Developing and owning hotels in the Caribbean comes with its unique challenges—local labor laws, weather unpredictability, and cultural nuances all contribute to the complexity. To mitigate these risks, a growing number of hotel owners are turning to third-party management companies, a trend that’s reshaping the region’s hospitality landscape.
At the recent Caribbean Hotel Investment Conference and Operations Summit, industry experts highlighted why third-party management is becoming the preferred model in the Caribbean, as global brands expand their footprint and development projects grow increasingly sophisticated.
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Expertise in Overcoming Regional Challenges
Operating in the Caribbean demands an intimate understanding of each island’s unique requirements. Michael Register, managing director at Trust Hospitality, emphasized the importance of tailoring strategies to specific locales.
“You have to look at what island you’re on first,” Register noted. “Do you need permits? Are there requirements to hire locals? Are there requirements to build workforce housing? Logistics are challenging. And you have to be attuned to the cultural differences on each island.”
Earlier this year, Trust Hospitality partnered with Hotel Equities to expand their hotel portfolio across Latin America and the Caribbean—a move that highlights the demand for seasoned operators in the region.
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Navigating Labor and Legal Hurdles
Labor regulations and permitting issues are top concerns for developers, according to Amy Ironmonger, a partner at K&L Gates LLP who advises on hotel and resort projects in the Caribbean.
“Our goal is to create documents that incentivize both parties toward a successful project while maintaining flexibility,” she explained. “Construction delays, permitting challenges, and unpredictable imports all add layers of complexity.”
Despite these hurdles, some operators argue that Caribbean bureaucracies are no more difficult than those in other parts of the world. Rich Cortese, senior vice president of Caribbean development for Aimbridge Hospitality, pointed out that strategic planning can simplify the process.
“Planning and bureaucracy exist everywhere,” Cortese said. “The difference lies in understanding each island’s unique dynamics.”
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Flexibility Across Islands and Brands
Flexibility is key when navigating the diverse regulations and cultures of the Caribbean. Some islands, such as the Dominican Republic and Jamaica, are known for their streamlined processes, while others, like the Cayman Islands, have stricter regulations.
“There’s more flexibility on certain islands where the government is less involved, and we get spoiled,” Cortese remarked. “But if you go to Cayman and want to move a rock, it has to be registered.”
This flexibility extends to partnerships between global brands and third-party operators. Keith Oltchick, chief development officer at Remington Hospitality, noted that major hotel brands are increasingly collaborating with third-party managers to navigate regional complexities.
“Brands are comfortable with third-party managers,” Oltchick said. “Some segments or locations the brands don’t want to manage directly, but they still want to grow in the region. That creates opportunities for operators like us.”
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Adapting to Diverse Ownership Profiles
Hotel ownership in the Caribbean often differs from other regions, requiring third-party operators to adapt to a variety of investor profiles. Institutional investors remain cautious due to the intricacies of Caribbean regulations, leaving room for alternative financing models like condo-hotels and citizenship-by-investment programs.
Michael Register explained the appeal of long-term, high-net-worth family assets over institutional capital. “It’s just too complicated to go in and digest everything for a single $30 million transaction,” he said. “Developers have to look for creative financing solutions, and that’s not going to change.”
A Promising Future
As third-party management gains momentum, the Caribbean is poised for a new era of growth and innovation in hospitality. With the right expertise and strategic partnerships, operators can turn regional challenges into opportunities, driving success in this vibrant and competitive market.
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