GLOBAL UPDATE
DIPPING THEIR TOES IN
A rendering of the Sandals LaSource Grenada Resort & Spa , set to open in December
UPDATES
MARRIOTT ’ S CROWDSOURCING SITE 11
HYATT SIEM REAP 12
FALKENSTEINER ’ S UPWARD TRAJECTORY 14
LOBBY AS ART STUDIO 16
ON THE WEB 18
After bottoming out in 2010 , improved hotel performance in the Caribbean is again attracting developers and hotel companies looking to expand . However , the uptick in deals remains a trickle compared to the Caribbean ’ s pre-recession pipeline .
Lodging Econometrics estimates new supply projected to open this year is only 0.1 % of the Caribbean ’ s existing hotel inventory , compared with 3.4 % growth in 2008 . Financing deals remains challenging for developers without their own capital to leverage , although the situation has improved from a few years ago .
“ U . S . lenders have mostly walked away from the region but are starting to quietly look back given the strong performance metrics the past 24 months ,” says Kenny Blatt , principal and chief operating officer , hospitality , Caribbean Property Group , New York City . “ A 50 % to 60 % loan-to-value ratio is still what is out there , which means you have to be creative in bridging the gap . For opportunistic investors looking for an eventual exit to realize gains , we still do not see players taking an interest .”
While the Caribbean ’ s hotel performance has improved , it remains far below its prerecession peak due to its reliance on the North American and Western European leisure traveler . “ The Caribbean has been a victim of overbuilding due to the strong performance prior to the downturn , and a lot of the developers were relying on the sale of residential product , and when that portion of these mixed-use projects tanked , sales ground to a halt ,” says Parris Jordan , managing director at HVS Bahamas . “ Any projects that have legs need to survive purely as a hotel . If the development is overly reliant on residential sales , it just won ’ t happen .”
The Caribbean remains littered with abandoned hotel development sites , one of which almost was the region ’ s largest development — the US $ 3.5 billion Baha Mar resort — until the Export-Import Bank of China stepped in to fund the stalled project . The Nassau , Bahamas , resort complex , now set to open in December 2014 , includes the 1,000-room Baha Mar Casino & Hotel , a 700-room Grand Hyatt , a 300- room Mondrian and a 200-room hotel from Rosewood Hotels & Resorts . It is unclear what impact Baha Mar ’ s opening will have on the region ’ s airlift and hotel performance .
“ With the large number of rooms opening at Baha Mar , the Bahamas will require additional airlift , which will possibly bring down airfare as volume increases year-round but also may cause potential losses in airlift to
8 HOTELS October 2013 www . hotelsmag . com