The Caribbean: Trending Issues and Challenges Facing Hospitality Development

By Parris Jordan Managing Director, HVS - Caribbean | August 30, 2015

The Caribbean hospitality industry continues to strengthen as hotel operating fundamentals have exhibited continuous growth following the global economic downturn that began in the last decade. The Caribbean hotel market has shown steady improvements in average rate, occupancy and RevPAR since 2010. As STR shares, Caribbean-wide average daily rate increased every year since 2011 and notably by 4.3% year to date through June 2015, compared to same period last year. And Caribbean-wide RevPAR improved every year since 2011. These trends are driven mainly be the increases in average daily rate. Moreover, with limited new supply scheduled to enter the market coupled with a favorable forecast for higher levels of tourist arrivals, the overall market is expected to continue to strengthen even further. However, the one major challenge still facing the region is the limited amount of financing available for new construction, which in turn limits opportunities for developers to build new hotels.

The Re-Emergence of the All-Inclusive

The re-emergence of all-inclusive hotels is taking great strides, as it is a fast growing sector. It seemed to fall a little under the radar, as independents and brands now have their own vacation club programs. But the all-inclusive hotel is back and better than ever with their creation of ultimate loyalty programs. Neil Kolton, Director of Resort Sales & Service for the Caribbean and Florida at Interval International, sees the all-inclusive ultimate loyalty programs to be appealing to the same demographic attracted to timeshares.

When the all-inclusive segment saw its lull, the emergence of such programs occurred in the traditional, timeshare resort; these were usually residential with the home away from home feel. Developers began selling such programs as an alternative to vacation purchases. All-inclusives have now joined in, and as Kolton has noted, it has become a very popular product offering. The all-inclusive product is similar, but it is not real estate. Rather it offers distinct amenities to customers such as special VIP privileges, early check-in and late checkout, good locations throughout the property, and at times a discount on the all-inclusive fee.

Javier Coll, Executive Vice-President & Chief Strategic Officer (CSO) of Apple Leisure Group believes that the all-inclusive hotel has long since been a trend, but is definitely now on the rise. The emergence of the high-end, all-inclusive hotel is a catalyst in such a rise. Apple Leisure Group is a vertically integrated business made up of tour operation companies, travel agencies and resort brands. Coll remarks that 99% percent of his customers chose to stay in all-inclusive resorts. Fifteen years ago, there would be a mixture between the all-inclusive and the traditional hotel, but that trend has in fact slowly faded.

Also 15 years ago, Apple Leisure Group developed the first set of high-end all-inclusives. “We believe that we are pioneers when it comes to that sector,” remarks Coll. Most of Apple Leisure Group’s all-inclusive properties are located in Cancun, Riviera Maya, Montego Bay, and Punta Cana. Interval International’s Neil Kolton also sees most all-inclusive properties in Mexico, Jamaica, and the Dominican Republic. He also sees more space for those all-inclusives to grow in areas such as Aruba and St. Maarten.

Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.