CORAL GABLES, Florida — More competition in the all-inclusive resort space is forcing brands such as Hyatt Hotels Corp. to improve all its offerings.
This means upping the game on food and beverage, entertainment, technology and overall service said Antonio Fungairino, Hyatt's head of development, inclusive collection, for the Latin America and Caribbean region. Fungairino spoke to Hotel News Now during an interview at the recent Caribbean Hotel and Resort Investment Summit.
"What can we do differently? What can we do better? A lot of times innovation is important but execution, when we're growing so fast, is probably more important in my opinion," he said.
Camilo Bolanos, senior vice president of development for Hyatt's Latin America and Caribbean region, said growth in the all-inclusive space right now is "paramount" for the company.
In April, Hyatt debuted its first all-inclusive Hyatt Vivid property with the Hyatt Vivid Grand Island in Cancún, Mexico. The brand was formed with younger generations in mind.
"We had a lot of success with the adult brands. But ... we started researching the needs of the customers in the [millennial and Gen Z demographics] and we created a brand specifically to cater to them. They're the ones that are traveling the most right now," Fungairino said. "The summary of what the brand does is it allows adults, whether alone, in a group or a couple, to experience a relatively easy [stay]. There's nothing rigid about it. The [food and beverage] is a focus, we have a food truck, we have different [food operating] hours than you would have in other brands, different types of food.
"We hope that this is one of many Vivids coming up in the pipeline," he added.
Hyatt's Inclusive Collection currently has 79 resorts open and operating, and another six in the pipeline in Latin America and the Caribbean.
Recent openings include the new Dreams Estrella Del Mar Mazatlán Golf & Spa Resort. Upcoming Inclusive Collection openings include a Dreams and a Secrets in Miches, Dominican Republic, by the end of the year, and a Secrets in St. Lucia in 2025.
"St. Lucia is really our focus right now. For a small market, we're going to have three or four hotels," he said.
Also in 2025, Hyatt is expected to open the Secrets Baby Beach in Aruba, which is a destination it has wanted to be in for 20 years.
"It's hard to develop [in Aruba] because the government just doesn't let you increase hotels. They're very careful about the volume of people going to the island," he added.
Penciling Deals
Fungairino said "the good thing is that demand outpaces supply," but the biggest hurdle right now against deal-making is financing.
He said secured overnight financing rate, or SOFR, is at about 5%.
"When you try to get a loan anywhere, it's going to be 7%, 9%, 10% depending on where you are, and sometimes the price expectations versus the financing market and equity may not work. People look for a certain [internal rate of return] and it doesn't happen ... so the opportunity right now is conversions from properties that are not in our portfolio," he said.
The Dominican Republic continues to lead the way for new-build and conversion opportunities. Conversions, however, aren't easy to come by as everyone is going after them right now, he added.
When Hyatt is looking to add a 350- to 400-room all-inclusive resort to its portfolio, the company will generally do new-build.
"A lot of our growth comes from one of our owners identifying a site that they believe is a great fit to a hotel they even own within the same area or at times growing out of a market. We have owners that have started with us in the all-inclusive space in the Dominican Republic, then built a hotel in Mexico and now maybe they're doing Jamaica," Bolanos said.
He said the all-inclusive segment really took off between 2020 and 2021 and drove investor appetite. However, the segment is still lacking investment from institutional players.
Much of that can come down to a lack of understanding around the all-inclusive model.
To gain attention from institutional investors and educate them on the model, Hyatt is hosting them on property at the Hyatt Vivid Grand Island and having them experience the segment first-hand.
They "see how elevated the experience is. In food and beverage there's a lack of understanding, even from the consumer perspective, that it traditionally might have been lower-end and lower-quality. Having fund managers and others visit hotels, experience and go through the motions of explaining the cost model [as well as] the margins and profit, they walk away amazed at how the numbers work and perform and how you can achieve great returns while delivering a sophisticated product," Bolanos said.
For now, Hyatt's Latin America and Caribbean team is focused on growing in markets where the company already has a footprint, such as Mexico, Jamaica and other islands in the Caribbean and even in non-traditional all-inclusive destinations including Curaçao.
"We are a company that has been super careful with our growth. We always are talking to the market, to investors with the message that we will be thoughtful. We won't do a deal just for the sake of doing a deal, and we always want to have hotels where our guests are traveling. That's critically important and we still have a lot of gaps within our footprint, speaking for [Latin America and the Caribbean], that need to be filled," he said.
Bolanos has been with Hyatt for 14 years and credits much of the growth from 2018 and on to strategic acquisitions and partnerships with Two Roads Hospitality, Apple Leisure Group, Dream Hotel Group and Mr and Mrs Smith booking platform.
"All of that investment into models with amazing distribution and great new hotels but asset-light — so not buying into the real estate but really the operations and the brands — and the ability to grow those has put us in a strategic position. In the history of Hyatt, this is the best time for us," he added.