With Power Fully Restored, Tourism Director Says Now Is The Time To Invest in Puerto Rico
Full power was restored to Puerto Rico on Tuesday, and Puerto Rico Tourism Co. Executive Director Carla Campos has declared the U.S. territory "open for business."
As head of the government agency responsible for promoting tourism in the commonwealth, Campos is offering a counterpoint to a slate of bad news. Puerto Rico has been in a financial tailspin for more than a decade, Hurricane Maria slammed the Caribbean in 2017 and recovery efforts have been mired in chaos. But after hitting bottom, the commonwealth now has some debt relief and recovery money flowing in, on top of generous tax incentives that were designed to boost investment.
"[For investors,] it’s the best time to be looking at this island,” Campos said. “One hundred thirty of 145 hotels are operating. Four thousand restaurants and shops are open. It will be a trendy destination for the future. It’s only a matter of time.”
Campos, who will be a panelist at Bisnow’s Caribbean Hospitality Investment Summit Aug. 23, said one study showed that prior to Hurricane Maria last year, only 45% of U.S. citizens knew that the commonwealth was part of the United States. Now, 95% know.
“It’s short, nonstop flight” from the U.S. mainland, Campos said. “You don’t need a passport to travel here. We are the U.S. Caribbean. You get the security, safety, ease of access from being a U.S. territory, but at the same time, we are a Caribbean island.”
Campos said her research shows that the greatest competition for tourist dollars is South and Central Florida. Unlike many Caribbean destinations, Puerto Rico's main draw is not the typical experience at Sandals or resorts on popular Caribbean islands like the Bahamas or Jamaica.
“People use local companies. They book their own tours. It’s more closely related with the experience in South Florida," Campos said. “[But] we’re building our first all-inclusive resort."
New projects underway will add 1,500 hotel rooms to the current inventory of 15,000. Campos cited upscale properties like the Wyndham Grand Rio Mar, a St. Regis and the El San Juan Hotel (part of Hilton’s Curio Collection), as well as a new Conrad and a new Waldorf. In Dorado Beach, the second-ever Ritz-Carlton Reserve, a $250M project, will open in October.
The “District Live” is a new entertainment area being developed in the downtown convention district, with high-capacity hotels and an indoor zip line. A $150M project is being planned for the surf destination of Rincon, Campos said.
All of this development has not come without challenges, as environmentalists decry the impact on locals and the environment. The Surfrider Foundation has said that some developments limit the ability of local people to access the beach and that some of the bigger ones have been approved without public comment. Others have sounded the alarm over impending climate change. Of course, some developers have in response pointed to jobs created by their projects.
A mix of incoming and local investors have been shoveling money into development. Putnam Bridge founder and CEO Nick Prouty is doing a major nautical tourism project at Puerto del Rey and is expected to invest $60M in a marina there, Campos said. Keith St. Clair, CEO of Isla Verde Group, has invested a half-billion dollars in four hotels, including ESJ Azul.
Rick Newman, known for having turned around the Sands Hotel & Casino in San Juan in the 1990s, has been renovating the Four Seasons Cayo Largo, a $170M project, and locally owned Prisa Group has several projects, including the $150M District Live, Campos said.
Owners of smaller properties are allowed to rent them out on Airbnb. Campos said the company last year agreed to a 7% room tax and shares its data insights with the government.
“Rather than the hosts paying the government, Airbnb collects and pays on the hosts’ behalf,” Campos said. “That’s generated $2.7M in room tax since August 2017 and growing.”
More investors are welcome.
“We are really looking to increase room inventory and diversify our experiences. Ten to 40% tax credits are available to investors for any tourism activity,” she said.
Campos said historically, because of political changes that came with elections, there has been inconsistency with branding and marketing to tourists.
A newly created destination marketing organization, called Discover Puerto Rico, will take on research, work with airlines and cruise lines, and launch a new, heavily digital, marketing strategy.
“Very few investors know the amount of benefits of investing in tourism here,” Campos said.
