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Caribbean hotel performance drops as Zika fears grow

Staff writer |
Concerns surrounding the Zika virus’ impact on the travel industry have taken center stage in recent weeks.

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From warnings about this summer’s Olympic Games in Brazil to Major League Baseball’s decision to move its scheduled series out of Puerto Rico due to Zika fears, the public is watching and worrying.

A survey in April by Travel Leaders Group showed that 96.1% of American consumers indicated that the Zika virus has not affected their travel plans this year.

While that sounds very positive, the converse is that 3.9% of Americans did change their travel plans. A 3.9% drop in demand would have a fairly noticeable impact on occupancies, and data through April for the Caribbean hotel industry shows the effects already.

Coming off a strong 2015, and despite a very modest increase in supply, all of the key performance metrics are down.

With close to half of the Caribbean demand base originating from the United States, we typically do not see such a sharp turn in performance unless the U.S. economy is in decline as well. While U.S. hotel performance through April hasn’t been robust, we continue to see respectable growth.

The disparity in trends prompted a more granular review of Caribbean data, which revealed some startling numbers through the first four months of 2016: 58% of hotels had occupancy declines with almost one quarter of hotels experiencing an occupancy slide of 8% or more; 47% of hotels had ADR declines; and 56% of hotels had RevPAR declines.

It’s important to note that a weakened Canadian dollar and an East Coast blizzard in January also had some negative impact, and the Easter shift usually creates positive lift in March, but the overriding issue dragging down performance appears to be Zika fears.

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