The Rise of Spanish Companies in the Caribbean

The Caribbean has shown to have tremendous investment potential for Spanish hotel interests, which have steadily expanded their presence beyond their successful ventures in Mexico, the Dominican Republic and Cuba.

Ventures by Spain-based companies are growing throughout the Caribbean, from the Bahamas in the north to Aruba in the south. Most notable this year is the influx of Spanish brands descending on the island of Aruba. The Occidental Grand finalized $24 million in investments and re-opened in May 2006 as the island’s first luxury all-inclusive product. This hotel closed in June 2005 for the transformation –re-opened as the island’s first luxury all-inclusive property. (Due to hurricanes in Florida in 2005, supplies were stuck in Miami. There was a delay with delivery; hence the postponed soft-opening).

Spanish hotel chain RIU purchased the Aruba Grand, closing it for a $120-million facelift and expansion. Upon completion third quarter of this year, the hotel will open with 451 rooms, nearly triple the original inventory. When completed, the new and improved resort with be the five-star RIU Palace. The Grand is the former Sheraton Hotel on the island. Resort giant Sol Melia is finalizing the purchase of the 153-room Bushiri Beach Resort. It too has plans to expand the property to approximately 450 rooms after having acquired it for about $120 million in investments.

Somehow it appears the Spanish “galleons” have ‘invaded’ Aruba.

Aruba’s Tourism Minister Edison Briesen said he sees the trend happening everywhere in the Caribbean. “It goes along the policy of the government to try to move out and not become too dependent on the American market which takes up 70 percent of our overall market (last year, there was a 9 percent drop in the US segment). We are diversifying the market as Europe is important to us and the euro is currently very strong against the dollar.”

European stay-over averages 13 to 14 nights. In line with work at the cruise terminals, Aruba attracts European cruise passengers who spend about a week on-board the ships on the dock.

Big news to the Aruba Hotel and Tourism Association came when another Spanish group, Occidental (formerly the Allegro), revamped the Grand. The resort is regarded a couple of steps up the overall brand segmentation of the company.

However, with the Spanish companies’ invasion, the largest transaction that took place recently in the Caribbean was clinched by US American investors, not Spanish. A group from New York bought a Dutch-Aruban government-owned property, and is now engaged in a long-term management contract with the owners.

The addition of Spanish chains means only positive improvement and extra receipts for Aruba. The AHTA chairman said the Sol Melia’s and RIU’s operate on a global scale. They will certainly bring another element, the European business, which goes in line with the diversification policy of the government. With RIU having close ties with the TUI group, the introduction of Aruba to Europe can be a huge hit. Most of the Spanish hotels are all-inclusive or mixed.

“Putting all eggs in one basket - the American market – has proven to be unwise for Aruba. Back then, the island enjoyed 2004 as its record year. The beginning of 2005 was good too; we could not even handle the business coming into Aruba. We saw the downturn in the US market at the end of 2005 and beginning of 2006 translating to a drop of 14 percent in the 70 percent of our total business,” said the minister.

Ever since Aruba’s major fallout hit tourism, seeking markets other than the US through the Spanish or any European chain offers Aruba a reasonable fallback position from today onwards, said Briesen.

Meanwhile all over the Caribbean, Spanish investors are taking their money and are looking for the right projects on the other islands. Over 30 of Spain’s most powerful hotel investors will meet with the Caribbean leaders. Top hotel executives of Spanish brands include Gabriel Escarrer, president of Sol Melia; Miguel Fluxa, president of Grupo Iberostar; Abel Matutes, president of the Fiesta Hotel Group; Simon Pedro Barceló, co-chairman of Barceló Enterprises; and Pablo Piñero, president of Grupo Piñero.

In recognizing the role of Spanish investors in the sustainable development of Caribbean tourism, Peter J. Odle, president of the Caribbean Hotel Association (CHA), and Senator Allen Chastanet, chairman of the Caribbean Tourism Organization (CTO), gather Caribbean hotel and tourism sectors September 14 to propose to Spanish hotel chains to look into establishing a firm footing in the Caribbean.