Caribbean tourism industry adapts yet again

From surviving health pandemics and economic crises to geopolitical disruption and catastrophic hurricanes, the tourism industry has repeatedly demonstrated its resilience.  

In the Caribbean – the most tourism-dependent region in the world – stakeholders continue to show an extraordinary ability to adapt, refusing to be derailed by even the most disruptive events. 

This year’s Baker Tilly Caribbean hospitality financing survey shows a tourism market navigating uncertainty with discipline.  

Confidence across the financing community remains intact, but it has become more measured.  

Banks are slightly more confident than last year, non-banks slightly less so, and both are responding to a more complex risk environment shaped by geopolitics, inflation, insurance pressure and the pace of technological change led by artificial intelligence (AI). 

That does not mean the market is stalling. Far from it.  

The underlying message from this year’s findings is that Caribbean tourism continues to command belief, capital and attention, but with investors and lenders taking a more selective, conservative approach.

Rather than a warning sign of decline, this is a sign of ongoing maturity. The region’s tourism industry has seen it all. It does not overreact to disruption – it adapts. 

Confidence has cooled 

The survey’s Confidence Barometer points to a market that is still very much open for business, but more alert to volatility. 

Banks reported a slight increase in confidence year on year, while non-banks remained more bullish overall, despite a modest drop from 2025.

While that dynamic is familiar – non-bank capital has consistently shown a greater appetite for risk and opportunity in the region – the shift this year is in tone, explains Gary Brough, managing director at Baker Tilly (Turks and Caicos). 

“Enthusiasm has become more qualified. Transaction activity has softened, pipelines are steady rather than surging, and both lenders and investors are closely monitoring the wider global landscape.

“In other words, confidence has steadied. After the Covid years of disruption, which were followed by sharp recovery and intense activity, the market is now settling into a more disciplined phase.”

Global shocks are now part of the financing equation

The growing influence of geopolitics is a key theme in this year’s survey. 

“The Caribbean has long been viewed as a relative safe haven during periods of global instability, and that perception still holds”, says Mr Brough. 

“But respondents are increasingly realistic about the fact that the region is not insulated from external shocks. Flight disruption, energy uncertainty and broader economic volatility are now part of the conversation and part of investment decision-making.”

That same caution is reflected in attitudes to inflation. More respondents now expect inflation to rise over the next 12 months, a notable change from last year’s more stable outlook. 

Even so, the findings suggest that while disruptive events may sharpen concern, they have not fundamentally changed the market’s underlying view of the region’s prospects. 

AI is moving into the mainstream

One of this year’s standout findings is the rise of AI as a serious strategic priority.

“Once discussed mainly in the context of customer-facing tools, in areas like flight and accommodation choices, AI is now being viewed much more broadly,” says Mr Brough.

Respondents see AI reshaping marketing, pricing, operations, financial analysis and even the pricing and availability of insurance. For a region where competitiveness, efficiency and speed to market are critical, that shift is significant.

Its potential is already being tested in powerful ways, explains Mr Brough. 

“During the 2025 hurricane season, an AI forecasting model developed by Google DeepMind outperformed long-established physics-based models and expert forecasters, delivering the most accurate predictions, most notably in connection with Hurricane Melissa.

“While AI will not replace expert judgement, it is expected to play an increasingly important role in improving predictability and preparedness. More accurate forecasting could help tourism operators respond faster, reduce disruption, limit insurance losses and, over time, support greater stability in insurance pricing and coverage.”

At the same time, the industry remains clear-eyed about AI’s role. It is viewed as an enabler, not a substitute, for the human touch that defines hospitality.

“The opportunity is not to automate the guest experience, but to use technology to strengthen decision-making, improve performance and free up investment for the service experiences that matter most, specifically memorable experiences delivered by human resources”, says Mr Brough. 

The all-inclusive model continues to lead the market

This year saw record engagement from banks in transactions involving all-inclusive resorts, underlining just how central the model has become to Caribbean tourism development. 

“The continued expansion of major brands into the space, through acquisition, conversion and new development, is reinforcing that momentum”, explains Mr Brough.

But there are caveats. 

“Respondents raised valid concerns around saturation, classification and economic leakage. But the direction of travel is unmistakable: all-inclusives remain a major financing target in the region, and one that continues to evolve.”

Resilience remains the defining advantage

If there is one takeaway from this year’s survey, it is this: the Caribbean tourism industry is not losing momentum, it continues to adapt and evolve. 

Financiers and investors are being more selective. They are pricing in geopolitical risk, inflation, operational friction and insurance constraints more carefully than before. But they are not stepping away.

The long-term case for Caribbean tourism remains powerful, underpinned by global demand, the region’s structural importance, and a sector that has repeatedly proven its resilience through crises. Post-Covid, holidays are increasingly viewed as non-negotiable rather than discretionary, as consumers prioritise experiences over material possessions.

That resilience is why this market continues to attract capital. And it is why cautious sentiment should not be mistaken for weak sentiment.