CARIBBEAN TRENDS

®

SA M

PL E

IN THE HOTEL INDUSTRY 2016

Caribbean Trends® in the Hotel Industry

2016

Table of Contents Maps Map of the Caribbean Region

5

Caribbean Hotel Industry Notables

6

Caribbean Hospitality Industry Updates 8

Zika

9

30 Million Arrivals Barrier

10

Caribbean Financial Troubles

11

New Hotels and Mergers

12

Summary Caribbean Market Trends Tables Tourist Arrivals by Month

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Cuba

13 15

Tourist Arrivals by Main Market

16

Cruise Passenger Arrivals

17

Tourist (Stop-Over) Arrivals and Cruise Passenger Visits

18

Hotel Operating Trends A Note to the Reader

20

Summary Operating Statements

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All Caribbean Hotels

22

Hotels with ADR Less Than $160

23

Hotels with ADR Between $160-$300

24

Hotels with ADR Between $300-$600

25

Hotels with ADR Greater Than $600

26

Hotels with Less Than 150 Rooms

27

Hotels with Between 150-300 Rooms

28

Hotels with Between 300-500 Rooms

29

Hotels with More Than 500 Rooms

30

Luxury Chain Segment

31

Upper Upscale Chain Segment

32

Upscale and Upper Midscale Chain Segment

33

Caribbean and U.S. Resort Comparison Notes on Caribbean Resorts

35

Comparable Resorts – U.S. Dollars per Available Room/Year

36

Comparable Resorts – Revenue & Expense Ratio Comparison

37

3

Caribbean Trends® in the Hotel Industry

2016

Supplemental Data Puerto Rico Hotels

39

Caribbean vs. U.S. Labor Costs

40

Caribbean Spa Operations

41

CBRE Hotels 43

CBRE Hotels Locations

44

CBRE Hotels Regional Leadership in North America

45 46

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CBRE Hotels Other Services

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About CBRE Hotels

4

Caribbean Trends® in the Hotel Industry New Hotels and Mergers: Investment in the Caribbean stagnated during the financial crisis, but capital investment in the hospitality and tourism industries have rebounded to close to pre-recession levels. There were three properties sold in 2015 accounting for over $200 million in sales revenue.

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The Baha Mar Resort in the Bahamas was initially scheduled to open in 2014, however the construction was halted when the developer filed for bankruptcy before construction was completed. In May 2016, the hotel construction was at a standstill with developers unsure when the project would resume construction. It is believed it could be 2018 or later before Baha Mar makes a meaningful contribution to the economy. This according to Standard & Poor’s, which lowered its Bahamas rating to BBB- and warned it could be heading for junk credit ratings. The Bahamas originally thought the resort could produce up to 12% of their GDP once completed, but numerous setbacks in construction have placed the entire economy at risk. Four Seasons will assume management of the Viceroy Anguilla resort in 2016, which is owned by Starwood Capital Group. Following the Resort's annual closure from August to October, the property will reopen as Four Seasons Resort and Private Residences Anguilla. The Four Seasons Resort and Private Residences Anguilla will be the second resort in the company's Caribbean collection of hotels. Anguilla will also see the opening of The Reef Hotel in November 2016. The hotel will feature 80 suites, a fitness center, a library, two tennis courts, and a boutique along with two dining options for guests.

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Also opening in November 2016 is the Bahia Principe resort in the Dominican Republic. This resort will feature 500 rooms, two pools, five restaurants, six bars, Wi-Fi access, a disco, and a children’s water park and is to be the 14th property in the company’s Dominican portfolio. The property will also include access to the Luxury Bahia Principe Esmeralda and Luxury Bahia Principe Ambar resorts, both of which are adultsonly properties. There is also a new hotel on St Barth’s scheduled to open on October 1, 2016: Le Barthelemy. It will feature 46 rooms and suites, a Michelin starred chef operating two dining options, décor by Hermes, and a spa with La Mer products. Highest level luxury will be the standard for the resort on this exclusive island.

The pipeline information for the Caribbean shows growth in the supply of all strata of hotels over the next year. Upscale hotels have the largest growth with 6,535 rooms under contract to add to 78,810 rooms already in existence. Within the region, the largest hotel category is unaffiliated hotels accounting for 334,724 rooms (56%) in the Caribbean and Mexico. The majority of the hotels in the region scheduled to open this year and next are all-inclusive resort hotels which appeal to American tourists more than European style a la carte hotels.

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2016

Caribbean Trends® in the Hotel Industry

2016

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year Total

8,683

7,667

5,797

5,055

7,532

5,663

1,564

2,841

5,963

8,314

73,232

Antigua & Barbuda *

23,637

24,808

26,048

23,564

18,513

16,845

21,359

16,660

12,153

16,920

21,616

28,327

250,450

Aruba

100,914

89,991

103,506

99,604

87,691

87,447

109,251

111,471

97,263

109,024

110,307

118,466

1,224,935

Bahamas † Barbados †

100,729

122,144

168,160

146,617

130,474

141,065

164,375

126,547

74,092

82,933

91,144

123,528

1,471,808

Belize †

56,125 30,858

57,789 31,753

57,385 39,136

51,716 27,569

40,993 24,707

39,687 29,187

53,964 30,967

42,927 23,874

32,153 14,242

41,688 18,945

52,987 29,909

64,458 39,977

591,872 341,124

Bermuda * British Virgin Islands Cayman Islands

6,772 38,356 34,395

8,177 40,839 35,769

14,019 48,392 45,476

18,729 36,889 36,017

24,534 34,700 29,265

28,711 32,640 32,573

30,815 38,509 37,798

26,813 21,024 28,971

18,851 11,562 15,205

18,117 19,114 20,240

13,199 29,140 29,777

11,072 41,853 39,893

219,809 393,018 385,379

Cuba Curacao Dominica † Dominican Republic * Grenada † Guyana Haiti Jamaica Martinique Montserrat Puerto Rico ** St. Lucia St. Kitts and Nevis

370,830 42,430 6,495 482,982 14,876 14,001 38,985 176,621 45,902 621 156,723 31,541 12,153

361,652 39,550 7,986 478,780 10,641 13,965 39,386 177,805 50,546 537 161,641 32,083 10,412

404,439 39,533 6,214 537,640 12,506 18,464 48,046 212,134 53,510 1,114 178,560 34,595 10,809

330,476 36,215 5,551 461,962 11,308 20,126 39,612 189,903 48,985 578 159,988 31,200 9,854

237,270 33,629 7,097 416,984 8,969 12,371 38,689 168,347 35,491 599 147,272 29,658 9,066

218,636 30,043 5,563 480,415 11,113 14,562 50,670 182,364 29,115 579 153,699 26,347 8,633

266,721 36,363 9,252 568,323 14,200 22,954 68,502 220,662 40,775 841 159,345 32,481 9,609

240,214 39,925 7,675 465,806 15,703 21,728 48,182 169,063 52,520 661 143,652 27,822

193,471 39,970 3,763 329,482 7,867 15,187 34,330 114,280 25,659 404 97,527 17,468

226,749 41,620 4,611 370,480 9,623 15,183 31,552 134,317 26,736 571 122,758 23,745

292,176 42,480 3,890 423,252 10,328 15705 30,414 158450 28,316 573 138,641 25821

382,145 46,684 6,377 583,753 13,601 22573 47,400 219096 49,809 1866 166,757 32147

3,524,779 468,442 74,474 5,599,859 140,735 206,819 515,768 2,123,042 487,364 8,944 1,786,563 344,908

St. Maarten * St. Vincent & the G’dines

48,379

50,456

54,308

49,185

39,088

36,029

40,685

39,464

24,323

33,727

41,015

48,592

505,251

5,269

5,008

6,137

7,654

6,080

3,953

4,391

5,864

10,367

75,381

20,148 36,090 37,633 73,371 2,015,826

20,020 32,614 29,650 69,169 1,737,665

17,845 34,661 32,258 69,479 1,821,358

27,840 42,041 35,525 71,699 2,170,042

25,942 37,125 33,358 55,804 1,834,674

13,502 29,164 15,078 31,274 1,273,787

13,585 30,678 19,625 40,139 1,479,912

12,138 34,480 27,319 52,517 1,727,421

43,315

205,680 439,749

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TOURIST ARRIVALS BY MONTH 2015 Jan Feb Country Anguilla 6,758 7,395

6,972

6,176

7,510

Suriname Trinidad and Tobago Turks and Caicos U S Virgin Islands Total

18,185 35,448 38,377 73,800 2,013,865

17,533 48,000 35,912 72,094 2,033,820

18,942 36,133 41,690 84,055 2,311,007

*Non-Resident Air Arrivals

**Non-Resident Hotel registrations only

39,627 386,052 75,657 769,058 2,265,654 22,685,031

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† Preliminary Figures

Note: Figures are subject to revision by reporting countries Source - Caribbean Tourism Organization

•

In 2015, total tourist arrivals for the Caribbean increased by 5.5 percent over 2014.

•

The winter months of March and December continue to draw in the most arrivals while July leads in the summer months.

•

October experienced the highest growth percentage with 11.7 percent.

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Caribbean Trends® in the Hotel Industry

2016

SUMMARY OPERATING STATEMENT All Caribbean Properties Year End 2015 % Change Ratio to Per Available Per Occupied in USD from 2014** Revenue Room/Year Room/Day Revenues $ 19,791,598

3.8%

55.9%

$

67,779 $

258.94

Food & Beverage

$

9,997,903

5.2%

28.3%

$

34,239 $

130.81

Other Operated Departments

$

4,401,752

3.3%

12.4%

$

15,074 $

57.59

Miscellaneous Income

$

1,199,243

167.2%

3.4%

$

4,107 $

15.69

$ 35,390,496

6.0%

100.0%

$

121,200 $

463.03

$

4,623,868

5.9%

23.4%

$

15,835 $

60.50

$

7,644,261

9.2%

76.5%

$

26,179 $

100.01

$

2,992,060

2.7%

68.0%

$

10,247 $

39.15

$ 15,260,189

7.0%

43.1%

$

52,261 $

199.66

$ 20,130,307

5.3%

56.9%

$

68,939 $

263.38

Total Operating Revenue Departmental Expenses* Rooms Food & Beverage Other Operated Departments Total Departmental Expenses Total Departmental Income Undistributed Operating Expenses Administrative and General Information and Telecommunications Systems Sales and Marketing Property Operation and Maintenance Utilities

$

3,369,293

3.3%

9.5%

$

11,539 $

44.08

$

356,760

37.9%

1.0%

$

1,222 $

4.67

$

2,418,149

9.2%

6.8%

$

8,281 $

31.64

$

1,759,702

4.3%

5.0%

$

6,026 $

23.02

$

2,115,267

-16.1%

6.0%

$

7,244 $

27.68

$ 10,019,171

0.8%

28.3%

$

34,312 $

131.09

Gross Operating Profit

$ 10,111,136

10.2%

28.6%

$

34,627 $

132.29

Management Fees

$

1,332,910

9.4%

3.8%

$

4,565 $

17.44

Income Before Non-Operating Income and Expenses

$

8,778,226

10.3%

24.8%

$

30,062 $

114.85

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Total Undistributed Expenses

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Rooms

Non-Operating Income and Expenses Income

$

(32,147)

-

-0.1%

$

(110) $

(0.42)

Rent

$

483,185

-2.8%

1.4%

$

1,655 $

6.32

Property and Other Taxes

$

119,489

-2.5%

0.3%

$

409 $

1.56

Insurance

$

822,900

-5.2%

2.3%

$

2,818 $

10.77

Other

$

237,532

-

0.7%

$

813 $

3.11

Total Non-Operating Income and Expenses

$

1,630,959

8.4%

4.6%

$

5,585 $

21.34

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

$

7,147,267

10.8%

20.2%

$

24,477 $

93.51

REVPAR

$

2015 185.50

Change 3.5%

ADR

$

258.94

2.6%

71.6%

0.9%

* Ratio to Revenue column is percent of corresponding Departmental Revenue

** Taken from a sub-sample of properties that reported data for both 2014 and 2015

Average Units Available Per Day

292

Average Units Available For Year

106,690

Average Paid Units Occupied For Year

76,432

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Occupancy

Caribbean Trends® in the Hotel Industry

2016

CARIBBEAN AND UNITED STATES COMPARABLE RESORTS U.S. Dollars Per Available Room/Year Caribbean

% change from 2014

United States

% change from 2014

Difference in Variance USD Percent

Revenues $

67,929

4.6%

$

65,326

3.0%

$

2,603

4.0%

Food & Beverage

$

35,491

6.7%

$

48,430

8.3%

$

(12,939)

26.7%

Other Operated Departments

$

15,912

1.5%

$

21,255

5.6%

$

(5,343)

25.1%

Rentals and Other Income

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Rooms

$

4,531

176.3%

$

4,950

89.1%

$

(419)

8.5%

$

123,863

6.8%

$

139,961

6.8%

$

(16,098)

11.5%

$

16,026

6.5%

$

16,216

8.0%

$

(190)

1.2%

$

27,792

10.2%

$

34,195

6.2%

$

(6,403)

18.7%

$

11,013

1.9%

$

12,996

5.5%

$

(1,983)

15.3%

$

54,831

7.4%

$

63,407

6.6%

$

(8,576)

13.5%

$

69,032

6.4%

$

76,554

7.0%

$

(7,522)

9.8%

$

11,543

3.4%

$

11,289

4.2%

$

254

2.2%

$

1,295

36.3%

$

1,928

37.9%

$

(633)

32.8%

Sales and Marketing (including Franchise Fees)

$

8,760

9.7%

$

8,989

7.4%

$

(229)

2.5%

Property Operation and Maintenance

$

6,254

4.4%

Total Revenue Departmental Expenses* Rooms Food & Beverage Other Operated Departments Total Departmental Expenses Total Departmental Income Undistributed Operating Expenses Administrative and General Information and Telecommunication Systems

6,426

2.3%

$

(172)

2.7%

$

7,558

-16.1%

$

4,034

-7.9%

$

3,524

87.4%

Total Undistributed Expenses

$

35,410

0.9%

$

32,666

4.1%

$

2,744

8.4%

Gross Operating Profit

$

33,622

12.7%

$

43,888

9.0%

$

(10,266)

23.4%

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$

Utilities

Management Fees

$

4,506

12.7%

$

3,469

8.4%

$

1,037

29.9%

Income Before Fixed Charges

$

29,116

12.7%

$

40,419

9.0%

$

(11,303)

28.0%

$

(135)

$

-

Fixed Charges Income Rent

$

1,999

-3.3%

$

272

-17.4%

Property and Other Taxes

$

405

-19.3%

$

2,786

10.4%

$

(2,381)

85.5%

Insurance

$

3,098

-5.9%

$

1,471

-5.0%

$

1,627

110.6%

Other

$

742

$

1,002

Total Fixed Charges

$

3,750

4.1%

$

5,531

24.4%

$

(1,781)

32.2%

Net Operating Income**

$

24,113

15.2%

$

34,888

5.5%

$

(10,775)

30.9%

* Ratio to Rrevenue column is percent of corresponding Departmental Revenue ** Before deduction for rent.

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Caribbean Trends® in the Hotel Industry

2016

Labor Cost Data: Caribbean and United States Comparison The following graphs and table compare labor costs for Caribbean hotels to similar expense ratios at U.S. properties

Labor Costs

42.8%

45.0%

37.5%

35.0% 30.0%

29.4%

25.0% 20.0% 15.0% 10.0% 5.0% 0%

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40.0%

31.5%

Caribbean

% Of Revenue

% Of Expenses

United States

Note: Total Labor Costs are the sum of Salaries and Wages and Payroll Related Expenses.

Employee Benefits 45.0%

41.9%

40.8%

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40.0% 35.0% 30.0%

29.6%

29.5%

25.0%

20.0% 15.0% 10.0% 5.0% 0%

Caribbean

% of Total Labor

United States % of Salaries and Wages

Note: This chart represents employee benefits as a percentage of total labor cost and total salaries and wages.

CHANGE IN LABOR COSTS: 2014 - 2015

Caribbean Salaries, Wages, Service Charges, Contracted Labor, and Bonuses 7.1% Payroll-Related Expenses 3.0% Total Labor Costs 3.7% Note: Percentage changes are only for properties that reported both 2014 and 2015 data.

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United States 5.2% 3.0% 4.6%