CORAL GABLES, Florida ā The Caribbean and Latin American region holds a lot of promise for hotel companies, but it's not a guaranteed success for just any venture.
During an executive panel at the Americas Lodging Investment Summit CALA conference, hotel executives said the region is taking off, and hoteliers can ride along with it provided they know what is required of them.
It is one of the most fluid areas in the world, said Juan Corvinos, president of Hotel Equities CALA. It is a specialty niche, and people who work in this area are often solely dedicated to it.
āWe are specialists in a moving target,ā he said, adding that each country in the region has its own jurisdictions and election cycles.
There are so many factors that affect hotel supply and demand, he said.
With all that in mind, however, the region is seeing āa golden eraā with U.S. consumers, this year in particular, Corvinos said.
āWe all as an industry have an opportunity to convince people that have not thought about our region that we should be their main, leading destination for travel,ā he said. āThatās all of our challenges. ā¦ I canāt think about a better time for us that we rely on the North American market, both Canada and U.S. and intra-country, to benefit form this surge in travel as fuel costs rise, as things are happening in the Middle East.
āIt is the best time that Iāve ever seen in my career,ā he said.
The region is in the perfect cycle at the moment, and it has long-term growth potential, Baha Mar President Graeme Davis said. The Bahamas are like the Hamptons of South Florida as they are 30 minutes away by plane, he said. Geopolitically, itās a safe destination with stable currency rates compared to the U.S.
The region as a whole is seeing a 40% lift in arrivals from Canadians flying over the U.S. to the Caribbean, he said.
āI think thatāll certainly continue for the next few years,ā he said. āI think people are now discovering, from Canada even more so, the Caribbean. I think weāre even now seeing European business. Instead of looking east to the Middle East, theyāre now actually looking to come to the Caribbean, as well.ā
The Baha Mar team is constantly looking for opportunities to make sure theyāre marketing to potential travelers, he said. There will always be lower cycles, hurricane seasons and unknowns, but the foundation is strong and the region is opening up and creating more awareness.
āThatās going to build for the future that they werenāt looking at before but are now looking at it, and weāll continue to build on it,ā he said.
About 15 years ago, roughly 30% of Americans had a passport, said Javier Coll, president of Mullen Hospitality Management. Now itās close to 50%, and Europe is at 99%.
āThereās a lot of potential in the American market, the natural market for these destinations,ā he said. āThe Europeans have been stable for a long time. Some countries, they went up and they went down, but Americans are growing every year. So what that means is that the potential for us to keep growing in these destinations is pretty big.ā
The distance of the region from the U.S. is a positive when considering the limited amount of vacation time Americans take each year, he said. They donāt want to go too long, too far, so being between three and four hours away as a destination makes it an ideal place to travel.
āThereās no other place to go unless they want to travel within the United States,ā he said. āIf they want to go to the beach that is not in Florida or California, thatās Mexico, thatās Dominican Republic, thatās the Caribbean islands.ā
These countries are enjoying a post-pandemic boom, but Jamaica is still recovering from last yearās Hurricane Melissa, Coll said. Thatās driving a lot of business to other parts of the region.
āThatās going to eventually change,ā he said. āThe moment Jamaica opens, everything is going to be stabilized, and weāre taking that into account for our underwriting, for our projections to owners. Weāre not presenting projections that keep going up. Thatās not really healthy.ā
Itās important for investors to know that demand and performance wonāt go up forever, he said. Itās not going to go down, but eventually it will go flat.
Corvinos echoed Collās sentiments, saying no one should assume constant growth in the region without rising costs. Dollar per dollar, itās getting more expensive to operate in CALA, including Mexico, where labor costs alone are expected to rise 12% to 18% this year.
āIt is important to realize that we are in a very competitive environment, but assuming ceteris paribus [all else being equal] is not a strategy, it's madness,ā he said.
One way to success in the region is establishing relationships with local landowners and officials, said William Phelan, Dominican Republic country manager for Cisneros and president of the company's under development Tropicalia project. To be a good developer in the region, the Tropicalia team needs to be good neighbors. Early in the resortās development process, they reached out and created a coalition of local landowners to work together and fill the needs of Miches region in the Dominican Republic.
āWe knew that nobody else was going to take care of them and nobody else was going to address them, so we sat at this table,ā he said.
The coalition members realized they needed roads for access, so the landowners and developers worked together and, through a public/private partnership in 2020, started putting money into Miches to build roads. The area needed water, so it built a municipal aqueduct.
āWe are the first tourism area in the Dominican Republic to be connected to a municipal aqueduct, and that was done through provincials,ā he said.
They wanted a say in what would happen with the beaches, so they worked with the government and requested co-management of a large natural marine protected area that neighbors the resort, he said.
āWeāve done this because weāre obviously looking long-term at protecting our investment through a group of like-minded individuals,ā he said.