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January 20, 2009
  • Time to prepare for future growth
  • De Marchena on the challenges
  • Update on Westin Roco Ki
  • Late but not canceling
  • Weddings to continue strong
Time to prepare for future growth
During his opening address to the Caribbean Marketplace held in St. Lucia, Colin Hunte, president of the St. Lucia Tourist and Hotel Association, challenged 1,366 attendees from 20 countries to cooperate more at local and regional levels to maximize opportunities through creativity and inventiveness. He urged the region to tap into its best asset - "its people, those back at home and those abroad".
A total of 871 suppliers received 298 buyers in St. Lucia for the region's most important travel booking event, Caribbean Marketplace. Attendance was slightly down from last year, attributed in part to travel buyer consolidations, shortage of flights into St. Lucia and to a lesser extent, the economic crisis.
This was the first time the event was held in the Eastern Caribbean. A 65,000 square foot tent hosted the delegates' meetings. "The industry has demonstrated the ability to recover," said Hunt in his comments during the opening ceremony. He said that nearly 900 million people traveled in 2008 and there are expectations that a similar number would do so this year.
The PM Stephenson King of St. Lucia spoke of cautious optimism, while stating that the event represented a "coming of age for St. Lucia." The challenges were there as the conference was affected by Internet router overload when organizers and Digicel, the local telecom company did not anticipate the high level of demand for the service from the start.
Senator Allen Chastanet spoke of challenges ahead for the region in dealing with consumer and investment confidence, value, taxes, competitiveness, employment, linkages, the exchange rate, and "the Obama factor". He said that the region is living through times of uncharted waters but more than ever these are times to enhance the environment, community relations and value. "We need to be better leaders, form better relations with the people we work with and focus on improving our cost structures," he said.
Chastanet says, "More than ever before we need to stop measuring success by percentage change, and measure by what our potential is. Let us prepare for growth when it comes back, so that we may be the first in line," he stressed.
De Marchena on the challenges
Enrique de Marchena, president of the Caribbean Hotel & Tourism Association, in St Lucia addressed the challenges ahead and lessons from the global financial crisis to be learned for the Caribbean and the Dominican tourism industry.
"Projects that did not have a large level of leverage will continue," he said, commenting on how this is shown in the local Grupo Vicini opening of major investments at the Port of Sans Souci in Santo Domingo.
Michael Head of St. Kitts commented that even projects such as the Mandarin Oriental in St. Kitts are on hold. "Hotels and banks don't go together these days," he says.
In the DR, operators Four Seasons (La Romana), Ritz Carlton (Cap Cana, yet to be started) and Westin (Roco Ki) have delayed construction and opening due to difficulties in securing financing. But within the past two months the Fernandez government has been present at start of construction of three new mega projects, Vista Cana, Punta Perla and Nuevo La Romana.
De Marchena is cautious about projects starting out in these difficult times. He said it is time to "separate what is illusion and what is reality."
"These are days when only hard work is going to make a difference," says De Marchena. He stressed that a record number of booths, 406 at Marketplace 2009 is evidence the private sector is willing to go the extra mile. This is up from 397 in 2008 and 371 in 2007.
Referring to the DR, he said to look to the case of St. Lucia where the government is banking on building on its present "simply beautiful" campaign, and will only be changing its logo to the Pitons, to be more authentic. They will maintain their present emphasis on boutique hotels, the ecological component and give better use to their advertising dollar. He criticized the DR Ministry of Tourism announcement that it planned to launch a whole new campaign.
"One of the lessons learned at Marketplace is that a time of crisis is not a time to change campaigns. You can confuse the consumer," he said.
De Marchena said the DR's big achievement in recent years was to have diversified markets, to reduce dependence on any particular market. "We can have the luxury of having an attractive offer over the wide range of 3 to 5 star properties. He highlighted the way in which investors have used 158-01 to create complementary offers.
On the issue of real estate developments, he said that those that are best prepared would survive. "Others that came with the wave, will leave with the wave," he predicted.
He said the DR is no newcomer to slowdowns. He said in 2001, many 3-star hotels that were not competitive didn't make it and were pushed out of business.
Now from his vantage point of overview of the Caribbean after his first months as president of CHTA, he comments that hotel infrastructure in the DR is excellent, at least on a par with some of the best in the Caribbean. "Where we are lacking is in public infrastructure, that is lagging behind". Furthermore, he says the greatest challenge to the country is the deficient electricity service.
On the downside, he says there is still a generalized feeling that regional governments do not yet understand the importance of tourism for their countries, despite the fact that it represents 20 to 70% of GDP. "Neither do they understand the magnitude of the crisis, and pretend it will not impact them," he commented.
In his own words at the opening ceremony, De Marchena set the tone. "Working together we can overcome challenges and create new opportunities to remain the number one warm weather destination in the world."
Update on Westin Roco Ki
Graeme Davis, vice president for Caribbean operations has announced that Westin Roco Ki is now scheduled for opening in time for winter 2009-2010. "We are shooting for late this year or the first quarter of next year at the latest," he said during Marketplace in St Lucia. "The reasons for the delay are financial; we are ready to go in when the owners are," he said, explaining Westin's role as an operator. He described the property as "long-awaited."
He announced that the property would be one of the first internationally-branded non-all-inclusive properties in the country with attractions like the Nick Faldo Legacy course with its signature 16th hole, and whales visible 100 yards offshore on a 2,500 acre development. The good news though is that the golf course is already in operation, booking tee times to the general public as of 15 December.
"Westin has stepped up its presence in the Caribbean following 2001 and 9/11 when corporations saw advantages in the proximity, safety factor to move resources to expand in the Caribbean". He admitted that the Caribbean "has been an area lacking a footprint, but that the demand from North American travelers for experiences in warm climates made the Caribbean 'a natural for us'." He said that nine years ago, the company only had three or four properties in the Caribbean. The chain now operates 11 hotels in the Caribbean, has five under construction and eight under development in brands from Westin, Sheraton, Sheraton 4 Points, W and St. Regis. Starwood Caribbean includes properties in Aruba, Nassau, St. John, St. Martin, Grand Cayman, Puerto Rico and Cancun. As in the case of the new Dominican venture, Davis said that the projects under construction "are moving at a slower pace than we expected to be, but they are still making pace for opening in the next 12 months."
"The Caribbean is one of the focal areas of growth for our company over the past eight years. In addition to the Roco Ki, Starwood has a W Retreat & Spa under construction in Vieques, Puerto Rico, which will be the first W in the Caribbean, and the Westin Le Paradis at St. Lucia, and the Sheraton Puerto Rico Convention Center Hotel & Casino.
He said that while the condo-hotel market "is being challenged" on real estate sales, he expected that in the long term the mixed use environment would be able to maintain itself with the right programming of hotels and events targeted to draw guests to the hotels.
Graeme Davis says that overall the luxury segment is the fastest growing, but at the same time "everyone's looking for value today."
Starwood operates 950 hotels worldwide in 60 countries.
Late but not canceling
New trends have developed as travelers respond to the uncertainty the present global financial crisis has brought to travel. Consumers are more likely to postpone travel decisions, rather than cancel their decision to travel outright, according to delegates at the Marketplace St. Lucia event, the leading travel booking annual event of the Caribbean.
This is affecting all segments of the market. "What we are seeing is a trend towards late bookings," confirms Leandro Cruz, director of sales for Casa de Campo. He says that at Marketplace companies were still taking reservations for the winter across the different market segments. Casa de Campo says the pinch is being felt in reservations for their villa accommodations.
Rachel Goldrick, brand marketer for Travel Counsellors in the UK says one of the new trends the global financial crisis has brought is that travelers, instead of booking six to nine months in advance, will book three months before travel time. She commented that tour operator bookings began to decline in 2007 when people began building their own packages and using the second homes of friends and family.
Zulma I Diaz of Normandie Hotel in Puerto Rico says the lull in the economy has brought back the rate wars. The late decisions for booking also means tour operators are pressuring properties to offer discounts, making these times when hotels need to get a grip on their own costs.
Could the time have come for real time inventory in hotel rooms? Hugh Riley, in charge of marketing at CHTA, explains that consumer behavior is behind it all, as consumers wait for that last minute price drop. "Booking windows are shrinking," he says.
Willem Jonckheer, a Caribbean Hotel & Tourism Association vice president, feels that Curacao is riding out the crisis based on its diversification. He says they saw occupancy levels of 80% thanks to the combination of having strong Venezuelan and South American markets in parallel to their European and North American clientele.
Jeff Malamut, president of Kingsway Tours out of Brooklyn, New York warned there were signs that now the Russian market may be softening. He explained that the lowering of petroleum prices would bring more problems for Russians, compared to those being experienced in the US.
Duane Kenny, general manager of a small boutique hotel in Tobago said the lull in US tourists was definitely hurting the market.
Bill Glegg, regional vice president for Choice Hotels International feels that the more upscale destinations have been more resilient. He says the company that always has marketed its non-all inclusive properties as good value, but now has gone ahead to offer a 20% discount to wade out the crisis days. However, their properties in Turks and Caicos and Cayman Islands are not feeling the downturn as much as their larger properties in Bahamas. On the contrary, he says they have gained when consumers have switched to their affordable properties so they can still afford to come down to their preferred beaches in those islands.
There is good news. Sally Parker, publisher for BMI Publications in the UK says the Caribbean could benefit from the decline in value of the British pound to the Euro. She says that a beer that cost 8-9 dollars now costs 12 dollars in Europe. "People will be put off with travel to Europe, and the Caribbean may become popular once again," she commented. She observed, one undeniable fact. "The British will never stop traveling; weather is so terrible you have to go somewhere else."
Weddings to continue strong
Carol Johnson, publisher of Destination Weddings & Honeymoons is bearish on the weddings category. She says that weddings are a recession-proof category. "In tough times people tend to bond together. Weddings unite households". She said that the Kiplinger Report is predicting 100,000 more weddings this year. She commented that post-9/11 there was a surge in weddings. "People can say no to a vacation, but they will go on vacation if a family or friend invites them to a wedding."
Among new trends, she said they are seeing a lot of "weddingmoons," where people go away to get married and honeymoon, and then return and have a big party at home to save costs. She forecast the DR would continue to do well.
She highlights the fact that in these cost-conscious times people are looking more into destination weddings for cost savings. "Some weddings are free, guests pay for their meals, and people can spend more time with family and friends," she stressed. She says that the benefit for the hotel is that they get customers for life.
She praised the DR for being an easy to get to destination, with many flights and attractive fares. "The DR is perceived as value for money. It is poised to prosper, for that matter how to get on the consumer short-list will be the issue," she commented.
Wedding Report says that Americans will spend US$61.4 billion on weddings. But spending per wedding is down as people seek to cut costs. According to the report, while US$28,000 was spent on a wedding on average in 2007, in 2008 reflecting the economic troubles, wedding spending was down to US$21,000, a 24% decline. Nevertheless, the report says weddings will remain consistent through 2013. In 2009 weddings are forecast to increase to 2.2 million in the US, up from 2.21 in 2008. Growth for 2013 is forecast to reach 2.24 million.
Johnson says that since weddings are planned well in advance, the effects should not be felt yet. "The fact is that milestone occasions will take place, regardless of whether the economy is perceived to be good or bad," she explains.

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