Summary Report by Estudios Tecnicos as submitted to the Puerto Rico Builders Association  

Hurricane Maria made landfall in Puerto Rico on Wednesday, September 20th, with sustained winds of 155 mph and gusts of up to 175 mph, causing tremendous devastation and destruction to the island’s infrastructure.

The impact of Hurricane Maria is estimated between $53.8 and $67.6 billion – Reconstruction costs alone could total $23.0 to $28.9 billion. Lost business activity was estimated at $13.7 to $17.2 billion.

In response to the aforementioned damage, over $6 billion dollars have been injected in the island’s economy through a combination of federal relief funding, central government investment, the Red Cross, and private insurers’ disbursements.

 

 

Given past experiences with hurricanes in Puerto Rico, an increase in GNP is expected in 2018 and 2019. 

Investment in construction would almost triple over the next two fiscal years.

Most of these reconstruction costs are related to housing units that need to be rebuilt over the coming months. Estimates place 40,000-60,000 homes destroyed and an additional 160,000-180,000 suffered minor to moderate damage.

However, the expansion in economic activity is only temporary. After fiscal 2019, Puerto Rico will likely return to a declining trend in GNP growth, as other socio-economic indicators will likely continue to deteriorate.

 

After 2019 that should average a negative -3.2% between 2020 and 2023. Between 2023 and 2027 1.9% growth is assumed, 2.4% between 2028 and 2032, and finally 3.0% growth from 2033 onward. The economy would reach 2006 levels by 2032.

This long recovery period is a further indicator of the massive structural damages that the economy has sustained not only from Maria but also from the prolonged economic contraction.

Economic recovery will require major structural adjustments and not simply marginal changes to improve efficiency in the public sector. 

The region and its hotel sector was significantly impacted by two, back-to-back, Category-5 hurricanes that tore through the northern Leeward Islands in September. Hurricane Irma had the greatest effect on the islands of Barbuda, St. Barth, Anguilla, St. Maarten/St. Martin, St. Thomas (USVI) and most of the BVI; while two weeks later Hurricane Maria mostly bashed Dominica, St. Croix (USVI) and Puerto Rico.

In Anguilla, it is reported that Four Seasons will re-open April, 2018, CuisinArt in the summer, and Cap Juluca in November of next year. Ce Blue and Frangipani can open as early as next month, and Zemi Beach is ready to open as soon as there is electric power.

 

 

In the BVI, damaged hotels with scheduled re-open dates include Scrub Island (February, 2018), Sebastian’s on the Beach (Q2, 2018) and Peter Island Resort (December, 2018). Other properties such as Maria’s, Village Cay and Nanny Cay are all already partially open. On the other hand, some of the major properties such as Rosewood Little Dix Bay (this resort was already closed for renovations), Long Bay Beach Resort and Bitter End Yacht Club are all closed until further notice.

In Puerto Rico there are many well-known tourist hotels already open for business or opening in early December, such as Ritz Carlton Dorado Beach, San Juan Marriott, Condado Vanderbilt and La Concha. Others with scheduled opening dates in January include Caribe Hilton, Condado Plaza, St. Regis Bahia Beach, Sheraton Old San Juan and Sheraton Puerto Rico. The Ritz Carlton San Juan is scheduled to re-pen in April. San Juan’s hotel inventory is therefore in relatively good shape compared to many smaller islands in the region. In the USVI, most of the larger hotel resorts were damaged. Those scheduled to open in 2018 include Renaissance Carambola (March), Bolongo Bay (June), Ritz Carlton (October), Marriott Frenchman’s Cove (December), and Westin St. John (November). Those that are closed indefinitely include Marriott Frenchman’s Reef, Caneel Bay and Sugar Bay.

In St. Maarten/St. Martin, all three Sonestas are closed until further notice, as is the Westin Dawn Beach, Divi Little Bay and Flamingo Beach, amongst others. St. Maarten’s hotel inventory appears to be the hardest hit overall in terms of percentage of rooms out of commission for the long term.

Conclusions and Forecasts

It appears that there will be a significant reduction in available rooms in this part of the Caribbean through the peak of tourist season 2018 due to hurricane damage, which will likely result in lower arrivals, but buoyed occupancy rates and average daily rates. We estimate approximately 5,000 rooms that were previously open will be closed throughout the primary tourist season of 2018 (at least through April) because of hurricane damage. Otherwise, the year 2017 was turning out to be relatively consistent with the prior year in terms of hotel statistics. Arrivals were continuing to grow, showing evidence if greater usage of nontraditional lodging options such as Airbnb, VRBO and other villa rental alternatives. There remains to be some concern with the growing number hotel rooms in inventory and the number of new projects being announced, and there is a significant increase in the number of rooms currently under construction (which are generally outside the hurricane affected areas). Growth in supply could result in a longer term decline in occupancy, especially if growth in arrivals begins to slow.

 

by James V. Andrews,  

Integra Realty Resources – Caribbean

Hurricanes Irma and Maria devastated Puerto Rico and left millions seeking a new place to call home. Now the effects are about to significantly impact Florida and be felt throughout New York, Illinois, Pennsylvania and other states across America.

With nearly 3.5 million Puerto Ricans planning on leaving the island (many already are here or on their way), U.S. cities undoubtedly will face a short-term burden. However, businesses could turn this into long-term advantages if they learn how to embrace the already flourishing Hispanic segment. 

Due to the proximity to the island, Florida will see the biggest influx of new residents comprised of families, business owners, doctors, nurses, lawyers, executives and other professionals, university students and more. With so many migrating within such a short timeframe, yes, it will challenge the local infrastructure, educational systems, employment rates, housing market and more. However, these fellow hard-working American citizens very quickly will begin fueling local economies, bringing more businesses and increasing diversity. They immediately will increase sales across nearly every industry — restaurants, grocery stores, retail outlets, car dealerships, banks, hospitals, colleges and so many more.

Could this swing sales as early as this holiday season? That depends on how you already view the Hispanic segment and if your marketing campaigns have been developed and executed through a culturally relevant strategy verses simple translations. Think about the significance of so many families and business owners rebuilding their lives and all the needs associated with it. If your company does not have multicultural messaging ready to embrace this market, your business surely will miss out. 

Earlier in the year, hopes were not high for fourth-quarter sales due to the perceived sluggish growth of the economy and a controversial leadership in the nation. The good news is that according to the latest report from ThinkNow, a leading Hispanic research company, Hispanics already were planning to spend 33 percent more this holiday season over last year, due to greater disposable income and better anticipated deals on technology and innovation. That number could go up, especially now with the addition of more relatives and friends from Puerto Rico moving in with or close by them. 

Approximately 1 million Puerto Ricans already live in Florida. After the disaster brought by the recent hurricanes, Puerto Ricans are projected to pass Cubans soon as the largest group of Hispanics in Florida.

By 2030, there will be a population increase of 6 million in Florida, and Hispanics will represent 30 percent of the state, according to Augusto Sanabria, president of Prospera, an economic development, nonprofit organization providing bilingual assistance to Hispanic entrepreneurs. Hispanics now constitute more than 20 percent of the state. It is estimated that 57 percent of the expected population growth will happen in counties such as Orange, Osceola, Hillsborough, Miami-Dade, and Broward, all of which already have a fast-growing Hispanic population. 

“These numbers confirm that our services are going to continue to be essential to ensure that Hispanics entering our market not only assimilate faster, but also increase their chances of succeeding in business,” said Sanabria. “These numbers don’t reflect the expected influx of business owners from Puerto Rico.”

For a successful fourth quarter and beyond, focus on the benefits of this changing market and implement these 3 key tips:

Embrace diversity: Over the decades, many corporations have thrown diversity under the rug. Is it because they are ignoring the statistics or do they think every segment responds to the same messaging? How are you planning to increase sales and assure a sustainable growth if you are neglecting the business impact that minorities, especially Hispanics, are bringing to the market place? This is a lucrative market that could enable your company to obtain a sustainable growth in the years to come.

Understand the differences: Many executives still identify the Puerto Rican community as the Mexican immigrant population. Puerto Ricans are Americans. They have U.S. passports and represent over 46 percent of the Hispanic population in Central Florida. You must get to know the new markets affecting our economy and ultimately your business. How much profit could you gain with a little extra knowledge?

Be prepared: It is estimated that 100,000 to 200,000 Puerto Ricans potentially could relocate, at least temporarily, to Florida. I strongly believe that based on the Hispanic market composition, Orlando and Tampa will be impacted the most. Puerto Rican entrepreneurs and business owners will begin fueling the local economy soon. How can you gain this loyal market?

If the Hispanic market was not on your priority list, it is time to rethink and reevaluate your marketing plan now. There is still a large population of foreign-born Hispanics, many of whom use advertising as an information vehicle to learn about brands and share their findings with others. Remember, diversity is a strong growth component of any modern city. And being adaptable is a strong asset to any successful company.

 

Hernan Tagliani , Contributing writer, Orlando Business Journal, Oct 11, 2017

 

 

 

 

 

 

The Puerto Rico Builders Association and top Puerto Rican government officials present, “Puerto Rico is Open For Business” at recent ULI event in Miami. Pictured from left to right – Adam Greenfader– Principal AG &T, Ricardo Alvarez – President of Álvarez-Díaz & Villalón| President of the ACPR, Manuel Laboy – Secretary of the Puerto Rico Department of Economic Development and Commerce Denisse Flores – Director of BDO Puerto Rico, Daniel Acosta – Daniel Acosta: Senior Vice PresidentMcCormack, Baron, Salazar Inc., José Izquierdo – Executive Director of the Puerto Rico Tourism Company. #PuertoRico#UrbanLand Institute#PuertoRicoOpenForBusiness

In an afternoon lunch session almost half of the audience had either been to PR or was doing business on the island. The message from the speakers was clear. The time is now. After almost a decade of crisis, consensus is clear, “the bottom has been hit”, and now the island is in a position to grow due to three key elements:

1. The approval of the US Congress’ Fiscal Committee
2. Ricardo Rosello’s local government’s clear and present focus on growing the economy
3. Some very lucrative tax incentives like law 20/22  that has drawn over 1,000 investors