Since 2008, HVS Miami has performed consulting engagements in the Stann Creek and Cayo Districts of Belize for various hotel developers, investors, lenders and operators.
The Government of Belize is keen on developing new partnerships and alliances with both local and foreign investors to cultivate investment opportunities within the lodging sector. This commitment coupled with a limited supply of hotel rooms, improving hotel fundamentals, and a dearth of upscale to luxury hotels in the marketplace makes Belize an attractive investment opportunity for hotel developers.
This article provides an overview of the Belizean tourism industry, while taking a closer look at the national lodging market and highlighting specific regions offering the greatest potential for hotel development. Belize Overview
Bordering Guatemala to the south and west, and Mexico to the north, Belize is strategically located at the center of the Americas where North America converges into Central America. With a population estimated at 333,20 residents,1
Belize is the smallest non-island sovereign state in the Americas. Although Kriol (Belizean Creole) and Spanish are spoken among the population, Belize is the only country in Central America where English is the official language. Due to its geographic location and cultural history, Belize is considered to be a Central American nation with strong ties to both the Caribbean and Latin American regions. Belize's Travel and Tourism Industry
Belize is divided into six districts: Corozal, Orange Walk, Belize, Cayo, Stann Creek, and Toledo. While each district offers tourists something distinctive and unique, the common themes influencing travel to Belize are coastal vacationing, jungle wildlife adventure, and the exploration of historic Mayan ruins.
Belize offers visitors a rich and diverse cultural and nature-based tourism destination. Although Belize is a small country, its geography ranges from rich pine forest, lush tropical rainforest, savannah, and mangrove forests to sandy beaches, rivers, streams and lagoons, all of which serve to enhance Belize's reputation as a premier nature and adventure tourism destination, and also lend credence to its slogan as "Mother Nature's Best Kept Secret."2
However, Belize's biggest attraction lies just off the country's shores, comprised of hundreds of small sand islands known locally as cayes, and the world's second largest barrier reef.
Since the early 1990s, Belize has gained recogntion from the international community as a pioneer in the ecotourism sector. An estimated 40 percent of Belize's land is under protected status, limiting tourism-related development to certain coastal and inland areas. Along the coast of Belize, resort and residential development has been concentrated within three locations: on the peninsula of Placencia, the small seaside town of Hopkins, and the main snorkeling and diving destination of San Pedro on Ambergris Caye.
Despite sanctions on real estate development, the Government of Belize recognizes the importance of the tourism industry and recently approved a $13.3 million loan for the Belize Tourism Board, the executing agency for these funds, to administer a national sustainable tourism master plan that will foster economic growth in the tourism sector and improve infrastructure for tourist destinations. Travel and Tourism Trends
Over the past decade, tourism has emerged as an integral pillar of the Belize economy. Tourism expenditures represent about 22% of GDP, and one in every seven jobs is related to or driven by tourism.3
The World Travel & Tourism Council estimates that this sector's relative contribution to GDP will almost double from $4.1 million in 2010 to $8.0 million by 2020.
The following table summarizes some key facts pertaining to Belize's travel and tourism industry.FIGURE 1: FORECAST OF KEY TRAVEL AND TOURISM INDICATORS ($US MILLIONS)
The travel and tourism industry is a significant driver of Belize's economy, and the country's dependence on this sector is anticipated to increase moderately by 2020.
The table on the following page presents a number of key macroeconomic indicators and their estimated impact on Belize's economy through 2020.FIGURE 2: KEY TRAVEL AND TOURISM TRENDS
According to the World Travel & Tourism Council, an estimated 25.9% of total investment in Belize will be allocated to the travel and tourism sector by 2020; this equates to approximately US $137 million.
A growing number of private developers have made significant investments in the coastal areas of Belize, which suggests that the private sector has a certain confidence in the future of the country.
In recent years, foreign demand for vacation and retirement homes spurred a boon in resdiential real estate development in certain resort destinations of Central America, with moderate activity occurring in Belize.
While this trend has slowed in conjunction with the overall healing of the global economy, the Government of Belize has instituted financial incentives to attract private investment for tourism-related projects.Economic and Demographic Review
Based on fieldwork conducted in Belize and our research, we have evaluated various economic and demographic statistics to determine trends in lodging demand. The primary source of demographic statistics used in this article is the Belize Tourism Board (BTB). The data are summarized in the following tables.FIGURE 3: OVERNIGHT VISITOR ARRIVALS
Since 2000, overnight visitor arrivals to Belize have grown modestly at an average annual compounded rate of 2.0%. After a challenging year in 2009 when international travel declined across the globe, total visitation to Belize increased by 2.8% in 2010.
Prior to the global downturn, visitation had registered positive year-over-year growth from 2000 to 2007, but this trend reversed in years 2008 and 2009, when visitation declined by -2.6% and -5.2%, respectively.
Overnight visitor arrivals to Belize are expected to increase as the government continues to pump investment in the country's infrastructure and global marketing efforts start to take hold.
Another important indicator of lodging demand are airport passenger counts. The following table illustrates historical operating statistics for the Philip Goldson International Airport (PGIA), the main port of entry for tourist arrivals to Belize.FIGURE 4: PHILIP GOLDSON INTERNATIONAL AIRPORT STATISTICS
The Philip Goldson International Airport (PGIA) is located just outside of Belize City. PGIA offers both international and regional airlift; regional carriers include Maya IslandAir and Tropic Air. International carriers into Belize include US Airways, American Airlines, Atlantic Airlines, Continental Airlines, Delta Airlines, and Grupo Taca. In addition, the airport accommodates a small number of charters and private flights that fly into the airport every year.
According to the Belize Tourism Board, 78% of all passenger arrivals that fly into PGIA originate from the United States, followed by Canada, which accounts for 5.5% of passenger arrivals. A new international airport is under development in the district of Placenia and is expected to offer charter flights originating from Europe and the United States; however, the PGIA airport will maintain its position as the main port of entry.
The cruise industry in Belize has experienced a recent boom, as the Carnival Corporation finalized an agreement to build a new cruise port in the Port Loyola area of Belize City in May 2010. The estimated cost of the cruise port is US $50 million, and represents Carnival's largest cruise port in the world. The new port is expected to generate more than US $500 million in revenue over the first 20 years of the agreement.
The port of Belize City has experienced robust growth over the illustrated period seen below, with cruise ship arrivals growing by an average annual compounded rate of 11.5%, despite lacking key infrastructure and service training in and around the port zone of Belize City.
The following table illustrates historical cruise ship statistics for Belize City.FIGURE 5: CRUISE SHIP STATISTICS
The Government of Belize has taken concrete steps to upgrade the port zone in Belize City for cruise line arrivals.
Direct government investment has been earmarked for the Fort George tourism area to upgrade tourism infrastructure, create a more diversified and competitve tour operator program, and enhance the aesthetic appearance and image of Belize's cruise tourism business. Profile of Belizean Hotel Supply
The national supply and branding landscape of the Belizean lodging industry consists of roughly 664 properties spanning 6,849 rooms, with a majority of the hotel inventory oriented towards the budget traveler.
The market is undersupplied in the branded hotel category with just one chain-affiliated hotel (Radisson Fort George in Belize City) and one brand-affiliated property (Ka'ana Boutique Resort - Small Luxury Hotels of the World). FIGURE 6: NATIONAL SUPPLY OF HOTELS BY REGION
Budget and economy hotels constitute a significant portion of the hotel inventory, with approximately 75% of all hotels in Belize offering 30 guestrooms rooms or less, according to the Belize Tourism Board.
The following table presents the total supply of hotels and hotel rooms by region.FIGURE 7: NATIONAL SUPPLY OF HOTEL ROOMS BY REGION WITH RANKINGS BASED ON NUMBER OF HOTEL ROOMS
Ambergris Caye, which includes the popular diving and snorkeling destination of San Pedro, contains the largest supply of hotel rooms (1,807 hotel rooms or 26.4% of total rooms supply), followed by the Cayo District (1,001 hotel rooms or 14.6% of total rooms supply), which is recognized for its historic Mayan ruin sites and natural reserves and parks.
It is also important to consider the average room count per hotel.
The following table indicates that the average room count per hotel in Belize amounts to roundly 10 guestrooms. FIGURE 8: MAP OF TOP 4 REGIONS BY NUMBER OF HOTEL ROOMS
Since budget and economy hotels comprise almost 75% of the hotel inventory, national occupancy and average rate figures for the national lodging industry are depressed.
These hotels are generally small in size, between 10 to 20 rooms, and offer little more than a bed and bathroom.
Historically, these hotels have catered to backpackers, adventure tourists, divers and other price-sensitive travelers.
The Belize District offers the largest hotels by room count with an average of 17 guestrooms per hotel, followed by Ambergris Caye and Orange Walk who average 13 guestrooms per hotel each.
In sum, there is a shortage of hotels in Belize that contain more than 30 guestrooms that sufficiently accommodate the needs of a sophisticated international traveler.
Given this fact, we are of the opinion that there is a market opportunity for hotel developers to build an upscale, full-service hotel with more than 30 guestrooms in one of the areas covered in the forthcoming section. FIGURE 9: AVERAGE ROOM COUNT PER HOTEL BY REGION
Improving global economic conditions, low construction costs, and mobilized efforts by the Belizean Government to attract private investment and market the country as a premier international tourist destination are factors that make the present timing opportune for hotel development.Areas Poised for Growth
Given the existing room supply, limited branded hotel inventory, and the government's active role in growing Belize as a tourism destination, it is our opinion that three areas present the greatest opportunity for hotel development: Placencia, Stann Creek, and Belize City.Placencia
Placencia is located on a sixteen-mile peninsula that extends off the southern coast of the Stann Creek District, and is bordered by the Caribbean Sea to the east and by a mangrove-fringed lagoon to the west. Placencia consists of three villages: Maya Beach, Seine Bight and Placencia Village. The most established community, known as the village of Placencia, encompasses the southern tip of the peninsula.
Previously a sleepy fishing village, Placencia has enjoyed increased tourism demand over the last seven years, which has led to some real estate development of large-scale projects, including several master-planned communities, the construction of a Municipal Pier and Promenade that is being funded by the government, a new international airport that is under construction, as well as proposals from investors to develop a new cruise port.
These developments are expected to usher in a new wave of higher-quality construction and design that will substantially improve the competitive standard of existing facilities and Placencia's viability as an international tourism destination. Of the three areas discussed in this section, Placencia is experiencing the most rapid growth in terms of real estate development and increased tourism activity.
We note that the market feasibility of a new hotel development in Placencia will be signifcantly influenced by the completion of the new international airport, which is scheduled to be finished by 2014. We would advise hotel developers to monitor the construction progress of the new airport. Stann Creek
Located within the southern region of Belize, the district of Stann Creek is home to most of the region's major urban communities. Most of these communities are sitauted along the coast, with basic infrastructure supporting the coastal areas. The two largest towns in the district are the coastal towns of Dangriga and Hopkins.
The town of Hopkins features the most hotel and vacation ownership inventory, most of which is positioned towards the upscale market. Overall, Stann Creek has the fifth largest hotel inventory in Belize, which is heavily concentrated along the coast where sea-based pursuits such as snorkeling, diving, fishing and tours of the regional cayes are the main attraction.
Although smaller than other hotel markets discussed in this section, the hotel inventory is relatively diverse ranging from small guest homes (most comparable to a budget hotel or hostel) to small upscale resorts such as Hamanasi. Hopkins benefits from relatively good airlift by virtue of regional air carriers, Maya Island Air and Tropic Air, which offer inexpensive flights to Dangriga.
Visitors can just as easily fly to Dangriga and drive approximately 30 minutes to Hopkins; multiple daily flights are offered from Belize City to Dangriga by the aforementioned air carriers with a total flight time of approximately 20 minutes.
Given the existing room supply and current demand for upscale lodging accommodations throughout the Stann Creek District, it is our opinion that an investment opportunity exists for hotel developers to introduce a first-class, chain-affiliated beach resort that can capitalize on the existing demand for more upscale hotel products in Belize and other Central American desinations, while utilizing the international marketing powers of a global brand, since no chain-affiliated beach resorts currently exist in the country. Belize City
Belize has become a popular cruise desination in the Caribbean, with roundly 765,000 passengers arriving via cruise ships in 2010. However, a lack of investment and infrastructure has deprived Belize City of realizing its full economic potential, including demand for overnight accommodations.
In an effort to realize the real economic benefits of bringing better tourism infrastructure to Belize City, the Government is seeking partnerships with global hotel brands to help redevelop the port zone and local businesses.
Given the Government's emphasis in developing Belze City as one of the Country's central tourism destinations, it is our opinion that an investment package offering government subsidies, tax incentives, and a commitment to regentrifying the surrounding areas could make the development of an upscale, brand-affiliated hotel financially feasible. Conclusion
Increased tourism activity over the last seven years has spawned real estate development primarily in the coastal areas of Placencia, Stann Creek and San Pedro.
The development of these areas has had a positive impact on the quality of the existing infrastructure, airlift capacity, and associated businesses and services throughout Belize even though a majority of the lodging establishments remain relatively small in scale.
Given the current pace of growth and aggressive marketing plan of the Belize government, it is our opinon that Placencia, Stann Creek and Belize City offer the most compelling market opportunities to develop a first-class lodging product that can take advantage of the existing and forecast demand for lodging accommodations.References:1 "Statistical Institute of Belize," Statisticsbelize.org.bz, Retrieved February 2011
2 belizetourism.org, Retrieved February 2011
3 Belize Tourism Board: Action Plan 2010-2012, Belize Tourism Board, January 2011
About the AuthorsTaylor Gray is an Associate with the HVS Miami office, specializing in hotel consulting and valuation. Prior to joining HVS, he served four years in hotel operations with Marriott, Raffles Fairmont International, and the Hotel Bel-Air. Since then he has provided hotel investment advice and conducted valuations, market feasibility studies, franchise selection, asset management and other consultancy assignments throughout Belize and the southeastern United States. Taylor is an Associate Member of the Appraisal Institute and a graduate of Cornell University's School of Hotel Administration.Kathy Conroy is Director-Partner in charge of overseeing operations of the Consulting & Valuation Services office of HVS located in Miami. She has been a designated member of the Appraisal Institute (MAI) for over 25 years, and has performed thousands of hospitality real estate feasibility analyses and valuations. Kathy is a recognized authority in timeshare, fractional, and hospitality mixed-use real estate, and serves as the President of HVS Shared Ownership Services Division, which focuses on consulting and valuation services relative to the above real estate sectors. Kathy is a frequent panelist and/or moderator at hospitality industry conferences. She has published 9 articles and authored 2 books. She also holds a certified general appraiser license and a real estate broker license. www.hvs.com