WHITEFISH, MT / June 19, 2014 / The Caribbean is the number one destination in the global cruise sector, with 37.3% of capacity this year, a figure which continues to be dominated largely by passengers from the U.S. and Canada. Overall Caribbean tourism has grown nicely so far in 2014 according to the latest Caribbean Tourism Organization (CTO) data, with 2% year-over-year growth across the region for Q1 and nearly 6.9M arrivals by cruise ship already. With the average ship bringing 2.5k tourists and roughly 500 crew each, generating some $226k in expenditures during each port of call, there is a ton of upside to be found cultivating the tastes and expectations of North American tourists to the Caribbean, especially for those arriving by cruise ship who miss out on hotel and resort-attached restaurant options.
The best dining packages from the top cruise lines get old mighty fast when passengers have eaten at the same on-board location several times during their trip, not to mention how quickly tiresome the standard menu can get on the majority of cruises. Even the dining options available on Royal Caribbean Cruises Ltd. (NYSE:RCL) Quantum Class vessels, where patrons can choose from between five different (upscale to casual dining) full-service restaurants, quickly become boring and passengers generally yearn to get off the boat and take in the local culinary offerings.
The island of St. Maarten is a particular hotspot for Caribbean tourists, with the largest cruise ship terminal in the Caribbean, the Port of St. Maarten, on the southern part of the island at Great Bay. This port, which has seen expansion to further the tourism industry over the last few years, can handle even the supersized Oasis Class ships (5.4k passengers and 2.4k crew) and saw some 1.79M cruise passengers dock last year in 631 vessel calls. St. Maarten has established itself as the capital of the booming Caribbean culinary tourism market and with over 43 miles of gorgeous coastline featuring 37 beaches on the island itself, as well as some of the world’s most attractive seascapes, the hotel and resort market on the island of St. Maarten also continues to thrive year after year.
Where People Stay Determines Where They Eat
For resort owners and hoteliers like Orient-Express Hotels Ltd. (NYSE:OEH), which operates the celebrity favorite Belmond La Samanna luxury resort on the longest and most exclusive stretch of beach (Baie Longue) on the island, in-house fine and casual dining options exist, including a beach bar. The same holds true for The Westin Dawn Beach Resort & Spa on the eastern side of the island run by Starwood Hotels & Resorts Worldwide, Inc. (HOT), both of whom continue to do steady business, with recently improving conditions in the European economy helping to bring up overall tourism numbers. All major hotel performance indicators remained positive for 2013 with upwards of a 67% occupancy rate, in line with expectations and the key sector indicator, revenue per available room, which grew by over 7.5% from 2012 to 2013 (CTO).
The in-house dining model for higher-end beach resorts and hotels throughout the Caribbean creates an insular vacation experience that has allowed the model to return solid revenues. A given facility acts as a self-contained city in many respects, with patrons only going out to visit even fancier gourmet restaurants for variety (or to they go out shopping and to the island’s other attractions). These kinds of luxury hotel, resort and spa operations are among the most sought after destinations in the Caribbean, and cruise ship tourists greatly desire a taste of the luxury resort life when they get off the boat at a gorgeous place like the island of Saint Maarten, with its classically idyllic beaches. Statistically high visitor volume in the sub-luxury hotel and resort space, combined with cruise ship stop-over tourists, creates a bustling market, particularly for dining and beach bars.
Dining is a Major Growth Area
Blue Water Global Group, Inc. (BLUU) looks to have put together a regionally focused strategy that is in essence a perfected execution of what attracts North American tourists to the smaller, less well run, private beach bar/grill type establishments that dot the region (a taste of the Caribbean resort life and the fusion cuisine). Blue Water has devised a branded, Caribbean-themed restaurant model that is somewhat akin to Hard Rock Cafe International’s eponymous venue and is focused on generating repeat business.
Complete with branded merchandise (the real secret behind Hard Rock Cafe’s revenues), the company’s Blue Water Bar & Grill™ concept fuses a walk/swim up beach bar, outdoor covered patio lounge, small-stage live music and an open-air kitchen off the main dining area where customers can see their food being prepared. Blue Water has even developed their own branded rum, an iconic souvenir of the Caribbean in and of itself, called Blue Water Ultra Premium Rum™, which will be sold by the beverage and by the bottle at each of their locations.
Blue Water’s initial restaurant location in St. Maarten was chosen for its exceptional waterfront location, as well as proximity to ports and island destinations, in addition to being in range of plenty of the local population, who often sustain a restaurant during the tourism off-season. Blue Water Bar & Grill represents the natural evolution of the Caribbean theme restaurant along Western franchise standards, hitting the target demographic sweet spot with maximum effect. Not too upscale and over-priced like the private gourmet locales and yet a comfortable distance in overall quality and presentation above local artisan eateries, which are mostly cynical tourist cash grabs.
This restaurant model would give average cruise goers exactly what they expect from a Caribbean experience at a reasonable price, with consistent quality from island to island along their journey, making Blue Water Bar & Grill a familiar destination away from the ship that customers can return to in each port of call. Blue Water plans to strategically expand across the Caribbean from St. Maarten on an island-by-island basis, chasing the trail of the major cruise lines. BLUU’s strategy to bring the feel of a resort together with a relaxed waterfront bar and dining atmosphere, capitalizing on the Caribbean’s growing reputation for fusion cuisine, is a formula for bottom-line success. The key with the company’s strategy is to offer consistent food quality from island to island and location to location, capturing the expectations of North American tourists for reliably good food and location conditions that they are used to back home, where the market is saturated by similar theme restaurants, as well as fast-casual dining brands.
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Lots of Upside Across the Spectrum
Operators like Fiesta Restaurant Group, Inc. (FRGI), the spin-off from the major U.S. Burger King franchisee Carrols Restaurant Group, Inc. (NASDAQ:TAST), already understand the growth possibilities in this space, with their Pollo Tropical brand of fast-casual restaurants serving Caribbean-inspired foods poised to fuel 20% EPS growth for many years to come on convenience-driven patrons. Well-known throughout Florida and the Caribbean, with a large density of locations in Puerto Rico, the Pollo Tropical model that began in Miami back in 1988 is doing so well for Fiesta Restaurant Group that despite the abundant potential in the Caribbean, their biggest growth market has boomeranged home and now resides in the U.S. southeast.
The allure of the Caribbean and its cuisine is indeed strong in North America and the same psychology/tastes which drive Fiesta Restaurant Group’s profits also make considerable room for the likes of Bahama Breeze, the Caribbean-inspired casual dining franchise from Darden Restaurants, Inc. (DRI), which is popular in Florida and along the east coast. These same tastes follow North Americans when they visit the Caribbean, but until the emergence of Blue Water Bar & Grill, a compelling offering has been missing to fill tourist’s needs.
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SOURCE: Emerging Growth LLC