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

Market Research AG&T

Market Research AG&T

 

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 Developers and investors who rely on outdated or incomplete information risk making costly decisions.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. 

Building a More Resilient Caribbean: Why Climate Infrastructure Has Become the Region’s Highest Priority

CARIF 2024

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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Resilience by Design: Lessons from Florida’s Most Sustainable Community

Resilience by Design: Lessons from Florida's Most Sustainable Community

Conversation with Amanda Staerker

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Resilience by Design: Lessons from Florida’s Most Sustainable Community

As climate-related events become more frequent and more costly, resilience has evolved from an environmental aspiration into a financial imperative.

For developers, investors, lenders, insurers, and public officials, the question is no longer whether to build resiliently—it is how quickly resilient design can become the new standard.

Few places illustrate this transformation better than Babcock Ranch in southwest Florida.

Often recognized as America’s first solar-powered town, Babcock Ranch is much more than a sustainability success story. It is a real-world demonstration that resilient planning, thoughtful engineering, and environmental stewardship can protect lives, preserve property values, and create stronger long-term investment returns.

The stakes could not be higher.

Nearly 80 percent of Florida’s 22 million residents live within 10 miles of the coastline, making the state one of the world’s most climate-exposed real estate markets. Hurricanes continue to increase both in frequency and financial impact. Hurricane Ian alone caused an estimated $84 billion in damages, making it one of the costliest natural disasters in U.S. history.

As existing infrastructure ages and population growth accelerates across coastal regions, communities can no longer afford to rebuild using yesterday’s standards.

They must design for tomorrow’s realities.

Expected to house more than 50,000 residents at full buildout, Babcock Ranch has attracted worldwide attention not simply because of its approximately 800-acre solar energy installation, but because of how it performed when tested under real-world conditions.

When Hurricane Ian struck southwest Florida in September 2022 with sustained winds exceeding 100 miles per hour, the community emerged largely intact. Homes experienced minimal damage, underground utilities remained operational, residents were able to shelter safely in place, and the town even provided refuge for neighboring communities affected by the storm.

That level of performance was no accident.

It resulted from decades of intentional planning.

Recently, I had the opportunity to visit Babcock Ranch alongside Amanda Staerker, one of the project’s early land planners. Walking the community reinforced an important lesson: resilience is not created by a single technology or building material. It is the product of thousands of interconnected planning decisions.

From the outset, the development incorporated Florida Green Building standards, underground utility infrastructure, native landscaping, extensive stormwater management, preserved wetlands, and a master plan that works with the natural environment rather than against it.

Perhaps most importantly, Babcock Ranch demonstrates that sustainability and economics are not competing objectives.

They reinforce one another.

Resilient communities experience less physical damage, shorter business interruptions, lower long-term maintenance costs, greater insurance confidence, stronger investor interest, and higher long-term asset values. For developers, resilience is increasingly becoming one of the strongest drivers of financial performance.

As Syd Kitson, CEO of Babcock Ranch, observed in a recent Urban Land Institute article:

“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.”

That philosophy offers valuable lessons well beyond Florida.

Across the Caribbean, coastal communities face many of the same challenges: stronger storms, rising insurance costs, aging infrastructure, and growing demand for sustainable development. The principles demonstrated at Babcock Ranch—working with natural systems, preserving ecological assets, investing in resilient infrastructure, and planning for long-term adaptation—are directly applicable throughout the region.

At AG&T, we believe the future of real estate development lies at the intersection of resilience, sustainability, hospitality, and sound economics.

Building resilient communities is no longer simply about reducing environmental impact.

It is about protecting investments, strengthening local economies, preserving communities, and creating places capable of thriving for generations.

Resilience is no longer a feature.

It is the foundation of responsible development.

Puerto Rico’s Manufacturing Renaissance Building the Next Generation of American Industry

Puerto Rico's Manufacturing Renaissance: Building the Next Generation of American Industry

Every crisis creates an opportunity to rethink the future.

When the COVID-19 pandemic disrupted global supply chains, it exposed the risks of relying on overseas manufacturing for products critical to national security and public health. At the same time, it highlighted Puerto Rico’s unique strategic advantages. With more than seventy years of manufacturing expertise—particularly in pharmaceuticals, medical devices, biotechnology, and advanced manufacturing—the island was uniquely positioned to play a larger role in strengthening America’s domestic supply chain.

That realization became one of the central themes explored in my book, Why Puerto Rico Now: A Masterplan for Resurgence, Resiliency, and Long-Term Economic Growth. While unprecedented federal reconstruction funding and competitive tax incentives have helped accelerate Puerto Rico’s recovery, long-term prosperity cannot depend solely on disaster relief or temporary incentives. Sustainable economic growth requires a diversified economy built upon innovation, manufacturing, entrepreneurship, technology, and private investment.

One of the leaders helping shape that conversation is Robert Crager, whose decades of experience in Puerto Rico’s manufacturing sector provide a unique perspective on the island’s future. In this interview, we discuss Puerto Rico’s historic role as a manufacturing powerhouse, the opportunities created by the reshoring of critical industries, workforce development, and why advanced manufacturing continues to be one of the island’s greatest competitive advantages.

As Puerto Rico enters a new era of investment, manufacturing represents far more than an economic sector—it is a foundation for resilience. Combined with growth in hospitality, technology, renewable energy, life sciences, and infrastructure, manufacturing has the potential to help create a more diversified and self-sustaining economy capable of generating prosperity for generations to come.

The conversation with Robert reinforces a simple but powerful idea: Puerto Rico’s greatest opportunities lie not only in rebuilding what existed before, but in creating an economy that is stronger, more innovative, and more globally competitive than ever before.

Ready to learn more.

Adam Greenfader Releases Why Puerto Rico Now: A Masterplan for Resurgence, Resiliency, and Long-Term Economic Growth

FOR IMMEDIATE RELEASE

Adam Greenfader Releases Why Puerto Rico Now: A Masterplan for Resurgence, Resiliency, and Long-Term Economic Growth

A forward-looking vision for Puerto Rico’s economic future through resilience, innovation, and sustainable development.

MIAMI, FLORIDA — November 2, 2022 — Real estate developer, author, and Caribbean thought leader Adam Greenfader announces the release of his new book, Why Puerto Rico Now: A Masterplan for Resurgence, Resiliency, and Long-Term Economic Growth—a comprehensive vision for building a stronger, more resilient, and globally competitive Puerto Rico.

Rather than focusing solely on recovery from past crises, the book presents a long-term strategy for transforming Puerto Rico into one of the Caribbean’s leading centers for innovation, hospitality, manufacturing, renewable energy, entrepreneurship, and sustainable economic development.

The inspiration for the book is deeply personal.

Having lived in Puerto Rico for twenty-five years, Greenfader experienced firsthand the island’s extraordinary resilience through economic recession, hurricanes, earthquakes, and the COVID-19 pandemic. The fifth anniversary of Hurricanes Irma and Maria served as a reminder that rebuilding cannot simply restore what once existed—it must create a stronger foundation for future generations.

“The question is no longer how Puerto Rico recovers,” says Greenfader. “The question is how Puerto Rico can emerge as one of the most innovative, resilient, and economically competitive jurisdictions in the Americas.”

Drawing upon more than three decades of experience and participation in over $2 billion of residential, hospitality, and mixed-use development projects throughout Puerto Rico and the Caribbean, Greenfader explores the opportunities created by federal reconstruction investment, strategic tax incentives, advanced manufacturing, technology, hospitality, renewable energy, and the island’s unique position as a bridge between the United States, Latin America, and the Caribbean.

The book argues that while federal recovery funding and investment incentives have accelerated Puerto Rico’s economic momentum, lasting prosperity will depend upon creating a diversified economy driven by private investment, entrepreneurship, innovation, education, and sustainable development.

Throughout its chapters, Why Puerto Rico Now presents practical ideas alongside bold long-term concepts designed to stimulate discussion among business leaders, policymakers, developers, entrepreneurs, investors, students, and members of the Puerto Rican diaspora.

The book is intended not only for the more than three million people who call Puerto Rico home, but also for the millions of Puerto Ricans living throughout the continental United States who remain deeply connected to the island’s future. It also serves as a resource for investors, entrepreneurs, developers, and business leaders exploring opportunities within one of the Caribbean’s most dynamic economies.

Adam Greenfader officially launched Why Puerto Rico Now during the Puerto Rico Builders Association’s Annual Convention in San Juan, bringing together leaders from government, finance, construction, hospitality, and real estate to discuss the island’s next chapter of economic growth.

Today, the book continues to contribute to conversations surrounding Puerto Rico’s future through conferences, universities, investment forums, industry organizations, and thought leadership initiatives throughout the Caribbean and the mainland United States.

About the Author

Adam Greenfader is Chairman of AG&T, a Miami-based real estate development and capital advisory firm specializing in hospitality, residential, mixed-use, and island developments throughout Puerto Rico, the Caribbean, and Latin America. Founded in 1998, AG&T has participated in more than 55 development projects with an aggregate value exceeding $2 billion.

A recognized speaker on Caribbean real estate, hospitality investment, resilience, and economic development, Greenfader has organized numerous investment conferences and educational forums designed to strengthen economic ties between Puerto Rico, the Caribbean, and the U.S. mainland. He previously served as Chair of the Urban Land Institute Caribbean Council and has been an active member of the Puerto Rico Builders Association since 1993.

Greenfader earned a Master of Real Estate Development degree from the University of Southern California, a Bachelor of Arts in Government from Clark University, and completed studies at the Université de la Sorbonne in Paris. He is also an accomplished photographer, author, and mentor to graduate students in the University of Miami Master of Real Estate Development + Urbanism program.

His work continues to focus on resilient communities, regenerative hospitality, sustainable development, and creating long-term economic opportunities throughout the Caribbean.

For more information about Why Puerto Rico Now, visit www.whypuertoriconow.com.

18 Billion For The Next Great Construction Boom

 

 

San Juan, Puerto Rico.

Last week The Puerto Rico Builders Association held its 70th 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.

 

Helping Puerto Rico since the 1950’s

Puerto Rico 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 BoardThe 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.”

Come celebrate 70 with the Puerto Rico Builders Association Puerto Rico on October 27-29 in San Juan. https://constructorespr.com/convencion-2021/

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.

 

 

State of the Caribbean Hospitality Market: Capital Markets, Lending, and the Road to Recovery

State of the Caribbean Hospitality Market: Capital Markets, Lending, and the Road to Recovery

On March 16, 2021, at a time when much of the global hospitality industry remained in crisis, the Urban Land Institute Caribbean Council convened one of its most comprehensive discussions on the future of Caribbean tourism and hotel investment.

The webinar, “State of the Caribbean Marketplace,” brought together an exceptional panel of leaders representing institutional lending, development finance, hotel brokerage, destination marketing, and investment to examine the unprecedented challenges facing the hospitality sector and, more importantly, how the industry could emerge stronger.

Moderated by Adam Greenfader, Managing Partner of AG&T and Chair of the ULI Caribbean Council, the discussion featured:

  • Juan Corvinas Solans, Managing Director, Head of International Hotel Finance

  • Rogerio Basso, Head of Tourism, IDB Invest

  • Alexandra Lalos, hospitality investment professional

  • Christian Charre, Senior Vice President, CBRE Hotels

  • Brad Dean, CEO, Discover Puerto Rico

Rather than focusing solely on the immediate effects of COVID-19, the panel explored the deeper structural changes taking place across the hospitality industry and capital markets. The discussion provided valuable insights into lender responsibilities, investor behavior, hotel valuations, operational resilience, and the future of Caribbean tourism.

A Crisis Unlike Any Other

One of the central themes of the conversation was why COVID-19 differed fundamentally from the Global Financial Crisis of 2008–2009.

While both crises placed tremendous pressure on the hospitality industry, their underlying causes—and therefore the appropriate responses—were entirely different.

The Global Financial Crisis originated within the financial system itself. Excessive leverage, declining real estate values, and failures in the banking sector led to a widespread credit contraction. Liquidity evaporated, financing became scarce, and many otherwise viable projects were unable to refinance their debt. Banks faced solvency concerns, and distressed asset sales became commonplace as lenders worked through troubled portfolios.

COVID-19 presented an entirely different challenge.

Hotels did not fail because of poor underwriting or excessive leverage. In many cases, they entered 2020 with healthy balance sheets, strong occupancies, and positive cash flow. Instead, the pandemic abruptly halted global travel through government-imposed restrictions and public health measures. Demand disappeared almost overnight, not because travelers had lost interest in tourism, but because they simply could not travel.

This distinction fundamentally changed the role of financial institutions.

The Responsibility of Lenders During Extraordinary Times

One of the most compelling discussions centered on the responsibilities of lenders during a crisis that was not caused by borrowers.

Panelists emphasized that traditional loan enforcement strategies would not serve either lenders or borrowers under these unprecedented circumstances.

Instead, many financial institutions adopted a collaborative approach that focused on preserving long-term asset value rather than maximizing short-term recoveries.

Throughout the Caribbean and internationally, lenders worked closely with hotel owners to provide temporary payment deferrals, covenant waivers, loan modifications, maturity extensions, and other restructuring solutions designed to bridge the industry through the temporary disruption.

This represented a significant evolution in lender philosophy.

Rather than forcing widespread foreclosures, financial institutions recognized that preserving high-quality hospitality assets would ultimately benefit borrowers, lenders, investors, employees, and local economies alike.

The discussion highlighted an important lesson from the Global Financial Crisis: unnecessary liquidations often destroy long-term value. In contrast, patience and partnership can preserve both businesses and communities during periods of extraordinary uncertainty.

Capital Never Left the Market

Another important takeaway was that while travel had stopped, investment capital had not.

Institutional investors, private equity firms, family offices, sovereign wealth funds, and hospitality-focused lenders continued to study the market throughout the pandemic.

Many viewed the crisis as a temporary interruption rather than a permanent impairment of Caribbean tourism.

The panel discussed how sophisticated investors were actively preparing for recovery by evaluating acquisition opportunities, recapitalizations, refinancing transactions, and development sites well before travel resumed.

This confidence reflected the industry’s belief that the Caribbean’s long-term fundamentals remained intact:

  • World-class tourism destinations

  • Limited beachfront supply

  • Strong luxury demand

  • Growing interest in wellness and experiential travel

  • Continued expansion by international hotel brands

  • Attractive long-term demographic trends

As history has shown, many of these investors were well positioned to participate in one of the strongest tourism recoveries in the world.

The Evolution of Hotel Finance

The conversation also explored how financing structures were evolving.

Lenders increasingly emphasized sponsor quality, operational expertise, liquidity, and business continuity planning alongside traditional underwriting metrics.

Hotel operators were expected to demonstrate greater flexibility in managing costs, staffing, technology adoption, and guest experience.

Developers likewise began integrating resilient design, sustainability, wellness amenities, and mixed-use programming into new projects, recognizing that these features would become increasingly important to both guests and capital providers.

The pandemic accelerated trends that were already reshaping hospitality finance.

A More Sophisticated Investment Environment

Rogerio Basso provided valuable insights into the role of development finance institutions in supporting tourism throughout Latin America and the Caribbean.

Unlike traditional commercial lenders, multilateral development banks often provide patient capital that can continue flowing during periods of market uncertainty. Their participation not only supplies financing but also reinforces investor confidence, promotes sustainable development, and encourages higher environmental and governance standards.

Christian Charre shared perspectives from the hotel transaction market, illustrating how valuation methodologies were adapting in response to temporary operating disruptions. Rather than relying solely on current cash flow, investors increasingly focused on normalized performance and long-term replacement value.

Brad Dean discussed the remarkable resilience of travel demand and emphasized that tourism remained one of the world’s most powerful economic engines. While the pandemic temporarily interrupted mobility, the human desire to travel, connect, and experience new destinations remained fundamentally unchanged.

Looking Back

Several years later, many of the observations shared during this discussion proved remarkably accurate.

The Caribbean experienced one of the fastest tourism recoveries globally. Hotel occupancies rebounded, average daily rates reached record levels in many destinations, institutional investment returned, branded residences flourished, and major international hotel companies accelerated expansion throughout the region.

Perhaps most importantly, the industry demonstrated that collaboration among lenders, investors, operators, governments, and development institutions could preserve long-term value even during periods of extraordinary disruption.

AG&T’s Commitment to Caribbean Thought Leadership

The State of the Caribbean Marketplace webinar reflected AG&T’s broader commitment to advancing meaningful conversations about the future of Caribbean real estate and hospitality.

Through its leadership within the Urban Land Institute Caribbean Council, collaborations with industry organizations, and partnerships with public and private sector leaders, AG&T has consistently created forums where investors, lenders, developers, hotel operators, policymakers, and academics can exchange ideas and shape the future of the region.

The conversation was never simply about surviving the pandemic.

It was about understanding how crises reshape industries, how responsible lending preserves markets, and how thoughtful leadership can position Caribbean hospitality not merely for recovery, but for long-term growth.

The lessons remain just as relevant today. Strong destinations are built not only through exceptional hotels and visionary developments, but through resilient financial systems, collaborative partnerships, and leaders willing to think beyond the next business cycle.

Could this be the year for Puerto Rico?

Adam Greenfader
 
 

Could this be the year for Puerto Rico?

 

It had been almost 12 months since my last visit to Puerto Rico. Thanks to the COVID lockdown expectations were low. The last time I visited, more than 2 years after hurricanes Irma and Maria, the devastation was still overwhelming.  Streets were lined with garbage, electrical lines in disrepair, and thousands of homes had roofs covered in blue tarps. This combined with more than ten years of economic recession made has made Puerto Rico extremely pessimistic. As I landed in Luis Munoz Marin Airport, I was thinking,  “Would the ensuing earthquakes and COVID pandemic ravage the economy even more…”

 

I travelled the entire island from coast to coast –  100 x 35 miles, in a two week period. I drove from San Juan to Aguadilla, Mayaguez, Ponce, Humacao, Fajardo, and Ocean Park.  The roads were in good condition, the street lights working, and many buildings newly painted.  Notwithstanding the COVID crisis, the economy was bustling.  Most palpable was the positive attitude and feeling of the people. I spoke with many colleagues and friends and was told that much of the hurricane insurance had circulated through the economy.  The 8-12 billion in Federal relief from CDBG-DR is expected by early 2021.  Homemade signs seeking construction workers can be seen throughout the island that read, “Se Solicita Carpinteros y Albanilles”.

While the tourists were clearly absent ‘en mass’, a handful of new boutique hotels, especially in San Juan, have been recently delivered between 2019-2020. Much of this new hotel activity is due in part to the Tourism Tax Incentive. The tax incentive provides up to 40% of the total project’s cost back to sponsors…incredibly, some of it can be used for funding as part of the initial capital stack.  While this is not common anywhere in the world, Puerto Rico’s is not a typical Caribbean destination. The total economic activity (GDP) in Puerto Rico is less than 7% for all tourism related activities.  This includes, hotels, trades, conventions, excursions, etc..   This is an astonishing low number for an island that is surrounded by warm water, beautiful beaches, and lush landscapes. Read more about why Puerto Rico is like this at: https://agandt.com/contact-why-puerto-rico-now/

These tax incentives combined with a team of dedicated individuals in the Destination Marketing Organization (DMO) –  Discover Puerto Rico and other Public Private Partnerships (Invest Puerto Rico) is helping to make Puerto Rico a thriving tourism destination. The island currently boats some of the top hotels in the Caribbean with ADR’s over $1,500 per night.  Much of this demand is generated by the Act 20/22 (now Act 60).  For the last five years, hundreds of high net worth US individuals have moved to Puerto Rico to take advantage of zero Federal capital gains.  Act 60 has resulted in over 500 families and hundreds of new business moving to Puerto Rico.  There seems to be no end in sight for these new Americans living in Puerto Rico.  

Dorado Beach

This week Puerto Rico also inaugurated for the first time in over 20 years, the same political party. The PNP or US Statehood party won the election with a mandate for political stability, reduced corruption, and closer ties with the United States. While the island’s economic crisis is far from over, the COVID pandemic has put Puerto Rico back in the spotlight for its manufacturing proficiency. The island of Puerto Rico is one of the world’s leading pharmaceutical destinations – producing more than the top 5 US States combined. As thousands of jobs come back to the USA-Puerto Rico, invariably many will end up where the cost of labor is 15% less expensive, and there is a 60 year culture of robust manufacturing.

 

So is this the year for Puerto Rico?  Strong yes if you are involved with affordable housing, luxury resorts, alternative energy and critical manufacturing.

While we at AG&T do not have the proverbial ‘crystal ball’ on the island’s long term economic growth, things feel like they are on the right track and we will have more clarity with the resolution to the island’s bond crisis, the electrical authority privatization (AEE), and the completion of the responsibilities of The Fiscal Oversight and Managemnt Board for Puerto Rico.