Carib hotel profits deteriorating in recession - researchers
Published: Friday | August 21, 2009
Hotels last year saw a 16 per cent fall in profits, linked to a four per cent decline in visitors.
Revenues also fell 4.5 per cent in 2008, a report by PKF Hospitality Research, has found.
PKF's annual survey, Caribbean Trends in the Hotel Industry, of the hospitality sector also found that steep discounts and special offers were not enough to boost visits and offset the drop in revenue.
Its report released August 10, also predicts that about 50 planned hotel projects will likely be delayed because developers are struggling to get financing.
105 projects
Citing data from a group called Lodging Econometrics, PKF said there are 105 projects comprising 22,136 rooms under development in the Caribbean, 54 of which remain under construction.
"It is suspected that the remaining 51 projects will be delayed until the economic situation improves," PKF said.
It noted that a number of hotels have been forced to close, including the Four Seasons on Great Exuma in the Bahamas.
Those still in operation, in addition to boosting marketing programmes, have been struggling to cut operating costs, even as the cost of doing business continues to rise.
"Utilities and insurance costs remain a major concern for Caribbean hoteliers," said PKF Hospitality in a release on the 2009 report.
"Unfortunately, hotel managers have relatively little control over these costs compared to other hotel operating expenses. In 2008, utilities and insurance expenses increased by 9.1 per cent and 6.3 per cent, respectively."
Labour remains the biggest cost item for hotels, while their tax bills have been relatively low at an average of "0.7 per cent of total revenue in 2008 versus 3.7 per cent for all US hotels."
PKF links the low tax bill to government subsidies or waivers on property and other taxes.
business@gleanerjm.com
CARIBBEAN HOTEL PERFORMANCE
2008 Dollars Per Available Room
| Rooms Revenue | US$55,084 |
| Total Revenue | US$103,143 |
| Departmental | |
| Expenses | US$44,054 |
| Undistributed | |
| Expenses | US$31,067 |
| Mgmt. Fees, | |
| Property Taxes, | |
| Insurance | US$7,216 |
| Net Operating | |
| Income | US$20,807 |
2008 Mix of Revenues Per cent of Source | Total Revenue |
| Rooms | 53.4% |
| Food and | |
| beverage | 26.9% |
| Other Operated | |
| Departments | 14.7% |
| Rentals and | |
| Other Income | 5.0% |
| Total Revenue | 100.0% |
Change In Unit-Level Performance - 2007 to 2008 Performance Measurement | Change |
| Total Revenue | -4.5% |
| Departmental | |
| Expenses | -3.2% |
| Department | |
| Income | -5.4% |
| Undistributed | |
| Expenses | 1.6% |
| Gross Operating | |
| Profit | -13.2% |
| Management | |
| Fees | -15.6% |
| Total Fixed | |
| Charges | 4.2% |
| Net Operating Income | -16.0%
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