The Bisnow Caribbean Hospitality and Tourism Summit held on August 1, 2019 at the Intercontinental Hotel in Miami drew over two hundred investors, developers, hotel operators and other industry professionals. Sponsored by the Puerto Rico Builders Association, this “not to miss” investor event celebrated its 3 rd year. You could feel the excitement in the audience that investor sentiment remains strong two years after the devastating hurricanes ravaged the islands. Business leaders and government officials representing Puerto Rico, Dominica and St. Maarten spoke about their respective recovery and resiliency strategies.
“We are proud to say that our island just closed fiscal 2019 with a positive GDP in over eleven years. Conservative estimates project this 2% growth to double next year with tourism as a major catalyst for economic growth, explained Emilio Colon Zavala, President of the Builders Association of Puerto Rico. The Puerto Rico panel moderated by Adam Greenfader of AGT clearly set the record straight at the event, that the recent political events have not stopped investment and most believe that it will lead to more transparency and Federal funding coming to the island.
Ms. Carla Campos, The Executive Director of The Puerto Rico Tourism Company and Brad Dean, head of the island’s first destination marketing organization, both shed light on Puerto Rico’s unique position to double its tourism offering across a horizontal platform and increased Puerto Rico’s overall GDP of tourism which sits at less than 7%.
“Puerto Rico is open for business and welcoming hospitality investors who are becoming aware of the unique set of competitive advantages which the Island boasts and that were previously unavailable. Aggressive government reforms, unmatched tax incentives, Island-wide eligibility for Opportunity Zone funds, and an economy on the rise, position Puerto Rico on a path to become the next hot ticket in hotel development,” said Campos. “The Island’s tourism economy has evidenced an aggressive recovery and is now experiencing growth. The Government of Puerto Rico is pursuing the expansion its hotel development pipeline and is committed to supporting the investment community in the process.”
“The time is now to invest in the island as airlift has recovered, cruise lines are hitting record breaking numbers, and the government more than ever is open for business,” discussed Mr. Brad Dean. The panel concluded its session with key highlights from Francisco Luis of Kevane Grant Thorton that explained the continued growth of the Act 20/22 with over 500 this year. Patricia Georges of McConnell Valdez believes that the Tourism Tax credit that provides developers up to 40% back on invested capital to build or renovate hotels and other tourism offerings will be the principal driver in doubling the islands hotel inventory in the ten years.
Cole Shephard, the CFO of LifeAfar, a recently created Opportunity Zone Fund closed last month on a hotel redevelopment in Old San Juan and believes the numbers speak for themselves. “If you compare prices in the old cities of Panama, Cartagena and San Juan, the winner is clear. Values in Puerto Rico are 60% of the other locations and then you get to add 20% Historic Tax Credits, 40% Local Tourism Incentives and now OZ capital gains benefits,” discussed Mr. Shephard.
Unique to this year’s event, was the Caribbean Project Showcase, where investors had the opportunity to evaluate new hotel development opportunities. Projects from Puerto Rico, Bahamas, Dominica and Sint Maarten were presented by some of the Caribbean’s top architectural and land planning companies such as Borges and Associates, Winstanley Architects, Land Design, and OBMI. One clear take away from the presentations, is that resiliency and sustainable design is a top of mind consideration today for project owners. Steve Davis Associate broker with Douglas Elliman and representative of the owners at Indigo Bay – a proposed 250 key hotel development project in Dutch Sint Maarten, discussed the importance of having a resilient site. “Indigo Bay withstood the events of 2017 with little damage. Much of this was due to the natural contours of the bay shaped mountain terrain but much was also because the owners put all of the infrastructure underground and have dedicated a significant amount of resources to beach protection, discussed Mr. Davis.
To learn more about Caribbean investment opportunities, join us at the Puerto Rico panel on September 24 at Bisnow’s National Real Estate Finance Summit in NYC.