Ahead of his session on hospitality investment, mergers and acquisitions at the International Hospitality Investment Investment Forum (IHIF) Berlin 2022, Apple Leisure Group’s President & CEO, Alejandro Reynal shares his insights on the profitability of the luxury all-inclusive segment, as the global travel group highlights its adaptability as a winning formula for growth.
Hospitality Insights: How is the luxury all-inclusive model positioned to thrive post-pandemic and beyond?
Alejandro Reynal: The pandemic has had a significant impact on consumer behaviours across all industries. When it comes to hospitality, there are three behaviour trends that I believe will end up benefitting the luxury all-inclusive model. The first is an increased desire to build connections and experiences. The second, a heightened focus on wellbeing, and the third, the rise of “bleisure” travel, as work-life boundaries blur and flexible work models become more prominent.
After years of social distancing and quarantines, consumers are seeking ways to build connections and interact with friends and family. This need has led to an increased demand for leisure travel, especially as consumers shift from spending on goods and services to spending on experiences. AMR’s luxury all-inclusive model is perfectly positioned to provide connectivity experiences to different types of travellers. Each of our brands caters to different moments and experiences. For example, Secrets® Resorts & Spas is for those seeking romantic moments, Dreams® Resorts & Spas for those looking to spend more time with family, and Breathless Resorts & Spas® for those seeking a social environment to reconnect with friends.
In terms of wellbeing, we have seen how the pandemic has led consumers to become more aware of the importance of physical and mental wellbeing. Our products cater to the needs of wellbeing-focused travellers, by providing well-equipped amenities such as spas and gyms, a wide range of food options to cater to different dietary needs, and ultimately an environment to relax and disconnect. Looking ahead, we plan to continue evolving our wellness offerings to meet customer demands in this space.
Finally, as the line between business and leisure continues to blur, I expect us to benefit from distribution from the group and business segment. I see two opportunities in this context. One is from companies that are moving to remote or hybrid models and are looking for opportunities to connect with their employees and create culture. The other is from workers who now have more flexible schedules and can travel to leisure destinations while working remotely. In addition, we expect Hyatt’s strength in the group / business segment to also drive incremental distribution in this segment.
Hospitality Insights: Why is the luxury all-inclusive model a valuable / profitable investment?
Reynal: When assessing the value of the luxury all-inclusive model, I like to think about it through the lens of our key stakeholders. For our guests, our model is built to provide them with premium experiences, ranging from fine dining to all-day programming for adults and children, depending on the hotel. Our value proposition and consistency in delivering unique, luxury experiences with a high-quality service is evidenced by the demand we have seen for our product before and after the onset of the pandemic and the high rates our guests are willing to pay.
For our hotel owners, there are clear benefits that drive profitability. We deliver high ADRs complemented by incremental spend on site (from our spas and other activities offered) and long average stays. We can also actively and predictably manage hotel costs, especially after the pandemic, which taught us to be nimble and adaptable.
Additionally, our owners benefit from a brand ecosystem that has a network effect in building a loyal consumer base. With our Breathless Resorts & Spas® and Vivid Hotels & Resorts brands, we are targeting younger generations, such as Millennials and Generation Z, who we expect to later become Secrets® Resorts & Spas and Zoëtry® users and eventually enjoy moments with their families at Dreams® Resorts & Spas resorts.
Finally, our model also has a strong impact in the communities we operate, boosting local economies with increased jobs and consumption.
Hospitality Insights: Adaptability is crucial to the resilience of any resort concept, particularly as our industry continues the path to recovery. How adaptable is the luxury all-inclusive model?
Reynal: Adaptability is crucial in any industry and type of resort. However, I don’t think we should only think about the model itself being adaptable, but also about the organisation and culture being adaptable. In our case, our model did put us in a solid starting position to adapt to the new reality with COVID: our infrastructure and open spaces were the perfect setting for social distancing, and we could deliver a full vacation experience without having to leave the resorts.
Nevertheless, it was our team that worked to adapt our products and services quickly and successfully. We were able to quickly adjust our front and back-office protocols, we implemented the CleanComplete Verification™ programme, and we were the first company to offer free testing at the hotels when the US requested mandatory testing to re-enter the country. This ability to react quickly was possible because we have an exceptional group of people ready to adapt to offer the best service to our stakeholders. That gives me confidence that no matter the challenges we will have ahead, we will be able to adjust to new conditions because of our culture.
Hospitality Insights: What is needed to drive luxury all-inclusive resort development in the EMEA region?
Reynal: The past couple of years have represented significant milestones for AMR in the EMEA region. We started 2020 with 17 hotels and ended 2021 with 40 hotels and 11,000 rooms under management, making the AMR Collection the fourth largest resort chain in Spain per room count. We also signed our first deals outside of Spain with three hotels in Greece.
We have achieved this because we have industry knowledge and a proven track-record of delivering exceptional products for guests, and attractive returns to our partners. Now that we are part of Hyatt, we are even better positioned to drive growth of the luxury all-inclusive segment and we will do that by doing what we do best:
- Continuously strengthening our capabilities in the segment to deliver best-in-class experiences to our guests
- Actively collaborating with investors and owners to bring the best products to the market
- Working with distribution partners and strengthening the position of our product and brands in the market
Looking ahead, we are focused on continuing to expand our presence in the region, especially in core leisure destinations in the region.
Hospitality Insights: What distinguishes the AMR Collection for growth in the EMEA region?
Reynal: The AMR Collection is well-positioned to leverage its sizeable strengths and two decades of experience in the luxury all-inclusive space to expand across EMEA, driving a profitable future for the company and its valued investors/developers. We have the depth of experience, a proven record of success, sufficient financial strength, and a seasoned team of hospitality professionals to provide investors with the level of confidence they need to develop luxury all-inclusive resorts in EMEA, particularly during these unprecedented times.
Our key competitive advantages run deep. We are the leading operating company in Spain managing assets for institutional real estate investors, and we have five distinct brands in Europe that are already known in key source markets such as the UK and Germany, to attract a diverse group of travellers. Our superb commercial engine is powered by excellent relationships with top tour operators and OTAs, well-positioned key direct sales capabilities, strong booking and yield management, and nearly two decades of experience in leading digital transformation. Our exclusive focus on pure hotel asset management activity helps avoid potential cross-risks derived from real estate. We shine in operational excellence thanks to the team of experienced architects and engineers, hotel managers, robust purchasing processes and monitoring tools, and sophisticated reporting and governance. Additionally, as part of our forward-thinking strategy, we are incorporating Environmental Social Governance (ESG) policies as drivers of investment and due diligence processes.