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by Loren G. Edelstein | May 24, 2016

The Caribbean hotel industry experienced noticeable performance decreases in the first four months of 2016 that can be linked in part to the spread of the Zika virus, according to STR's consulting and analytics division. Compared with the April year-to-date period of 2015, the Caribbean's occupancy fell by 3 percent, to 72.9 percent. Average daily rate was down by 1.4 percent, to US$268.86. Revenue per available room dropped by 4.4 percent, to US$195.99.

"An April survey conducted by Travel Leaders Group showed that 96.1 percent of American consumers indicated that the Zika virus had not had an impact on their travel plans this year," said Steve Hennis, STR's vice president for consulting and analytics. "While that sounds positive, the converse would state that 3.9 percent of Americans did change their travel plans because of the virus." He added, "A 3.9 percent drop in demand would have a fairly noticeable impact on occupancies, and data for the Caribbean hotel industry shows the effects already. Coming off of a strong 2015, and despite a very modest increase in supply, all of the key performance metrics are down."

Hennis also cited the following data in regards to performance in the Caribbean:

• 58 percent of hotels reported an occupancy decline, with almost one quarter experiencing an occupancy slide of 8 percent or more;
• 47 percent of hotels reported an ADR decrease; and
• 56 percent of hotels reported a RevPAR decrease.

A weakened Canadian dollar and the East Coast blizzard in January bear some of the responsibility for the negative performance thus far in 2016, noted Hennis, but the overriding issue appears to be fear over the Zika virus.

"The travel industry has dealt with other recent epidemics like SARS and swine flu, yet the affected regions have rebounded," Hennis said. "The expectation is that Zika fears will subside, and the issue will simply become another part of the travel decision-making process. Much like concerns about social unrest, terrorism and even bad weather, travelers weigh the risks in the planning process. In the meantime, destinations are taking preventative measures to fight mosquitos and hopefully contain the outbreak. A more permanent solution is in the hands of the scientific research and medical communities that are working diligently to better understand the Zika virus."