KPMG is delighted to present KPMG’s 11th annual Caribbean Hospitality Financing Survey, highlighting lending trends in the region’s hospitality and tourism industry and the outlook for the future of the industry.

Regular readers and subscribers to our survey will recall that last year we expanded our survey beyond banks to also include non-bank capital providers such as equity and mezzanine investors. At the time we stated that our new survey participants “appear to be more optimistic about the future than banks and more bullish about the potential of new markets and new products”.

This more bullish trend has certainly continued this year. Our annual Caribbean Financing Confidence Barometer, which is always one of our very best indicators of prevailing financier sentiment, reveals that non-bank capital providers registered
a “jaw dropping” 8.17 (2014: 7.00) out of 10 in terms of their level of confidence for the next 12 months.

Not to be outdone, financial institutions registered an admittedly more sedate 6.50 (2014: 6:00) out of 10, a confidence level which is nonetheless at the highest level since 2008, representing the sixth year in a row that confidence has grown amongst
banks.

The reasons for the increased confidence levels appear to be numerous but include growth in the US economy, the main feeder market for the Caribbean, improved airlift into the region and a general feeling that those existing operators who have survived the recession are now more robust and well positioned for future growth.

None of the banks surveyed think it’s a perfect time to lend in the Caribbean and
13% actually stated they are currently not interested in lending in the Caribbean. Half of our bank respondents considered lending in the Caribbean to be high risk/high return and that they would need to proceed cautiously.

Non-bank providers again showed more optimism. 17% of them think it is a perfect time to lend in the Caribbean and 50% of them would critique a Caribbean lending opportunity like any other project.

In terms of emerging opportunities, responses were quite literally all over the map with 15 different Caribbean jurisdictions receiving honorable mentions as favoured countries that our respondents would be willing to lend to. Generally banks and non-banks favoured different countries. There are also quite different views on new markets and new ideas such as economic citizenship programs which received strong support and healthy skepticism in equal measure.

So how are we to interpret these findings? Without wishing to be accused of “ducking the issue” the answer would appear to be that it is actually a very unusual financing environment to predict.

Confidence is way up on prior years, there is liquidity in the system but financing is not readily available.

Clearly there remain some obstacles that are still holding back the flow of capital into the region and we explore this challenge in greater detail elsewhere in this publication.

The main Canadian banks, long established in the Caribbean, remain at the core of financing the region’s tourism industry and their current outlook and strategy is very much one of the factors contributing to the current situation.

KPMG would like to take this opportunity to thank, once again, all the contributors to this survey. We very much appreciate your continued support and invite you to
encourage others to participate as obviously the more feedback we receive the more valuable our findings will be.

To read and download the whole report go to: http://www.kpmg.com/BM/en/IssuesAndInsights/ArticlesPublications/Documents/Advisory/2015Documents/2015-Caribbean-Hospitality-Financing-Survey-.pdf