Topping the wish list, the hotel chains in this popular holiday destination have one very special wish: more affluent visitors, particularly Americans, and even more particularly those coming back to buy holiday homes.
The Punta Cana region on the east coast of the Dominican Republic has grown into one of the most popular Caribbean destinations, with its giant all inclusive hotels which attract the type of public known in tourism circles as “boozy and bronzed”. Many of these hotels in Punta Cana are nearly fully booked for this coming festive season and forecast more visitors in 2012 than in any other year since the end of the 90´s.
However, the huge Punta Cana mass market has a disadvantage: the area´s reputation as a bastion of cheap accommodation has hampered the expansion of luxury hotel complexes. A mere 8.2% of hotel rooms in Punta Cana are classified as luxury compared with 14.4% in the rest of the Caribbean according to Smith Travel Research.
"To a certain extent it´s a challenge selling Dominican Republic to the high class public”, says Ignacio 'Nacho' Foncillas, financial advisor to the Spanish investment company Redberry SA, which controls 2 luxury resorts in Cap Cana, a series of holiday complexes and luxury homes spread over 10,000 hectares in Punta Cana. "In the long run, it´s a perception totally based on a lack of information”, he highlighted.
This misconception means that some luxury accommodation in Punta Cana is less expensive than on other Caribbean islands. Rooms at the elegant 35-suite Tortuga Bay in the Puntacana Resort complex cost an average of between US$550 to US$1.400 per night. Rates at the luxury Sanctuary complex, next door to the Cap Cana development, go for between US$249 to US$5.000 per night. Travel agents say that these prices are much higher in the exclusive resorts on the quiet islands of St. Bart and Anguilla, where the development of hotel complexes on their white sands has been restricted. Rates at Cap Juluca, a 95 room resort on Anguilla, go for betweenUS$1.000 and US$8.000.
Because Punta Cana has large, affordable, easily accessible complexes “sometimes it´s perceived as not that private or top range”, explained Ginny Caragol, director of the Valerie Wilson Travel Inc. luxury travel agency.
What Punta Cana is lacking in sparkle it makes up for in volume.
The arrival of passengers at Punta Cana international airport increased by 9.7% in the year ending 30 June and a 10.5% increase is forecast for the coming fiscal year. This exceeds by far the 3.1% growth rate forecast for the Caribbean as a whole. Experts attribute the increase in Dominican Republic to the fact that holiday makers are avoiding Mexico for fear of the violence related to drug trafficking and the enormous offer of tourist complexes.
In reality, Dominican Republic´s first big incursion into tourism was with luxury properties. The country, which shares the island of Hispaniola with Haiti, appeared for the first time on the worldwide radar in 1975 when Gulf & Western Inc from the USA built the Casa de Campo luxury resort spread over almost 3,000 hectares on the southeast coast. Around the same time, American investors teamed up with Dominican Frank Rainieri and bought a 6,000 hectare strip of wilderness on the east coast of the country and over the following 30 years developed the exclusive Punta Cana complex.
Rainieri built Punta Cana International Airport in 1985 which helped to convert the area into a first class destination. The airport prompted an explosion of tourist complexes, most, however of the all inclusive ilk. These centers are characterized by offering guests accommodation, food and beverages for a flat affordable daily rate.
Rainieri says he could change the name of the complex to forge a distance between the party-scene that has taken over. “I probably made a mistake: I named the airport Punta Cana and the name became generic”, says the 66 year old president of the Punta Cana Group. “We are definitely looking at how we can identify ourselves better,” he added.
Nowadays, the original Punta Cana resort includes 3 exclusive golf courses, the 250 room Puntacana Hotel, Tortuga Bay resort and a village with shops, schools and housing for employees. The central piece is the Corals Golf Course on the sea´s edge, designed by the renowned architect Tom Fazio, and 126 homes surrounding it, an average of US$ 1.4 million for over 4,000 square meters. Among the owners of the first mansions built there are Julio Iglesias, the Dominican designer Oscar de la Renta and the Russian ballet dancer Mikhail Baryshnikov.
Next to Puntacana Resort is Cap Cana, a complex spread over more that 10,000 hectares which began attending high level visitors and holiday homes buyers in 2001. In the long term, property developer Cap Cana Group S.A. imagines a set of luxury complexes and holiday homes build around a marina and 3 golf courses and designed by Jack Nicklaus, one of the most renowned golfers in history.
Nevertheless, Cap Cana´s progress has been erratic. A Trump brand-named housing estate set on a plateau overlooking Cap Cana is almost paralyzed. An unfinished golf course languishes and another reduced its membership fees last year from US$ 75,000 to US$ 50,000 and opened its doors to non-member golfers. Cap Cana announced last October that it had fallen behind in payments on US$ 119 million in bonds and that it was trying to negotiate restructuring with the creditors.
Ricardo Hazoury, president of the Cap Cana Group, maintains that the sales of already existing houses far exceed the sales of new lots because the developers are not building. “This is a long term project”, he stated. “We started out at a good time when property prices were increasing and the market was unbelievable. At the moment, Cap Cana is really feeling the pinch”, he added.
Redberry, which controls the Sanctuary resorts and the new Fishing Lodge in Cap Cana contracted U.S. company Salamander Hotels & Resorts in June to administer the properties. “We understood that we needed a tour operator in sync with the American market”, says Fonciillas.
In total, the Punta Cana area encompasses around 30,000 hotel rooms, almost all of them all inclusive. Mexico´s Palace Resorts LLC is among the most recent owners which opened the Punta Cana Hard Rock Hotel in 2009 with 1,800 rooms and a casino. For US$ 225 a night guests can avail of the complex´s 9 restaurants, casino, spa, 15 swimming pools and 1.6 kilometers of beach.
Punta Cana´s mega resorts do not apologize for their predominance. “The consumer expects the all inclusive experience from this destination”, says Frank Maduro, Palace´s marketing vice president, and adds “We´re just giving the consumer what he wants”.
Source: The Wall Street Journal - Online