Zika Virus Linked to Poor Q1 2016 Performance of Hotels in Caribbean

According to STR, the Caribbean hotel industry experienced noticeable performance decreases in Q1 2016 that can in part be linked to the spread of the Zika virus.

Compared with the April year-to-date period of 2015, the Caribbean’s occupancy rates fell 3.0% to 72.9%, ADR was down 1.4% to US$268.86 and RevPAR dropped 4.4% to US$195.99.

“An April survey conducted by Travel Leaders Group showed that 96.1% of American consumers indicated that the Zika virus had not had an impact on their travel plans this year,” said Steve Hennis, STR’s VP for consulting & analytics. “While that sounds positive, the converse would state that 3.9% of Americans did change their travel plans because of the virus. A 3.9% drop in demand would have a fairly noticeable impact on occupancies, and data for the Caribbean hotel industry shows the effects already. Coming off of a strong 2015, and despite a very modest increase in supply, all of the key performance metrics are down.”

According to the Centers for Disease Control and Prevention, Zika virus disease is spread to people primarily through the bite of an infected yellow fever mosquito, or Aedes aegypti.

In the Caribbean:

- 58% of hotels reported an occupancy decline with almost one-fourth of hotels experiencing an occupancy slide of 8% or more;

- 47% of hotels reported an ADR decrease; and

- 56% of hotels reported a RevPAR decrease.

Hennis said that a weakened Canadian dollar and the East Coast blizzard in January bear some of the responsibility for the negative performance thus far in 2016, but the overriding issue appears to be fear over the Zika virus.

“The expectation is that Zika fears will subside and the issue will simply become another part of the travel decision making process,” Hennis said. “Much like concerns about social unrest, terrorism and even bad weather, travelers weigh the risks in the planning process. In the meantime, destinations are taking preventative measures to fight mosquitos and hopefully contain the outbreak. A more permanent solution is in the hands of the scientific research and medical communities who are working diligently to better understand the Zika virus.”

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