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Hotel development may not be happening at a breakneck pace in the Caribbean, but supply follows demand, which is high for luxury resorts in the region.<\/p>\n
The big brands continue to grow their luxury footprints across the Caribbean and larger Latin American region, exploring products such as higher-end, all-inclusive resorts and ultra-luxury hotels in additional to traditional luxury resorts with and without branded residences.<\/p>\n
At the Caribbean Hotel Investment Conference and Operations Summit presented by HVS, executives from brands in the region shared their recent activity and growth plans, balancing the consistent demand for high-end resorts with the challenges of developing and staffing in the region.<\/p>\n
Bojan Kumer, vice president of Caribbean and Latin America development for Marriott International, said that in the past five years, 40% of Marriott\u2019s signings in the region were for luxury products, and of those, the vast majority came with luxury branded residences attached.<\/p>\n
\u201cWe\u2019ve seen not only the interest for typical European-plan luxury product, but also interest in all-inclusive luxury and all-inclusive luxury that comes with branded residences as well,\u201d he said.<\/p>\n
The Sanctuary Cap Cana, part of Marriott International’s Luxury Collection brand, opened in 2022 in Dominican Republic and was Marriott’s first luxury all-inclusive resort. (Marriott International)
The Sanctuary Cap Cana in Punta Cana, Dominican Republic, opened in 2022, and The Ritz-Carlton, Turks & Caicos opened in Grace Bay in June 2021 with branded residences. Kumer said there\u2019s more on the way in the Caribbean \u2014 about half of the signings Marriott will do for new projects this year will be in the luxury segment.<\/p>\n
\u201cThere is high demand from travelers from the U.S., who are spending more,\u201d Kumer said. \u201cAnd we see a lot of multigenerational travelers, which brings demand for branded residences.\u201d<\/p>\n
Hilton also keeps an active pipeline in the Caribbean and Latin America, said Pablo Maturana, vice president of development for Latin America and the Caribbean for Hilton.<\/p>\n
The company identifies Puerto Rico as its largest growth market in the Caribbean, and in the works over the next few years are a Tapestry Collection hotel in San Juan and a Curio Collection hotel in San Juan as well.<\/p>\n
\u201cIf we\u2019re talking about ultra luxury, where the cost to build is over $1 million per key, without branded residences the deal just doesn\u2019t pencil,\u201d Kumer said. \u201cYou still need the same labor and amenities though, but it helps because most owners will put their units in the hotel program, and [developers] get the cash sooner since they can sell condos as soon as they close the financing, about two years prior to the hotel opening.\u201d<\/p>\n
Maturana said that while that model of selling condo units first to fund tough-to-finance luxury hotel development has and will traditionally be the scenario in the Caribbean, the demand just for residences is taking off.<\/p>\n
\u201cNow we\u2019re seeing there\u2019s so much premium on the branded residential sale, that branded residential itself is a business,\u201d he said. \u201cPeople are craving the product and the service and hotel companies are well-geared to do it.\u201d<\/p>\n
Both Marriott and Hilton are dipping toes into stand-alone luxury hotel-branded residences.<\/p>\n
However, speakers cautioned that structuring condo-hotel development deals can carry different complications depending on where they\u2019re located and who the buyers of the owned condo units may be. The U.S. Securities and Exchange Commission has established regulations for developers selling condo units around owners\u2019 ability to put their units into an adjacent hotel\u2019s rental program.<\/p>\n
When condo owners are primarily American \u2014 like they are in the Caribbean, speakers said \u2014 extra care must be taken to comply with these SEC regulations.<\/p>\n
Luxury Going Strong
Six Senses, the luxury brand acquired by IHG in early 2019, is making its push into the Caribbean.<\/p>\n
\u201cWe have a blank canvas in the Americas. The Caribbean, U.S. and Mexico are our prime focus,\u201d said Vijesh Patel, development manager of Six Senses Hotels Resorts & Spas. The brand has two luxury resorts in the works in the region \u2014 one in Grenada slated to open next year, and one in the Bahamas, which Patel said the company \u201chopes to be the showcase of sustainability in the Caribbean.\u201d<\/p>\n
The seemingly endless demand for luxury in the region is a big draw, said Cecilia Sanchez, director of development for Mexico and the Caribbean for Accor\u2019s luxury and lifestyle division.<\/p>\n
\u201cThe region provides an exclusivity factor for ultra-luxury in particular,\u201d she said. \u201cThere\u2019s space for these destination hotels.\u201d<\/p>\n
For Accor, that means bringing brands to the region that resonate for American travelers* \u201csince they\u2019re our main feeder market,\u201d Sanchez said.<\/p>\n
Accor is exploring adding all-inclusive elements and packages to its existing luxury brands, such as Fairmont.<\/p>\n
\u201cIt\u2019s very market-driven,\u201d she said. \u201cIf your competitors are doing luxury all-inclusive and you\u2019re doing European plan only, it puts you behind.\u201d<\/p>\n
Sanchez cited the company\u2019s Fairmont Mayakoba resort in Mexico as a model of a resort not fully all-inclusive, but offering an all-inclusive resort package, similar to competing resorts nearby.<\/p>\n
\u201cIt\u2019s a good hybrid,\u201d she said.<\/p>\n
Marriott has seven luxury or upper upscale all-inclusive resort projects in the pipeline, Kumer said. The Sanctuary Cap Cana, which opened in 2022, was the company\u2019s first luxury all-inclusive resort.<\/p>\n
\u201cYou have to be careful about how you enter that market. You can\u2019t just have the amenities and say you\u2019re luxury,\u201d he said. \u201cIt\u2019s critical to have an operational team dedicated to all-inclusive luxury, and to develop new brand and operational standards for all-inclusive to be successful.\u201d<\/p>\n\n\n
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