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Projects support healthy Caribbean tourism
Hotel & Motel Management / June 16, 1997

By Larry Luxner

From Aruba to St. Vincent and more than 30 islands in between, the Caribbean -- perhaps more than any world region -- is synonymous with tourism. In 1996, the hotel-travel sector accounted for nearly a third of the Caribbean's GNP.

So far this year, most islands are showing impressive increases in stayover tourism arrivals. These include Anguilla (32.9%); Antigua & Barbuda (12.8%); Aruba (2.5%); Barbados (2.2%); Bermuda (17.1%), Grenada (5.1%), St. Kitts-Nevis (4.2%); St. Maarten (46.8%) and the U.S. Virgin Islands (23.3%). Only the Bahamas, Jamaica and St. Lucia reported drops in tourist arrivals.

With that in mind, the Puerto Rico-based Caribbean Hotel Assocation (CHA) hosted its first Caribbean Hotel & Tourism Investment Conference in early April; nearly 400 delegates attended.

"The numbers exceeded our expectations," said John Jefferis, president of the CHA, which represents 1,139 hotels in 35 destinations. "We have succeeded in opening a dialogue with the international investment community. They know that the Caribbean, as individual nations and as a region, is ready to partner with them on projects that promise a good return on investment."

In the Bahamas -- which hosted the CHA meet -- there's no shortage of such projects. Canada's RHK Capital Inc., for instance, will spend $100 million to refurbish the Old British Colonial Hotel in central Nassau. The one million square-foot redevelopment includes a 305-room, five-star luxury hotel, an office complex for banks, 150 luxury seafront condos, 300 apartment units and a marina.

Meanwhile, a subsidiary of Hong Kong's Hutchison Whampoa Ltd. will acquire to government-owned hotels -- the Lucayan Beach Hotel and the Grand Bahama Beach Hotel -- for $100 million. In April, Sun International of South Africa signed an agreement to construct Phase II of the 1.4 million square-foot, $450 million Atlantis hotel complex on Paradise Island -- billed as the world's largest resort outside Las Vegas. In 1996, occupancy for the Atlantis resort was 87%, with an average rate of $157 per night.

And in Bermuda, Renaissance Resorts International has signed up golf legend Jack Nicklaus as part of a controversial $250 million bid to transform an old U.S. military base into a tourist resort.

In Cuba -- the Caribbean's largest country -- hotel investment is constrained by Washington's trade embargo, which forbids most U.S. citizens from traveling to the communist island and prohibits American investment there. Nevertheless, some 1.2 million visitors -- mainly from Spain, France, Canada and Italy -- are expected to visit Cuba this year, leading some observers to wonder whether Cuba can build enough hotel rooms to keep pace with the sudden influx. The government built 4,000 new rooms last year, bringing Cuba's total capacity to 27,000 rooms.

In late March, the Castro regime announced plans to construct 15 new hotels (with more than 6,000 rooms) on Cayo Coco and other keys along the north coast of Ciego de Avila province; most will be joint ventures between government-run Cubanacan and unidentified foreign partners. Yet Carlos Lage, Cuba's economic czar, says hotel construc-tion continues to be plagued by cost overruns, construction delays, poor record-keeping, general disorganization, and bonus payments being made regardless of performance.

One of the Caribbean's leading destinations remains Puerto Rico. In fiscal 1996, tourist arrivals jumped 8% over the previous year, with more than 1.4 million visitors arriving from the U.S. mainland, Europe, South America and other Caribbean islands.

To accommodate them all, more than a dozen new hotel projects have recently opened or are currently under construction. In fact, the government-run Puerto Rico Tourism Co., which fought for passage of the Tourism Incentives and Development Act of 1993 and now administers it, estimates that $680 million worth of hotel projects are under construction or in the review stage. Gov. Pedro Rosselló sees the number of rooms eventually doubling from the present 10,000 to more than 20,000.

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