Caribbean hotels tracked by PKF Hospitality Research (PKF-HR) reported a 10 operating income percent increase in 2011, the region’s largest annual increase in the figure since 2008. In 2011, Caribbean hotels also posted just a 1 percent occupancy increase; a 5.6 percent increase in average daily rate (ADR) and a 6.7 percent increase in revenue per available room (RevPAR) compared with 2010. Last year was also “the first since the recession where the Caribbean’s hotel industry posted positive growth in all three major top-line performance indicators,” said Scott Smith, PKF-HR’s senior vice president.

According to Smith, the Caribbean’s hotel industry faces several unique challenges, including a preponderance of resort properties, which rely more heavily on golf, spa and casino revenue compared with other types of hotels. Regional hoteliers also face higher operating costs, with food and beverage expenses averaging 85.2 percent of revenue versus 70.9 percent at comparable U.S. resorts. Higher utility costs also are a factor, as many Caribbean countries lack the infrastructure to produce low-cost energy. Caribbean utility expenses are 126 percent higher than utility expenses at U.S. properties, according to the PKF-HR report.

Caribbean hotel and tourism operators also are challenged by inadequate airlift, the report found. “The success of upcoming resorts, as well as the ones already in existence, relies on the expansion of the airlines,” said Smith. “With more tourists visiting the region, the Caribbean needs viable transportation for its guests.”

PKF-HR’s findings echo comments made earlier this year by Josef Forstmayr, former president of the Caribbean Hotel & Tourism Association (CHTA), who said the Caribbean region’s “total lack of a comprehensive, user-friendly transportation network” has cost regional destinations more one million visitors between 2006 and 2010.

The PKF-HR report did find some other positive developments for Caribbean hoteliers, including low property taxes “due mainly to government subsidies.” In addition, hotel development has resumed following the cessation of several projects due to insufficient funding in the past three years. There are 135 hotels currently in the Caribbean/Mexican hotel development pipeline, according to a Smith Travel Research (STR) report.  “These new properties are expected to attract more visitors to the region, which will have a positive effect on the Caribbean’s overall economy,” Smith said.