THE financial and economic downturn of 2008 heralded a precipitous decline for many hotel operators in the Caribbean.
The once revered SuperClubs has dramatically retreated from its home market, Jamaica; in the Bahamas, Atlantis continues to experience difficulties and has had to cut its room rates to as low as US$70; the Almond hotel in Barbados has been sold; the Four Seasons in Exuma sold out to Sandals; the Ritz Carlton in Jamaica was forced to sell out after faltering performances over recent years; in the highest-value real estate auction ever held in the Cayman Islands, the Ritz-Carlton Grand Cayman hotel property was sold to an American private equity company for around US$180 million.
Boldness in bad timesOver the last five years, 2008 to 2013, Sandals has maintained a relentless expansion exercise during the biggest financial crisis since the Great Depression of the 1920s. It has also upgraded all its properties, adding the Balmoral wing to the Royal Bahamian in the Bahamas.During the said period, Sandals Whitehouse became fully operational; the Four Seasons in Exuma was acquired, the Veranda hotel in Turks& Caicos was bought for around US$100 million and the LaSource hotel in Grenada was purchased for an undisclosed sum.All this underscores the Sandals Group’s unwavering faith in Caribbean tourism. In all the Caribbean countries it operates in, tourism is a leading economic driver and the main earner of foreign exchange.The hotel group led by Gordon ‘Butch’ Stewart may well be seeing something that many Caribbean governments may do well to take note of — a glorious future for Caribbean tourism.
Encouraging numbersCaribbean Tourism Organisation (CTO) figures for 2012 and forecasts for 2013 bears this out.According to Beverly Nicholson-Doty, chairman of the Caribbean Tourism Organisation (CTO) and US Virgin Islands Tourism Commissioner, Caribbean destinations are on pace for a strong 2013 following a 2012 season that saw a 5.4 per cent region-wide increase in tourists.In a wide-ranging statement issued on February 13, Nicholson-Doty said Caribbean tourism growth “outpaced the rest of the world” in 2012, which saw 25 million visitors that year. She further expects international visitor traffic to the Caribbean to grow by “another four to five per cent” in 2013.Tourist arrivals to the Caribbean from the US increased 4.1 per cent in 2012 compared with 2011, “holding steady with the pre-recession levels of five years earlier,” said Nicholson-Doty. US arrivals increased in all of the reporting Caribbean countries, she added.In addition, Caribbean hotels are generating stronger results, with regional properties reporting improvement in four key performance indicators for the second consecutive year.“The overall occupancy for the Caribbean increased by 7.1 per cent; average daily rate went up 4.8 per cent and total room revenues by 8.9 per cent,” said Nicholson-Doty. Revenue per available room also rose by 12.4 pe rcent in 2012. “Should these trends continue, it certainly augurs well for 2013,” she added.Canada is the fastest-growing Caribbean travel market, according to Nicholson-Doty, posting a 5.9 per cent arrivals increase in 2012, marking the country’s fifth straight year of growth. In an “encouraging sign” visitor spending in CTO-member countries totalled US$27.5 billion in 2012, a 3.6 percent increase over 2011 and the third consecutive year of growth.“This marks a return of aggregate spending by visitors to the pre-recession level,” Nicholson-Doty said.
Allowing Caribbean tourism to prosperDespite this rosy forecast, many Caribbean governments continue to impose even more taxes on tourism operators as their economies contract, thus killing the goose that lays the golden egg.Vincent Vanderpool-Wallace, the former tourism minister of The Bahamas and also former head of the Caribbean Tourism Organisation (CTO), recently produced an important paper on Caribbean tourism in which he pointed out the following: “Hotel occupancies across the region average 60 per cent annually and tourism represents some 15 per cent of regional GDP. In some Caribbean countries, the tourism contribution to GDP is as high as 80 per cent. It does not take much arithmetic to see that if occupancies could be advanced to 90 per cent, the tourism contribution could be increased by some 50 per cent.”
ConundrumIt is a conundrum that whilst tourism continues to be a potent economic force in the Caribbean and is projected to continue to be so, many operators are failing.This is a testament to the Sandals brand and its operational abilities. It has placed much stock in marketing and exceeding the visitor’s expectations – a mantra that has served it well since 1981.
The test of timeThe test of time has really brought its rewards and St Lucia stands as a prime example.When Sandals acquired the Hyatt Regency over twenty years ago, the group met with a negative backlash that almost saw it being ignominiously sent away.It had to see its way through a political maelstrom and much resentment from many local business leaders who stood firm in their opposition to Sandals.After twenty years, Sandals has played a major role in transforming St. Lucia’s visitor profile, attracting more visitors from the United States and marketing it as a top destination – a jewel in the Caribbean’s crown.The current Prime Minister Dr Kenny Anthony can now allow himself a rueful smile, knowing that his fateful decision to stand firm behind Sandals and support its acquisition of the Hyatt Regency helped to foster growth of the country’s tourism product, providing much needed foreign exchange and helping to make it one of the best performing economies in the Caribbean over that twenty-year period.The endurance of Sandals and its inexorable expansion cannot be put down to fortuity.In St Lucia a number of projects over that period have got no further than ambitious renderings – dreams that failed to become a lasting reality.Also many hotel operators have had to sell their assets and face the ogre that is receivership, including the once reputable Smuggler’s Cove. It truly is a game called survival of the fittest; being able to stand tall with the big dogs and make them take notice.In 2013, over 20 years later, Dr Kenny Anthony who is once again the Prime Minister has to make a decision that will see Sandals once again enhance his country’s tourism product.Having repaid its faith in St Lucia , Sandals now is looking to add additional 200 rooms and introduce over-the-water suites akin to those found in such exotic locations such as Bali. Here, some 700 jobs will be created and this project will cost over US$100 million, a fillip for the economy.This is the next step in the evolution of Caribbean tourism and one that can be boldly taken by a far-sighted political leader.The author Richard Bach once said: ” Listen to what you know instead of what you fear.”More than twenty years later, Dr Kenny Anthony well knows what Sandals can deliver and how it has endured to become the leading Caribbean resort operator in the world.
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Sandals continues to expand while other operators falter
Almond Beach Village, Barbados (File photo)
Sandals Chairman, Gordon “Butch” Stewart.
Almond Beach Village, Barbados (File photo)
Sandals Chairman, Gordon “Butch” Stewart.