CARIBBEAN TRENDS SA M PL E IN THE HOTEL INDUSTRY 2016
Maps Table of Contents Map of the Caribbean Region 5 Caribbean Hotel Industry Notables 6 Caribbean Hospitality Industry Updates Cuba 8 Zika 9 30 Million Arrivals Barrier 10 Caribbean Financial Troubles 11 New Hotels and Mergers 12 Summary 13 Caribbean Market Trends Tables Tourist Arrivals by Month 15 Tourist Arrivals by Main Market 16 Cruise Passenger Arrivals 17 Tourist (Stop-Over) Arrivals and Cruise Passenger Visits 18 Hotel Operating Trends A Note to the Reader 20 Summary Operating Statements All Caribbean Hotels 22 Hotels with ADR Less Than $160 23 Hotels with ADR Between $160-$300 24 Hotels with ADR Between $300-$600 25 Hotels with ADR Greater Than $600 26 Hotels with Less Than 150 Rooms 27 Hotels with Between 150-300 Rooms 28 Hotels with Between 300-500 Rooms 29 Hotels with More Than 500 Rooms 30 Luxury Chain Segment 31 Upper Upscale Chain Segment 32 Upscale and Upper Midscale Chain Segment 33 Caribbean and U.S. Resort Comparison Notes on Caribbean Resorts 35 Comparable Resorts U.S. Dollars per Available Room/Year 36 Comparable Resorts Revenue & Expense Ratio Comparison 37 3
Supplemental Data CBRE Hotels Puerto Rico Hotels 39 Caribbean vs. U.S. Labor Costs 40 Caribbean Spa Operations 41 About CBRE Hotels 43 CBRE Hotels Locations 44 CBRE Hotels Regional Leadership in North America 45 CBRE Hotels Other Services 46 4
New Hotels and Mergers: Investment in the Caribbean stagnated during the financial crisis, but capital investment in the hospitality and tourism industries have rebounded to close to pre-recession levels. There were three properties sold in 2015 accounting for over $200 million in sales revenue. The Baha Mar Resort in the Bahamas was initially scheduled to open in 2014, however the construction was halted when the developer filed for bankruptcy before construction was completed. In May 2016, the hotel construction was at a standstill with developers unsure when the project would resume construction. It is believed it could be 2018 or later before Baha Mar makes a meaningful contribution to the economy. This according to Standard & Poor s, which lowered its Bahamas rating to BBB- and warned it could be heading for junk credit ratings. The Bahamas originally thought the resort could produce up to 12% of their GDP once completed, but numerous setbacks in construction have placed the entire economy at risk. Four Seasons will assume management of the Viceroy Anguilla resort in 2016, which is owned by Starwood Capital Group. Following the Resort's annual closure from August to October, the property will reopen as Four Seasons Resort and Private Residences Anguilla. The Four Seasons Resort and Private Residences Anguilla will be the second resort in the company's Caribbean collection of hotels. Anguilla will also see the opening of The Reef Hotel in November 2016. The hotel will feature 80 suites, a fitness center, a library, two tennis courts, and a boutique along with two dining options for guests. Also opening in November 2016 is the Bahia Principe resort in the Dominican Republic. This resort will feature 500 rooms, two pools, five restaurants, six bars, Wi-Fi access, a disco, and a children s water park and is to be the 14 th property in the company s Dominican portfolio. The property will also include access to the Luxury Bahia Principe Esmeralda and Luxury Bahia Principe Ambar resorts, both of which are adultsonly properties. There is also a new hotel on St Barth s scheduled to open on October 1, 2016: Le Barthelemy. It will feature 46 rooms and suites, a Michelin starred chef operating two dining options, décor by Hermes, and a spa with La Mer products. Highest level luxury will be the standard for the resort on this exclusive island. The pipeline information for the Caribbean shows growth in the supply of all strata of hotels over the next year. Upscale hotels have the largest growth with 6,535 rooms under contract to add to 78,810 rooms already in existence. Within the region, the largest hotel category is unaffiliated hotels accounting for 334,724 rooms (56%) in the Caribbean and Mexico. The majority of the hotels in the region scheduled to open this year and next are all-inclusive resort hotels which appeal to American tourists more than European style a la carte hotels. 12
TOURIST ARRIVALS BY MONTH 2015 Country Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year Total Anguilla 6,758 7,395 8,683 7,667 5,797 5,055 7,532 5,663 1,564 2,841 5,963 8,314 73,232 Antigua & Barbuda * 23,637 24,808 26,048 23,564 18,513 16,845 21,359 16,660 12,153 16,920 21,616 28,327 250,450 Aruba 100,914 89,991 103,506 99,604 87,691 87,447 109,251 111,471 97,263 109,024 110,307 118,466 1,224,935 Bahamas 100,729 122,144 168,160 146,617 130,474 141,065 164,375 126,547 74,092 82,933 91,144 123,528 1,471,808 Barbados 56,125 57,789 57,385 51,716 40,993 39,687 53,964 42,927 32,153 41,688 52,987 64,458 591,872 Belize 30,858 31,753 39,136 27,569 24,707 29,187 30,967 23,874 14,242 18,945 29,909 39,977 341,124 Bermuda * 6,772 8,177 14,019 18,729 24,534 28,711 30,815 26,813 18,851 18,117 13,199 11,072 219,809 British Virgin Islands 38,356 40,839 48,392 36,889 34,700 32,640 38,509 21,024 11,562 19,114 29,140 41,853 393,018 Cayman Islands 34,395 35,769 45,476 36,017 29,265 32,573 37,798 28,971 15,205 20,240 29,777 39,893 385,379 Cuba 370,830 361,652 404,439 330,476 237,270 218,636 266,721 240,214 193,471 226,749 292,176 382,145 3,524,779 Curacao 42,430 39,550 39,533 36,215 33,629 30,043 36,363 39,925 39,970 41,620 42,480 46,684 468,442 Dominica 6,495 7,986 6,214 5,551 7,097 5,563 9,252 7,675 3,763 4,611 3,890 6,377 74,474 Dominican Republic * 482,982 478,780 537,640 461,962 416,984 480,415 568,323 465,806 329,482 370,480 423,252 583,753 5,599,859 Grenada 14,876 10,641 12,506 11,308 8,969 11,113 14,200 15,703 7,867 9,623 10,328 13,601 140,735 Guyana 14,001 13,965 18,464 20,126 12,371 14,562 22,954 21,728 15,187 15,183 15705 22573 206,819 Haiti 38,985 39,386 48,046 39,612 38,689 50,670 68,502 48,182 34,330 31,552 30,414 47,400 515,768 Jamaica 176,621 177,805 212,134 189,903 168,347 182,364 220,662 169,063 114,280 134,317 158450 219096 2,123,042 Martinique 45,902 50,546 53,510 48,985 35,491 29,115 40,775 52,520 25,659 26,736 28,316 49,809 487,364 Montserrat 621 537 1,114 578 599 579 841 661 404 571 573 1866 8,944 Puerto Rico ** 156,723 161,641 178,560 159,988 147,272 153,699 159,345 143,652 97,527 122,758 138,641 166,757 1,786,563 St. Lucia 31,541 32,083 34,595 31,200 29,658 26,347 32,481 27,822 17,468 23,745 25821 32147 344,908 St. Kitts and Nevis 12,153 10,412 10,809 9,854 9,066 8,633 9,609 St. Maarten * 48,379 50,456 54,308 49,185 39,088 36,029 40,685 39,464 24,323 33,727 41,015 48,592 505,251 St. Vincent & the G dines 6,972 6,176 7,510 5,269 5,008 6,137 7,654 6,080 3,953 4,391 5,864 10,367 75,381 Suriname 18,185 17,533 18,942 20,148 20,020 17,845 27,840 25,942 13,502 13,585 12,138 205,680 Trinidad and Tobago 35,448 48,000 36,133 36,090 32,614 34,661 42,041 37,125 29,164 30,678 34,480 43,315 439,749 Turks and Caicos 38,377 35,912 41,690 37,633 29,650 32,258 35,525 33,358 15,078 19,625 27,319 39,627 386,052 U S Virgin Islands 73,800 72,094 84,055 73,371 69,169 69,479 71,699 55,804 31,274 40,139 52,517 75,657 769,058 Total 2,013,865 2,033,820 2,311,007 2,015,826 1,737,665 1,821,358 2,170,042 1,834,674 1,273,787 1,479,912 1,727,421 2,265,654 22,685,031 *Non-Resident Air Arrivals **Non-Resident Hotel registrations only Preliminary Figures Note: Figures are subject to revision by reporting countries Source - Caribbean Tourism Organization In 2015, total tourist arrivals for the Caribbean increased by 5.5 percent over 2014. The winter months of March and December continue to draw in the most arrivals while July leads in the summer months. October experienced the highest growth percentage with 11.7 percent. 15
SUMMARY OPERATING STATEMENT All Caribbean Properties Year End 2015 % Change Ratio to Per Available Per Occupied in USD from 2014** Revenue Room/Year Room/Day Revenues Rooms $ 19,791,598 3.8% 55.9% $ 67,779 $ 258.94 Food & Beverage $ 9,997,903 5.2% 28.3% $ 34,239 $ 130.81 Other Operated Departments $ 4,401,752 3.3% 12.4% $ 15,074 $ 57.59 Miscellaneous Income $ 1,199,243 167.2% 3.4% $ 4,107 $ 15.69 Total Operating Revenue $ 35,390,496 6.0% 100.0% $ 121,200 $ 463.03 Departmental Expenses* Rooms $ 4,623,868 5.9% 23.4% $ 15,835 $ 60.50 Food & Beverage $ 7,644,261 9.2% 76.5% $ 26,179 $ 100.01 Other Operated Departments $ 2,992,060 2.7% 68.0% $ 10,247 $ 39.15 Total Departmental Expenses $ 15,260,189 7.0% 43.1% $ 52,261 $ 199.66 Total Departmental Income $ 20,130,307 5.3% 56.9% $ 68,939 $ 263.38 Undistributed Operating Expenses Administrative and General $ 3,369,293 3.3% 9.5% $ 11,539 $ 44.08 Information and Telecommunications Systems $ 356,760 37.9% 1.0% $ 1,222 $ 4.67 Sales and Marketing $ 2,418,149 9.2% 6.8% $ 8,281 $ 31.64 Property Operation and Maintenance $ 1,759,702 4.3% 5.0% $ 6,026 $ 23.02 Utilities $ 2,115,267-16.1% 6.0% $ 7,244 $ 27.68 Total Undistributed Expenses $ 10,019,171 0.8% 28.3% $ 34,312 $ 131.09 Gross Operating Profit $ 10,111,136 10.2% 28.6% $ 34,627 $ 132.29 Management Fees $ 1,332,910 9.4% 3.8% $ 4,565 $ 17.44 Income Before Non-Operating Income and Expenses $ 8,778,226 10.3% 24.8% $ 30,062 $ 114.85 Non-Operating Income and Expenses Income $ (32,147) - -0.1% $ (110) $ (0.42) Rent $ 483,185-2.8% 1.4% $ 1,655 $ 6.32 Property and Other Taxes $ 119,489-2.5% 0.3% $ 409 $ 1.56 Insurance $ 822,900-5.2% 2.3% $ 2,818 $ 10.77 Other $ 237,532-0.7% $ 813 $ 3.11 Total Non-Operating Income and Expenses $ 1,630,959 8.4% 4.6% $ 5,585 $ 21.34 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) * Ratio to Revenue column is percent of corresponding Departmental Revenue ** Taken from a sub-sample of properties that reported data for both 2014 and 2015 $ 7,147,267 10.8% 20.2% $ 24,477 $ 93.51 2015 Change Average Units Available Per Day 292 REVPAR $ 185.50 3.5% Average Units Available For Year 106,690 ADR $ 258.94 2.6% Average Paid Units Occupied For Year 76,432 Occupancy 71.6% 0.9% 22
CARIBBEAN AND UNITED STATES COMPARABLE RESORTS U.S. Dollars Per Available Room/Year Caribbean % change from 2014 United States % change from 2014 Difference in USD Variance Percent Revenues Rooms $ 67,929 4.6% $ 65,326 3.0% $ 2,603 4.0% Food & Beverage $ 35,491 6.7% $ 48,430 8.3% $ (12,939) 26.7% Other Operated Departments $ 15,912 1.5% $ 21,255 5.6% $ (5,343) 25.1% Rentals and Other Income $ 4,531 176.3% $ 4,950 89.1% $ (419) 8.5% Total Revenue $ 123,863 6.8% $ 139,961 6.8% $ (16,098) 11.5% Departmental Expenses* Rooms $ 16,026 6.5% $ 16,216 8.0% $ (190) 1.2% Food & Beverage $ 27,792 10.2% $ 34,195 6.2% $ (6,403) 18.7% Other Operated Departments $ 11,013 1.9% $ 12,996 5.5% $ (1,983) 15.3% Total Departmental Expenses $ 54,831 7.4% $ 63,407 6.6% $ (8,576) 13.5% Total Departmental Income $ 69,032 6.4% $ 76,554 7.0% $ (7,522) 9.8% Undistributed Operating Expenses Administrative and General $ 11,543 3.4% $ 11,289 4.2% $ 254 2.2% Information and Telecommunication Systems $ 1,295 36.3% $ 1,928 37.9% $ (633) 32.8% Sales and Marketing (including Franchise Fees) $ 8,760 9.7% $ 8,989 7.4% $ (229) 2.5% Property Operation and Maintenance $ 6,254 4.4% $ 6,426 2.3% $ (172) 2.7% Utilities $ 7,558-16.1% $ 4,034-7.9% $ 3,524 87.4% Total Undistributed Expenses $ 35,410 0.9% $ 32,666 4.1% $ 2,744 8.4% Gross Operating Profit $ 33,622 12.7% $ 43,888 9.0% $ (10,266) 23.4% Management Fees $ 4,506 12.7% $ 3,469 8.4% $ 1,037 29.9% Income Before Fixed Charges $ 29,116 12.7% $ 40,419 9.0% $ (11,303) 28.0% Fixed Charges Income $ (135) $ - Rent $ 1,999-3.3% $ 272-17.4% Property and Other Taxes $ 405-19.3% $ 2,786 10.4% $ (2,381) 85.5% Insurance $ 3,098-5.9% $ 1,471-5.0% $ 1,627 110.6% Other $ 742 $ 1,002 Total Fixed Charges $ 3,750 4.1% $ 5,531 24.4% $ (1,781) 32.2% Net Operating Income** $ 24,113 15.2% $ 34,888 5.5% $ (10,775) 30.9% * Ratio to Rrevenue column is percent of corresponding Departmental Revenue ** Before deduction for rent. 36
Labor Cost Data: Caribbean and United States Comparison The following graphs and table compare labor costs for Caribbean hotels to similar expense ratios at U.S. properties Labor Costs 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0% Employee Benefits 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0% 29.4% Caribbean 37.5% Note: Total Labor Costs are the sum of Salaries and Wages and Payroll Related Expenses. % Of Revenue % Of Expenses 40.8% 41.9% 29.5% 29.6% Caribbean United States % of Total Labor % of Salaries and Wages Note: This chart represents employee benefits as a percentage of total labor cost and total salaries and wages. 31.5% United States CHANGE IN LABOR COSTS: 2014-2015 Caribbean United States Salaries, Wages, Service Charges, Contracted Labor, and Bonuses 7.1% 5.2% Payroll-Related Expenses 3.0% 3.0% Total Labor Costs 3.7% 4.6% Note: Percentage changes are only for properties that reported both 2014 and 2015 data. 42.8% 40