Caribbean Resort Development Scene- Flat or Recovering?

With two weeks to go before the annual Caribbean Hotel and Tourism Investment Conference in San Juan, it may still seem optimistic to believe that the Caribbean resort development scene has already bottomed out and is now in recovery mode, but that is the belief of Robert MacLellan who has a long and specialist track record in the region. MacLellan is Managing Director of MacLellan & Associates, the largest Caribbean based hospitality consultancy.

In explaining the reasons for his view, MacLellan said, “While much of our work in 2009 consisted of appraisals on stalled projects, expert witness assignments involving project legal disputes and advising banks on exit strategies for distressed projects, 2010 has turned the corner and the majority of our assignments are now development consultancy oriented.” While he would not divulge confidential details, he confirmed that the company was currently working on six resort projects and that he expected the majority of these to break ground this year. According to MacLellan, two of the projects are located on Dominican Republic’s North Coast, two in the Grenadines, one in Dominica and one in Anguilla – some will be operated under management contract by international boutique brands. He went on to say that in order to cope with the increased workload the company had expanded the consultancy team to fourteen persons and now includes a project finance expert, a specialist hospitality industry lawyer and a marina consultant.

MacLellan compared the impact on the Caribbean of the recent world-wide recession to the region’s challenges in the aftermath of the 9/11 disaster and said, “We had to modify the business models for mixed use resort development in 2001 to ensure that projects could proceed then and we have made similar changes now to allow projects to progress. Marketing and construction phasing is now more sensitive, real estate marketing must reach a wider range of potential target countries in a cost effective manner and project financing requires higher levels of both equity and debt than structures employed during the boom years.”

Commenting on present difficulties, MacLellan stated that many of the semi completed but distressed projects in the Caribbean could be mired in legal disputes for periods of up to five years, based on past history in the region, and that real estate sales on these projects were obviously blighted in those circumstances until the courts ruled on all outstanding matters. He also highlighted challenges in producing accurate valuations in current market conditions, saying, “Appraisals of existing properties and development sites across the Caribbean have always been challenging, given the shortage of accurate deal data for comparable transactions, but today specialist expertise in the hospitality industry and in depth regional knowledge is an absolute prerequisite to even commence the exercise with hopes of a meaningful result.”

BACKGROUND INFORMATION

Robert MacLellan is a Fellow of the Institute of Hospitality and a member of the International Society of Hospitality Consultants – an elite invitation-only group of specialists world-wide. He has a Masters Degree in International Hotel Management from University of Surrey, where he majored in hotel design and development. In a diverse 35 year career in the hospitality industry, MacLellan gained his operations experience with major international hotel chains and cruise lines, working in UK, Spain, the Caribbean, North and South America and the Middle East. He worked for consultancy practices in Florida and London prior to holding three positions at Vice President and Managing Director level in London based property and hospitality companies.

MacLellan & Associates is a specialist consultancy and valuations practice, founded in 1997, which serves the hospitality, tourism and leisure sectors in the Caribbean. The company’s consultants, based in St Lucia, Miami, St Maarten, Trinidad, Antigua and London, have extensive international experience at senior levels in operations management, sales and marketing, human resources, tourism development, project management and valuations. In St Lucia the company lists among its clients the award winning resorts, the Landings and Cap Maison, as well as The Tides at Sugar Beach which Viceroy Hotels will launch in the Fall this year .