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Puerto Rico Tourism Bounces Back

Two years after Hurricane Georges pounded the island, Puerto Rico's hotel room inventory will reach an all-time high of 12,654 for this year's winter season and zoom to 19,100 by 2002


June 15, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

Forecast: This winter season will be hot. With the U.S. economy rolling and local hotel room inventory up, hoteliers predict a banner season...

Nearly two years after Hurricane Georges put 4,500 hotel rooms out of commission, Puerto Rico’s tourism industry has enjoyed a speedy recovery and is ready for the winter high season with more rooms than ever.

Not only is hotel room inventory at its highest level, at 12,654, another 4,800 rooms will be under construction by year’s end, with another 2,500 rooms in the pipeline to be ready in 2002, for a total of 19,100 rooms.

"It’s amazing to see the significant investment that has been made by new hotel investors and by those already established here," said Jose Corujo, executive director of the Puerto Tourism Co. "This investment puts the island in a privileged situation."

Because of this, CARIBBEAN BUSINESS made a detailed survey of present and future projects and spoke to hotel industry executives who are generally hopeful about the upcoming winter season and the prospects of additional hotel rooms.

The mood is clearly optimistic, but it wasn't that way just a short time ago. "The 1999 tourism season saw Puerto Rico's room inventory reduced by the lingering impact of 1998's Hurricane Georges," said Rick Newman, president of the Puerto Rico Hotel & Tourism Association (PRHTA).

When Hurricane Georges pounded the island on Sept. 21, 1998, it all but ruined the chances of a successful winter season. But Puerto Rico’s tourism industry bounced back quickly and it experienced a prosperous 1998-1999 winter season, with occupancy rates at 71.9%, the highest ever recorded.

Many believed these high occupancy rates were due in part to the temporary closing as a result of hurricane damage to three hotels–the 177-room Radisson Normandie Hotel (from September 1998 to April 2000), the 255-room Crowne Plaza Hotel (from September 1998 to present) and 96-room Ramada San Juan Hotel (from September 1998 to July 1999). In addition, the 644-room Caribe Hilton Hotel closed its doors for major renovation (from March 1999 to December 1999) one month before the 1998-1999 winter season was over. Furthermore, the 225-room Carib-Inn Hotel had closed in August 1998 because of legal problems.

"The hotels that were still operating in 1999 enjoyed a good season due to the high occupancy rates sparked by the reduced room inventory on the island," Newman said.

The Hurricane Georges destroyed or damaged nearly 4,500 of the 11,900 hotel rooms endorsed by the Tourism Co. as of October 1998. Of these, 75% were restored in time for the high season, which begins Dec. 15 and ends April 15, but still 1,400 rooms remained out of commission.

Georges visit was a rarity. It had been nine years since Puerto Rico had suffered a severe hurricane. When Hugo hit in 1989, it had been more than 40 years since the last major hurricane. Indeed, in the past 72 years, only seven major hurricanes have affected Puerto Rico.

Although room demand was relatively high in 1998, hoteliers expressed concern about whether the industry could sustain that 71.9% occupancy level when the hotels being repaired were once again opened for business.

Their fears were compounded as the Y2K scare kept visitors away during the last week of December 1999 and for the first two weeks of January 2000, causing hotel registrations for those weeks to decrease by 8%.

Nonetheless, all that changed in the following months (February through April), when tourism activity reflected increases. Average occupancy for the last three months of the 1999-2000 winter season was a healthy 74%.

The post-tourism season (May and June 2000)–also referred to as the shoulder season or off-season–appears promising, with some hotel occupancy rates at more than 80%.

Newman attributes the success of the island’s shoulder season to three components: corporate business travel remained strong, meetings and conventions increased, and summer packages that have brought more leisure business.

As the robust U.S. economy is expected to continue putting more money in winter season travelers’ pockets, they could be enticed to Puerto Rico’s diverse hotel properties.

"Interest rate hikes must be watched. But the economy is expected to remain strong," Newman said. "Even the possible impact of rising fuel costs on travel won’t deter tourism unless it becomes a crisis."

In 2002, the Tourism Co. expects to have approximately 19,100 hotel rooms built or under construction. This number would exceed the Rossello administration’s long-term tourism plan, which proposed boosting the island’s inventory to 16,000 rooms by 2003.

Many believe the challenge will be to fill the new rooms, but the Tourism Co. does not appear to be troubled by this task.

Tourism Co. gives two reasons for this. First, each hotel does its own marketing. Second, the government has actively diversified the island’s offerings to tourists by adding markets outside the U.S. mainland, new air routes, online marketing, and aggressive summer promotional campaigns.

Hotel renovation investment in Puerto Rico from 1996 to 2000 has been $135.6 million and investment in expansions estimated at $44 million. This does not include upcoming investment in new properties, said Corujo, adding that these investment figures reflect confidence in Puerto Rico as a tourism destination.

Another element that reflects the strength of the industry is the fact that most hotel investors who received government financial help from the island’s Hotel Development Corp. (HDC) have paid back their loans before their deadline. The HDC had between a 10% to 40% stake in five properties. The investors of these five hotels had up to 10 years to pay back the government’s investment.

For example, the Westin Rio Mar Beach Resort & Country Club in Rio Grande (opened in 1996), the Colonial Hotel & Beach Resort in Isla Verde, formerly known as the Colony San Juan Hotel (opened in 1997) and the Hampton Inn San Juan Resort in Isla Verde (opened in 1997) have all paid back the government’s investment.

On the other hand, Embassy Suites in Isla Verde (opened in 1996) has partially paid its debt while the Wyndham Old San Juan Hotel & Casino is the only property left still owing full debt to the government.

As far as how many rooms the market can hold, Corujo says the market itself will determine that figure.

"As we grow, the market will determine how many rooms it can sustain," Corujo said. "The Tourism Co. will monitor hotel development and be watchful that the industry maintain high occupancy rates."

In the meantime, Corujo is confident that Puerto Rico–as a tourism destination–can still handle more rooms. "For example, the new 1.5 million-square-foot convention center will require more rooms to accommodate visitors in the metro area," Corujo said.

Here’s a look at hotel projects that have recently reopened and those that are under construction and scheduled to open this upcoming 2000-2001 winter season.


The Radisson Normandie Hotel is a 177-room hotel that reopened on April 15 after Hurricane Georges destroyed the property’s acrylic atrium roof in September 1998 resulting in extensive interior water damage.

After Hurricane Georges in 1998, the Caribe Hilton was operating little over half its room inventory–340 rooms. It reopened completely in December 1998, only to close its doors in March 1999 for extensive renovation. The 644-room hotel reopened definitively on Dec. 25, 1999.

The Ramada San Juan, formerly known as the Ramada Hotel Condado, is a 95-room hotel that closed its doors after Hurricane Georges caused damages, then reopened for business in July 1999. Raul Bustamante, executive vice president of Hilton International and general manager of the Caribe Hilton, purchased the hotel in October 1999 for $5.7 million.

Ready for tourism season 2001

This upcoming 2000-2001 winter season, nine new hotels will come onboard, most of them located outside San Juan, which fits in with the Tourism Co.’s plan to diversify the island’s tourism product.

The new players in the lodging industry are Casa Cubuy Ecolodge in Naguabo, Hostal Bahia Marina in Culebra, Mayaguez Plaza, Ocean Villas in Rio Grande, Villas de Costa Dorada in Isabela, Martineau Bay Resort in Vieques, Paradise Hotel and The Verde Casino in Isabela, Playa Almirante in Añasco, and Plaza de Armas in San Juan. These hotels will increase the island’s room inventory by 544.

The Crowne Plaza Hotel is a 255-room hotel that is temporarily closed after Citibank took over ownership from previous owner H.I. Development last year. After Hurricane Georges tore off a side of the building, the hotel closed for several months and reopened with fewer rooms, while repairing damages. The hotel is currently in the process of being sold and is expected to open by year’s end.

Besides new hotels, existing properties are expanding their facilities, such as the Fajardo Inn, which is undergoing a 33-room expansion to the existing 52-room hotel and is scheduled to reopen in June.

The Lighthouse Inn in Cabo Rojo is undergoing a 35-room expansion to the existing 31 rooms. The hotel is expected to open in July. Boqueron Beach Hotel in Cabo Rojo is undergoing a 58-room expansion to its 26 rooms and is expected to open in June.

A popular strategy among developers is to build timeshare units or condo-hotels with potential for lock-outs allowing for maximum flexibility in room nights available. For instance, a two-story villa with two bedrooms upstairs and kitchen and living area downstairs can be broken into three distinct units, allowing guests individual access (or keys) to each second floor bedroom and a key for the first floor as an efficiency apartment.

And Puerto Rico has a fair share of condo-hotels and timeshares. The Hyatt Hacienda del Mar in Dorado will open its second phase of 42 timeshare units in August that will provide 84 additional keys to its current 38 units that provide 76 keys. Villa Montaña in Aguadilla is undergoing its second phase of expansion, which includes adding eight more villas that are managed under the condo-hotel concept. Villa Montaña’s expansion is expected to be ready in June.

Villas de Costa Dorada in Isabela is a component of the existing 52-room Costa Dorada Hotel. The project’s first phase consists of 36 villas that will be managed under the condo-hotel concept. Villas de Costa Dorada is expected to open in June.

Palmas Doradas-Doral, formerly known as the Candelero Hotel and Palmas Inn, will open 30 condo-hotel units that will provide 100 keys. There is no scheduled date to open these condo-hotel units.

Also, Howard Johnson’s–the former Travelodge in Isla Verde–is undergoing an 18-room expansion to its 93 rooms. The existing rooms will also be renovated. Project completion is expected in November.

Operational by 2001

In 2001, Puerto Rico’s tourism industry will welcome 11 new hotels, once again most of which will be located outside the San Juan metro area.

The new hotels are Paradisus Coco Beach Resort & Casino in Rio Grande, Cayo Largo Inter-Continental Beach Resort in Fajardo, Rincon del Mar Beach Resort, Caguas Real Hampton Inn, Embassy Suites Dorado del Mar in Dorado, Casa Suari in Ponce, Dos Mares in Fajardo, Hacienda Punto Pozuelo in Guayama, Hacienda Tropico in Vieques, Ocean Palace in Hatillo, and Punta Maracayo in Hatillo. These properties will add more than 1,900 rooms to the island’s inventory.

Paradisus Coco Beach Resort & Casino, also known as Sol Melia, is Puerto Rico’s first all-inclusive resort. Its first phase will consist of a 490-room hotel, swimming pool, spa, casino, and a convention center. The hotel is expected to open April 2001.

Cayo Largo Inter-Continental Beach Resort is a 314-room hotel that will have a convention center, an 18-hole golf course, tennis court, swimming pool, and gym. The hotel is expected to open by July 2001.

Rincon del Mar Beach Resort is a 103-room hotel that will have a ballroom, gift shop, game room, oceanfront restaurant and cocktail lounge, outdoor bar and grill, swimming pool, and tennis court. The hotel is scheduled to open by October 2001.

Caguas Real Hampton Inn & Suites is a 125-room hotel that will complement the $150 million Caguas Real Home Resorts project. It will have an 18-hole championship golf course and a clubhouse. The hotel is slated for completion by December 2001.

Casa Suari in Ponce is a 58-room hotel located in the former Casa Suari, an old mansion across from Ponce’s cathedral at the Delicias Plaza.The hotel is expected to open by June 2001.

Dos Mares is a 450-room hotel in Fajardo. The developer has recently signed a letter of intent to build a JW Marriott hotel. The agreement with Marriott also includes building 250 timeshare villas under its Vacation Club International signature. The hotel’s completion is expected by July 2001.

Hacienda Punto Pozuelo in Guayama is a 50-room beachfront hotel on 11 acres. The hotel is expected to be completed by December 2001.

Hacienda Tropico in Vieques’ second phase is a 32-room hotel on 12 acres of land. The hotel is expected to open by March 2001.

Ocean Palace in Hatillo is a 120-room hotel that will have a river pool, basketball and tennis courts, spa, and golf range. The hotel is expected to be completed by Dec. 2001.

Punta Maracayo in Hatillo is a 50-room hotel that will have basketball courts, a swimming pool, and a playground for children. The hotel is expected to be completed by July 2001.

Besides hotels, the tourism industry will have various condo-hotel expansions and villas to add to the island’s room inventory.

Costa Bonita in Culebra is a condo-hotel with 41 villas (each having four keys) for a total of 164 keys. The first 18 villas of Costa Bonita are expected to be completed by January 2001 and the remaining 23 villas by May 2001.

Embassy Suites Dorado del Mar is a 174-room hotel complemented by 91-condo-hotel units, and an 18-hole golf course. The hotel will have an atrium, coffee shop, and stores. The hotel and the condo-hotel are expected to open March 2001.

Horned Dorset Primavera Villas in Rincon are 22 luxury one-bedroom villas that are expected to be completed by November 2001.

Regents Resort at Palmas del Mar in Humacao, formerly known as the Palmas Inn, is a 90-room beachfront condo-hotel that has yet to announce an official opening date.

Pichi’s in Guayanilla is a 45-room expansion that is expected to open by May 2001.

Villa Montaña’s third phase is a 12-room expansion to the existing condo-hotel, which should be completed by June 2001.

In the pipeline for 2002

Two major players will enter the market by 2002, Marriott Courtyard and Four Seasons, while two existing properties will have completed additional construction phases.

Marriott Courtyard in Isla Verde is a two-tower hotel, each with 163 rooms. The project is expected to have meeting and convention space, banquet area, entertainment center, and a gym. The project is scheduled for completion by January 2002.

Martineau Bay (condo-hotel) is a 90-room property that is expected complete by January 2002.

Paradisus Sol Melia’s second phase is an additional 490-room hotel that is expected to be completed by December 2002.

San Miguel Partners (Four Seasons) is a 350-room hotel that will be located within a residential-resort community to be developed in Luquillo (between the Westin Rio Mar Beach and the Wyndham El Conquistador resorts). The planned resort-community is expected to be built in two phases over a 10-year period. The first phase includes the hotel, one 18-hole championship golf course, and timeshare units. The hotel is scheduled for completion by June 2002.

This Caribbean Business article appears courtesy of Casiano Communications.
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