ULI Southeast Florida / Caribbean Announces New Chair Scott MacLaren
ULI Southeast Florida / Caribbean names Scott MacLaren of Stiles as the district's new chair.
In June, key Caribbean hospitality lenders, investors, and operators provided insights on the region’s hospitality recovery outlook at our second Caribbean Roundtable: Coming Back to the Caribbean webinar.
In a discussion led by Adam Greenfader, ULI Southeast Florida/Caribbean’s Chair of Caribbean Engagement, speakers Christian Charre – SVP, CBRE Hotels; Alejandro Zozaya – Executive Chairman, Apple Leisure Group; Nicholas Hecker – Executive Managing Director, Sculptor Capital Management; and Chris Cylke – COO, Revpar International discussed current market trends, shared insights from their sectors, and provided forecasts for recovery and reopening.
Nick Hecker: The Caribbean is still seeing much more capital in the market than in the recession of 2008, but it is biforcated. Large public issuers have a much easier time attracting capital than single-asset owners, which is the majority of the Caribbean hospitality market.
Investors are taking a cautious approach, working from a 5-years-to-return model. Current investment is focused on the major historic markets with significant airlift.
Christian Charre: Transactions are still taking place, since there is still a significant amount of capital available. However, we are seeing discounts of roughly 30% – 35% on most deals. Cash is king right now, and transactions are happening quickly – predominantly quick, 30-day max., no contingency deals.
Alejandro Zozaya: Recovery will vary significantly within the Caribbean, depending on which countries provide the majority of the market’s tourism. The islands that rely on European markets will likely have a more difficult time. Although we hope to see recovery by Summer 20201, without a vaccine, we could see a worse Q1 in 2021 than we saw this year.
Christian Charre: It will likely take until 2023 for us to get back to the 2019 record high levels of 31.5 million travelers to the Caribbean.
Chris Cylke: The Caribbean region is better poised than similar global tourism destinations from an operational standpoint with its long history of hurricane recovery and reopening.
Nick Hecker: Small scale and single-property owners make up a large percentage of the Caribbean’s hospitality industry, and these owners are having a significantly more difficult time attracting the capital they need than larger owners.
Christian Charre: Helping these small-scale owners find rescue capital should be a big priority so that these assets can remain locally-owned.
Alejandro Zozaya: Each country has distinct reopening and operating protocols, which creates confusion and uncertainty among travelers to the region. We need to develop a strategic agreement to unify protocols throughout the Caribbean so that travelers know what to expect and can feel safer about travel to the region as a whole.
Then we as distinct islands and operators need to refocus our marketing away from competitive advantage statements (Stay with us because we are the best and the safest), because this gives the impression that certain areas are less safe, which decreases the region’s appeal as a whole to the potential traveler. Instead we should all be focused on marketing one consistent message: the Caribbean is open and safe and we are all following the same protocols. If we’re lucky, this will get us to a point where we see tourism recovery to about 50% of our usual numbers. At that point, we’ll be able to return to our competitive approach, but that will only happen if we are able to unify to create enough confidence in people to travel.
Chris Cylke: Caribbean hotels and resorts rely on large corporate events for a large portion of their revenue. Retooling and refocusing away from corporate events will be crucial to recovery. Right now we are tailoring to high-end travelers, but this will not be enough to sustain the industry going forward.