September 20, 2023

Caribbean Hotel Performance Surges: A Post-Pandemic Success Story

The Caribbean stands out as one of the most robustly rebounding tourism regions globally, with 2023 poised to set a new all-time record. Spearheaded by the Dominican Republic, major destinations are experiencing unprecedented influxes of visitors following the relaxation of entry and movement restrictions. The region capitalizes on its prominent international visibility and reputation as a premier vacation haven, providing a distinct competitive edge over its counterparts in the tourism sector. Over the past five years, significant developmental endeavors have transformed the larger Caribbean islands, catalyzed by collaborations with renowned international hotel chains.

Caribbean Hotel Perfomance

Despite pandemic-induced interruptions, this upward trajectory persists, generating fresh demand for these destinations. The following graphic shows the development of the region in hotel KPI's.

The Average Daily Rate (ADR) serves as a metric indicative of the mean price attributed to each room which is booked. Notably, the Caribbean region has demonstrated remarkable resilience in this aspect, consistently observing an upward trajectory in room rates despite the challenging pandemic circumstances (graphic).

Moreover, while the Revenue per Available Room (RevPAR) experienced a decline amid the pandemic's onset, it is noteworthy that within approximately one and a half years, around the mid-point of 2021, the Caribbean successfully regained its pre-pandemic RevPAR levels (graphic). This exemplifies the region's agility and capacity to rebound.

Let's delve into precise numerical data concerning travelers who visited the Caribbean. The statistical insights derived from aptly depict a pronounced resurgence in demand, steadily converging towards the levels observed prior to the pandemic.


A Resurgence Attracting Investor Interest

The resurgence and swift recovery observed within the hospitality industry across the Caribbean not only underscore its renewed vitality but also pique the keen interest of potential investors. This phenomenon is further substantiated by comprehensive surveys conducted by prominent entities such as Baker Tilly and KPMG, which provide a comprehensive perspective on the financial dynamics and investment inflows within the realm of resorts operating within the region. These surveys resonate in unison, revealing a consistent narrative that illuminates the prevailing financial landscape of Caribbean resorts. Their findings serve as a testament to the market's rebound, signifying not just a revival but also an attractive investment proposition for those scrutinizing the hospitality sector. The confluence of empirical data and industry insights provided by these reputable surveys contributes to the overarching understanding of how capital movement is shaping the trajectory of Caribbean resorts in the post-pandemic era.

The 2019 Caribbean Hospitality Financing Survey provided by KPMG (graphic) shows a discerning perspective on investor sentiments, highlighting the disparities in confidence levels between distinct categories such as private equity funds, family offices, developers, and banks, particularly when gauged against the backdrop of the pre-COVID scenario. The analysis up to 2019, a year preceding the pandemic, reveals a notable decline in investor confidence over the preceding half-decade. These observations were notably vindicated by subsequent events, as the emergence of COVID-19 in the global landscape further exacerbated this diminishing investor confidence, thereby underscoring the accuracy of the apprehensions prevailing during the pre-pandemic period.

By comparing the pre-COVID KPMG survey with the subsequent “Caribbean Hospitality Financing Survey 2022” conducted by Baker Tilly (graphic), an intriguing consistency in the outcomes emerges, aligning with the trends witnessed between 2015 and 2019. Furthermore, this analytical approach sheds light on the post-pandemic landscape, revealing the investor sentiment following the trajectory of the Caribbean's commendable post-COVID performance. This provides a comprehensive perspective encompassing both the period before the pandemic and the subsequent recovery, enabling us to discern the mood and responsiveness of investors to the region's resilient post-pandemic performance.

Private equity funds, family offices, and other entities within the real estate investment sphere are increasingly recognizing the inherent resilience of hotel investments, evident in their capacity to withstand crises such as the one posed by the COVID-19 pandemic. Notably, the Caribbean region, having exhibited a remarkable recuperation, has nearly restored its tourism figures to the levels witnessed prior to the pandemic. Impressively, the region welcomed over 20 million tourists in the year 2022, a figure that compares favorably to the pre-pandemic tally of 23 million tourists recorded in 2019.