The hotel market in Latin America and the Caribbean is hot and the upswing shows no signs of slowing down. It’s a transformative time for the area, as several major hotel brands are doubling down, buying regional hospitality companies, debuting brands in new countries and expanding their offerings of non-luxury brands.
Some in the hospitality business refer to the region as LATAM. More recently, the CALA acronym is being bandied about to refer to the diverse geographic area covering South America, Central America, Mexico and the Caribbean. While most hotel companies lump this quartet of regions together, they are four completely different markets with differing prospects for development and growth.
According to Lodging Econometrics (LE), the CALA hotel industry surged in late 2024, with luxury and upscale projects driving a 15 percent rise in developments across key markets. LE’s Q4 2024 Latin America Construction Pipeline Trend Report reports the region’s total construction pipeline climbed to 685 projects/110,033 rooms. The luxury segment achieved record-high numbers during the quarter, with 129 projects/26,077 rooms. Upper upscale projects also reached a record high with 115 projects/22,509 rooms, while upscale projects stood at 136 projects/19,220 rooms.
Significant Developments
In February, Hyatt entered into an agreement to purchase Playa Hotels & Resorts, a leading owner/operator of all-inclusive resorts in Mexico, the Dominican Republic and Jamaica. The deal extends Hyatt’s all-inclusive portfolio strategy, which follows the creation of the Hyatt Ziva and Hyatt Zilara brands in 2013, the acquisition of Apple Leisure Group in 2021 and the recent 50/50 joint venture with Grupo Piñero in 2024.
The latter brought Bahia Principe Hotels & Resorts into Hyatt’s Inclusive Collection, the largest portfolio of luxury all-inclusive resorts in the world. Hyatt is also bringing its new Hyatt Vivid brand, a lifestyle all-inclusive, to the Dominican Republic later this year.
Overall, in terms of the entire region, said Antonio Fungairino, head of development, Americas, Hyatt’s Inclusive Collection, “We believe our greatest opportunities are Mexico, Brazil and Colombia. We remain dedicated to thoughtfully expanding in new and emerging markets where there is little to no Hyatt representation.”
Hilton is also bullish on the market. Pablo Maturana, vice president of development for Latin American and the Caribbean, said, “2024 was a landmark year for Hilton in the region … with more deals signed than in any previous year.”
By the end of 2024, Hilton had a regional portfolio of 280 hotels in more than 30 countries and a record 130 projects in development. Hilton entered five new markets, including Turks and Caicos Islands, Paraguay, Bonaire, St. Vincent & the Grenadines and Antigua and Barbuda.
Only 30 percent of the company’s pipeline projects signed last year were in the luxury and lifestyle spaces. In fact, Hilton’s largest brands in the pipeline are more midscale. Hilton Garden Inn has 30 projects in development and Hampton Inn and Tru by Hilton both have in the neighborhood of 25.
In all, Maturana said the three parts of the region that are driving the growth are Mexico (40 hotels in development), the Caribbean (35 in the pipeline) and Brazil, where, in the last three years, Hilton has doubled its presence and pipeline projects will double that again.
Marriott is expanding in the luxury and upscale segments throughout the region, including all-inclusives. The company closed the year with 183 properties in the regional pipeline, a 15 percent increase from the previous year, with a record 67 deal signings in 2024.
“We are also identifying regionally relevant products in South America while reaching new customers in high-growth markets across the Southern Hemisphere,” Michael Leon, senior director of development for CALA, said. That strategy may be following the game plan set by the 2023 acquisition of the Mexican City Express brand.
City Express by Marriott, an affordable midscale brand, will be introduced to Argentina, Bolivia, Peru and Nicaragua during the next three years. Bojan Kumer, Marriott International regional vice president, development Caribbean and Latin America, said the brand was a big part of “our development plans for midscale in Brazil, where (we) anticipate significant expansion for the City Express by Marriott in key high-growth markets across the country, including primary destinations like São Paulo as well as secondary and tertiary markets.”
Hotel Management spoke with several hospitality industry analysts about the nuances and opportunities of each region. The group consists of Patricia Boo, STR regional director for Central & South America; Bruce Ford, senior vice president and global business development director for Lodging Econometrics; John Lancet, HVS senior managing director and practice leader for the South and the Caribbean and Richard Katzman, HVS senior managing partner for the Latin America Region.
Mexico
The analysts agree. Mexico is the star of the region. Ford reports that Lodging Econometrics data shows the country has the most hotels in the regional pipeline, with a record-high 248 projects. He said since the pandemic, the country has been fertile soil for American franchise companies, with a spurring of growth among both select serve and full-service brands.
Boo said Mexico is “the largest hospitality market in the region, not just in terms of size and diversity. It’s also very tourism-focused and thus friendly to investment.” Of course, geography helps, too. “The proximity to the United States and volume of air connectivity helps drive demand to the country.”
That said, Mexico does not rely solely on international markets. “Mexico has huge domestic demand,” Boo said, “both on the corporate and leisure sides. So, if you are a large hotel chain with a lot of brands targeting different segments, there are large markets to target within the country.”
In addition, Katzman of HVS points out the structural strengths. “Developers there are sophisticated and the capital markets are fairly mature,” Katzman said. While Mexico is often viewed as a leisure destination, Katzman said that business travel there is also booming. Mexico’s status as an export manufacturing hub, particularly in central and northern parts of the country, has led to constant demand for business-style hotels in medium and large cities.
South America
Structurally, South America is not a monolith. Different markets have different drivers and different regulatory frameworks. “South America is highly fragmented,” Katzman said. “Companies have to go about the region country by country.” While there is cross-border investment, it is limited based on differing legal systems.
That said, with a growing middle class, Boo said many countries in South America need more supply to meet demand. She noted that the majority of hotels across the continent are still not branded, although European-based companies like Accor and NH Hotels (now owned by Minor) were early entrants in terms of international brand presence.
Ford said he is seeing the greatest investment in Brazil and Colombia. According to LE data, Brazil has 106 projects underway, up 23 percent year-over-year. Colombia follows with 30 projects and Peru with 28 projects.
Like Mexico, Brazil has huge domestic and regional demand and both corporate and leisure demand. But unlike Mexico, Boo said, there’s a great deal of bureaucracy to deal with. “It is difficult to navigate legislation and getting access to capital and getting profits out of the country can be challenging.”
Her advice for companies looking to move into the continent is to “come in with the main flag, usually in the luxury or upper-upscale segment and then move down the segmentation ladder once they get to understand a local market.”
She also advised that a good strategy can be to buy out or partner with local hospitality companies. In doing so, “they are not just buying a company, but buying the know-how on how to get through red tape and other challenges.”
Central America
Within Central America, “It’s really all about Costa Rica,” Ford said. “Demand for hotel rooms is up significantly, as is the ability to charge a higher rate.” Several groundbreaking hotels are opening there this year, including the Waldorf Astoria Costa Rica Punta Cacique and Nekajui, a Ritz-Carlton Reserve located on the Papagayo Peninsula.
Panama is also doing well, particularly in adding more business class hotels, according to Ford. Boo explained that is because Panama has the added advantages of air connectivity through COPA and a modern convention center built in 2021.
“The strong growth in group business is bringing demand and helping to increase rates, which makes Panama more attractive to investors,” Boo said. At the same time, she sees huge potential in outlying regions, particularly after brands have planted their flags in the capital city.
Caribbean
Given the importance of tourism to most countries in the Caribbean, some have specialized investment promotion agencies, tax exemptions for tourism projects, bilateral investment agreements, free zones with special tax conditions and foreign investment promotion laws, all of which are appealing to developers.
Lancet of HVS said, “The Dominican Republic is a prime example of a place where the government is pro tourism; there are incentive programs and barriers to entry are reduced.” As a result, he said for the foreseeable future, that country will continue to grow at the highest rate in the Caribbean.
The proof is in the statistics. The Dominican Republic continues to be the country with the largest share of room supply—holding 40 percent of existing supply—followed by Jamaica, Puerto Rico and the Bahamas. According to Lodging Econometrics, the Dominican Republic achieved record highs with 66 projects in 2024, a 38 percent year-over-year increase from 2023. A great deal of that growth is driven by the all-inclusive market.
Two big segment growth areas for the entire Caribbean, Lancet said, are all-inclusives and branded residences. All-inclusives have expanded significantly during the past five years, according to Lancet, particularly in Mexico and the Dominican Republic. Jamaica is also experiencing momentum in that space.
Meanwhile, branded residences are also booming post-pandemic. “COVID was a game-changer in terms of developers seeing the true opportunity in branded residences.” He noted that “Turks & Caicos in particular is a shining success story” in terms of this type of development, where units are sold and then put into a rental program.
This article was originally published in the April edition of Hotel Management magazine. Subscribe here.