In the Caribbean and Latin American (“CALA”) sub-regions the role of Tourism & Travel outpaces global metrics by 50%, making a direct contribution of over 15% to GDP and accounting for over 15% of employment.  This strong growth in CALA tourism is likely the result of pent-up demand for more physical capacity in the Lodging segment of the Travel & Tourism market, which was created during the period 2008 through 2012. During that period, the relative lack of liquidity constricted investment, in new hospitality projects such as resorts, hotels, retirement communities and so on. The vacuum in development capital, created by the withdrawal of traditional sources of hospitality financing during that time, has only in the last few years begun to fill up with private sector foreign direct investment (“FDI”), from Europe, Asia, the Middle East as well as the Americas. 

As a result of this influx of capital, Tourism to CALA has been undergoing a major, sustained upswing, a trend that is likely to continue in stride, and is expected to continue to substantially outstrip world average tourism growth in the next decade. Hotels and resorts in CALA are currently enjoying consistently higher profit margins than their counterparts in the U.S. and Europe, and transaction activity in the sector is strong and is perceived as favorable to both buyers and sellers. Following are some of the highlights contributing to the attractiveness of the CALA region:

• Rapidly growing tourism and hotel industries (i.e., demand outstripping both supply and world average tourism growth in demand). With heightened environmental concerns in the region and globally, less beach front land will be developed, and new developments will be less dense.
• Rapid growth of CALA middle class, creating heightened demand for residential, commercial and industrial property.
• A stable region open to foreign investment, with low labor costs.
• High hotel occupancy rates fueled by a rapidly growing global middle class, relatively stronger international currencies and affluent baby boomers for whom travel and leisure is an increasing priority.
• Over $20 billion annual market for Hotel sector in the Caribbean alone.
• Most vigorous expansion in decades, and the current expansion compares favorably to previous upswings in the region.
• Inflation has remained subdued and is expected to remain so for the several more years. Recent well-designed tax and expenditure reforms contribute to macro-economic stability.
• Tourism to the region has been undergoing a major, sustained upswing, a trend, which is likely to continue in stride. Post-9/11 safety concerns, along with high oil prices, mean that despite a weaker dollar, Americans will continue to choose the Caribbean for its cheaper flights, and to stay closer to home.
• Hotels and resorts in CALA are currently enjoying consistently higher profit margins than their counterparts in the U.S. and Europe.
• Non-local capital providers can significantly affect the functioning of the local tourism industry. It is believed that many CALA countries expect private sector FDI to provide the lion’s share of tourism industry development capital.
• It is the view of experts that the industry is highly fragmented and is far from saturated.
• An increasing number of CALA countries now offer a solid and investor-friendly legal regime, generous incentives and improving infrastructure.
• New laws are being passed in more and more CALA countries that ensure equal treatment of domestic and foreign investment, full repatriation of capital and profits, and free currency convertibility. Increasingly, incentives are being offered to develop less-developed tourist areas and new tourist areas in provinces and localities with much potential, and governments are encouraging bank lending for the tourism industry.