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Premium Prices
According to the ARDA International Foundation’s 2014
State of the
Industry
report, island resorts had among the highest average sales
price per interval in 2013 (US$26,495), second only to urban resorts
(US$26,777), and well above the industry average of US$20,460. They
also had the highest maintenance fees, averaging US$922 compared
with US$845 for all resorts.
The higher prices reflect both high demand and the high cost of
operations. “Energy costs in the Caribbean are about 35 cents per kilo-
watt hour,” says Matt Cooper, chief marketing officer of the Caribbean
Hotel & Tourism Association (CHTA). To put that in perspective, Miami,
Florida, area households paid an average of 11.8 cents per kilowatt
hour in January 2015. Hawaiian resorts also pay high utility bills, with
rates on Maui reaching as much as 50 cents per kilowatt hour.
“Resorts must take a comprehensive approach,” Cooper says. “It’s
possible to cut costs by 10 to 30 percent, and doing so will also appeal
to guests who appreciate environmental sensitivity.”
Hyatt Ka’anapali Beach, which opened in December 2013, fits the
bill. Its sustainability features meet LEED certification requirements,
including a solar thermal-assisted hot water system, high-efficiency air-
conditioning units with an energy management system, low-flow
kitchen and bath fixtures, and other sustainability features.
Islands likely to be affected by hurricanes will have higher insurance
costs, and it’s also just more expensive to maintain an island property.
“The resorts are exposed to extreme conditions, such as heat and salt,”
says Ed Kinney, global vice president of corporate affairs and communi-
cation for Marriott Vacations Worldwide. “You also have to be prepared
with contingency plans for water and sewage, should power not be
available.”
Getting There
“There’s no way of accessing the Caribbean except by air or sea, so
resolving aviation and maritime issues is of primary importance to
policymakers,” Riley says. “In no region are the issues of air trans-
portation for international and intraregional travel more challenging
than the Caribbean, with its high dependency on tourism.”
Taxes also play a role. “On many islands, government fees can
double the price of a ticket,” says Frank Comito, CEO and director gen-
eral of CHTA. With tourism a main economic driver for island
economies, governments look to that sector to fill their coffers.
And it’s not just the islands themselves. The U.K., for example,
had increased its Air Passenger Duty (APD) by up to 160
percent since it was introduced 20 years ago, and six times
in the last six years. APD had been based on the mileage
between the destination country’s capital and London, so the
Caribbean was especially disadvantaged due to its distance. The CTO
led advocacy on behalf of the Caribbean for lowering the duty, Riley
says. Now, all long-haul flights will fall within the same fee bracket,
resulting in cheaper U.K. flights to the Caribbean.
Destination advocacy groups often work with governments and the
airlines to improve airlift to their destinations. The CTO, for example,
has an aviation task force to encourage, champion, and inform the
facilitation of air transportation into and throughout the Caribbean.
For timeshare marketers, the high prices often mean tourists are
qualified to purchase simply by virtue of being there. Explains Larry
Shulman, chief sales and marketing officer for Hyatt Vacation Ownership
(HVO), “Airfare to Hawaii is expensive. If you have a family of four, that’s a
significant financial commitment. You’re looking at a good customer.”
The luxury segment has been less affected by the 2008 downturn.
“I don’t think the price of travel has a large impact on our business,”
says Paolo LoCastro, general sales manager for Oyster Bay Resort on
St. Maarten in the Caribbean. “We’re active in the St. Maarten
Timeshare Association to make the cost of airlift more affordable
because it impacts tourists’ discretionary spending once they’re here.
It affects our restaurants and shops, but it doesn’t keep people from
visiting the island.”
Timeshare owners find ways to cope. Shulman reports that some
customers at HVO’s new Maui property are purchasing two biennial
weeks, so they can come every two years but stay two weeks. At
Paradise Beach Villas on the island of Aruba, many owners have dis-
covered that the savings from flying midweek for their Saturday check-
in can pay for a hotel stay of a few days.
Expanding the Market
The Caribbean and Hawaii are both heavily dependent on U.S. tourism,
but expanding the visitor pool can help resorts and destinations to
even out demand. In Aruba, Andy Osbourne, president of the Aruba
Timeshare Association, has found that the Latin American market is a
good source of rental business during the early winter months when
other visitor counts are lower.
“Government and tourism boards need to market collaboratively
for their destinations,” CHTA’s Comito says. “The world is our competi-
tion.” To effectively promote the region, the Caribbean Tourism
Development Company (CTDC), which is jointly owned by CTO and the
CHTA, focuses on business development and worldwide marketing of
the Caribbean, and its “Life Needs the Caribbean” campaign supple-
ments marketing efforts across the region. The campaign’s vibrant,
multihued Caribbean logo has become widely recognized.
To reduce its dependence on North American markets, Hawaii’s
Tourism Authority launched an initiative to increase tourism from Asia
and Oceania, which has resulted in improved airlift. According to a
2013 report, new air service from Taiwan in the spring of 2013 con-
tributed to a doubling of visitors from there. Expanded air service from
Oceania led to a jump in arrivals of 30.2 percent.
Staffing Up
The difficulty of finding hospitality and sales staff will also vary according
to location. Shulman was pleased to find that Maui had a plethora of
sales talent. LoCastro has trained his own staff. “There wasn’t a signifi-
cant pool of experienced timeshare salespeople on St. Maarten, but we
have had a great deal of success training local men and women to
become successful and professional salespeople,” he says.
This is another area where the industry has made progress by work-
ing together. The CTO Scholarship Foundation annually awards grants to
aid in the education of Caribbean nationals who have exemplary acade-
mic achievement and leadership skills. The CHTA’s Education
Foundation also offers scholarships and special assistance for the edu-
cation of Caribbean tourism industry personnel and students. The CHTA
foundation boosts awareness of career opportunities in the industry.
In Aruba, the local association has plans to work with high schools
and colleges to encourage young people to join the industry. “We want
to explain the wonderful opportunities at our resorts for people from
our own island,” Osbourne says. “This is a natural area for us to work
together.”
See page 2 for currency conversions.
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