News for the Hospitality Executive
|September 2, 2010 - A recent article by Parris
Jordan and La Baik of HVS provided interesting data on the apparent low
volume of US-branded hotels in the Caribbean, when compared to the
hospitality scene in North America. The conclusion reached was that
there may be an opportunity for significant growth by brands in the
region in the near future.
At MacLellan&Associates, as the largest hospitality consultancy based in the Caribbean, they take a more cautious view on hotel brand penetration – one that takes into account the relatively long and mixed history of US brands in the Caribbean. While the world’s first hotel management contract was Hilton’s 1948 agreement on Puerto Rico’s Caribe Hilton, and this hotel still operates under that flag today, very few of the numerous Holiday Inn properties built in the region in the 1970s currently operate under that brand. STR data over the last five years would suggest that the highest RevPARs in the Caribbean have been achieved by the top non-branded or soft-branded boutique resorts, rather than major luxury brand properties. In the recent downturn, many of the most spectacular failures and stalled projects among mixed-use resorts in the region have involved the biggest and most prestigious hotel brand names. MacLellan&Associates' consultancy team’s lengthy experience of branded operations in the Caribbean has been similarly mixed, and this leads to some hard questioning when evaluating potential operators and negotiating management contracts on behalf of clients.
Hotel brands are basically selling management and marketing expertise when they enter into a management contract and, therefore, there should be an expectation on the part of the hotel owner that the brand will outperform the best run non-branded hotels of similar style, scale, and standard in a particular location. This is a legitimate requirement to justify the relatively high fees and the fundamentally operator-biased terms and conditions in an average management contract today – even after vigorous negotiation of the performance-related elements. In trying to evaluate the likely performance in the Caribbean of a branded property under management contract, MacLellan&Associates offers a few basic observations.
MacLellan&Associates is a full-service consultancy and appraisals practice, established in 1997, which specializes in the hospitality, tourism, and leisure sectors in the Caribbean. The company is the largest hospitality consultancy based in the region, ensuring that the team has an in-depth knowledge of Caribbean countries. The company’s consultants have extensive international experience at the senior level in operations management, sales and marketing, finance, human resources, tourism development, project management, and valuations.
The consultancy’s assignments over the last thirteen years involve large-scale mixed-use resorts, convention hotels, up-market boutique resorts, eco-style developments, urban area business hotels, marina villages, retirement communities, spa resorts, and golf courses. The company has carried out work in Jamaica, Bahamas, Belize, Honduras, Grand Cayman, Dominican Republic, BVI, Anguilla, St. Kitts&Nevis, Barbados, Antigua&Barbuda, St. Lucia, St. Vincent&the Grenadines, Grenada, Trinidad&Tobago, and Dominica.