WILLEMSTAD, Curaçao — After heating up over recent years, the Caribbean hospitality market has stabilized this year while supply continues to grow.
At the Caribbean Hotel Investment Conference & Operations Summit, presented by HVS, experts discussed trends in the region, such as softening occupancy and competition with cruise lines.
"The Caribbean historically, for the last three to four years, has always been at the top. It's been a high-growth market," Hannah Smith, senior analyst at STR, said in a presentation at the conference. "Really coming out of the pandemic, [it's been] one of the strongest markets in the world. And we've seen it reach kind of a stabilization point this year."
Hospitality trends in the Caribbean
While the data from CoStar, which excluded Cuba, still indicates the Caribbean is a strong region, some areas have lagged slightly. Occupancy and pricing power have slowed for some Caribbean markets and segments over the past 18 months.
"We're no longer in that really high-growth environment where, no matter what hotels did, people were going to come and they were going to pay a couple of years ago," Smith said. "Now we're in kind of that mature phase of we need to think a little bit more about who are these guests we're bringing in. Do we need to change our strategies to bring them in?"
She added that the leveling off that the region has experienced in no way compares to what the United States has seen this year.
Group demand in the Caribbean has been a reliable growth generator for hotels in the region, but this year it's also plateaued, Smith said. The market as a whole sees 15% group business, and while August was a strong month for group bookings, they came in at a lower rate, so average daily rate was down for the month.
"We are seeing that group has taken a step back," Smith said. "That's really no surprise, considering that's what we're seeing globally as well."
Only three markets have seen a decline in ADR overall year to date — Jamaica, Bahamas, and Trinidad and Tobago — while the rest of the region has pushed ADR growth even if occupancy dipped.
Upper-upscale and upscale are growing occupancy, according to the CoStar data, with 3.1% and 1.3% year-to-date growth, respectively.
Luxury occupancy year to date has dipped slightly by 2.4%, but the segment is still pushing ADR, growing 3.9% to $547 a night. There's a "much more modest pricing growth across the board in the lower classes," Smith said, pointing to more price sensitivity from leisure travelers.
When looking at the year so far, Kristina D’Amico, vice president of hotels asset management at JLL Hotels & Hospitality, pointed to a strong first-quarter occupancy for the region — even higher than previous years — but a more significant drop off in the second and third quarters.
"And what we're [asking] in the properties that I'm asset managing right now is, how do we fix [the second quarter] and [third quarter]?" she said. "We always know [the first quarter] is going to be stronger, and you'll see the bar get better every single year. But, what is happening in [the second quarter] and [third quarter] and why can't we get people to the Caribbean during those periods to maintain the occupancy?"
The air arrival data, which shows the Caribbean was up 6% last year, shows which markets are growing travel fastest. Overall, the Caribbean's air visitation year to date September 2025 compared to the same period last year is up 9%. Puerto Rico is up 14.4% and Curaçao is up 13.2%.
D’Amico pointed to growth in cruise arrivals in the region as something to watch. Year to date for September 2025, cruise-passenger visitation for total arrivals is up 17% over the same period last year. The Bahamas grew cruise passenger arrivals 34.6% and the Dominican Republic saw a 11.8% increase, per JLL and CTO data.
For revenue-per-available-room change in the Caribbean, D’Amico identified four leading markets — Barbados, U.S. Virgin Islands, Curaçao and Saint Lucia — with Aruba, Puerto Rico and the Dominican Republic as stable.
Meanwhile, hoteliers in the Cayman Islands, Trinidad, the Bahamas, Turks and Caicos, and Jamaica are under repressure. D’Amico pointed to competition with the cruise industry, softening in occupancy and weakness in the middle quarters of the year as concerns.
"My perspective — the seas are a little choppy right now. Last year, we rode the wave," she said. "This year, picture is a little different."
Incoming supply
What hasn't leveled off for the Caribbean, however, is incoming hotel supply — especially on the high end and especially in the Dominican Republic.
"In terms of the rooms under construction right now, if all of them were to open tomorrow, it'd be about 10% growth in upper-upscale scale and 12% growth in luxury," Smith said.
Realistically, that 10% and 12% will deliver spread across three to four years considering the construction timelines.
The Dominican Republic has about 6,000 rooms in construction, representing 7% of its existing inventory, according to CoStar data. Some of the region's smaller islands, such as Saint Lucia, Turks and Caicos, and Cayman Islands, are seeing significant percentage rooms growth but not as many rooms comparatively, Smith said.
In her presentation, D’Amico said the Caribbean is set to increase room supply by 6% with a total of 16,000 rooms in the pipeline through 2029.