concept, growing exponentially, is on the rise and has been received well by lenders. Consumer’s and investor’s confidence has grown in recent times due to faster returns.
Due to the widespread trend, Cobham has noticed greater acquisition of second homes in the Caribbean and purchases of time-share resorts.
Managing director of MacLellan and Associates, International Resort Consultants, Robert MacLellan said: “New hotel construction in the Eastern Caribbean is now clearly being driven by condo-hotel type development with few conventional properties currently in planning. Regional banks are getting comfortable with this kind of business model.”
What is different in the Eastern Caribbean, compared to the typical Florida condominium model, is that a high percentage of apartment buyers favor an emphasis on ‘buy to rent’ usage. Some resorts do operate on a streamlined, profit sharing rental pool system, more cost-efficient in terms of management, time and inventory occupancy maximization, while raising no particular tax issues for the mainly European apartment buyers in the Eastern Caribbean.
According to MacLellan, the phenomenon accelerated thereafter the 9/11 downturn,” added MacLellan. “In St. Lucia, for instance, the government refined the Alien’s Landholding taxes and procedures while confirming resort would enjoy tax incentives similar to those granted to conventional hotels,” he said. “The result – the equivalent of 500 new rooms due to be added to St. Lucia’s inventory by 2007.”
Cobham added that there are projects for new marina and condo-residential developments, new mixed-used resorts (with 125 key flag hotels and 50 condos) and acquisition/conversion to 120-room 3 and half star condo-type property.
Of the 40 to 50 tourism projects the FirstCaribbean has seen over the past
18 months, 30 were of the condo-type, mixed-use, villa set-up. In Barbados, there are 3 new 5-star condo-hotels, golf, residential and spas, new tennis-villas and new retirement/gated residential communities with wellness centers sparking up. In St. Vincent & the Grenadines, there are new mixed-used hotels, golf, spa and casino and new villa development around established hotels.“Definitely, the condo-type is the direction where the market is going,”
Cobham noted.Anguilla, the Caribbean’s emerging hot spot boasts new estate villas, spa and golf, new 85-unit development, villas and condos, and mixed-use development villas and marina. Antigua has a new 200-unit villa-hotel concept; St. Kitts, a new flagged 250-room resort condo-hotel; Grenada, new villas; St. Maarten, new 600-room hotel/condo; Cayman, a new 114-room condo-hotel & spa; Turks & Caicos, 3 new condo-hotels; St. Thomas, new mixed-used development, condo, marina and yacht club; Bermuda, new condo and villa developments; Bahamas, 7 mixed-use condo-hotel developments.
Mark Lunt, Practice Leader, Hospitality Advisory for Ernst & Young LLP said the real hot trends in the hospitality sector include spas, privacy and relaxation, suites, multiple dining options, connectivity and family/kids activities. These are getting the highest scores these days as opposed to windsurfing, formal service, turndown, single-dining option, fax machines and couples only programs. Demand is expected to increase in the area of new developments to entrance destinations, he added.
In 2004, a record 21.8 million tourists came to the Caribbean for the multi-dimensional experience that today’s traveler is looking for. “While there is a gradual shift in tourist interest from high-density activity to more personalized activities such as exploration of historical, cultural and ecological heritage, the visitor gets it all in our region,” said Luther Miller, director of Finance and Resource Management, Caribbean Tourism Organization. “Travelers want leisure, adventure, trekking, recreation, sports, and learning.”
According to the CTO director, more and more visitors are experience new and indigenous cultures, unique cultural attractions and festivals and fine indigenous cuisine. “They want distinctive ecological systems such as rainforests and rare and interesting plant and animal species, pristine beaches, calming warm and balmy breezes, and, as you no doubt are aware, we are well endowed in this area,” Miller said.