Caribbean & Latin America: the New Focus of International Hotel Capital

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Introduction

Hotel investment in the Caribbean and Latin America is experiencing its best moment in a decade in 2026. For years, investors looked to Europe or Southeast Asia. Today, that compass has shifted. The region holds 755 active projects totaling over 113,000 rooms under construction or in advanced planning, according to the JLL Q1 2026 pipeline report.

Moreover, this is not a passing trend. It is the convergence of several structural factors: a shortage of quality supply, growing demand from high-net-worth travelers, and a price-to-asset ratio still far more favorable than Europe. As a result, institutional and private capital is entering the region with force.

At IHCS, we have been operating in this region for years. For instance, in Tulum we achieved +18% RevPAR in 10 months with a 40-room wellness boutique hotel. That is the kind of result we want you to understand before making any investment decision.

Why 2026 Is the Right Moment for Hotel Investment in the Caribbean

The regional hotel sector has matured. Air infrastructure has improved significantly. Likewise, regulatory frameworks have stabilized in the main markets. As a result, international demand has surpassed pre-pandemic levels in almost every destination

The most revealing figure: in March 2026, Caribbean hotel occupancy reached 79.6%. That represents a 6.3% increase compared to the same month in 2025, according to data from Caribbean Journal. This is not a one-off spike — it is a structural shift.

For investors, this translates into a clear equation: assets priced below European replacement cost, solid demand, and insufficient quality supply. On the other hand, cap rates in mature markets are already below 7% in the European luxury segment. Consequently, institutional investors are seeking alternatives with higher yields. Latin America and the Caribbean provide them.

To understand how to evaluate an asset’s profitability before investing, see our guide on hotel cap rate and the hotel business model.

The Markets Leading Capital Attraction

🇲🇽 Mexico: The Region’s Deepest Market

Mexico leads the pipeline with 247 projects and 36,646 rooms. That represents 33% of the Latin American total, according to Visit Latin America. Its geographic breadth is a key advantage: from the Riviera Maya to Mexico City and Los Cabos.

Tulum deserves special mention. The destination went from alternative to competitive in just a few years. Demand for wellness and experiential luxury tourism still outpaces available supply. Therefore, well-positioned projects generate returns that are difficult to achieve in more saturated markets.

Mexico City adds another dimension. Specifically, it combines corporate and MICE demand with a shortage of boutique supply in premium neighborhoods. This creates clear conversion and repositioning opportunities.

🇩🇴 Dominican Republic: The Caribbean Engine

The Dominican Republic is today the engine of the Caribbean. It received 11.6 million visitors in 2025, with Punta Cana recording 82% occupancy in the first quarter of 2026. These are figures that rival the world’s best vacation markets, according to Dominican Today.

Its pipeline is also the most robust in the Caribbean: 84 projects and 18,014 rooms. Highlights include the Grand Aston Coral Golf Resort & Spa ($160M investment, 200 rooms, and 325 residences) and the Moon Palace The Grand Punta Cana, with a total investment of $1.5 billion.

What makes this market particularly interesting is the emergence of new instruments. For example, hotel asset tokenization already offers projected returns of 7–14% annually. This opens access to investors with smaller ticket sizes.

🇧🇷 Brazil: The Giant Awakens

Brazil ranks second with 132 projects and 18,172 rooms. Furthermore, it is the fastest-growing market: +18% in projects and +20% in rooms compared to the previous year. Its depth is unique: massive domestic demand, multiple attraction poles, and a high-income middle class with growing appetite for hotel quality. However, it has historically been underestimated by international investors. That is changing.

🇨🇴 Colombia: The Market That Surprises

Colombia is perhaps the most surprising market when analyzed closely. Tourism generated USD 21.6 billion in revenue in 2025, surpassing historic sectors such as coffee and hydrocarbons. In other words, tourism is now the country’s leading source of foreign exchange.

Medellín leads the transformation narrative, with brands such as Mama Shelter (Accor/Ennismore) opening in 2026. Cartagena, for its part, maintains its historic luxury appeal. Bogotá consolidates its position as a corporate and MICE hub in South America. In short, Colombia is attracting investment in sustainable luxury, wellness, and cultural tourism — the highest-margin segments.

Before entering any new market, hotel demand analysis is an essential first step.

Which Hotel Investment Formats Work in This Region

Not all formats are equally suitable. IHCS’s experience in the region identifies the models that deliver the best results:

1. Luxury Boutique Hotels (30–120 Rooms)

This is the format with the highest potential. Demand from high-net-worth travelers exceeds supply in virtually every key destination. Well-designed projects can achieve returns of 12–18% in markets such as Tulum, Cartagena, or premium areas of the Dominican Republic. For more detail, read our analysis on investing in boutique hotels.

2. Asset Conversion and Repositioning

This is also one of the most powerful value-creation vectors. Historic or former residential properties with prime locations exist throughout the region. With the right strategy, they can multiply in value. Entry cost is lower than new construction and execution timelines are shorter. Explore our guide on hotel asset management.

3. Lifestyle Resorts with Residential Component

Especially relevant in Mexico and the Caribbean. The sale of residential units allows partial recovery of initial capital. Meanwhile, the hotel’s operating cash flow sustains the project. This works well in high-profile vacation destinations.

4. Tokenization and Co-Investment

New fractional investment instruments are democratizing access to the sector. With tickets from USD 50,000, non-specialized investors can participate in projects in the Dominican Republic or Mexico. However, the regulatory market is still emerging. Therefore, selection of the management team is critical.

Risks Every Investor Must Know

An honest analysis cannot ignore the risks. IHCS identifies and mitigates them from the due diligence phase:

Regulatory risk. Regulatory frameworks can change, especially in Mexico or Brazil. Political cycles impact land regulation and permits. The key is having experienced local teams on the ground.

Currency risk. Most operations are denominated in US dollars. However, operating costs are in local currency. Volatility can affect margins.

Execution risk. In new construction projects, timelines and budgets are the main risk vectors. The difference between a profitable project and one that is not usually comes down to the management team.

Post-opening operational risk. Opening a hotel is just the beginning. Without solid revenue management and a strong operator, the asset will not reach its potential. That is why the role of the hotel consultant is to anticipate these issues from day one.

IHCS’s Experience in the Region

At IHCS, we do not talk about Latin America from theory. We have executed projects with measurable results:

Boutique & Wellness in Tulum, Mexico — 40 rooms. Result: +18% RevPAR in 10 months, 78% occupancy, Top 10 in the destination.
Feasibility study for a 4★ hotel in the USA — Validated projections, projected ADR +15% above competition, approval from investor and operator.

Every project starts with a rigorous feasibility study. We analyze the market, the competition, the optimal business model, and realistic financial projections. Only then does capital get deployed where it can generate real returns. Discover how we develop hotel projects from scratch.

How to Structure Your Market Entry

If you are considering hotel investment in the Caribbean or Latin America, these are the key steps:

1. Define your investment profile. Are you seeking passive returns or direct control of the asset? Is your horizon 5 or 15 years? The answers determine the market, the format, and the structure.

2. Conduct a feasibility study. No serious capital is committed without market analysis, a financial model, and competitive evaluation. It is the difference between investing and gambling. Cost per key is also an essential metric at this stage.

3. Select the right operator. The operator can make or break the asset’s return. Negotiating the management contract is one of the most critical decisions. Read our guide on management contracts vs. lease agreements.

4. Plan profitability from day one. RevPAR, ADR, GOP, and GOPPAR are not just metrics — they are the indicators to project and monitor from opening day. See how to improve GOPPAR in independent hotels.

Conclusion

Hotel investment in the Caribbean and Latin America is not the market of the future — it is the market of the present. The pipeline exceeds 755 projects. Caribbean occupancy reached 79.6% in March 2026. The Dominican Republic received over 11.6 million visitors in 2025. Colombia generates more tourism foreign exchange than coffee and coal combined. The fundamentals, in short, are solid.

For investors who know how to read cycles, the entry window is open. But it will not stay open indefinitely.

At IHCS, we support investors and developers at every stage: from initial feasibility through operator selection and profitability monitoring.

Talk to our team and evaluate your opportunity →

Frequently Asked Questions

Why are the Caribbean and Latin America attractive for hotel investment in 2026?

The region combines factors that rarely align. Assets are still priced below European replacement cost. Tourist demand is growing steadily. Additionally, quality supply is scarce in the luxury and boutique segments. Air connectivity has also improved notably. As a result, institutional investors are seeking alternatives to mature markets where cap rates have compressed.

Which markets offer the highest return potential?

Mexico leads with 247 active projects (33% of the regional total). Tulum, Los Cabos, and Mexico City are the main hotspots. The Dominican Republic is the Caribbean engine, with 82% occupancy in Punta Cana in Q1 2026. Colombia surprises with $21.6 billion in tourism revenues in 2025. Brazil, for its part, shows the fastest accelerating growth: +18% in new projects.

What return can a hotel investor expect in this region?

It depends on the format and the market. Luxury boutique hotels in Tulum or Cartagena can achieve returns of 12–18%. Tokenization instruments project returns of 7–14% annually with a lower ticket. Conversion and repositioning projects can also improve ADR by 20–30%.

What risks should I consider before investing?

There are four main risks. First, regulatory risk: frameworks can change. Second, currency risk: operating costs are in local currency. Third, execution risk: timelines and budgets in construction. Finally, post-opening operational risk. A rigorous feasibility study and an experienced consulting team are the best ways to mitigate them.

How many rooms does a hotel need to be profitable in this region?

There is no universal minimum. However, IHCS’s experience indicates that luxury and lifestyle boutique hotels with 20 to 120 rooms offer the best balance. Smaller hotels can also be profitable, though they require very efficient operations.

Read more: Is a 10-room hotel profitable?

Can I manage the hotel remotely without being present in the country?

Yes. The standard model is to appoint a professional operator for daily operations. Meanwhile, the investor monitors KPIs and financial results periodically. IHCS can support you in hotel operator selection and ongoing profitability tracking.

How can I start a hotel project in Latin America with IHCS?

The starting point is a conversation. We analyze your investor profile, the asset you have or are seeking, and the target market. From there, we design the feasibility study with real data. If you also have an asset and are looking for financing, we can also help you find investors.

Schedule a call with our team →

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