The average Caribbean hotel that participated a new survey from US-based hospitality advisory firm PKF Consulting USA LLC enjoyed a 10.9% increase in net operating income in 2012.
Results were compiled in the firm´s newly released 2013 edition of Caribbean Trends in the Hotel Industry.
According to PKF, this is the second year in a row that Caribbean hotels have experienced a double-digit increase in NOI and the highest annual growth in profits that Caribbean hotels have seen since 2008.
The Caribbean hotel industry is made up of a large number of resort properties, which creates the opportunity to earn profits from a variety of services and amenities.
Properties in the Caribbean Trends sample reported the highest level of revenue growth (+6.4%) in other operated departments, meaning that visitors to the Caribbean are spending more money on extra amenities, such as golf courses, casinos and spas.
Unfortunately, Caribbean hotels have higher operating costs than comparable US properties. For example, in 2012, the average Caribbean hotel incurred 20.1% greater food and beverage expenses than the average US hotel.
This is attributable to the fact that importing the necessary food, equipment and supplies to the region is very costly, the firm said. Utilities continue to be a large expense in the Caribbean, as well. Many Caribbean nations lack the infrastructure to produce cost-efficient energy, and this is clearly reflected in the report.
Utilities grew by 5.0% from last year and are 164.8% higher than the cost of utilities in comparable U.S. properties. Off-setting these relatively high costs are the lower labor expense ratios in the Caribbean.
The growth in profits is attracting developers. Accordingly, there has been much development activity in the Caribbean. As reported in Smith Travel Research´s June 2013 Construction Pipeline Report, there are 17,932 rooms either under construction or planned for development in the region. In addition, several hotels are undergoing major renovations and improvements.
While Caribbean hotel performance is showing improvement, the additional supply of hotel rooms could hinder the pace of recovery. In 2012, occupancy levels at the properties that participate in the PKFC Caribbean Trends survey grew by 4.2% while average daily rates increased by only 0.9%.
According to PKFC´s Caribbean Trends report, airlift continues to be a major consideration for the Caribbean hotel industry. Local hoteliers always have stressed the importance of reliable and stable airlift to the region, and in light of recent developments, such as the upcoming opening of Baha Mar and increasing levels of occupancy in the region, this has become even more important.
The overall outlook in the Caribbean is a positive one, with occupancy, ADR and profits all increasing.
Find out more at www.pkfc.com.