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ATLANTA-The economic recession in the US has spread to leisure assets in the Caribbean, as vacationers shun plane rides, preferring instead to motor to destinations closer to home. And much like their counterparts in the US, hoteliers in the region are dramatically slashing rates to boost occupancy. However, a May report from Smith Travel Research indicates such moves are having little impact on revenues. Between May 2008 and May of this year, RevPAR in the Caribbean fell from $149.92 to $114.26, a plunge of 23.8%. Similarly, ADRs took a 17.4% dive, declining from $205.86 to $170.13.
Scott Smith, a locally based senior vice president at PKF Consulting Inc., recently did a study of the Caribbean hotel industry. He found that in 2008, the average hotel in the region registered a 16% decline in its bottom-line profits versus 2007. Hotel managers did manage to achieve a 1.1% reduction in operating expenses; nevertheless, that cutback failed to offset the 4.5% decrease in total revenue.
Although he has yet to compile stats for this year, he holds little hope for a quick turnaround in 2009. “Unfortunately, it’s going to be a lot worse,” Smith says. He notes that his study took into account only traditional hotels, not all-inclusive resorts. “I suspect that those types of properties have been hit as bad, maybe not from an occupancy, but from a rate standpoint.”
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