HOLLYWOOD, Florida — All-inclusive resorts are no longer a specific niche, Marriott International’s Laurent de Kousemaeker said.
“That [all-inclusive resorts are] restricted by a certain price point or a certain experience no longer is true,” he said. “You can have a lifestyle experience. You can have a very upscale experience, and you can have a luxury experience. You can have a lower-end experience.”
All-inclusive resorts are now a way of purchasing vacations across a spectrum of brands and positioning, Marriott’s chief development officer for the Caribbean and Latin America said in an interview at the Hotel Opportunities Latin America conference.
Marriott entered the all-inclusive resort space in 2019 with extensions of seven of its existing brands, de Kousemaeker said. All-inclusive resorts used to have the value proposition of being the “cheap fun, sun and rum vacation,” but now have shifted to a “convenient, holistic vacation experience” that targets customers at all levels, he said.
Guests were traditionally bargain-focused European clientele, but now that demand segment is being complemented by the high-rated, more demanding U.S. customer, he said.
The timing of Marriott’s entry into all-inclusives couldn’t have been better, de Kousemaeker said.
“The sequencing has just been right, and the effects of the pandemic shifting toward leisure is fueling that growth in that direction,” he said.
Marriott has 32 open all-inclusive properties with 10,300 rooms in eight countries in the Caribbean and Latin America. The company recently announced a deal to convert the Sanctuary Cap Cana in Punta Cana, Dominican Republic, to its Luxury Collection. It has also signed the soon-to-open Royalton Splash Riviera Cancun, owned and operated by Blue Diamond Resorts, to its portfolio through the Autograph Collection.
The 1,049-room Royalton Splash Riviera Cancun resort features a water park, lazy rivers, a kids club, a teens club, laser tag, a bowling alley and 21 food and beverage outlets.
“It’s going to be a destination in itself,” de Kousemaeker said. “That’s what’s amazing about these all-inclusive hotels. They essentially just become destinations where you don’t necessarily compete with the hotel next door. You could be competing with Atlantis or maybe even Disney.”
It’s supply-driven demand when a resort becomes the destination itself, and it changes the dynamics in a positive way, he said.
Marriott has focused on the Caribbean and Latin America region to start, but now is looking at global opportunities for all-inclusive resorts, de Kousemaeker said.
“Expect over the coming years to see that model grow internationally,” he said.
Competition for Guests
If there was a finite amount of demand, de Kousemaeker said he’d be worried about the growing competition in the all-inclusive resort space. Marriott, Hilton, Hyatt Hotels Corp., Wyndham Hotels & Resorts and Sonesta International Hotels Corp., among others, have entered and expanded in the all-inclusive space.
The broadening guest profile and appeal of all-inclusive resorts also has changed the competitive landscape.
“Now it’s the Marriott customer, it’s the Hilton customer, it’s the Conrad and it’s the Ritz-Carlton customers that are now seeing the opportunity to just have a hassle-free vacation with their families or with their partner,” he said.
De Kousemaeker said Marriott's Bonvoy loyalty program gives it a competitive advantage, as does its approach to using existing and recognizable brands to build equity with guests and set clear expectations. Marriott has also added more of its brands to the all-inclusive portfolio, most recently its JW Hotels brand.
“We understand our Ritz-Carlton customer,” he said. “We understand what they want, what they’re looking for, their tastes or needs and their interests. We understand they go on vacation, so why not design the vacation for them in a way they can recognize the brand that they love and use that brand on their vacation?”
Marriott in Caribbean and Latin America
Beyond all-inclusive resorts, Marriott has 327 hotels with 65,500 rooms representing 21 brands in 37 countries in the Caribbean and Latin America, de Kousemaeker said. At the time of the interview, the company had 127 projects and 22,000 rooms in the pipeline in the region.
High demand from leisure travelers is driving Marriott's growth in the region, he said. The ease of travel to and from the U.S. along with high vaccination rates and loosened restrictions have fueled the pent-up demand the hotel industry had hoped for.
Marriott’s average occupancy for all of the Caribbean and Latin America region is at 93% of pre-pandemic levels, he said. Revenue per available room for the first quarter of this year was 167% of what was achieved in the first quarter of 2021.
“We had the best quarter that we've had since pre-pandemic,” he said. “Leisure travel continues to be the main driver.”
Its resorts in Mexico and the Caribbean have led the rebound, surpassing 2019 levels, and airlift trends in the region are positive, he added.
Marriott began focusing on conversions as a path to growth in the region before the pandemic, particularly through its soft-brand collections, de Kousemaeker said. It’s Delta brand also created a new avenue for conversions.
During the pandemic, conversions became the main focus for growth because of the disruptions to new construction, he said. Of the deals signed this year to date, about half have been conversions when about five years ago, about 15% of the pipeline was conversion projects.
Marriott hasn’t shifted away from new builds so much as expanded the conversion component, he said. As the market recovers, investors and owners will feel more confident in performance trends, leading to further investment in new projects.