Latin Finance - September/October 2010 - 80

caribbean tourism investment

Tourism Crawls Back
by Taina Rosa

s North American consumers start to believe in economic recovery, more travelers are hitting the Caribbean, nudging hotel chains back into expansion mode. However, financing is still not widely available to hotel developers, and what is out there will cost more, say market participants. “We are seeing more business coming this year. The economy in the US is doing better than last year and the Caribbean does better when the US economy improves,” says Salo Smaletz, regional vice president of development for InterContinental Hotel Group (IHG). IHG has 10 hotels in the Caribbean, including Holiday Inn and Crowne Plaza franchises. Tourist arrivals to the region this year are up 4.5% as of June compared to the corresponding period of 2009, according to JPMorgan. The Barbadosbased Caribbean Tourism Organization (CTO), which promotes tourism in the More tourists are coming to the islands, but lenders are cautious on the sector region, says that between January and May, tourist arrivals rose 2.0% in the Dominican Republic, 3.1% in Barbados, is likely to reduce personal consumption expenditure, a key and 7.3% in Jamaica, in comparison to the same period of 2009. determinant of tourism demand in the Caribbean. Hotel occupancy rates are also seeing some improvement. Elsewhere, the Canadian market has also slowed down, According to CTO, they jumped 7.0% in the first quarter of 2010 according to CTO. As of the first half of 2010, business from that after having dropped 4.1% in 2009. The data takes into account country was up just 1%, it adds. activity in 24 Caribbean countries. The pipeline of hotels under construction is also active. Financing Hurdles According to US-based hotel real estate research firm Lodging During the financial crisis hotel projects were scrapped or delayed Econometrics, this year there are 72 hotels in the construction as business plans for some developers fell apart. But now that the pipeline, up from 69 in 2009. global economy is slowly improving, many chains are expanding. Overall, CTO says this year’s Caribbean tourism industry “Two years ago a lot of projects were put on hold because of outlook is mixed, with markets dependent on the US faring better a lack of access to debt,” says Laurent De Kousemaeker, chief than those getting most arrivals from Europe. In fact, it says development officer at Marriott International, which has some 20 countries reliant on Europe are in for a bumpy ride in light of euro hotels in the Caribbean. zone economic woes. However, Moody’s says that even though De Kousemaeker explains that higher end projects with US recovery is underway, financial deleveraging by households residences were hit hardest. “The whole sector of the luxury resort

After taking a drubbing during the global crisis, Caribbean tourism is slowly coming back to life. However project finance is hard to get and generally more expensive.

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September/October 2010

Latin Finance - September/October 2010

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