Image: Dominican Republic
Kena Betancur  /  AP
The financial crisis has forced a stall on the multimillion dollar construction project of the Punta Palmera Condominium at the Cap Cana Resort in Punta Cana, Dominican Republic.
updated 11/19/2008 1:59:15 PM ET 2008-11-19T18:59:15

The ocean glows a milky turquoise. Tiny waves lap at the powder-beige sand, in no rush to reach the line of postcard-perfect palm trees.

Hundreds of luxury villas are positioned to take in the view, but there are no guests. There are no roofs either; neatly tied bundles of red tiles are stacked outside. The wind slams doors and rustles the yellowed newspaper taped to the windows.

The paralyzed work scene at the Cap Cana resort, a development including four luxury hotels, three golf courses and a mega-yacht marina, is a victim of the global financial crisis that has hit the Caribbean's tourism industry especially hard.

Cap Cana fired 500 workers last month after Lehman Brothers declared bankruptcy and a $250 million loan fell through. Talks to re-negotiate a $100 million short-term loan collapsed last week, and more layoffs are expected.

"Our project has been affected by the economic tsunami that has paralyzed the global financial markets," said Cap Cana President Ricardo Hazoury.

Construction is also paralyzed at the Ritz-Carlton Molasses Reef resort in secluded West Caicos, where 60 Chinese workers revolted last month to demand back wages. About 160 workers have been sent home to China, and it's unclear when construction will resume at the hotel, marina and condominium project, which is three-quarters complete.

Video: Holiday travel forecast This month, the sprawling Atlantis resort in the Bahamas laid off about 800 workers, citing low occupancy rates. Baha Mar Resorts Ltd. laid off about 40 employees at its Sheraton Resort in the Bahamas and 40 more at the Wyndham Nassau Resort. The Bahamas Hotel Catering and Allied Workers Union has called a demonstration Thursday to demand government aid.

"I've been in the business 38 years. I have seen the impact of the Gulf War. I have seen the recession of the '80s. Certainly Sept. 11," said Robert Sands, senior vice president of external affairs at Baha Mar. "But nothing has been of a global nature, which makes the current financial situation we're in much more worrisome."

In Puerto Rico, the Caribe Hilton laid off more than 50 people this month because of rising costs and sluggish occupancy rates. The last time the hotel had to lay off workers was after the Sept. 11 attacks, General Manager Jose Campo said.

"What worries me is that this will last longer," he said. "We are mounting an aggressive campaign, but the situation is what it is."

Even the normally busy holiday season is expected to be relatively quiet.

"There is space available for the holiday season and beyond," said Alec Sanguinetti, CEO of the Caribbean Hotel & Tourism Association. "This is often a time when hotels are sold out and vacationers are looking for any place that has availability."

Image: Ritz-Carlton Molasses Resort, West Caicos
David Hinds  /  AP file
The paralyzed construction of the Ritz-Carlton Molasses Resort on the small undeveloped island of West Caicos in the Turks and Caicos Islands.
Workers are spending their days off looking for jobs outside the tourism industry. Others have already been sent home.

Victor Felipe Feliz, 24, has been feeding his two children on store credit since he lost his construction job at Cap Cana last month.

"I need to work so I can buy Pampers, so I can buy food," he said. "It has been a couple of months since I bought clothes. I can't afford anything."

Cap Cana plans to fire another 1,000 workers in the coming months, according to a company official who spoke only on condition of anonymity because he wasn't authorized to release the information. But Cap Cana President Ricardo Hazoury said he expects the project to go forward as the company outsources certain services.

Video: Travel tips for tough times The 50-square-mile (130-square-kilometer) development is nestled in the Dominican Republic's easternmost point amid lush jungle. Its developers include Deutsche Bank, the Trump Organization and the Ritz Carlton Hotel Company.

Cap Cana runs more like a city than a private development. It generates its own power and water and has hundreds of villas and condominiums — even a school. Some of the villas and hotels are inhabited, but most remain under construction.

"We used to have a lot of workers — brick layers, plumbers, electricians," said Wilkin Cuevamato, who was laid off but later found work at another Cap Cana property. "The majority have left and gone home."

The crisis has affected air travel as well. American Airlines, the main carrier to Puerto Rico, has cut back flights by 44 percent, though other airlines are stepping in to reduce the overall drop to 14 percent.

Video: Cutting the travel budget Some hotels are offering cheap, last-minute deals. Scott Berman, a tourism adviser for Pricewaterhouse Coopers in Miami, says the picture after the holiday season is bleak.

"It's fair to say that '09 is going to be a rough patch," he said.

Getting money to finance new projects will be difficult amid the credit squeeze. A new U.N. report predicts access to external financing for the region will be limited, and what is available will come with high interest rates.

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But some remain optimistic. In September, even as the financial crisis was gathering steam, Hilton Hotels Corp. announced plans to build 17 hotels in the Caribbean, adding to the 13 it already has.

"We have analyzed the region," said Gregory Rockett, who is overseeing the expansion. "We are very confident that in the next five years we can do these numbers."

And Sanguinetti points out that for North Americans, the Caribbean remains a quick and attractive getaway.

"We provide a relaxing escape from the tensions that people are facing at work during this economic crisis," he said. "We expect that pent-up demand will be released."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Photos: Caribbean way of life

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  1. Barbados

    This undated photo courtesy of the Barbados Tourism Authority shows Harrismith Beach, Barbados. Sun, surf and sand are the main draws on this tropical Caribbean island. (AP) Back to slideshow navigation
  2. Barbados

    This undated photo courtesy of Barbados Tourism Authority shows The Watering Hole rum shop in Barbados. The rum shops on the island are good places to sample local food and drink, watch a game of dominos, or just get to know the friendly and hospitable Bajans. (AP) Back to slideshow navigation
  3. St. Lucia

    Developed, beautiful and situated in the Eastern Caribbean, St. Lucia is accessible from Europe and Canada, and reachable -- albeit not as easily -- from the United States. St. Lucia is known as a romantic destination. The island gets plenty of visitors, including wedding parties. (Holger Leue  / Lonely Planet Images) Back to slideshow navigation
  4. St. Lucia

    Cocoa pods lie on the ground ready to be processed at Fondoux Plantation in Soufriere, St. Lucia. Cocoa is one St. Lucia's main produce alongside the more obvious banana crop. (Chris Jackson / Getty Images) Back to slideshow navigation
  5. St. George's

    The capital of Grenada, St. George's is considered one of the prettiest harbor towns in the Caribbean. Grenada's unique layout includes many finger-like coves, making the island a popular sailing destination. (Richard Cummins  / Lonely Planet Images) Back to slideshow navigation
  6. The Cayman Islands

    The Cayman Islands very popular attractions, Stingray City and the nearby shallows known as the Sandbar, provide the only natural oportunity to swim with Atlantic Southern Stingrays. (David Rogers / Getty Images) Back to slideshow navigation
  7. Stingray City

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  8. St John's

    In high season, up to five cruise ships visit St John's, Antigua, each day. The boats unload mostly American and European passengers who fan out across the island visiting the casinos and beaches. Antigua is easily accessible, and can offer good values for tourists. (Chris Jackson / Getty Images) Back to slideshow navigation
  9. Antigua

    Antigua, located in the Northeastern Caribbean, is a popular tourist spot. While there are high-end, stylish hotels, the island also features a large number of mid-priced options. Visitors will find beach bars, restaurants, casinos and shopping. (Richard I'Anson  / Lonely Planet Images) Back to slideshow navigation
  10. Antigua

    People walk along an area known as Devils Bridge in Indian Town Point, Antigua. Antigua is a wintertime destination for many visitors from the north. (Joe Raedle / Getty Images) Back to slideshow navigation
  11. Dominica

    Not as well known as other Caribbean islands, Dominica is green, fertile and mountainous. Visitors will find some opportunites to scuba dive, but watersports are not its main draw. The island does, however, offer a slew of rainforest trails -- great for hiking and sightseeing. (Greg Johnston  / Lonely Planet Images) Back to slideshow navigation
  12. Dominican Republic

    An old church building is seen in La Romana, the third-largest city in the Dominican Republic. (Wayne Walton / Lonely Planet Images) Back to slideshow navigation
  13. Belize

    Belize gets more than 850,000 visitors each year. The hot spot allows watersports such as kayaking and snorkeling, as well as inland activities like hiking and birding. The Mayan ruins of Altan Ha, pictured, are easily accessible from Caye Caulker. (Andrew Marshall / Lonely Planet Images) Back to slideshow navigation
  14. La Tortuga

    A fisherman repairs his nets on Cayo Herradura, off the island of La Tortuga in Venezuela. The country offers visitors a variety of activities to choose from, but remains undervisited -- especially compared to its South American neighbors. (Lynne Sladky / AP) Back to slideshow navigation
  15. Cuba

    Cuba blends the fantastic attractions associated with other Caribbean destinations with an amazing history. Tourists can stroll white sand beaches, take in the incredible architecture and party into the early-morning hours. (Javier Galeano / AP) Back to slideshow navigation
  16. St. Barthelemy

    St. Barthelemy is a vacation spot of stars and millionaires. Trendy, chic and sexy, St. Baarths is safe for tourists, but expensive to visit. About 8,700 people reside on the island. (Mark Mainz / Getty Images) Back to slideshow navigation
  17. Puerto Rico

    A man climbs to a 40-foot waterfall at the south side of the Caribbean National Rain Forest, commonly called El Yunque, near Naguabo, Puerto Rico. Most visitors hike the well-marked paths in the northern half of the park's rain forest but the trails in the south allow hikers and nature lovers to explore the only tropical forest in the U.S. national forest system. (Herminio Rodriguez / AP) Back to slideshow navigation
  18. Puerto Rico

    The cupola of San Juan Cemetary as well as colorful homes sit next to the ocean in Old San Juan, the original capital city of San Juan, Puerto Rico. The old city is a historic district of seven square blocks made up of ancient buildings and colonial homes, massive stone walls and vast fortifications, sunny parks and cobblestoned streets. (Joe Raedle / Getty Images) Back to slideshow navigation
  19. Puerto Rico

    Men play dominos in Old San Juan, Puerto Rico. Old San Juan is a well-preserved colonial city that allows tourists a peek into the past. (Joe Raedle / Getty Images) Back to slideshow navigation
  20. Guadeloupe

    Guadeloupe isn't as developed as some other Caribbean islands, but it offers a variety of beaches -- some active with watersports, some secluded. The island also offers beach bars, restaurants, mid-range hotels and other tourist amenities. (Marcel Mochet / AFP - Getty Images) Back to slideshow navigation
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