KPMG’s 2011Caribbean HotelBenchmarking       SurveyTravel, Leisure and Tourism              August 2011     KPMG INTERNATI...
1│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
KPMG’s 2011                  Caribbean Hotel             Benchmarking SurveyDear Reader:KPMG’s Caribbean Travel, Leisure a...
OverviewMethodologyKPMG’s Travel, Leisure and Tourism practice in the Caribbean conducted benchmark surveys into theregion...
Profile of survey respondentsProperty type                                                                     Caribbean lo...
Ownership/management structure                                                                                       Indep...
Average number of available rooms                                                  125                                    ...
Primary guest market                                 80%                                 70%                              ...
Benchmarking resultsApproximately two-thirds of participating hotels reported that 2010’s performance did not meet budget....
ADR                                                                                RevPAR      $350                       ...
Despite the uptick in certain key performance indicators, 2010’s profitability was down across the board when compared to20...
OutlookMost hotels in the Survey believe 2011 will be better than 2010 but that meaningful growth will not return until 20...
In an effort to maintain rates and occupancies, nearly 45% of hotels are using revenue enhancement (e.g. up-selling, cross...
Indicators of growth                 Housing market recovery    Increased financial market stability          Improved emp...
ConfidenceBelow we compare the results of respondents’ confidence in the industry against results from last year as reflected...
KPMG’s Caribbean Travel, Leisure andTourism ContactsPlease contact the KPMG firm represented in your country if you have an...
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Caribbean Hotel Benchmark Survey

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Caribbean Hotel Benchmark Survey

  1. 1. KPMG’s 2011Caribbean HotelBenchmarking SurveyTravel, Leisure and Tourism August 2011 KPMG INTERNATIONAL
  2. 2. 1│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  3. 3. KPMG’s 2011 Caribbean Hotel Benchmarking SurveyDear Reader:KPMG’s Caribbean Travel, Leisure and Tourism group ispleased to present the results of the 2011 Caribbean HotelBenchmarking Survey, which has been designed to help owners,operators, lenders and investors better understand the profile andperformance of hotels in the Caribbean.Since releasing our last survey several Caribbean destinationshave begun to show signs of stabilization with increased visitorsand occupancies. However, the hotel industry continues to operatein difficult times with challenges of lower daily rates, falling visitorspend and higher operating costs leading to reduced profitabilityin 2010. Nevertheless, most Survey participants do expect to seesignificant improvement in market conditions over the next 12 to24 months and several are investing in order to capture some ofthis anticipated growth. What is clear, however, is that there are no“quick fix” solutions for the region and improvements will take timeand a lot of hard work and will, in many ways, depend on globaleconomic conditions and developments.We take this opportunity to say a special thank you to our Surveyparticipants (who will also receive a more detailed analysis ofthe financial results separately). We welcome participation fromadditional properties for future surveys.If you have any questions concerning the Survey please contact usor your local KPMG office listed on the back page.Sincerely,Charlene Lewis-Small Gary BroughAssociate Director Managing DirectorKPMG in The Bahamas KPMG in The Turks and Caicos Islands KPMG’s 2011 Caribbean Hotel Benchmarking Survey │2
  4. 4. OverviewMethodologyKPMG’s Travel, Leisure and Tourism practice in the Caribbean conducted benchmark surveys into theregion’s hospitality industry. Financial information for 2009 and 2010 was collected from hotel properties invarious Caribbean jurisdictions.This report is based on the survey data collected. Financial information was analyzed on a consolidatedbasis and is based on a non-weighted average (mean) of the number of properties.Financial information is presented in accordance with the tenth edition of the Uniform System of Accounts forthe Lodging Industry (USALI). Survey responses were reclassified according to USALI where necessary.The Survey responses were not audited.3│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  5. 5. Profile of survey respondentsProperty type Caribbean location Limited Other French-speaking service 4% All inclusive 4% 4% 11% Dutch-speaking 11% Select service 22% Spanish-speaking 18% English-speaking Full service 67% 59%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. KPMG’s 2011 Caribbean Hotel Benchmarking Survey │4
  6. 6. Ownership/management structure Independent Part of privately operator with owned chain franchise 8% 4% Managed by international chain 36% Independent operator without franchise 52%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.Hotel size 400 or over rooms 200-399 7% rooms 7% 75-199 Under 75 rooms rooms 30% 56%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.5│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  7. 7. Average number of available rooms 125 124 123 122 121 120 2009 2010Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.Average number of full time employees 166 165 164 Number of employees 163 162 161 160 2009 2010Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. KPMG’s 2011 Caribbean Hotel Benchmarking Survey │6
  8. 8. Primary guest market 80% 70% 60% 50% 40% 30% 20% 10% 0% USA UK Canada Europe OtherSource: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.Rating Primary guest segment Corporate/ business 5 star 3 star 17% 29% 29% Leisure/ 4 star independent 42% 83%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.7│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  9. 9. Benchmarking resultsApproximately two-thirds of participating hotels reported that 2010’s performance did not meet budget.How did 2010’s performance compare to budget? 60% 50% 40% 30% 20% 10% 0% Much worsethan Somewhatworse Much worse than Somewhat worse Same as Same as Somewhat better Much better than Somewhat better Much better than expected expected than expected than expected expected expected than expected than expected expected expectedSource: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.The 3% increase in RevPAR includes the combined effect of a 1% dip in ADR against a 4%increase in occupancy.Occupancy 65% 64% 63% 62% 61% 60% 59% 58% 57% 56% 55% 2009 2010 1Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. KPMG’s 2011 Caribbean Hotel Benchmarking Survey │8
  10. 10. ADR RevPAR $350 $215 $345 $210 $340 US$US$ $335 $205 $330 $325 $200 2009 2010 2009 2010 Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. 9│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  11. 11. Despite the uptick in certain key performance indicators, 2010’s profitability was down across the board when compared to2009, largely because of:■ a decrease in guest expenditure on discretionary/incidental items■ increases in expenses related to other operated departments, utilities, management fees and fixed costsOn average, reporting hotels posted positive income before fixed charges but negative net operating income. Neverthelessboth the average room and full-time employee counts held steady over the period.Profitability (as % of total revenue) 50% 45% 40% 35% Departmental income 30% 25% Gross operating profit 20% Income before fixed charges 15% Net operating income/(loss) 10% 5% 0% (5)% 2009 2010Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. KPMG’s 2011 Caribbean Hotel Benchmarking Survey │10
  12. 12. OutlookMost hotels in the Survey believe 2011 will be better than 2010 but that meaningful growth will not return until 2012 or 2013.Will 2011’s performance be better than 2010’s? 70% 60% 50% 40% 30% 20% 10% 0% 1 = not very 2 3 = moderately 4 5 = very optimistic optimistic optimisticSource: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.When will growth return? 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2012 2013 2014 2015 or beyondSource: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.11│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  13. 13. In an effort to maintain rates and occupancies, nearly 45% of hotels are using revenue enhancement (e.g. up-selling, cross-selling, improving reservation systems, etc.) as their primary performance improvement tool for 2011, followed by cost cuttingmeasures at just over 20%.Primary performance improvement tool for 2011 No measures to be taken Room rate discounting Rate obscuring Increased marketing Cost cutting Revenue enhancement 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.Slow economic recovery, particularly in the main source markets for visitors, is seen as the primary hindrance to a rebound inthe Caribbean tourism industry. As such, nearly half of the hotels surveyed believe that a turnaround in the economy will bethe main indicator of a return to growth.Challenges to growth Increased destination costs Reduced airlift Increased travel costs Increased hotel operating costs Fragile global economic recovery 0% 10% 20% 30% 40% 50%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. KPMG’s 2011 Caribbean Hotel Benchmarking Survey │12
  14. 14. Indicators of growth Housing market recovery Increased financial market stability Improved employment numbers Improved consumer confidence Stronger general economic recovery 0% 10% 20% 30% 40% 50%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.Given the difficult operating climate over the last few years, an overwhelming majority of reporting hotels do not believethere is enough regional government leadership to make the changes they think are needed within the tourism industry.Specific concerns noted include the lack of investment in the industry by some jurisdictions and the general cost andavailability of airlift.Are regional governments showing sufficient tourism leadership? Yes Unsure 4% 18% No 78%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey.13│KPMG’s 2011 Caribbean Hotel Benchmarking Survey
  15. 15. ConfidenceBelow we compare the results of respondents’ confidence in the industry against results from last year as reflected inour 2010 Caribbean Hotel Benchmarking Survey:Caribbean hotel confidence barometer 5 What hotels are saying: “Growth is visible again” “Must focus on improving our competitive Confidence level (1 bearish – 5 bullish) 4 3.52 advantage – people and culture” “Signs are positive but seen false 3 2.77 dawns before” “The sky is not the limit, only we can limit our skies!” 2 “Our destination’s brand has lost its lustre” 1 “Until governments fully appreciate the importance of the sector, not just in direct 0 Oct 10 May 11 employment and construction, but the ancillary services suchSource: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. as accounting and insurance, their policies will never address the core problemsDespite the drop in confidence, more than 40% of in the sector”hotels indicated that they intend to expand within thenext 18 months, using a variety of funding sources:How will expansion plans be funded? Debt/equity New equity hybrid 17% 17% Operational cash flow 33% New or refinanced debt 33%Source: KPMG International, KPMG’s 2011 Caribbean Hotel Benchmarking Survey. KPMG’s 2011 Caribbean Hotel Benchmarking Survey │14
  16. 16. KPMG’s Caribbean Travel, Leisure andTourism ContactsPlease contact the KPMG firm represented in your country if you have any questions. KPMG firmsare represented in more than 20 countries in the Caribbean region, and have a specific knowledgeand understanding of the business, cultural, economic and political facets of conducting businessin each country.Anguilla, St Kitts and Nevis Cayman Islands St LuciaClaudel Romney Kris Beighton Frank Myers1 264 497 5500 1 345 914 4392 1 758 453 1471cvromney@kpmg.ai krisbeighton@kpmg.ky fvmyers@kpmg.lcAntigua, Dominica Dominican Republic St Vincent and theCleveland Seaforth Doris M. Brea Grenadines, Grenada1 268 462 8868 1 809 412 5999 Brian Glasgowcseaforth@kpmg.ag dorisbrea@kpmg.com 1 784 456 2669 brianglasgow@kpmg.vcBahamas Dutch Caribbean, Cuba andCharlene Lewis-Small Suriname Trinidad and Tobago1 242 393 2007 Henk de Zeeuw Raoul Johnclewis@kpmg.com.bs 599 9 7325156 1 868 623 1081 dezeeuw.henk@kpmg.an raouljohn@kpmg.co.ttBarbadosLisa Taylor Jamaica Turks and Caicos1 246 434 3900 Patricia Dailey-Smith Gary Broughlisataylor@kpmg.bb 1 876 922 6640 1 649 946 4613 podailey-smith@kpmg.com.jm gbrough@kpmg.tcBermudaStephen Woodward Puerto Rico, US Virgin Islands1 441 294 2675 Miguel Ventastephenwoodward@kpmg.bm 1 787 622 6190 mventa@kpmg.comBritish Virgin IslandsRussell Crumpler1 284 494 1134russellcrumpler@kpmg.vgThe information contained herein is of a general nature and is not intendedto address the circumstances of any particular individual or entity. Althoughwe endeavor to provide accurate and timely information, there can be noguarantee that such information is accurate as of the date it is receivedor that it will continue to be accurate in the future. No one should act onsuch information without appropriate professional advice after a thoroughexamination of the particular situation.© 2011 KPMG International Cooperative (“KPMG International”), aSwiss entity. Member firms of the KPMG network of independent firmsare affiliated with KPMG International. KPMG International provides noclient services. No member firm has any authority to obligate or bindKPMG International or any other member firm vis-à-vis third parties, nordoes KPMG International have any such authority to obligate or bind anymember firm. All rights reserved.The KPMG name, logo and “cutting through complexity” are registeredtrademarks or trademarks of KPMG International.

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