Why 2023 was a ‘tremendous success’ for Caribbean hospitality

MIAMI — The Caribbean hotel sector outperformed the Americas region in revenue and profit generation, which reflects its post-COVID recovery and highlights continued growth opportunities for the region, according to a data presentation from HotStats at the 15th annual Caribbean Hotel Resort Investment Summit (CHRIS) in Miami.

Looking at comparable markets, the Caribbean achieved the highest revenue per occupied room gains in 2023, and that trend has remained strong at the start of 2024, according to Laura Resco, director of hotel intelligence, Americas for HotStats.

The desire to be outside and these experiences that these types of resorts can provide are still very much part of the DNA of the modern traveler.

Laura Resco

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Resco said the Caribbean, when initially emerging from COVID, represented an opportunity for U.S. consumers to leave the country when they didn’t have the entire world to explore.

“Right now, the desire to be outside and these experiences that these types of resorts can provide are still very much part of the DNA of the modern traveler,” Resco added in an interview with Hotel Investment Today. “So, that’s why, from a top-line point of view, I see such tremendous success [in the Caribbean].”

Profit margins in the Caribbean have steadily increased since 2023, mainly because of tight controls of undistributed expenses. However, Resco said labor costs in the region are less daunting than the increases in other markets like the U.S.

“From a bottom-line point of view, you have certain areas in the Caribbean where labor is more abundant than it is in the United States,” she said.

However, the expansion of those expenses, particularly labor, beyond top-line increases, is still a threat to the continued growth of those profit margins for the rest of 2024. “So, the staffing challenge that we have in the United States may not be as prevalent in the Caribbean… However, it is still the number one cost increase,” Resco said.

Nicola Madden-Greig, president, CHTA, at CHRIS

Travel, tourism update

During the same CHRIS session, Nicola Madden-Greig, president of the Caribbean Hotel and Tourism Association (CHTA) and group director of marketing and sales at Kingston, Jamaica-based Courtleigh Hospitality Group (CHG) provided an update on travel and tourism in the Caribbean.

Madden-Greig said overall Caribbean travel demand is robust. When judged by the metric of international arrivals in 2023 compared to 2019, the Caribbean (+3%) led global recovery over the Americas (-14%), Europe (-22%), Asia Pacific (-41%) and Africa and the Middle East (-12%). 

Travel is anticipated to grow for the region with forecasts calling for anywhere from 5% to 10% growth, which could vary between welcoming 33.8 and 35.4 million tourists.

Almost half of those tourists come from the U.S. and the biggest reason for the increase is that the overall airlift into the Caribbean from the U.S. has so far increased to 26.9 million seats in 2024, up 6.1%. The biggest year-over-year increases in airlift happened in the Bahamas (+13%), Dominican Republic (+5%), Aruba (+17%), Virgin Island U.S. (+20%) and Turks & Caicos Island (+28%). 

“This is significant. Airlift has been really challenging for the region,” Madden-Greig said. “Some destinations have better airlift than others, but it’s something that, as a region, we are working very hard at increasing.”

She added that the increased airlift is due to extensive work with regional partner airlines, especially on increasing lift between Caribbean destinations.

Coming to the Caribbean once doesn’t mean you’ve been to the Caribbean. If you’ve been here [5-10 times] at various destinations, then I might consider that you have come to the Caribbean.

Nicola Madden-Greig

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“There is a heavy focus on multi-destination travel,” Madden-Greig said. “We are saying to the world, do not just think of the Caribbean as one destination. We want you to think about visits to more than one destination.”

Madden-Greig said there is so much geographic and cultural diversity from country to country in the region that it can’t just be treated as one destination.

“Coming to the Caribbean once doesn’t mean you’ve been to the Caribbean,” she said. “If you’ve been here [5 to 10 times] at various destinations, then I might consider that you have come to the Caribbean.”

Hotel pipeline way up

The hotel construction pipeline in the Caribbean is also plentiful. According to STR data through the end of 2023, the region has 28,163 projects under construction (up 116% from 2019), 15,295 projects in the final planning stages (up 47% from 2019) and 15,758 projects in the planning stages (up 151% from 2019). Overall, the pipeline is up 99% from 2019 numbers.

That growth is happening across the various segments, with luxury up 193%, upper upscale up 148% and upscale up 196%. The biggest pipeline growth is in the lower segments, with the economy up by 650%, the midscale up by 775%, and the upper midscale by 321%.

“While we see a big uptick in the luxury of upscale and upscale, we are also seeing growth in the midscale, upper midscale and economy sections,” Madden-Greig said. “This is important in terms of what the market needs and where the growth is planned at this stage.”