With increased competition, hoteliers diversify Caribbean options

Hilton allied with Playa Hotels & Resorts last year to boost its all-inclusive options. Photo credit: Hilton

Hotels and resorts across the Caribbean are adapting quickly to new demands from travelers. A new report from Agnes Pierre-Louis, a senior consultant at Horwath HTL Miami, examines how the Caribbean resort product is evolving to stay relevant in an increasingly global tourism market.

Regional Pipeline

The Caribbean is showing a healthy development pipeline. According to STR, the overall Mexico/Caribbean region had 131 hotels with 29,187 rooms in the construction phase, a 30.7 percent increase in rooms year over year. The Dominican Republic has 6,216 rooms under construction, while Jamaica has 2,144 rooms and Cuba 1,327.

Hilton is on track to open its 100th hotel in Mexico by 2022, and Marriott International expects to expand its footprint in the country more than 50 percent by the end of 2023. In 2018, Marriott signed deals to open 36 hotels with more than 2,300 rooms in the Caribbean and Latin America. Close to 40 percent of this total is for development in Mexico. Four of the company's boutique Moxy Hotels projects have been approved for the region as well.

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Experiential and All-Inclusive

While the opportunities and pace of development vary among the different islands, the region also faces increasing competition from warm-weather destinations in Latin America, Southeast Asia and North Africa. While beach vacations are popular, the growth in demand for experiential travel is driving Caribbean hotels to expand their offerings. 

The report noted shifts in the socioeconomic environment have influenced consumer purchasing habits, encouraging travelers to seek value-add opportunities. This has driven a boost in all-inclusive resort development. Last year, Apple Leisure Group, owner of AMResorts, purchased The Mark Travel Corp. to “deliver exceptional value to travelers.” Hilton and Netherlands-based Playa Hotels and Resorts formed a strategic alliance in September that specifically focuses on boosting the American company's all-inclusive offering. At the time of the deal's signing, Hilton and Playa announced plans to open eight additional all-inclusive resorts together by 2025.

All-inclusive resorts usually require a minimum of 300 rooms, the report notes, and pass on savings to the guests by scaling operations and through vertical integration with tour operators.

The Caribbean is positioned to accommodate the growing multigenerational trend—but some families are opting for vacation rentals as opposed to staying in traditional hotels. Private rentals are not only seen as offering better value than hotels for groups but also provide private spaces for gathering; one of the most sought-after amenities by this segment, the report noted. 

Caribbean hoteliers also are incorporating elements of the increasingly popular boutique and lifestyle segments into their resort designs. The design experience is intended to set a tone and influence the mood and activities of customers as well as immerse them in a unique environment, according to the report. For example, Kimpton Hotels opened in Grand Cayman in 2016 and is planning a property in Grenada for this year. Kempinski and Marriott’s Autograph collection are both scheduled to open in Dominica shortly. Ushuaia by Palladium, Margaritaville and Hard Rock Hotels are all looking to increase their presence throughout the region in the coming years.

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