While we bask in the hot, humid days of summer, I am constantly reminded that all good things come to an end. Except, of course, when you live in the Caribbean, where summer would appear to be eternal (barring tropical storm developments, of course). We can learn how to better handle our own summer prospects by looking at places that manage them year-round.
I recruited Richard Williams to shed some light on the situation. The pulse of the Caribbean in his blood — his family first arrived in Barbados in 1652, and he’s been involved in the hospitality industry his entire life. Currently, he’s the interim GM of the Ocean Terrace Inn, which sits on a small beachside peninsula across from downtown Basseterre on the tranquil island of St. Kitts.
Larry Mogelonsky: The Caribbean was badly hit by the economic downturn of late 2008 and early 2009. Has there been an overall recovery?
Richard Williams: The region certainly suffered at a disastrous level, which has left it still paralyzed. There’s a lot of employment in the region, and many hotels — having spent capital reserves necessary to survive the downturn — no longer operate. This has been particularly devastating to the independent hotels, which represent about 65% to 70% of all the accommodation units throughout the Caribbean.
So, no, I don’t think there has been an overall recovery. Economists are saying this recovery should start to show itself in 2014 and 2015, and we’re certainly looking forward to that.
LM: The Caribbean has always been a nexus for the “rich and famous.” How has the upper segment of business fared?
RW: The top end of the luxury market in the Caribbean has paralleled that market segment elsewhere in the world — it has fared very well. The well run hotels and the well funded hotels have survived and continue to blossom. The Caribbean continues to attract a very affluent audience, particularly during the winter months, with easy access from Europe and the United States for the private-jet traffic, which has increased, as well as for owners of private yachts, many of whom come through the region to islands like Barbados, St. Lucia and Anguilla.
LM: Where are the investment opportunities for growth?
RW: Today, the market is dictating that the real success stories are those that develop a thriving hotel component followed by a residential component, rather than starting with a condominium project first. Turks and Caicos and Anguilla, to name two amongst the many, offer significant real-estate opportunities out of the very tangled mess left from the economic downturn. There are many developments that remain unfinished and could be acquired as very competitive investments. The final segment that’s still out there is the small independent operator who was very hard hit by the economic downturn and is on the verge of going to the market to sell his or her hotel.
LM: How does the move to a stronger U.S. dollar impact the region?
RW: Generally speaking, this makes travel more expensive for non-U.S.-dollar denominated markets like European countries and the United Kingdom. It does improve the purchasing power of Caribbean hotels looking to buy in the greater market, but overall it is a negative because it makes the region less competitive worldwide.
LM: How have cutbacks in airlift by European carriers impacted business?
RW: It’s ended up driving more traffic through London into the hands of carriers like British Airways and Virgin (certainly towards the English-speaking Caribbean). It’s meant that there’s been a growth of charter traffic from Italy as well as countries in Eastern Europe.
Yes, the cutbacks have created new challenges, but realized growth is still coming through the larger, all-inclusive properties in the region. By pulling in volume, the all-inclusive properties have helped keep ticket prices down.
LM: Are there opportunities for seasoned hoteliers looking for employment in the Caribbean?
RW: There are fewer opportunities than there used to be 15 or 20 years ago. More recently, the Caribbean has many more of its own indigenous hoteliers who couldn’t have attained their knowledge base in an earlier decade because they wouldn’t have had access to the proper educational resources. Most of the industry today is run by people from the Caribbean, certainly amongst the independent hotels.
LM: What is your outlook for hotels in the region?
RW: I’m an optimist by nature, and I think the outlook for the Caribbean hotel industry is very good. Tourism is the ultimate answer to the region. The Caribbean Hotel & Tourism Association (CHTA) must play a much more assertive role in leading the industry and providing solutions for the small, independent hotels. In my opinion, the CHTA often gets preoccupied with big-picture solutions, losing sight of the core of its membership. The other issue is political leadership. Politicians need to treat tourism and hospitality as a foreign exchange earner in the same way they’d treat manufacturers. They must minimize the operating base costs while enhancing the revenue so everyone in the economy benefits.