Tourism investment community guardedly optimistic

There is a growing feeling that tourism is beginning to turn the corner in the Caribbean, with hotels and investors feeling that better times are ahead.

That’s the feedback from the Caribbean Hotel and Resort Investment Conference, arranged by Burba at the JW Marriott Marquis Miami. Founder Jim Burba outlined the talking points to the Compass.

“The mood at the conference was surprisingly good in the context of the last three to four years. It was not like 2006/07 where all deals were do-able and it was go, go, go, however.

“Delegates told us that RevPAR and performance numbers had turned the corner and were growing and that there would be a higher expectation of more money available. It was the beginning of a turnaround process and you could feel it. Lending is tight but they are prepared to talk,” he said.

The amount of inventory coming online was small, allowing people to catch their breath, he said.

Mr. Burba said real estate is cyclical and hotels are firmly part of that, with a sense of overbuilding prior to the economic slump now equalised to a more realistic situation.

“There’s a sigh of relief, perhaps, that we are not spiralling and things have turned,” he said.

Immediately following the Caribbean conference was an event concentrating on the Latin American market, he said.

“Latin America is positive and seen as more stable than Europe, which has not happened in a long while. The difference in moods last year were perceptibly different but the conferences were closer this time. Latin America was optimistic, but the Caribbean seemed to be getting on its feet more.

“About a third of delegates stayed for both conferences; investors, advisers, brands and people clearly shopping to see what is going on down there,” Mr. Burba said.

Private debt funds

One thing that came out of the investment conference was news that real estate investor the Brilla Group is setting up a debt fund for the Caribbean.

“That is good news; it is a private sector firm raising money to provide debt for the tourism and lodging industry, filling a void. While lenders are coming back, that is not quick enough for some people.

“That is an interesting sign; there is an imbalance of capital and Brilla is going to go out and raise money. There are money sources coming together – these guys are the real deal. The traditional banks are slow in coming forward, so this is a positive sign that the markets are starting to work again,” Mr. Burba said.

He said private sector investors historically were on the equity side and therefore such investors now saw an opportunity to be “on both sides”. The United States, he said, was bouncing back a little more in terms of investment, but Europe was not.

In terms of travel to the Caribbean, Mr. Burba said, he said he had spoken to an economist who said that the disarray in some European markets, such as Spain, would impact on tourism.

“Europe is not dead and gone, for example Germany is still a market that travels, but depending on where you source your market from the impact will be greater,” he said.