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Dominican Republic’s tourism industry has been rocked to its core in 2019, following the high-profile deaths of at least 10 U.S. citizens that prompted a downward spiral in the number of visitors to the Caribbean destination this summer amid safety concerns from consumers.
Global hospitality brands, however, haven’t lost sight of the opportunity at hand in the country, particularly in the all-inclusive space. The growing hotel category represents an untapped revenue stream for many hospitality giants.
Marriott International, the Four Seasons, and Palace Resorts are among the many hospitality companies that remain committed to opening new all-inclusive resorts in the Dominican Republic by 2022. Even more immediate are the debuts of new resorts from the likes of Hyatt and Hilton.
Virginia-based Playa Hotels & Resorts, owner and manager of all-inclusive properties across the Caribbean and Mexico, will be responsible for operating both chains’ first all-inclusive offerings in the country, set to open in Punta Cana and La Romana by year’s end.
“Brands have a desire to have a major presence in the Caribbean and Mexico, not just the Dominican Republic. But you have to be in all-inclusive to be successful,” Kevin Froemming, Playa Hotels & Resorts’ executive vice president and chief commercial officer, told Skift in an interview. “The economics of all-inclusive works so well in these markets because you have an engaged labor force and the area is sensitized to tourism.”
Playa Hotels invested $80 million into renovating rooms at existing properties to rebrand under the Hilton umbrella, according to Froemming. Hyatt’s new Ziva and Zilara resorts were just the opposite — constructed from the ground up by the management company for $200 million.
Playa Hotels will significantly add to its portfolio in the Dominican Republic with its new additions. The company’s lone hotel in the country, the Sanctuary Cap Cana, endured up to a 40 percent loss in business after flight cancellations from travelers nervous about food and beverage and safety practices, Froemming said.
And while hotel companies normally ratchet up the marketing budget ahead of a new property launch, Playa Hotels was forced to pull back on advertising on Hyatt and Hilton’s new resorts, following numerous media reports, CEO Bruce Wardinski said last month.
“It will be a slower opening than usual, which is unfortunate for us and for investors,” he said during a Sept. 12 panel discussion on the state of Dominican tourism at the Four Seasons hotel in midtown. Wardinski also acknowledged that Playa Hotels has already reached out to Hilton and Hyatt to encourage their combined 120 million-plus loyalty members to stay at the new properties.
“We will market the resort, but we can’t compete against the news,” he said. “Do you think that Hyatt, Hilton or Playa Hotels would invest hundreds of millions of dollars in a location we would not feel incredibly secure in? Absolutely not.”
In an email, Hyatt Vice President of Global Brands Steven Dominguez, added, “Hyatt Ziva Cap Cana and Hyatt Zilara Cap Cana plan to implement numerous security measures, including manned entry gates, closed-circuit monitored security cameras, and 24-hour security personnel. Additionally, hotel colleagues will participate in mandatory ongoing trainings designed to reinforce safety protocols.”
Hilton, with already 1,200 rooms available in the Dominican Republic, opened its latest Homewood Suite hotel in the capital of Santo Domingo this week, doubling down on its commitment to growing its market presence in the country, according to Juan Corvinos, vice president of development, Caribbean and Latin America.
“Reports on the ground suggest our properties have seen an increase in questions from guests, including from group managers, but we have not seen a dramatic impact on business and growth plans,” he said.
While Hilton does not have any immediate plans to open another all-inclusive in the Dominican Republic, Corvinos added that the Hilton La Romana is a welcomed addition to Hilton’s portfolio and the chain looks forward to continuing its all-inclusive growth in the region with Playa Hotels.
Damage Already Done
Dominican officials present at the tourism panel in September were quick to point out that the damage from “sensationalized” media reports on tourist deaths in the nation this year has already been done.
That despite 5,000 rooms currently under construction across the country, representing a $1 billion investment and a vote of confidence for the Dominican Republic as an ascending tourist destination, according to Rafael Blanco Tejera, first vice president of the National Dominican Hotel & Restaurant Association (ASONAHORES).
Addressing public food safety concerns last month, Tejera said government officials are working to improve safety standards around food and beverage, but did not go into specifics.
“Most hotels are audited by international firms including for food and beverage,” said Tejera. “However, to improve confidence we are going to start verifying all international audits.”
The Dominican Ministry of Tourism this week was scheduled to release the much-anticipated toxicology reports by the Federal Bureau of Investigations of the tourists that died in the country, but postponed the release citing the results received from the bureau were only partial.
“We have our results, and are at ease,” said Javier Garcia, the country’s minister of tourism, at the event. “The FBI’s results, we have no doubt, will prove they will come back negative. If it was an issue, they would have called us a while back.”
International arrivals to the Dominican Republic plummeted by 11 percent and 7 percent in July and August, respectively, according to data provided to Skift by the Dominican Republic’s Ministry of Tourism. The immediate outcome is millions of dollars lost in revenue for a nation whose tourism sector accounts for 17 percent of its gross domestic product.
What’s more, tourism in the Dominican Republic was on track for another year of significant growth through the end of the second quarter of 2019. Visits to the destination instead are now flat year-over-year, with the nation also on pace to suffer its worst tourism output in nearly half a decade.
According to the State department, reported unnatural deaths by U.S. citizens in 2019 in the Dominican Republic are in line with statistics recorded over the last five years. Death tolls in the country have also steadily declined from 25 in 2015 to 13 last year.
The State Department considers the Dominican Republic a level two country — out of four — on a danger scale for U.S. travelers, the same as other popular destinations like Mexico, France, and Jamaica. Ten deaths by U.S. citizens have been reported in 2019 through June 30 in the Dominican Republic, compared to 99 in Mexico, eight in France, and five in Jamaica.
The Road Back
To return Dominican tourism back to at least 2018 levels — when the nation recorded a 6.2 percent spike in international arrivals — government officials are relying on marketing the country as a safe travel destination to U.S. residents just as much as they are on hotel development.
Brandon Billings, vice president of social media and content strategy at MMGY, a marketing firm that works with tourism boards around the world, said the Dominican tourism board has done what it can to manage the crisis and control the narrative. But once the news broke, the power of social media took over.
“As soon as news got out, the way for people to voice their opinions was on social media. So you have to control what’s reality and not reality,” said Billings. “At the end of the day it is about emotion. Consumers talking on social media are emotionally driven. So how do you get back to emotional triggers that drove initial interest in the destination?”
Buy-in from local hotel partners, cruise lines, and other businesses go a long way here, Billings added. Once customers see that corporate America is all in, it becomes easier plot a comeback.
“We do not have any clients in the Dominican Republic, but I imagine hotels and other companies are leveraging internal research and understanding market potential there, while also judging how perception is changing around the destination,” he said.