I'll explain...
Wow! Bit of clarification called for.
There is a lot of money to be made from 'distressed properties' in most real estate markets, no doubt about it. Many people have made their fortunes buying older properties, refurbishing them, and flipping them.
That being said, the question was from someone looking to buy a small hotel. In this particular case, that of a small hotel being purchased by a foreigner with limited experience of the North Coast, a 'distressed' property can be a nightmare.
Note that by 'distressed' I mean closed for some time.
If you are a large hotel chain, like Marriot for example, and have the resources to completely overhaul and renovate a property as well as the marketing connections and experience, combined with the experience of how differently (not to say better or worse) things work in the Dominican Republic, then buying a distressed property might very well be for you.
But many if not all of the closed hotels in the area have been closed for years and have started (or more than started) to deteriorate. Also, the tour operators (and more importantly the travel agents) already have an image, justified or not, of the distressed hotel which will be difficult to overcome. The time, resources and expertise needed to overcome that image is beyond most people looking for a 'small hotel'. Add to that the fact that many (although certainly not all) closed properties are potential legal nightmares wtih outstanding bills, legal issues etc just waiting to be taken up again once some money starts flowing in.
So one buys a distressed (closed) resort and saves some money. Assume you get lucky and there are no outstanding legal time bombs. Add on a lot more money to bring it up to spec and a modest amount to market it. Then go find trustworthy people to fill your key positions. Find suppliers and negotiate prices with them not knowing what suppliers are better than others nor what things should cost. Assume your key personel are honest and won't be taking cuts from the suppliers and can help somewhat. Assume as well that your trustworthy key staff can steer you clear of the people, government and other, coming by with their hands out to fleece the newbie. With any luck you can find tour operators to contract with you (although tour operators now are preferring the much larger resorts). So you're not making any coin for the first minimum 6 months while you renovate, then 8-12 months from when you show a finished product for contracting. Add that loss of revenue to the price. Now go and compete as a newcomer with the established players. After 5 years, assuming you manage to keep your head above water (which keep in mind the previous owners couldn't), how much have you saved?
The other option: Pay a bit more for an established business. Established staff. Established reputation which is easily checked out at any travel agent or tour operator head office. Established suppliers. Make whatever profits you're going to make from day one, instead of 1-2 years off. See what you're getting from day one. Enjoy an establised place in the marketplace and profit from the mistakes that have gone before you instead of learning at great cost from your own mistakes.
The recuperation of distressed properties is a paradigm that works well in a marketplace where buying/selling is more a factor of price than opportunity. In NY, for example, if you want to move a property, just price it somewhat below market value and someone will snap it up quickly -- there are enough buyers for that. In the DR, especially in the hotel market, selling a property is not as easy. Unless the price is ridiculously low, a buyer can be either easy or extremely difficult to find, depending on a lot of factors, luck included.
So, in short, the money saved in buying a distressed property can prove extremely expensive in the long run. A newcomer to a new business environment would be well advised to pay the premium for an established business.
Again, if you're a shrewd hotelier with construction/renovation experience and an understanding of how things work in latin-america, the initial savings might compensate the risk and you might come out ahead in the long run. But I would hope that you save quite a bit on the price.
My apologies if I've offended any sensibilities by not being clearer in my initial post.
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Edit: If you can find someone who has a successful business but for whatever reason wants out of the DR, there's your deal right there. There are many reasonably successful expats in the DR who would love to move on to other places and other things, but can't because their business keeps them in the DR. There you have the best of both worlds -- a motivated seller with an undervalued product instead of a motivated seller with a cheap product.
