Caribe Hospitality sees branded, select-service hotels as path forward in Caribbean and Latin America

CORAL GABLES, Florida — As the Caribbean and Latin America region grew as a major destination, so has Costa Rica-based Caribe Hospitality grown its portfolio of branded, select-service properties aimed at business travelers visiting the region.

The ownership and development company has been around for 26 years, building a portfolio of hotels across Costa Rica, Mexico, El Salvador and Barbados, said Daniel Campos, director general and partner at Caribe Hospitality, in an interview at the Americas Lodging Investment Summit CALA. It developed the first Marriott International-branded hotel in the region, a Courtyard by Marriott in Monterey, Mexico. Following development projects also introduced branded, select-service hotels to markets around the region. 

Currently, the company owns 12 properties, 10 of which are Marriott brands and two are with Hyatt Hotels Corp., he said. All are select-service hotels with the exception of one, which is a Hyatt Centric.

Caribe Hospitality is one-stop shop as owner, developer and asset manager for its hotels. When starting out, there weren’t many third-party management companies as most hotels were either brand- or owner-managed, he said. Given his company’s focus, he had the brands manage his properties, which aligned with the brands’ goals.

“The hotel brands were interested in going to these markets, but they wanted to be sure that the hotels were operating at the right standard, which didn’t happen all the time, so they did the management,” he said.

Now, there are more third-party operators that want to manage properties in the region, he said. On a single-property basis, the cost of operations isn’t going to differ much between brand management and a third-party manager.

“But if you’re a professional third-party manager and you have two or three or four or five properties, for sure you’re going to be able to run them for less than what it costs to run by the brands,” he said.

Caribe Hospitality takes a long-run approach to ownership, Campos said. If there’s an opportunity to sell, it would consider its options. In 2007, it sold some properties when debt was cheap and there was a lot of money and private equity available, and investors were competing for deals.

Growth through transactions would be a challenge as the market is shallow, leaving few opportunities, he said. Even so, there are potential deals out there, and it’s a faster way to enter a market than developing.

Most of Caribe Hospitality’s hotels cater primarily to business travelers and groups, but the company is considering all-inclusive resort development in Costa Rica as the country’s infrastructure improves, Campos said.

“One of the biggest challenges on the North Coast, we are one of the rainiest countries in the world, but we don’t have water,” he said. “There’s no infrastructure to get the water into the developing area, but the area is getting better."

The big brand companies have moved mostly into the luxury all-inclusive spaces, but the mid-market ones are where many business travelers want to spend their built-up points to vacation with their families, he said. That’s where his company would look to work with the brands in the all-inclusive space.

As a company based in a country where most of its energy comes from renewable resources, Caribe Hospitality has prioritized a sustainable development process. It also makes good business sense, Campos said.

Many corporate clients when looking for accommodations have a requirement to show they are staying somewhere with sustainability-focused practices or designs, he said. Without those, it would lose out on many potential customers.

The other side is the savings sustainable practices and designs create, he said.

"If your business model is right, you're going to save money because you're going to use less water, you're going to use less energy, you're going to recycle, you're going to get into a circular economy," he said.

Having certifications from the International Organization for Standardization also means earning a better rate on energy costs, he said.

"So, it's good for the business because we're going to save money, and it's in line with our principles and our policies of trying to be more efficient," he said.

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