With a strong pipeline of new hotel rooms and improving performance data, tourism in Central America and the Caribbean is poised for growth, says hotel research expert STR Global

With 439 hotels projects in development in Central and South America totalling 70,970 rooms and 167 hotel projects totalling 29,430 rooms in the Caribbean and Mexico, the regions are demonstrating considerable growth and improvements in performance, setting them on a positive trajectory for growth.

A large proportion of this growth is taking place in Mexico and Central America. Mexico leads the region with 19,443 rooms being added to an existing supply of 347,332 rooms – a number which already dwarfs any other Caribbean or Central American destination. In total there are 125 hotel projects in the pipeline in Mexico. This growth, a majority of which is in the upscale and midscale chain scales, is expected to cement the country’s status as a tourism powerhouse. Recent openings include the 1,100-room Royalton Riviera Cancun, the 140-room Hyatt Place Ciudad del Carmen and the 156-room Courtyard by Marriott Queretaro and several major international hotel brands have announced plans to open new hotels in Mexico, including IHG and Sofitel.

Panama ranks second in terms of rooms in development with a pipeline of 2,934 new rooms in development. Several new hotels have opened recently in Panama City, including a 165-room Hyatt Place, 347-room Hilton and Grace Panama, a 60-room contemporary urban boutique hotel, all built to tap into the growing business and leisure markets, which have been stimulated by successive years of economic growth and the expansion of the Panama Canal.

Panama City

Panama City

The Caribbean hotel sector, which suffered significantly from decreased demand levels in 2008-2010, has also begun to bounce back. The Bahamas has led the way in terms of new supply growth with 2,880 rooms in development, building on an existing supply of 13,241. While there are 9 hotel projects in development, a substantial proportion of this growth comprises Baha Mar, the multi-hotel complex in Nassau slated for opening in late Spring 2015. The resort is set to include a 1,000-room Baha Mar Casino & Hotel, a 700-room Grand Hyatt, a 200-room Rosewood Hotel and a 300-room SLS Lux Hotel. Jamaica is also building on a substantial existing supply, with an additional 980 rooms in the pipeline.

The Caribbean has, in general, managed to improve performance levels too. Both occupancy and ADR (Average Daily Rate) have begun to improve. Across the region RevPAR (Revenue per Available Room) has enjoyed a moderate increase. In year-to-date October 2014 results, St Lucia increased RevPAR more than any other Caribbean destination. RevPAR grew by 24.0% to $259.71, which placed it at the top of the Caribbean RevPAR leader board, with Jamaica next in line with a RevPAR increase of 23.6 percent to $148.55. Aruba and the Turks & Caicos Islands also both achieved RevPAR increases of 15.4% and 13.1% respectively.

Overall the pipeline and performance suggest that the tourism sector is in a far better position than it was 5-6 years ago and set for future growth. The improvement is certainly positive for real estate investors too. Typically, the opening of hotels brings with it investment in an area and its infrastructure. So, good news for the hotel sector often means good news for the real estate sector too. All in all, a pipeline with promise.

 

This article was originally published in Issue 5 of The Caribbean Property Investor magazine. To read the full issue, click here.