Big Profits For The Caribbean Hotels

Despite high operating costs, the profitability of Caribbean hotels continues to be high, according to a recently released study.

The study, which was conducted by PKF Consulting, and based on financial statements from 35 hotels across the region, including properties in Antigua, Aruba, Bahamas, Jamaica and the British Virgin Islands, revealed that in 2005, Caribbean hotels earned an average of US $111,414 per available room, representing a profit of US $25,541 per room.

In comparing the figures to a set of similar properties in the United States, the study reported that while the average room earnings of Caribbean hotels was lower than that for the U.S. – which stood at US$125,200 ­ the Caribbean’s profit margin of 22.9 % was higher than the U.S. profit margin of 20.4 %.

Robert Mandelbaum, PKF’s director of reseach and information services, told the Caribbean Media Corporation that profitability could be attributed to tremendous growth in Caribbean travel, with the overall strength of the United States economy bringing good fortune to hotel owners in the region.

However, he said limited natural resources and high food import and energy bills were impacting on hotel’s balance sheets.

“There are some obstacles to operating a property in the region in terms of getting in products and services and the availability of labour, but the Caribbean is such a popular destination with more airlift and more competitive prices, that despite the operational challenges, the increased demand is offsetting the high operational costs,” Mandelbaum added.

In a breakdown of operating expenses, the PKF reported that hoteliers in the larger islands benefited from the availability of an abundance of low-wage labour on larger islands, but said hoteliers on several smaller islands were discovering that they had less control over labour expenses due to prevailing market conditions.


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