2017 Hurricanes Will Have Moderate Impact on Luxury Lodging

by Richard D'Ambrosio
2017 Hurricanes Will Have Moderate Impact on Luxury Lodging

Photo: Shutterstock.com

A number of Caribbean islands have had their natural fauna and downtown districts heavily damaged by Hurricanes Irma and Maria, but experts say the region’s recent growth in five-star lodging should keep availability and pricing stable for luxury travelers.

“The Caribbean is just coming up to the peak of new luxury hotel supply opening, so there won’t be a big net drop in supply as a result of the damaged and closed hotels,” said Andrew Cohan, managing director of the Miami office of Horwath HTL, a global hospitality advisory firm.

Anguilla, the British Virgin Islands, Dominica, Puerto Rico, St. Barths, St. Maarten, and the U.S. Virgin Islands all took hits to both their natural settings and properties. For example, on St. Barths, Eden Rock will reopen in late 2018, though it is receiving guests at its villas again. The Belmond Cap Juluca on Anguilla, which was closed for renovations is not expected to reopen until mid-2018.

Caribbean luxury hotel occupancy peaked in 2014-15 as a slew of new properties opened. As a result, “after years and years of healthy rate increases, pricing is increasing slightly to flattening in 2017,” so Cohan doesn’t expect the loss of five-star rooms due to the hurricanes to impact rates this winter and into 2018.

“Price increases from last winter season were already starting to hit some resistance because occupancy was down a few points,” he said. “There might be selective opportunities for the best loved resorts that are normally selling out regularly in winter to hike rates a little.”

Still, Cohan and others believe that true luxury consumers will favor islands and other destinations this winter that resemble their expectations for the lush Caribbean experience.

Alternative destinations garnering attention
A few weeks ago, Cohan traveled on business to a luxury property on the Cayman Islands. Sharing a cab to the hotel, a woman down for the weekend with girlfriends described to him how the group had originally booked the Turks & Caicos, but shifted plans to Grand Cayman to enjoy a better overall experience.

Anthony Lassman, co-founder of Nota Bene, a luxury travel service based in London, agreed with Cohan. “The luxury market behaves very differently from other markets. This demographic are super wealthy and this buys freedom of choice without budgetary constraints.”

Lassman and others are already seeing high-end clients moving reservations, or open to looking elsewhere.

“I’ve had two [luxury travel] clients who have redirected their bookings away from islands that were impacted,” said Emily Rawlins, owner of Merriway Travel, Sacramento, Calif. “They called immediately with their concerns.”

“I think luxury travelers are more forgiving and they are being patient during this recovery period. But at the same time, it is about finding a balance, an appropriateness about what they are investing their money in.”

The job right now for travel agents, Cohan said, “is to educate their clients about where the luxury traveler can expect to have the experience they are looking for, but still do good for those islands hurt by the hurricanes by supporting them in getting back on their feet.”

“The Caribbean islands most affected by the hurricanes have seen devastating damage across all classes of hotels,” Lassman said. “Most of the ultra-expensive boutique hotels of St Barths, for example, have been severely damaged with no reopening dates given as yet.” Still, Lassman said, “we see no wholesale evidence of the Caribbean being avoided, but only certain islands work right now.”

If they do choose alternate destinations, Lassman believes some luxury travel customers will choose nearby locales like Mexico, and Central or South America. Further afield, he sees clients looking at Hawaii, Bhutan, or “maybe a safari in Africa; a top resort in the Maldives.”

Cohan sees Riviera Maya, Mexico, Belize and Honduras benefitting as well, as these destinations have been developing higher end resorts and hotels the last few years. He called out the Mayakoba resorts, including Hyatt Hotels’ Andaz, Mayakoba, opened about one year ago, as the type of property that might benefit.

Caribbean will be back soon
Despite the damage, the Caribbean’s strength is its year-round growing season, allowing for the local fauna to return to a normal state faster than many might realize, which will lead the luxury traveler back.

Cohan at Horwath HTL lived in Miami through the devastation of Hurricane Andrew in 1992. He remembered how the region’s tree canopy was heavily damaged. “Everything that had a leaf on it was knocked down or stripped bare. I kept getting lost driving around, because I could see buildings I never knew existed, because the trees had blocked them. But five years later, everything was lush again. That’s one of the benefits of the tropics. Things grow quickly.”

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