Business

Puerto Rico's Government said Wednesday it would back a US$1.2-billion resort on the island's north coast, the biggest hotel project in two years for a region hit hard by the world economic crisis.

The Ritz-Carlton Reserve Dorado Beach Resort & Spa is to be the island's first six-star resort.

"This kind of initiative represents an extraordinary advance in the renewal of tourism in Puerto Rico," Governor Luis Fortuno told reporters.

He pledged a US$231-million loan for the resort's first phase, which is to include 130 rooms, 20 of which will be available for purchase.

The loan is backed by the Government Development Bank for Puerto Rico, the Tourism Development Fund and several financial firms, including UBS Financial Services and Popular Securities.

The resort is scheduled to open in late 2012. Fortuno said it would generate more than 2,500 jobs during the construction phase, and nearly 900 jobs once it opens.

The project also calls for US$300 million in future expansion and US$600 million for construction of a separate 400-room hotel, as well as homes and condominiums, but financing has not been secured, said Eric Christensen, CEO of Dorado Beach Resort, which is overseeing the project.

"This is the biggest hotel financing in the entire Caribbean region in the last 18 months," said Carlos Garcia, president of the island's development bank.

The announcement comes as Puerto Rico enters its fourth year of recession that has seen thousands of government employees laid off to offset a US$3.2-billion deficit. The island is grappling with a 16.6 per cent unemployment rate, higher than any US state.

The investment shows developers are confident the economy will rebound, but the project will be built in stages that do not have a definite due date, said Elias Gutierrez, an economist at the University of Puerto Rico.

"I hope everything comes out as planned," he said. "In these times, any investment that Puerto Rico manages to attract is good. ... The situation we face is very serious."

While tourism is slowly rebounding on some islands, construction of resorts across the Caribbean has stalled in recent years as financial firms went bankrupt and investment capital dwindled.

- AP