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2021 Caribbean Hospitality Financing Survey

Sep 15, 2021

Baker Tilly, Turks and Caicos Islands recently launched its eagerly awaited 2021 Baker Tilly Caribbean Hospitality Financing Survey.

The results of the survey include several positive references to the Turks and Caicos Islands. For example, banks, private equity funds, family offices and developers all named TCI as the country in the region which they are most confident about in terms of providing financing to tourism projects.

The last 18 months have clearly been an extraordinarily difficult period for the region’s tourism industry. Whilst many stakeholders in the industry may have their own instinctive feel as to how the pandemic has impacted financiers’ current perspective of Caribbean tourism projects, Baker Tilly’s survey is the first of its kind that is able to give a definitive view on such matters based on comprehensive data provided directly by banks, private equity funds, family offices, and developers pursuant to an extensive survey exercise.

It is very encouraging for the region that many of the survey findings reflect signs of positivity and optimism amongst the financing community.

The main messages coming out of the Baker Tilly survey include, but are not restricted to, the following:

  • Some 60% of respondents state that COVID has unquestionably been the biggest threat to tourism in their lifetime.
  • The confidence level of the non-bank community, being private equity funds, family offices, and developers, is more than double the level pre-pandemic.
  • All non-banks anticipate making new investments in Caribbean tourism-related projects in the next 12 months.
  • A major contributor to these confidence levels is a perceived real estate boom which two-thirds of respondents believe will last for at least a year.
  • The real estate boom is partly fueled by High-Net-Worth individuals who are contemplating an investment in the Caribbean as part of a Plan B or Plan C in the event of further COVID outbreaks or similar pandemics.
  • Private villas, serviced by established resort management companies or on a “stand-alone” basis, represent a rapidly growing market segment creating an entire ecosystem of jobs
  • Most respondents believe it will be at least late 2022 before tourism numbers return to pre-COVID levels.
  • A couple of cautionary notes. Approximately half of respondents believe it is becoming more difficult to conduct business in the Caribbean and some 20% of banks anticipate that more than 10% of their tourism industry clients will go out of business within the next 12 months
  • The sentiment is very much one of excitement and optimism exemplified by the following quote when respondents were asked what fills them most with optimism about the future “The fact that the industry survives something like COVID against all odds.”

Gary Brough, Managing Director of Baker Tilly, Turks and Caicos Islands, who is leading Baker Tilly’s tourism initiatives in the Caribbean said “The survey findings certainly corroborate what we are seeing in the marketplace but even we were quite surprised at just how high the confidence levels of the financing community are and the extent of financiers commitment to making investments in the regions tourism industry over the next 12 months. This certainly represents good news for our regional economies particularly given that the Caribbean is the most tourism-dependent region in the world.

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Gary Brough
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