THE CARIBBEAN: Navigating the New World
February 29, 2012By Tracey Smith
In the centuries since Columbus’ first travels to the West Indies, hemispheres have continued to converge along its warm harbors and shores—connecting east to west, north to south—amid the windy elements of time, culture and commerce. In the current economic climate, the timeshare industry now faces rich opportunities as well as challenges for growth within the Caribbean.
The reopening of Bluebeard’s Castle last spring marked yet another milestone in the property’s nearly 350-year history. The strategically situated St. Thomas gem overlooks the colorful capital of Charlotte Amalie, and with it, the even more colorful past of an island and its diverse neighbors in the Caribbean Sea. In the case of Bluebeard’s Castle, under the new management of SPM Resorts, the resort has aggressively sought to reclaim its former shine, being awarded the RCI Silver Crown rating for 2011, the first time in a decade.
Bluebeard’s history mirrors that of the Caribbean at large, its focus metamorphosing from colonial fortification to trade to tourism. As a sector, tourism contributes well over one-third of the region’s GDP, making it the most tourism dependent in the world.
When the economic downturn in the U.S. led many airlines to reduce lift to nearly all destinations, the Caribbean was not exempt. Yet in this challenging environment, timeshare has emerged and surged as an ever more important subset.
“Pre-sold vacations result in relatively high demand for weekly occupancy,” explains Minister Richard Skerritt, sitting chairman of the Caribbean Tourism Organisation and Minister of Tourism & International Transport for St. Kitts and Nevis. “High occupancy is especially welcome in difficult economic conditions, even when expenditure per visitor might be lower than normal.”
Compared to an average hotel occupancy at or below 60 percent, timeshare resorts have maintained an average occupancy around 80 percent. Those affiliated with major hospitality brands often well exceed this average, enjoying the added benefits of efficient reservations systems, extensive online presence and sheer scale. Marriott Vacation Club reports an annual average occupancy of 94% systemwide. “That figure is even higher among our Caribbean resorts, which are always especially popular,” reports Ed Kinney, the company’s vice president of corporate affairs and communications. Despite impressive occupancies, the U.S. real estate market decline has significantly impacted the overall timeshare industry in the Caribbean, for developers and purchasers alike.
“There’s currently less U.S. investment for new projects,” observes Geoff Ballotti, chief executive officer, RCI. “However, there are still strong investments coming from Europe, Latin America and the Caribbean itself.” “Developers are challenged to source consumer financing,” adds David Callaghan, vice president, resort sales and service, Interval International. “Resorts that can self-finance and hold their own paper have a clear advantage in the marketplace.”
To address the heightened need for investment and consumer financing, industry education efforts have ramped up in the Caribbean. “Barbados helped host a two-day timeshare event this year sponsored by Interval International in which experts from around the world were brought in to talk about opportunities in developing timeshare models in the destination,” says Richard Kahn, president of KTCpr.
Still, new development remains largely on hold. Despite success at each of its six share ownership resorts in the Caribbean, Marriott is currently opting for a conservative approach. “There’s nothing on the radar for the Caribbean for next 12-18 months, as we continue to sell down the current pipeline of points,” says Kinney. “We want to become asset-light and reduce current inventory before business expansion, enhancing our shareholder value.”
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