Islands Face Challenges

Hospitality Report Predicts Caribbean Hotels Face a Tough 2008

Scott Smith 
Scott Smith of PKF
On the eve of what should be the busiest months for travel to the Caribbean, the region faces a proverbial perfect storm of worrisome economic factors with potentially far-ranging consequences for growth.

An early warning was sounded by Atlanta-based PKF Hospitality Research in its latest report on Caribbean Trends in the Hotel Industry, released July 31. Among the assessments in the report, PKF senior vice president Scott Smith argued that, while the Caribbean hotel industry saw steady business in 2007, "we expect more challenges" once the total-year figures are compiled for 2008.

Smith cited problems such as rising costs for energy and labor, increased fares and decreased flights to the region, and continued growth in hotel development despite the economic warning signs. One net result, according to the report: Large upscale properties will experience a drop in meetings business. (Interestingly, Smith told M&C he does not expect the region's propensity for hurricanes to have a significant impact on business, calling it a "known quantity.")

One region's downturn can be another's boom, however. Going forward, Smith told M&C, "Mexico is going to be more competitive with the Caribbean on the group side." Indeed, Cancun already has enjoyed a surge in business, having shaken off the ravages of Hurricane Wilma in 2005.

Sandy Kitrell, a senior buyer for incentive house Carlson Marketing, agrees with this assessment: "My activity right now is stronger in Mexico than the Caribbean," she said. Kitrell believes this is because airfare to Mexico "is a little bit more reasonable" than the Caribbean.

Taking a proactive stance, Alec San­gui­netti, director general and CEO of the Caribbean Hotel & Tourism Association, vowed to "continue to promote the Caribbean as a major provider" for groups.