The all-inclusive model is making a comeback – but what has sparked this interest and why is it such a hot topic in hospitality investor circles?
There’s not one simple answer, according to Roger Allen, Group CEO of RLA Global, although improved accessibility is one factor.
“Its’s taken a while for destinations in Europe to build up a sustainable airlift into those locations and for operators, particularly in the US, to look at those destinations and be confident that they can operate for a significant majority of the calendar year,” he said.
Renewed customer demand
Customer demand of course has a huge part to play: a Wyndham survey earlier this year found that 75 percent of travellers believed the best way to travel was to book an all-inclusive trip, and 77 percent believed that an all-inclusive vacation was the least stressful way to travel.
“During the pandemic, people’s views about how we holiday, especially how we holiday as families, have changed. People wanted to know what to expect,” said Dimitris Manikis, president EMEA, Wyndham Hotels & Resorts.
Grégory Lanter, chief development and construction officer at all-inclusive holiday group Club Med, said that the post-pandemic consumer inclination towards holiday packages was a trend for the long-term, speaking at the International Hospitality Investment Forum (IHIF) in Berlin earlier this year.
Manikis also suggested that the perception of all-inclusives has changed, and a more competitive market has driven standards and product quality.
“Traditionally they’ve been associated with inexpensive package holidays or adults-only beach getaways, sticking to the tried-and-true formula of buffet-style meals, beaches, and programming that’s designed to keep guests on-property. But today’s traveller is ever more discerning. People want to spend their precious leisure time enjoying elevated culinary and cultural offerings that go beyond their everyday experience,” said Alex Fiz, Managing Director, All-Inclusive, Marriott International Caribbean and Latin America.
“All-inclusive has become mainstream, it’s not just for families, it’s for all segments of the consumer pyramid,” agreed Manikis.
“It had stagnated for many years, now you see it going through a complete transformation, which is why we at Wyndham got into it.”
Wyndham’s all-inclusive play
Wyndham partnered with all-inclusive resort owner, operator and developer Playa Hotels & Resorts to launch its upper-midscale, all-inclusive resort brand Alltra in 2021. The first two properties were in Mexico: a 458-bedroom property in Cancun and a 287-bedroom hotel in Playa del Carmen.
Manikis said the properties were doing “phenomenally well” and the next stage was to bring the brand to Europe, which he hoped would be announced by the end of the year.
“For us, it’s a matter of time to do the first deal in Europe,” he said.
Wyndham is looking at the usual suspects: the Mediterranean, Spain, Portugal, Greece and Turkey. Manikis said to have five properties under the brand by the end of 2023 “would be a good start for us”.
However, the group won’t be launching more all-inclusive brands anytime soon: “We have to work on Alltra first, we have to make Alltra work. And then consider if [we need] any others. We’ve got our hands and our plate full of business at the moment, and opportunities, so unless we feel the urge and the need to do another one, I think that’s the one we’re going to go on.”
Hyatt Hotels Corporation is also seeing opportunities to grow its all-inclusive footprint in Europe. Speaking at IHIF, Hyatt CEO Mark Hoplamazian described the luxury all-inclusive segment as “very underpenetrated”. Alejandro Reynal, CEO of Apple Leisure Group, which Hyatt acquired last year, agreed there was a “huge opportunity” for all-inclusive resorts in the south of Europe and that the “great returns” the group had observed in its all-inclusives in the Americas could be replicated there.
The rise of seamless travel
Marriott International has also been active in the resort space since buying Elegant Hotels’ seven Barbados properties in 2019, followed by a long-term deal in 2021 with Sunwing Travel Group’s hotel division, Blue Diamond Resorts, one of the fastest growing hotel chains in the Caribbean and which propelled Marriott into the top 10 global all-inclusive players.
Fiz agreed the pandemic has escalated the desire for seamless travel: “The extra regulations and expenses associated with travelling during Covid highlighted the benefits of a hassle-free trip, and the sector began to attract new customers who may not have considered it before.
“Consumers are drawn to the ‘everything-under-one-roof’ model of the resorts, the simplicity in the booking and pricing process, and the peace of mind with knowing how much their trip will cost before they leave home. As travel continues to be unpredictable in the aftermath of Covid, the all-inclusive concept has never been more appealing.”
The All-Inclusive by Marriott Bonvoy portfolio comprises 30 hotels, all based in the Caribbean and Latin America. In June, Marriott opened the Westin Porto de Galinhas in Brazil, Marriott’s first all-inclusive resort outside of Mexico and the Caribbean. Fiz said the company saw “plenty of growth potential” in the all-inclusive market alongside an increased demand for luxury all-inclusives.
Confirmed pipeline openings include Marriott’s first luxury all-inclusive hotel, which will open in September: the Sanctuary Cap Cana, an adults-only 325-bedroom property in the Dominican Republic, and Marriott’s first hotel in partnership with Playa Resorts. Slated to open in December is the 1,049-bedroom new-build Royalton Splash Riviera Cancun, as part of Marriott’s agreement with Sunwing. It also plans to renovate its seven Elegant hotels.
Although the segment is relatively small (328,000 bedrooms) compared to the million hotel rooms Marriott manages around the world, the business plans to more than double its all-inclusive portfolio in the next few years. Countries such as Curacao, Jamaica and the Dominican Republic are in its sightline, with the Caribbean “well positioned for growth potential”, and a break into Europe on the cards.
“Some European and North African markets on our radar are those on the Mediterranean coasts: Spain, Croatia, Turkey, Tunisia, Egypt, and Algeria,” confirmed Fiz.
Industrywide, 52% of all-inclusive properties are in the Caribbean and Latin America, however interest in Europe is clearly picking up. When it comes to the differences between the two markets, Fiz highlighted that in the Americas, the weather can be more stable and warmer, particularly in Mexico, the Caribbean and Central America, while the properties tend to be larger and offer more amenities and services.
The costs are also different, with the cost of chain supplies and imports varying from destination to destination. In the Caribbean, for example, most goods have to be imported to the islands.
New concepts
Although Europe is where the modern all-inclusive concept originated in the post-war years, many brands are now looking back to Europe and bringing with them new concepts, some of which were founded in Europe and have gone on to grow significantly in the Americas.
Another change in the market has been more of a focus on providing a sense of location and engaging with the local community, according to Manikis.
“You’d be in Morocco or Turkey, and it was the same thing… that is changing. People are looking for experiences, they are willing to experiment more, they want to feel part of the local culture. The all-inclusive is starting to adapt to those needs,” he said.
He also suggested local engagement was a potential solution to the staffing crisis: instead of communities seeing an all-inclusive as a threat, they can be what he described as “an ally and a strategic partner”.
Manikis added: “The DNA of Alltra and how we look at developing that is exactly that. We want to do it with the local community, for the local community, and create a great experience for the guests… We’re not places just to sleep anymore, we’re part of the community, and during the lockdowns we saw that, how the hotels became places where people came together and helped support the community.”
Although the fundamentals of Alltra will be the same, he said that the amenities, facilities and food offering will be tweaked to align with the definition of luxury all-inclusive in an asset’s specific location.
Meanwhile, Allen suggested there were still some markets that were still “under-served” and in need of a luxury all-inclusive – for example Tunisia, whose tourism market has struggled to recover from a mass shooting in 2015.
“I would argue it probably has some of the best beaches in the Mediterranean, but it doesn’t have a luxury all-inclusive product,” he said.
“That’s begging for a luxury product to improve the destination and the appeal of the destination.”
Interested in finding out more about the all-inclusive market? Come join us in Portugal for the Resort and Residential Hospitality Forum.
On Tuesday, October 18 at 2.45pm PDT we will be running a session entitled: The All-Inclusive Model Makes a Comeback: What's New?