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Unlocking Opportunities in the Caribbean Hotel Market: Strategic Approaches for Developers and Investors

Executive Summary

The Caribbean hotel market presents a unique mix of challenges and opportunities for developers and investors. 2024 has been marked by fluctuating economic conditions, limitations on construction financing, an increased cost of equity, and of course a continued threat caused by climate change. Fortunately, the post Covid19 demand travel has continued with record ADR and occupancy rates. In these uncertain times, having actionable market data is key to successful investment and development. At AG&T we explore the value of comprehensive market studies, providing a roadmap for developers, investors, and asset managers to capitalize on emerging opportunities.

In today’s complex and competitive hotel development landscape, particularly in the Caribbean, having real-time, data-driven insights is critical for success. Developers and investors who rely on outdated or incomplete information risk making costly decisions. A well-executed market study provides the essential intelligence needed to assess opportunities, identify risks, and develop strategic approaches to investment, whether in new developments or the acquisition of distressed assets.

Market Overview

1. Tourism Trends and Data-Driven Insights:

The Caribbean remains one of the most popular tourist destinations globally, but tourism patterns are shifting. Post-Covid19 recovery travel trends reveal a growing preference for boutique, eco-friendly, and experiential hotels over traditional large-scale resorts. A market study provides granular data on these trends, helping developers and investors align with consumer preferences and focus on markets with the highest demand potential.

2. Key Growth Markets Identified Through Market Studies:

– Emerging Markets: A comprehensive study identifies little known or explored market areas. At AG&T we specifically look for new trends in destinations as well as existing markets that are growing beyond their “tried and true.” For example, locations like Sint Maarten is demonstrating great growth opportunities due to rising demand for unique and luxury travel experiences.

– Distressed Assets: Market studies pinpoint distressed assets. These reports offer actionable insights on pricing, market saturation, and infrastructure development, enabling investors to make informed decisions on acquisition and repositioning strategies.

3. The Value of Local Market Intelligence:

While national or island-wide trends are useful, localized data is essential for accurately assessing a hotel project’s potential. A robust market study provides detailed insights at the regional, city, or even neighborhood level, ensuring that developers and investors have a clear picture of demand, competition, and pricing within specific micro-markets.

What a Market Study Provides for Developers and Investors

1. Feasibility and Opportunity Assessment:

– Demand Forecasting: A market study analyzes current and projected demand for hotel rooms in the target market. For example, in regions like St. Maarten or St. Kitts, understanding whether tourism demand is driven by cruise visitors, long-term vacationers, or business travelers can drastically change a project’s design and service offerings.

– Competitive Analysis: Detailed reports compare the competitive landscape, outlining the strengths and weaknesses of existing properties. For instance, a study in the Dominican Republic may reveal that while large resorts are abundant, there’s an unmet demand for boutique, wellness-focused hotels. This insight allows developers to fill a gap in the market.

2. Financial Modeling and Profitability:

– Revenue Projections: Market studies provide data on room rates, occupancy levels, and operating costs in the target market. Financial models help investors calculate expected revenue and ROI under different scenarios. Whether targeting distressed assets in Puerto Rico or new developments in St. Vincent, having accurate financial projections is key to securing financing and ensuring long-term profitability.

– Capital Expenditure Insights: For distressed properties, market studies identify necessary capital improvements and calculate the potential return on those investments. Investors can make informed decisions on whether rehabilitation costs will result in the desired market repositioning and profitability.

3. Site Selection and Location Analysis:

– Site-Specific Data: A market study dives deep into location-specific factors, such as tourism patterns, infrastructure development, and government incentives. For example, a report on

– Accessibility and Market Entry Barriers: Islands that require two stops have historically been slow to attract new hospitality inventory. Challenges in getting to the island is a crucial factor for a developer. However, what happens when travel length shifts due to “work-at-home” trends? A market study will assess the impact of air travel, ferry services, or visa requirements on potential guest numbers as well as the absorption of for sale condo-hotels.

4. Regulatory and Tax Environment:

– Navigating Local Laws: Each Caribbean nation has its own set of legal, tax, and regulatory challenges. Market studies include detailed breakdowns of local regulations, such as property taxes, hotel licensing, and foreign investment restrictions. Developers and investors benefit from understanding these complexities before committing resources to a project.

– Incentive Programs: Many Caribbean nations offer tax breaks or incentives for hotel development, especially for projects that boost local employment or align with sustainability goals. Market studies identify these opportunities, allowing investors to capitalize on favorable policies.

Competitive Positioning: Why AG&T Market Studies Stand Out

1. Tailored Insights:

Unlike generalized reports, AG&T market studies are customized to the client’s specific project goals and investment criteria. Whether you’re acquiring a distressed asset or launching a new hotel development, we offer data-driven insights designed to optimize your decision-making process.

2. Thirty-one years of Experience in the Caribbean:

With over 30 years of experience in Caribbean hotel development, AG&T leverages deep relationships and on-the-ground expertise to provide unparalleled market intelligence. Our studies incorporate both quantitative data and qualitative insights from local stakeholders, ensuring a comprehensive view of each market.

3. Proprietary Data Access:

Our clients benefit from access to proprietary datasets that are not available through public sources. This includes up-to-date information on hotel performance metrics, traveler demographics, and competitive pricing data—ensuring that you have the most current and relevant information at your fingertips.

4. Miami Based

Our main offices are based in Miami, Florida. Miami is the capital of the Caribbean and allows us to tap into a vast array of events, conferences, thought leadership programs, and associations.

Service Offerings for Market Studies

1. Basic Market Study Package: To buy or not to buy

– Focus on feasibility and high-level market analysis.

– Includes demand assessment, competitive analysis, and location data.

Ideal for preliminary project evaluations or investors seeking initial insights into a market.

2. Foundational Market Study Package: Creating the Highest and Best Use development

– Comprehensive analysis, including financial modeling, revenue projections, and site selection guidance.

– Detailed breakdown of regulatory and tax environments.

– In-depth competitive landscape analysis and investor reports.

– Site planning and design recommendations

– Sales and marketing guidance in terms of pricing inventory, rental program, ROI, and HOA, and hotel brand recommendations.

Ideal for investors and developers looking for a detailed blueprint to guide decision-making for their internal team.

3. Advanced Market Study Package: Building the Capital Stack

– Implement architectural designs into financial modeling

– Establish capital stack requirement

– identify key project metrics, returns, and waterfall structure.

Ideal for investors and developers looking for a presentation focused document to attract capital and construction debt.

Case Study: “Pioneering Luxury: A Case Study on Developing Sint Maarten’s First Five-Star Hotel”

In 2019, AG&T initiated the first of three comprehensive market studies for a 125-acre beachfront parcel at Indigo Bay on the Dutch side of Sint Maarten. The phase one study focused on determining the highest and best use for the land, offering insights into project density, hotel characteristics, and land pricing. Based on this research, AG&T prepared an offering memorandum, which became a key resource for a developer conducting due diligence. As a result, the developer secured an option on the property, marking the initial step towards a major luxury development.

As part of the due diligence process, AG&T conducted a Foundational Comparative Market Study, essential for evaluating the region’s market potential. Since Sint Maarten had not seen a new luxury hotel in decades, AG&T explored 11 distinct luxury hotel projects across key markets, including Anguilla, St. Barths, Turks and Caicos, Cabo San Lucas, Panama, and Costa Rica. The study provided a detailed analysis of the competitive landscape, pricing models, unit size dimensions, and buyer preferences, leading to a full-scale project design. This design phase, supported by architecture, engineering, legal, and marketing teams, resulted in the creation of the Vie L’Ven hotel and residences, complete with carefully chosen hotel brand partners, food and beverage concepts, and spa affiliations.

As the global landscape shifted due to the COVID-19 pandemic, AG&T conducted a third and In-depth Market Study just prior to the project launch in February 2024. This study revealed key changes in pricing metrics, amenity preferences, and inventory release strategies, helping to align the development with the evolving needs of the post-pandemic travel and tourism market.

“We are very excited about the Vie L’Ven Hotel and Residences development. The research conducted by AG&T helped us better define the project scope and fine tune the condo-hotel unit offering.” Jordan Debrincat, VP Altree development.

By February 2024, Vie L’Ven broke ground. The first phase of condo-hotel residences have been successfully marketed and sold, positioning the development as a premier luxury destination in Sint Maarten.

Conclusion: The Strategic Value of a Market Study

In today’s competitive and fast-changing Caribbean hotel market, having access to reliable, actionable data is more critical than ever. A well-executed market study provides developers and investors with the insights needed to navigate challenges, capitalize on opportunities, and make confident, informed decisions. Whether you are looking to acquire distressed assets, enter new markets, or reposition existing properties, AG&T provides tailored market studies offer the strategic guidance needed to ensure long-term success.

About AG&T

AG&T is a leading Caribbean development and advisory founded in 1993. We have offices in Miami, Palm Beach, and Puerto Rico. AG&T concentrates in creating resort developments, island projects, and master planned communities. We have a track record in over 18 Caribbean islands in 55 projects that is valued at 1.5 Billion USD. Our key services include:

• Hotel Development and planning

• Commercial Real Estate Sales

• Capital Advisory (Equity | Debt)

To learn more contact us at amanda@agandt.com or visit our web site www.agandt.com.

September 24-25 – CARIF 2025 Financing For Caribbean Infraestructure

Looking to secure financing solutions for Caribbean projects? Don’t miss CARIF 2025 Financing For Caribbean Infrastructure on September 24-25 at Coconut Grove’s luxurious Ritz Carlton. Discover the new players in investment funds and sovereign wealth funds, and explore their appetite for collaboration. Uncover the opportunities for regional commercial lenders and multilateral development banks to partner with you. Dive into the latest trends in financial models for infrastructure development and the driving forces behind them. Above all, uncover the elusive investment opportunities waiting for you in this dynamic industry. Join us to propel your investments to new heights!

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Strategies for Coastal Resilience

As sea level rise, coastal storms, flooding, erosion, and subsidence increasingly threaten our coastal communities, many land use professionals have been innovating solutions. In this webinar, speakers from design, engineering, and finance backgrounds will feature case studies of coastal resilience strategies in real estate and land use.

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Building Resilient Communities

Conversation with Patricia Carrero

2 Videos

Preview

6:13

Full Interview

26:59

Building Resilient Communities

Florida’s resilience continues to be a growing practical and financial priority. Some 80 percent of Florida’s 22 million residents live within 10 miles (16.1 km) of the coast. The stakes from climate related catastrophes are high. Topping the list of costliest storms to hit Florida, in 2022 dollars, is Ian, at $84 billion, according to the U.S. National Oceanic and Atmospheric Administration. As existing buildings age and population growth across the state invites continued losses, new sustainable solutions are needed.

Babcock Ranch in Southwest Florida is a new town expected to have over 50,000 people at buildout. It’s known globally as being “the nation’s first solar-powered town” and showcases around 800 impressive acres of solar panels. The master-planned community is best known however for withstanding hours of sustained winds over 100 miles per hour (161 kph) when Hurricane Ian made landfall in September 2022. With homes and other buildings left mostly unscathed, residents were able to remain home after the storm, and the community welcomed storm refugees to its shelters.

Today many eyes are fixed on this sustainable new town including myself and Amanda Staerker, one of the project’s early contributors in the land design. Together, we toured Babcock Ranch and have shared with you some of the site visit insights.

The main contributors to this success of Babcock include new construction to Florida Green Build Certification standards, underground utilities, native landscaping, and a land plan that minimizes intrusion into the natural systems.

In a recent ULI article, Building for Resilience: How Newer Construction Homes Fared in Florida’s Hurricane Season, the CEO of Babcock Ranch, Syd Kitson, stated,

“Storm safety was absolutely at the top of our list…How could we convince people they could shelter in place? We knew if we did it right from the beginning, we could prove they could.”

Babcock has taught us that we can design for sustainable living by promoting walkability, alternative modes of transportation, and by embracing technologies that allow us to reduce energy. It has taught us that we need to work with nature and to re-introduce back into our built environments the ecology that provides a natural protection.

https://urbanland.uli.org/public/building-for-resilience-how-newer-construction-homes-fared-in-floridas-hurricane-season/

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Ready to Recession Proof 2023?

Ready to learn more.

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Adam Greenfader soon to release new book

FOR IMMEDIATE RELEASE

Adam Greenfader Set To Release His New Book – “Why Puerto Rico Now: A Masterplan For Resurgence, Resiliency and Long-Term Economic Growth”

Puerto Rico and the Internal Revenue Service had created a series of tax incentives to bring in new businesses and people to the island. This had the unintended consequence
of attracting a new breed of entrepreneurs – blockchain and crypto investors. Suddenly, Puerto Rico finds itself leading a technological revolution with thousands
of people bringing new ideas, connections, and capital to the island.

Miami, Florida, November 2, 2022, Adam Greenfader’s motivation for Why Puerto Rico Now originates from his first-hand experience of living through climate related tragedies. September 2022 marked the five-year anniversary of Hurricanes Irma and Maria – the worst climate disaster in Puerto Rico’s modern-day history. Adam also had several family members perish in the building collapse in Surfside, Florida.

New approaches are urgently needed to rebuild Puerto Rico for the long term and create an independent economic model that will last generations. The author lived in Puerto Rico for 25 years and completed over 1 billion dollars in residential, hospitality, and commercial developments in Puerto Rico. Adam continues to work on-island and is a champion for Puerto Rico and avid organizer of Puerto Rico based investment events, on-line seminars, and island promotional publications.

Why Puerto Rico Now will be soon released in a digital share format or NFT. This new technology will allow those who collaborated in the work to participate in its success. The goal is that Why Puerto Rico Now becomes a peer-to-peer platform for innovation.

This book is intended for the 3 million Puerto Ricans that live on island and the 5 million that live off-island primarily in NYC, NJ, and Florida. Why Puerto Rico Now may be of specific interest to the more than 15,000 Act 60 (formerly Act 20/22) grantees who are looking to Puerto Rico as a place to live, invest, or to help economically.

On November 14, 2022, Adam will be officially launching his new book at the Puerto Rico Builders Association annual conference in San Juan, Puerto Rico. It is also available on Audio read by the author.

About The Author:

Adam Greenfader is a recognized business leader, speaker, and forward-looking thinker. He is the chairman of AG&T, a real estate development and advisory firm based in Miami, Florida.

AG&T specializes in residential development, hospitality, and island projects. Adam moved to Puerto Rico in 1993 and lived in San Juan for 25 years, where he and his wife raised their two children. Part of his motivation for this book comes from his first-hand experience of living through multiple hurricanes and climate change related tragedies.

He holds a Master of Real Estate Development (M.R.E.D.) degree from the University of Southern California and earned a Bachelor of Arts degree in Government from Clark University. Adam attributes his passion for art, design, and photography, from his studies at the Universite de la Sorbonne, in Paris, France.

Adam Greenfader was an early innovator and likes to say O.G. in Puerto Rico’s internet development with the launching of vidacool.com, a social media community for Hispanic youth. Adam is passionate about the convergence of blockchain and real estate, finding innovative solutions to sustainable development and creating resilient communities.

Adam has been a long-time member of the Puerto Rico Builders Association, the National Association of Home Builders, and the Caribbean Green Building Council. Adam Greenfader currently chairs the Urban Land Institute’s Caribbean committee in Southeast Florida/Caribbean. In his spare time, he enjoys mentoring students at the University of Miami Master of Real Estate Development program.

As Puerto Rico turns a page on a new chapter in its economic development, Adam is hopeful for a better tomorrow.

For complete information, visit: www.whypuertoriconow.com

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18 Billion For The Next Great Construction Boom

San Juan, Puerto Rico.

Last week The Puerto Rico Builders Association held its 70^th year conference in San Juan Puerto Rico. The historic event was inaugurated with a conversation on Financing the Next Great Economic Construction Boom. The panel included Michael McDonald, Executive Vice President and Group Director at Firstbank, Luis Alemañy President and CEO at the Economic Development Bank of Puerto Rico, and Eric Delgado Business Banking Relationship Manager at Acrecent Financial Corporation and Adam Greenfader, Managing Partner at AG&T.

It was clear from the conference panelists, that after more than fifteen years of stagnate growth, Puerto Rico appears ready to build back better. Billions of dollars of FEMA and CDBG-DR funds are being allocated in what will be the largest government funding program in US history. While much of the Federal funds will be used to subsidize projects, the group was in agreement that there is a huge need for private investment and capital to bridge the financing gapMichael McDonald, Executive Vice President and Group Director at Firstbank, made the historic announcement that the bank is opening up its construction division. Several members from the newly formed team were present in the packed room including Carlos Navarro and Mei Li Tsai Rivera. “There is no better indicator of an economy that is ready to grow that when a bank reopens its construction division”, quoted Alfredo Martínez-Álvarez, Jr., Chairman of the Puerto Rico Builders Association.

Equally promising, Luis Alemañy President and CEO at the Economic Development Bank of Puerto Rico, was asked about the much awaited CDBG-DR funding. Mr. Alemañy explained that the Economic Development Bank of Puerto Rico has already started allocating over $225 Million dollars to small entrepreneurs. The group was especially receptive to the fact that the grants are being disbursed in $50,000 tranches and does not require repayment.

Since 2008, Puerto Rico has gone from twelve financial institutions to less than four. Eric Delgado Business Banking Relationship Manager at Acrecent Financial Corporation, sees a new role for niche lenders filling that gap in Puerto Rico. He specifically discussed how Acrecent can play a role in funding new construction projects. “We are able to get to funding much faster than traditional banks and also have the capacity for higher loan to coast ratios. Both Firstbank and Acrecent mentioned that capital is seeking anywhere from 25%-35% of project equity.

“As Puerto Rico gets ready to build thousands of much needed homes, critical infrastructure and other key projects, it will be up to both private and public institutions to step up and provide the much needed capital and leadership”, quoted Adam Greenfader of AG&T. All of the panelist were in agreement that the island in the next few years is ready for strong growth. They specifically mentioned that in addition to the more than 8 billion dollars of Federal Grants, Puerto Rico has one of the most robust tax incentives and credit programs in the world. The hospitality incentive with a 40% tax credit was specifically highlighted as a very strong component of any capital stack today.

Helping to plan a better future for the island, The Puerto Rico Builders Association will be holding its annual conference on September 20 and 21, 2022. Speaking and sponsorship opportunities are available and you may contact AG&T at contact@agandt.com.

AG&T is a real estate development and consulting company founded in 1998 with headquarters in Miami, Florida. Our track record spans over 55 real estate development projects in Puerto Rico, Sint Maarten, Costa Rica, Panama, Mexico, Dominican Republic, and various other Caribbean islands.

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Adam Greenfader Shares New Opportunities in Puerto Rico

Adam Greenfader, Managing partner of AG&T (7 minute video) speaks on new opportunities in Puerto Rico. Learning this video about the the island’s history and how you can learn from the past to generate real value and long term economic growth. The video includes new information about tax incentives, the tourism tax incentive, Act 20/22, and other tax credits for real estate development. Contact us for more information and to learn about Why Puerto Rico Now

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Helping Puerto Rico since the 1950’s

70 years ago, when the Puerto Rico Builders Association was formed, the United States was on the brink of entering the World War II. December 7, 1941, would be considered a day that would “live in infamy”. Thousands of Puerto Ricans as American citizens fought in the War and would return home as victors to an island on the precipice of great economic growth. Thanks in large part to Operation Bootstrap, o “Manos a La Obra”, the Puerto Rico Builder’s Association has played a vital role in shaping the island’s long term economic development. The Puerto Rico Builders Association (formerly known as the Homebuilders Association) was formed in a critical period of time when the island was undergoing a massive transformation from an agricultural society into a leading manufacturing hub.

Puerto Rico would see historic growth for more than three decades and the Puerto Rico Builders Association would play a leading role in shaping the island’s zoning regulations, environmental protections, financing, and building codes (often referred to as a Miami’s building code on steroids). Puerto Rico benefited greatly from these concerted efforts by the Puerto Rico Builder Association with one of the highest homeownership rates in the Western world at 68%. Puerto Rico is also the second largest public housing jurisdiction in the United States second only to New York City.

In 2015, The Puerto Rico Builders Association, under the leadership of then PR Builders president, Ricardo Alvarez Diaz Villalon joined forces with the Urban Land Institute Southeast Florida/Caribbean District Council. ULI founded around the same time as the PR Builders Association, is one of the oldest and largest networks of real estate and land use experts in the world. ULI’s mission is to shape the future of the building industry and create thriving and sustainable communities around the globe. Shortly thereafter, Puerto Rico was devastated with two back-to-back category five hurricanes.

Hurricanes Irma and Maria destroyed most of the island’s electrical infrastructure and informal housing stock at a cost estimated over 100 billion dollars. ULI together with the Puerto Rico Builders Association created a task force to study the effects of the storms and how to build back better. Under then ULI president Greg West, the Puerto Rico Builders Association and ULI convened national panel of experts and created a specific action plan for the municipality of Toa Baja.

The Puerto Rico Builders Association and ULI have since held multiple meetings and conference throughout the years in both Puerto Rico and Miami to explore new areas of synergy and improvements to the island’s build environment. ULI’s current president, Scott McLaren was recently quoted, “we strongly value our long standing partnership with your organization and admire the leaders who go above and beyond, especially when faced with such tremendous obstacles.”