Hotel investors lay out markets of interest for deals in Caribbean and Latin America
Hotel investors lay out markets of interest for deals in Caribbean and Latin America
Puerto Rico, Dominican Republic top the list
Alinio Azevedo, of Driftwood Capital, left, speaks alongside Andro Nodarse-León, of LionGrove, right, during an investment panel at the Americas Lodging Investment Summit Caribbean and Latin America conference. (Bryan Wroten)
https://www.costar.com/article/1390951141/hotel-investors-lay-out-markets-of-interest-for-deals-in-caribbean-and-latin-america
By Bryan Wroten
CORAL GABLES, Florida — The Caribbean and Latin America region is seeing increased interest from investors, both domestic and international, and they each have preferred countries to work in.
During the "Investments Insights" panel at the Americas Lodging Investment Summit Caribbean and Latin America conference, executives from hospitality and real estate investment companies shared their respective approaches to the region.
Driftwood Capital owns a portfolio of 45 hotels and operates 90, and all properties, except for one, are in the U.S., said Alinio Azevedo, managing director of luxury and lifestyle investments. They range in type from limited service to lifestyle resort properties. The company has a narrow focus on the CALA region, with one property in Puerto Rico and the other hotel in Costa Rica, he said.
“We are looking to do more, and that's why we're spending a lot of time looking at opportunities to grow outside of the country,” he said. “We're seeing similar patterns (as in the U.S.). I think the sources of capital are somewhat similar, and we at Driftwood Capital continue to truly focus and like the upper end of the market."
There are merits to having a more diversified portfolio by having properties in certain key locations outside of the U.S., Azevedo said. Any expansion will be done carefully, and the team is looking at which countries they are most comfortable with in terms of risk and stability as well as those where cultural and business connections would allow for better navigation of systems.
Beyond that, they’ve looked into places they believe will continue to serve U.S. clients as this segment pays the most from an airlift and demand perspective, he said. Driftwood also considers those with lower labor costs when compared to most North American and European countries. As a starting point, they’re looking at Mexico, Costa Rico and the Dominican Republic as well as expanding in Puerto Rico.
The risk premium for Puerto Rico is tighter than the rest of CALA, said Andro Nodarse-León, founder and CEO of LionGrove, which owns and operates three properties on the island. It’s becoming more of an institutional market, and conditions there have improved. The island is in better shape now than the day before Hurricane Maria arrived in 2017, as it has received approval for tens of billions of dollars in recovery capital, even though not all of it has been deployed.
“There are millions of dollars have gone into the island, so the power grid is in a better place, utilities in general are in a better place,” he said. “Roads are in a better place than they were before Hurricane Maria.”
When looking at some of the programs of the island office, like its tax credit programs, it’s a recognition of some of the shortcomings compared to places such as South Florida or Arizona, he said. Even so, Puerto Rico today is in a much better place than it was, and it’s a deeper institutional market than it ever has been.
“It reminds me a lot of Miami, I would say, in the late ’90s, early 2000s,” he said. “Some of the patterns that I see there are similar to what I saw growing up here during that time.”
San Juan, its surrounding areas, and the island overall are performing incredibly well, Nodarse-León said. Last year was a record year for arrivals to the island, and the prior four years were each record years on their own.
Between the metro area and the areas outside, occupancy is usually in the high 70s or low 80s, he said. Outside this area, it’s more like the low 70s but still strong. At resorts outside of the metro area, the capture rate on ancillary spend is high because guests stay longer, compensating for a lower occupancy.
The Dominican Republic was doing relatively well in terms of infrastructure, and there was a period of several years in which there was a concentrated effort to improve the transportation infrastructure, said Simón Suárez, vice president of institutional relations and projects of Grupo Puntacana. The energy infrastructure didn’t see the same investment, so the tourism sector assumed a more private capital-based infrastructure for energy that is efficient.
The country is building an expanded highway to the Miches region as the area is developing quickly due in part to the fast deployment of private capital, he said. The city of Puerto Plata has lagged for some time, but there is now a private sector initiative to build a highway from Santiago to Puerto Plata that will cut the drive time down to 30 minutes, putting Puerto Plata well within the reach of two airports.
Pension funds becoming more active in hotel deals in the country are a logical result of the dynamic position of the tourism sector, Suárez said.
“These funds have found very little else to develop or to finance, especially because of the regulatory limitations on the levels of risk that they assume, and the tourism sector has proven to be a ... relatively low-risk proposition, and so the funds are very active,” he said.
Bigger banks have also been active and successful in their lending, following the opportunity opened by the local banks, he said. That has not been the case in many other destinations.
Founded in 2020, Alójica has acquired four hotels in Mexico, and it has three legacy properties in Costa Rica, said Eduardo Ahumada de Toledo, senior vice president. It hasn’t been easy reaching institutional capital as they are used to having certain areas of expertise and have more exposure to select-service hotels in urban areas through the FIBRAs, Mexico’s real estate investment trusts. They have some exposure to luxury, especially in Cabo, but practically none to all-inclusive resorts.
“So, for us, it wasn't easy,” he said. “It only took us the better part of three years to explain to them what an all-inclusive hotel is, why it works, and then walk with them on how that life cycle is.”
When they ask about transactions, it’s difficult to explain that there is a feasible exit strategy for these property types because there aren’t a lot of transactions to point to, he said, with Playa Hotels & Resorts being a notable exception.
Going through the value proposition, however, has been helpful because all-inclusive resorts are significantly more profitable on a per-key basis compared to European plan projects on an apple-to-apple basis, Ahumada de Toledo said.
“It’s becoming easier, but it’s still a challenge,” he said.
Alójica has one pension fund in its Fund 1, which has its two properties in Puerto Vallarta, he said. It is actively raising its second fund with institutional capital for two properties in Cancun that it already owns.
“It's obviously easier to raise money with identified assets and an identified business plan versus doing discretionary capital, but it hasn't been easy, so it's taking a lot of educational work with the components and other types of institutional capital to explain to them how the model works,” he said.
Luxury beach resort in Florida sells for $835 million
Joint venture between Sculptor REIT, Trinity acquires JW Marriott Marco Island Beach Resort
JW Marriott Marco Island Beach Resort on Florida's Gulf Coast sold to a joint venture for $835 million. (JLL)
https://www.costar.com/article/889031664/luxury-beach-resort-in-florida-sells-for-835-million?
A joint venture between Sculptor Diversified Real Estate Income Trust and Trinity Investments has acquired the 809-key JW Marriott Marco Island Beach Resort on Florida's Gulf Coast for $835 million.
The joint venture procured a $690 million five-year, floating‑rate commercial mortgage loan through Wells Fargo and JPMorgan Chase & Co., which is securitized in a stand-alone CMBS offering for this acquisition.
MassMutual, through its global asset manager Barings, had owned the property for over 40 years. The property underwent a $320 million renovation in 2018, which included the addition of the 94-room Paradise by Sirene, an adults-only part of the resort. The hotel was rebranded with the JW Marriott luxury flag following the renovation.
The property consists of 26.7 acres with a quarter mile of resort-controlled beachfront along 3 miles of private beaches, according to a news release from JLL’s Hotels & Hospitality Group, which represented the seller in the transaction. JLL also assisted the borrowers in securing the loan.
The resort has 140,000 square feet of event and meeting space, 12 restaurants, two 18-hole golf courses across more than 400 acres, a 24,000-square-foot spa, five outdoor swimming pools, four tennis courts, fitness and business centers, and an entertainment venue.
"The successful execution of this transaction across both equity and debt underscores the depth of JLL's capital markets platform and our relationships with buyers and lenders focused on high-quality hotel assets," JLL's Hotels and Hospitality Americas CEO Kevin Davis said in the release. "Luxury beachfront resorts of this caliber remain among the most sought-after assets in the hospitality sector, particularly properties like the JW Marriott Marco Island that combine scale, irreplaceable coastal positioning, championship golf amenities, and recurring membership income — attributes that generate stable cash flows and provide insulation against market volatility while offering meaningful upside potential."
CapEx considerations for hoteliers with aged-out real estate
The capital expenditure tsunami is incoming
Alan Benjamin (Benjamin West)
https://www.costar.com/article/816858186/capex-considerations-for-hoteliers-with-aged-out-real-estate?
By Alan Benjamin - HNN columnist
All indications are that we are in the first gear of the next hospitality business cycle, and transactions are finally starting to pick up.
Despite inflation, tariffs, higher interest rates, and many other headwinds, the industry cannot continue to offer a worn-out product in this competitive environment, fueled by social media posts and more than 100 new brand introductions. In March, at the NEWH Leadership Conference in Washington, D.C., Marriott stated that 77% of their premium branded hotels are due or past due for a renovation in the next 3 to 5 years. This is not unique to Marriott, and the capital expenditure tsunami is coming.
As I reflect on the last 40 years of hospitality industry business cycles, let’s examine some of the differences and similarities about the start of this post-COVID Recovery.
The cycles of ‘86, ‘91, ‘01, and ‘08 were followed by mostly “V-shaped” recoveries for our industry within 18 to 24 months. For our current post-COVID recovery, we are more than 72 months or 6 years since the March 2020 COVID closures, and are just beginning to see our industry recover. This is in sharp contrast to the normally very closely aligned airline industry, which had very strong profits in 2023 and 2024, and in 2025 hit the all-time industry record of about $40 billion in profit, a 50% increase from the 2019 pre-COVID results of $26 billion. For our hotel industry, the slow recovery is not pretty, as many participants in the capital stack, owners and lenders, are facing major haircuts to exit a property, and in some cases, of total capitulation, they are handing the keys back.
In past cycles, if one could buy almost any hotel at about 65% of replacement cost, it was hard to lose money. This held true for both a $10 million select service hotel that was bought for $6.5 million and a $400 million resort that was purchased for $260 million. However, in this cycle, we see many hotels that do not pencil at pricing that is as low as 20% of replacement cost. A hotel that would cost $500,000 a key to build today still doesn't make economic sense at $100,000 per key acquisition price. Why is this well-known acquisition value metric no longer applicable? What changed this time? The answer is CapEx inflation and the greater age of the physical hotel building. While there are many measures of inflation, Cleveland Fed President Beth Hammack stated on April 15, 2026, that “we’ve had a decade’s worth of inflation in five years.”
Due to the building boom of all the hotels built in the 1980s prior to the 1986 Tax Reform Act, a lot of the existing hotel real estate is now circa 40 years old. Benjamin West’s area of the CapEx process, furniture, fixtures, and equipment, is about the same if the hotel is 10, 20, 30, 40 or 50 years old.
But many of these 1980s assets are at the end of their useful building life. So, even if the location is still providing good demand generators and the location metrics are positive for a hotel, it is the physical building CapEx costs that make or break the economic business case, not FF&E. Window seals, boilers and chillers, kitchen and laundry equipment, plumbing and electrical needs, roofs and parking lots, elevators, ADA compliance and ever increasing brand standards are the key items. In prior cycles, most of the CapEx dollars could be spent on FF&E and other immediate guest-facing areas. Now, a vast majority of the budget must be invested in something the guest does not even see. However, if you don’t have timely hot water and adequate HVAC, no guest will care how nice the furniture and artwork package is in the rooms.
Whereas FF&E costs are relatively the same regardless of where a hotel is located (minor differences in freight), the labor portion of the CapEx process, and all the GC costs, vary greatly by location and overall labor demand in each specific market. Labor for hotels is competing with labor for data centers and other forms of real estate, and labor shortages today are very real in many markets.
From 2019, I would estimate FF&E product costs (assuming consistent design and brand standards) are up about 25%. However, overall labor costs are up significantly more, usually around 40% to 50% over the same period. With the major building systems’ CapEx needs on a 40-year-old building, FF&E may be as low as 15% to 20% of the overall renovation budget.
So, although tariffs and fuel surcharges must be budgeted for, in this cycle, FF&E is usually not the buy or walk away decision point. The luxury and resort segments that appeal to the top of the “K” in the K-shaped economy combine more costly FF&E with a greater need for labor, with higher levels of trim and finishes. The luxury labor portion, which has had the largest increase, will cost a lot more today than prior to 2019.
What this means for the FF&E portion of CapEx is a sharper focus on cost. Nonetheless, be careful to not have a myopic “spreadsheet focus” on the cost of FF&E products, as well as the fees of the CapEx team of service providers. In the last cycle, the buzz words that led many people down the wrong path were “factory direct” and “25% less than all the others” as firms tried to get in the door. This cycle, “AI-powered” and “AI-enabled” are the buzzwords du Jour. While AI is great at making some of the administrative tasks surrounding CapEx more efficient, I think we are more than a few days away from my bot calling the seating vendor’s bot to move the 16-week lead time to 12 weeks.
CapEx is not easy. This is an 18- to 36-month partnership. Character matters. Integrity matters. Experience matters. While time is always of the essence in our industry, before kicking off the CapEx process, slow down, trust your gut, and make sure the consultants are working as your fiduciaries.
Alan Benjamin, ISHC, is founder and president of Benjamin West, the world’s leading hospitality FF&E and OS&E purchasing firm, serving owners in over 40 countries.
Transforming from a position of strength: Brambles CEO Graham Chipchase
https://www.mckinsey.com/au/our-insights/transforming-from-a-position-of-strength-brambles-ceo-graham-chipchase
Graham Chipchase, CBE, is the CEO of Brambles. Kate Smaje is a senior partner in McKinsey’s London office, and Wesley Walden is senior partner in the Melbourne office.
From overcoming skepticism to sustaining momentum, the logistics company’s CEO shares lessons on leading transformation into a more digital era—without a crisis as a catalyst.
In this conversation with McKinsey’s Kate Smaje and Wesley Walden, Brambles CEO Graham Chipchase reflects on leading a transformation from a position of strength. To meet the company’s growth ambitions, he launched a two-track agenda: strengthening the core pallet logistics business while building new digital and data-driven capabilities. Along the way, Chipchase shares lessons on overcoming skepticism within the organization, maintaining transparency with investors, and embedding continuous transformation into the company’s culture. The following transcript has been edited for clarity and length.
Wesley Walden: Thinking back to 2018, what was the impetus for making such a big change?
Graham Chipchase: When I joined in 2017, it was very clear we had some financial challenges, driven by two factors. The first was a series of acquisitions that hadn’t paid their way. The second centered on asset losses and low asset productivity. These issues were front of investors' minds, affecting our share price performance.
A critical part of the problem was that about 20 percent of our business portfolio was pretty different from the remaining 80 percent. That set a real limit on enterprise-wide thinking.
Our decision in 2018 to divest our last major nonpallet business became a catalyst for reconsidering how we operate. By that point, our share price and stock market perception had improved sufficiently that I could feel confident announcing that we would disrupt ourselves from a position of strength—not from a burning platform with the company’s survival at stake.
Kate Smaje: What had the company tried in the past?
Graham Chipchase: I spent some time reviewing previous transformations at Brambles. The results had been disappointing. We found that the efforts were mainly top-down, driven mostly by central HR and finance teams. That meant there wasn’t much buy-in from the rest of the organization.
Moreover, external consultants played a key role in the day-to-day work, while internal people running the transformation were balancing it with their day jobs. Their experience left the concept of “transformation” somewhat tarnished within the organization.
Wesley Walden: How did this effort overcome that kind of negativity?
Graham Chipchase: It was very important as a leadership team to understand each of the missteps from the past so that we wouldn’t repeat them. By framing this work as disrupting ourselves voluntarily, from a position of strength, we helped underscore the contrast with previous experiences.
We were transparent about what we didn’t know. For example, we said that we knew digital would be important for the company’s future, but we weren’t 100 percent certain how. We sensed we could do more to standardize our processes across the enterprise and make better use of financial levers, but, again, the details were uncertain. This sort of openness helped build buy-in from the bottom up.
Kate Smaje: How did external stakeholders, such as investors, respond to this approach?
Graham Chipchase: Some thought we should be more aggressive: “It’s all about cost savings, and you’ve got to go faster.” I pushed back pretty hard, especially on moving faster, because we had to get buy-in. Instead, we listened to people about what they felt needed to change and how it should be done.
I also was pretty clear that our focus couldn’t just be about cost-cutting, because high costs weren’t the company’s main issue—they just weren’t. The business was performing well.
Kate Smaje: That’s very different from having your back against a wall, isn’t it?
Graham Chipchase: It’s not necessarily any easier, though, because when there’s a burning platform, everyone understands that they’ve got to do something.
Small gestures matter. For example, the lead program manager for the transformation attended an internal leadership conference for about 100 of our senior executives. That program manager spoke individually with every attendee, asking, “What do you think about the transformation so far? Do you have any concerns?” About 80 percent of the leaders were fully on board. About 10 percent were uncertain, which meant holding follow-up conversations to address their reasons for hesitating.
The final 10 percent didn’t seem to want to change. It was up to me to announce, “This is now happening. The bus is moving.” I had to be clear that this wasn’t just a fad that would fizzle out.
We had real reasons to change, emerging signs that required action sooner rather than later. Some of our customers, for example, suggested in feedback that we could be difficult to work with. That had to change. We were also starting to experiment with digital and had to find out how to use it well.
Wesley Walden: Those two issues point in two very different directions.
Graham Chipchase: Yes, and that led us to think of this as a two-track transformation. Track one is delivering a better vision for the existing business. Track two is evolving toward a new digitally driven business that is better for customers, better for us, better for the environment, and better for our shareholders.
As we developed our ideas, we recognized that we needed support (see sidebar, “Collaborating with McKinsey”). We also resolved to communicate our transformation plan publicly and did so on an investor day in 2021.
Wesley Walden: That was a difficult period.
Graham Chipchase: Yes. The share price dropped significantly. Part of the reason we heard was our commitment to invest in digital, our transparency about the costs we would incur. It’s at moments like these that resolutionand is really important. Our view was that the share price would eventually recover because we were doing the right thing, and it would show up in the business.
Instead of retreating, we communicated even more. We’ve always had balanced scorecards internally, designed to show both our financial performance and our long-term health as an organization. So we created a balanced scorecard to communicate with the outside world and show progress on a quarterly basis. It took time, but the share price did recover as the progress became clear.
Kate Smaje: So the market was watching your progress. During this time, the transformation was at an inflection point, and people internally may have had questions as well. How do you balance all stakeholders while staying centered enough to keep the transformation moving?
Graham Chipchase: First, you have to work with your organization’s culture. I think the Brambles culture is exceptional: collegiate and results-focused. I also learned that it’s very, very ready and willing to take on new challenges.
Second, one of your critical responsibilities as a leader is to overcommunicate during these periods. We did a lot, but it’s always possible to do more. For example, if you say, “We’re doing digital,” that may mean 900 different things to 900 different people. I think if you use simple ideas and break them down, it helps.
To me, “digital” has the layers of an onion. The first layer is making our current business run more efficiently: tracking our pallets 100 percent of the time, making sure that we’re charging correctly when pallets are used—all of those simpler things. The second layer is using the data we generate to give our customers better insight into what’s going on in their supply chain. The third layer is really interesting: It’s exploring entirely new businesses we could develop based on our data.
Wesley Walden: Was there a moment on the journey where you could really start to see the shift coming through?
Graham Chipchase: As an ex-CFO, I’m tempted to say, “Show me the money,” and indeed, a couple of years of growing both our revenues and our profitability led me to think that the changes are starting to work. But it’s the less visible changes that I think are more interesting and important.
We’ve made the company more resilient, not only through the transformation but also through changes we’ve made to contracts that reduce our exposure to inflation spikes. We’ve changed how we buy critical materials. These are structural changes that make the company very different from what it was even ten years ago.
And we are using technology in so many new ways. Once I could see that our business units accepted the digital team as people who could help them get to better performance, I thought, “Now we’re okay.”
I believe in this. If it doesn’t work and I get fired, so be it. I don’t want to get fired for doing something I don’t believe in, because that’s a waste of time.
In the past, I think people would see transformation as a time-bound exercise: two years and we’re done. We’ve now created an environment where people understand that the focus may change over time, but it’s all part of continually trying to transform from a position of strength.
Wesley Walden: What have you learned through the journey, and how has your leadership style evolved?
Graham Chipchase: I think a lot of people are very afraid to be aspirational. They worry about how it will impact their performance targets. My answer is: Let’s be aspirational and not worry about what the budget targets are until we do the budget.
One of the benefits of being a longer-term CEO is that you have a sense of what’s going to work and what’s not. At some point, you say, “I believe in this. If it doesn’t work and I get fired, so be it. I don’t want to get fired for doing something I don’t believe in, because that’s a waste of time.”
Kate Smaje: If you had a time machine, is there something that, with the benefit of hindsight, you would have done differently?
Graham Chipchase: Although I’m not sure how I would have done it, I would try to move even faster on digital and get it into the business quicker. I was impressed when I saw it day one, and it’s only been getting better.
Kate Smaje: What are you most proud of from the past five years?
Graham Chipchase: I can start with our evolution in digital, from 20 people in one office to thousands being trained on data and digital topics. Over roughly nine years, our market capitalization has more than doubled.
Yet we aren’t losing sight of our culture, centered on performance, sustainability, and collegiality. One example is that big transformation programs can consume so much attention that performance can deteriorate in less visible areas, such as safety. But our safety performance is improving as well, even as our business grows. Sustainability remains a core commitment: For 2025, Time magazine rated us the third most sustainable company in the world, and our transformation has helped us use resources even more efficiently. And the Top Employers Institute has named our primary operating unit, CHEP, a Top Employer in 26 countries, four regions, and globally.
Third, communicate like hell.
But what I’m always most happy about is when I see people we’ve taken a chance on succeed; the transformation has been an opportunity for some people to really step up.
Wesley Walden: What would your advice be for other CEOs who are about to embark on a similar journey?
Graham Chipchase: First, identify whether your transformation is of the “burning platform” type or the “disrupting yourself from a position of strength” type. How you then proceed is very different, I think. Second, make sure you understand the culture of your company and how it will best be able to execute on what you want to do with the transformation. Third, communicate like hell.
DUHC&S | Strategic Hospitality Consulting & Advisory
We transform hospitality and tourism businesses through strategic solutions, operational efficiency, and comprehensive renovation. With over 40 years of experience working with brands like Hilton, Hyatt, Sheraton, and Sonesta, we enhance asset value and profitability through:
*Operational excellence and brand standards (GSI +90%)
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✅ Successful projects across 6 Latin American countries
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