Dominican Republic and Jamaica leads in regional hotel construction

Dominican Republic and Jamaica leads in regional hotel construction

US hotel performance growth forecast to fall below 1%

Friday, November 22, 2019

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The Dominican Republic and Jamaica came out as the top performers in the growth in hotel construction in the Caribbean region, according to a newly-released report from hotel analytics firm, STR.

The Dominican Republic is the top performer with 5,738 rooms in construction, a 7.9 per cent increase compared to 2018. This is followed by Jamaica, which reported 1,925 rooms in construction.
This represents a 7.7 per cent increase for Jamaica followed by Cuba, which had 1,128 rooms in construction, a 1.7 per cent increase.

The report from STR, which provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors, shows that hotel construction continues to grow in the wider Caribbean-Mexico region.

In that region there were a total of 151 hotel projects comprising 30,809 rooms as of October this year, which represents a 16.8 per cent jump compared to the same period in 2018.

Most of the new rooms being constructed fall in the category of luxury with 7,270 followed closely by the upscale segment, which accounted for 7,221 rooms. The upper scale segment was next with 6,341 rooms
According to STR, the luxury segment showed the largest increase compared to 2018, a jump of 10.6 per cent.

In the wider Caribbean-Mexico region, four countries in the region reports more than 1,000 rooms under construction.

Mexico led with 16,303 rooms, followed by the Dominican Republic, Jamaica and Cuba.


In the meantime, growth projections for US hotel revenue per available room (RevPAR) have been downgraded to less than 1.0 per cent for 2019 and 2020. This is based on the latest 2019 forecast revision by hotel analytics firm, STR and Tourism Economics.

The previous version of the US hotel forecast released in August this year called for RevPAR increases of 1.6 per cent in 2019 and 1.1 per cent for 2021. With occupancy at flat to slightly lower levels year over year, average daily rate (ADR) has been the sole driver of growth in RevPAR, the industry standard performance metric.

STR President Amanda Hite points out that, “US hotels have posted nine-straight years with RevPAR increases of basically 3 per cent or higher, so growth levels below 1 per cent will clearly represent the industry’s worst years since the recession.”

She explains, “the major factor in our revisions continues to be a lack of pricing confidence. Supply growth is coming in ahead of demand growth a bit sooner than expected, so occupancy levels are slightly lower than projected.”

According to Hite, “the major difference is with ADR, where the analytics firms downgraded by 80 basis points for 2019 and 60 basis points for 2020. ADR has grown below the level of inflation for five-consecutive quarters.”

Fourteen of the top 25 US tourism markets are forecasted for a decrease in RevPAR for the year. The steepest declines are projected for Seattle, Washington, and New York, New York.

Of the 11 key markets projected to report RevPAR growth, four are expected to post an increase of 3 per cent or higher. They are Atlanta, Georgia; Denver, Colorado; Phoenix, Arizona and San Francisco/San Mateo, California.

— Durrant Pate

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