POLITICAL AND SECURITY
It is important to note that Roatan is an oasis from both these issues that have a much larger impact on the mainland.
Polititcally, Roatan generates a large bounty of tax revenue from its tourist trade and all the political parties in the country are supportive of tourism and foreign investment on the island. The ZEDEs are an exception as they are looking to act outside the Honduran legal framework.
The proposed project will be owned by a company registered in Honduras and subject to Honduran financial laws which negate any political rist.
It is also important to note that the bulk of the project revenues come from sales of land lots within the property and the initial investment is expected to be completely returned to the investors within three years.
We are also establishing connections with the Crawfish Rock village leaders and expect to have their full support and cooperation.
With regard to the violence, Roatan has a low crime rate compared to most of the Caribbean and many US cities. There is no production of drugs on the island and crimes are mostly petty. The exceptional violent crimes are triggered by persona fueds and within minor drug distributors.
FX
There are some considerations on the FX front. Roatan accepts US dollars
as well the Honduran Lempira (HNL). There was a brief period at the
beginning of 2016 when it appeared the local government may have
wanted to standardize around the HNL and businesses stopped accepting
USD, however, the gov’t soon dropped the idea and both currencies
stayed in popular circulation. Around 85% of resort charges are paid in
USD and only 15% in HNL If the US Dollar were to appreciate against the
HNL, this would only benefit the business as costs would be lower relative
to the USD revenues. On the other hand, if HNL became stronger, we
would raise the USD prices for resort bookings, which would be expected
in the tourist market. Honduras is still relatively cheap for the standard of
tourism offered and there is room for the prices to go up without making
the retreat any less competitive on the cost front.
FXREAL ESTATE
The Real Estate market on Roatan has reflected the US economy more than mainland Honduras’ economy. The market crashed ten years ago alongside the US and has been stagnated at those levels since. Activity in this market has only just picked up over the past year as the US economy has taken an upturn. Real estate is still cheaper here than other Caribbean Islands and Central American countries that transitioned to a tourist economy earlier. This gives a good potential upside to the property value.
Though the island is fairly insulated from activities on the mainland, there is still a risk that these activities may spill over to the island causing a downturn. However the government is aware of the tourism related revenue potential of the island and is pushing to expand this are for further growth.
The land being purchased slopes up from the beach to a high ridge. We will clear a large beach along the waterfront and only start construction after the land has risen a few feet in consideration of a potential sea level rise.