Why Look Beyond the U.S.? The Real Case for Hotel Investment in Latin America

When investors think about hotel real estate, the U.S. often feels like the obvious choice: strong demand, high occupancies, healthy ADRs, and a deep pool of reliable operators. On paper, it looks like a no-brainer.

So why are institutional investors still deploying billions into Mexico, the Dominican Republic, Costa Rica, Colombia, Brazil, and beyond?

Because the investment thesis in Latin America is fundamentally different — and in many ways, more compelling for the right kind of sponsor.

Below are seven reasons why savvy hospitality investors continue to allocate capital across the region.

1. Lower Entry Costs Create Real Upside

U.S. hotels are typically priced to perfection. Strong operations + cheap debt historically = high valuations.

In contrast, Latin America often offers dramatically lower cost per key — sometimes half or even a third of comparable U.S. assets. Even when ADRs are lower, the basis is so attractive that your upside-to-cost ratio is meaningfully higher.

Lower basis = more value creation potential.

2. Operational Improvement Drives Immediate Value

Most U.S. hotels are already optimized. Revenue management is sophisticated. Labor structures are established. Distribution channels are mature. Competition is fierce.

Latin America is different:

• Many assets lack professional asset management

• Distribution and pricing strategies vary widely

• Brand conversions can unlock +15–40% ADR

• F&B, labor, and cost controls can be reshaped

• Ownership groups often welcome hands-on strategic support

For seasoned operators, this is where real alpha lives.

3. Supply Grows Slowly — Demand Often Grows Fast

When a U.S. market becomes attractive, developers respond quickly. Capital floods in, supply rises, returns compress.

In many Latin American markets:

• Financing is harder to secure

• Permitting can be slower

• Land can be constrained

• International brands enter selectively

The result is natural supply discipline, even as tourism grows year after year. Structural “demand > supply” conditions create durable pricing power for well-positioned assets.

4. FX Risk Cuts Both Ways — and Presents Opportunity

Currency cycles can hurt short-term performance, but they also:

• Lower your USD entry basis

• Increase a destination’s competitiveness

• Create cycles where RevPAR rebounds strongly in USD

Investors who understand FX and structure intelligently can capture long-term value others overlook.

5. Less Competition = More Alpha for Capable Sponsors

U.S. hotels attract institutional capital at scale. Deals get bid up quickly, underwriting is highly efficient, and competition is intense.

Latin America is more opaque, relationship-driven, and under-served by sophisticated sponsors. For investors with regional expertise, bilingual skills, and strong operator networks, this creates real access advantages that simply don’t exist in U.S. markets.

6. Tourism Growth Is Structurally Higher

Many Latin American tourism markets are growing faster than the U.S.:

• Mexico and the Dominican Republic consistently break arrival records

• Costa Rica leads in high-value eco-tourism

• Colombia’s international arrivals have surged

• Caribbean all-inclusive demand remains incredibly resilient

This is long-term structural growth — not a one-off rebound.

7. Development Deals Actually Pencil Out

In today’s U.S. environment, high land prices, construction costs, and interest rates make new hotel development extremely challenging.

In Latin America, well-structured developments can still offer:

• Attractive land pricing

• Competitive construction costs

• Tax incentives in certain countries

• Strong pre-opening demand

• Above-market IRR potential

For investors comfortable with the region, development can be a powerful value-creation tool.

So Why Invest Beyond the U.S.?

Because the opportunity profile is different.

• U.S. hotels offer stability, liquidity, strong operators, and efficient markets — perfect for core and core-plus strategies.

• Latin American hotels offer growth, arbitrage, operational upside, and favorable entry points — ideal for value-add, opportunistic, and development strategies.

For cross-border investors, the strongest portfolios often blend both.

If you're exploring hotel investments across the Americas — or considering cross-border partnerships — I’d be happy to exchange views or share insights. The opportunities are real, but capturing them requires the right expertise, on-the-ground understanding, and disciplined asset management.

About the author:

Haizar Baiz is a co-founder of Latitude Asset Management, where he leads cross-border hotel investment strategy and asset management across the Americas. He focuses on value creation, market analysis, and helping owners navigate complex hospitality markets. He can be reached here on LinkedIn for conversations or collaboration.