Highlights from CHICOS 2017
Last week, our founder Jennifer Findlay, returned to the island where she began her career in hospitality, to attend CHICOS 2017, held at the Hamilton Princess Bermuda. Hosted by HVS, the conference was a gathering of owners, investors, developers and operators along with leaders from several tourism associations throughout the region. Though the region has obviously suffered some significant setbacks, the overall feeling at the conference was one of great hope, resilience and opportunity. Below we share our selected highlights — stay tuned next week as we further recap some inspirational moments from the various panels on design, luxury and leadership in the 21st century and beyond.
REGIONAL DATA & KEY STATISTICS:
o 32 island nations in the Caribbean
o 39 million people call this region home
o Hospitality & Tourism is the main economic sector for region, totaling $36billion
o The region welcomed 30 million visitors in 2016
2017 – YEAR-TO-DATE
o 67.4% average occupancy
o $127 ADR
o $86 RevPAR
2017 – STORM RECOVERY
o Harvey - 70bn damage
o Irma - 62bn damage
o Maria – 51bn in damage
THE SILVER LINING
o So many island nations have more recently adopted the Miami-Dade building code standards, leading to superior practices and infrastructure that is more resilient than before. As a result, storm recovery time should continue to diminish and islands should be able to get back on their feet quicker than before.
o Recovery is a time for rejuvenation, and for many properties this presents access to CAPEX improvements that otherwise would not have been unavailable. The opportunity presents to emerge stronger than before.
o “We need to take care of the people. The people are taking care of the guest first, then the asset, then their families. They are so resilient, but we need to give back and really do something about this.” Alex Zozaya, CEO @ Apple Leisure Group
o Alex continued, “There is a tremendous opportunity for each island to show the uniqueness and diversity of its culture, geography and people. As industry leaders, we need do more in this manner and the closer the market the more specific the marketing strategy needs to be.”
KEY OBSTACLES TO OVERCOME:
o Puerto Rico for example - 14% of the islands residents have left since Hurricane Maria. Labour is a real concern as talent has been lost and will be difficult to recover.
o Demand for resources is far exceeding supply in this post-hurricane landscape. Prices on drywall and lumber will inevitably increase.
o In many cases, there is nowhere for people to live with some companies building work camps (i.e.: renting boats to house as many as 75 people off-shore).
o Insurance – many are still waiting on payouts while premiums are suspected to spike before they level-out again.
o Airlift is major piece of puzzle to open doors for mid-scale properties - relatively affordable flight prices are needed. As noted by Alex Zozaya, “there is a high dependency on Florida & San Juan for connectivity. There are so many flights reliant on these gateway airports and we need to do a better job diversifying”.
DEVELOPMENT IN THE REGION
o 188,000 rooms under construction
o 222,000 rooms in final planning
o 175,000 rooms in early planning
o 83% of building is in limited-service space
Despite the challenges since the downturn in 2009, growth and recovery has been steady. Zika did have a significant impact on certain island nations, yet what operators learned from the downturn is that even though demand has gone down rate has not. Operators have generally been able to hold rate this time.
According to Andro Nodarse-Leon of Leon-Mayer & Co. “Dealing with an unknown like Zika vs. dealing with consequences of a hurricane, which are in fact more predictable, I actually feel better about risk today than I did one year ago. Also, when looking at the health of the feeder markets, it is positive, and thus can only bode well for more travel to the region. I believe that the Caribbean is getting more and more interesting and that the overall perception is changing. There is a continued up-market trend and this bodes well for both rate and ancillary spend”.
DEVELOPING ON TIME & ON BUDGET
Labour, logistics & politic state are key risk factors that follow funding according to Stephen D’Angelo, CEO and President of DCK Worldwide. “Early involvement is key to set realistic expectations. Overall there is a shortage of General Contractors in the region. Delays cause everyone to be reactionary yet when there is an understanding of what is ultimately causing the delays and this is met with open communication then the necessary changes are made and challenges are more easily overcome”.
Tim Peck, Chairman of OBM International believes it is all about the team that you build around you. “Ensure you know what you know, and know what you don’t know. It is a process of education and ensuring a realistic understanding. As far as the skills of the labour force, designing with this in mind is absolutely key”.
JAMPRO is an Agency of the Government of Jamaica’s Ministry of Economic Growth and Job Creation that promotes business opportunities in export and investment to the local and international private sector. They advise on all modalities of doing business in Jamaica and develop best practices for internal investment. Diane Edwards, President of JAMPRO spoke to the importance of partnering with local project managers and architects as they know the in’s and out’s of the area. Time and approvals are always a factor, with varying levels of bureaucracy in different regions, so local involvement with this knowledge is critical to best expedite the process. Diane cited the example of the newly opened Secrets in Montego Bay, which came in both on-time and under budget, much to do with the strong local project management team.
Check back next Friday for our recap of the various panels on design, luxury and leadership in the 21st century and beyond that were featured at CHICOS 2017.