Reflecting on the trajectory from the depths of the pandemic to the present, Fernando Garcia-Chacon expresses admiration for the rapid rebound witnessed in the Caribbean hotel investment market. As the leader of the CBRE Hotels Advisory team, Garcia-Chacon acknowledges the initial hope that hotel investments might regain their footing by 2024 or 2025. However, the reality has surpassed expectations, with a surprising recovery evident by 2022.
Garcia-Chacon highlights the remarkable surge in figures within the space, attributed to the reopening of Europe and the resurgence of the cruise industry. Contrary to expectations of a plateau, momentum has continued unabated into 2023 and beyond.
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One notable transaction directly involving Garcia-Chacon was the December sale of the Jewel Punta Cana from Playa Hotels & Resorts to a local Dominican entity, amounting to $82 million. Such deals typify the current landscape, characterized by transactions involving family-held offices and high-net-worth individuals.
An emerging trend that Garcia-Chacon observes is the proliferation of brands in the all-inclusive segment, with the acquisition of Apple Leisure Group by Hyatt in 2021 serving as a major catalyst. This diversification sees a departure from the traditional ownership model dominated by Spanish families or entities, with increased involvement from different real estate owners, franchisees including Hilton and Marriott brands, and diverse operators.
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Identifying the Dominican Republic and Mexico as key hotspots for hotel investment, Garcia-Chacon’s assessment aligns with Andrew Dickey, managing director of the Hotels & Hospitality Group at JLL, who adds Puerto Rico to the list of pivotal markets. Noteworthy transactions in Puerto Rico, including the acquisition of Hyatt Place San Juan and Hyatt House San Juan, underscore its growing significance.
Dickey emphasizes the unparalleled performance of destinations like San Juan, attributing it to a prolonged scarcity of supply juxtaposed with soaring demand. Flight traffic serves as a telling indicator of market vitality, with destinations like San Juan experiencing a surge in arrivals over the past 12 to 18 months.
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Both Dickey and Garcia-Chacon identify insurance as a critical challenge affecting hotel investment, a sentiment echoed beyond the Caribbean to include regions like Florida and California. While insurance costs are on the rise, the Caribbean market has not yet reached the crisis levels seen in some U.S. states.
Despite challenges, optimism prevails. Advising clients to hold amidst high interest rates and insurance costs, Garcia-Chacon anticipates a surge in activity from the second quarter onwards, underscoring the resilience and potential of the Caribbean hotel investment market.
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