BRIDGETOWN, Barbados — All-inclusive resorts have long been a stalwart in the Caribbean, but as the big global hotel companies such as Marriott International, Hilton and Hyatt expand their presence, the segment is growing in competitiveness and sophistication.
“Half of the all-inclusive rooms in the world are here in the Caribbean, and that’s accelerating even more,” said Robert MacLellan, principal of MacLellan Associates, at the Caribbean Hotel Investment Conference and Operations Summit.
All-inclusive resorts charge guests per person, not per room, like traditional or “European-plan” hotel pricing models. Included in that per-person price are meals, drinks including alcohol, entertainment and more. Guests can pay extra for top-shelf liquor, spa services and excursions or special activities.
The fundamentals of making all-inclusive resorts profitable are still vital to the segment, speakers said.
That translates typically to a few basics:
- All-inclusives rely on having a high volume of guests, and most have 300 to 700 rooms on average.
- They achieve the best margins when they’re located in countries and islands with reliable airlift from countries such as the U.S. and Canada.
- It's vital to have have affordable and available employees in the destination.
But as the segment matures, brands are switching things up by offering smaller all-inclusive resorts that cater to more high-end travelers, dabbling in off-site experiences and marketing to younger guests.
More upscale resorts with fine dining, spas and well-appointed guestrooms are popping up.
“This is the new trend," said Paula Cerrillo, director of development for Marriott International. "This is what allowed U.S. companies to enter the space. The traditional perception was that all-inclusive resorts were massive, cheap and had no quality. So we need to do a good job keeping the standards higher because we want the U.S. traveler. That is the key.”
Marriott is a relative newcomer to all-inclusive resorts, entering the segment significantly in 2019 with its purchase of Elegant Hotels Group. Today the company has 37 all-inclusive resorts in the Caribbean, Brazil and Mexico operating under the Autograph Collection, Elegant, Delta by Marriott, Westin and The Luxury Collection brands.
Cerrillo said Marriott sees opportunity in the Caribbean for smaller upscale and upper-upscale, all-inclusive resorts of about 200 to 250 rooms. Earlier this year, the Royalton CHIC Antigua opened as part of Marriott’s Autograph Collection. The all-inclusive resort has 235 keys, overwater bungalows and a spa. The site made sense for a smaller Autograph Collection resort because Antigua, in the eastern part of the Caribbean, can support higher rates, Cerrillo said.
Upscale hotel brand recognition plays a role, too, said Nicole Tilzer, vice president of all-inclusive and resort strategy for Hilton.
“We have companies with dozens of brands to play with,” she said.
Hilton has 16 all-inclusive resorts in the Caribbean, Mexico and Turkey. It first entered the segment in the early 2000s and made a big push in 2018 by partnering with Playa Hotels & Resorts for new resort development and rebranding of existing resorts.
Now the brand company is extending two of its soft brands, Curio Collection and Tapestry by Hilton, into all-inclusive resorts. The Zemi Miches will open in Dominican Republic early next year as part of Curio Collection, and a Tapestry Collection will open in Cancun later next year as a conversion project.
Hyatt Hotels Corp. accelerated its all-inclusive push with the purchase of resort operator Apple Leisure Group in 2021. Now Hyatt has an all-inclusive collection of 10 brands and more than 100 resorts in the Caribbean, Mexico, South America and Europe. In late October, Hyatt inked a joint venture with Grupo Piñero to add 23 all-inclusive hotels and 12,000 rooms to the Hyatt platform.
Antonio Fungairino, head of development for the Americas for Hyatt’s Inclusive Collection, said he’s seen more high-end, all-inclusive resorts enter the segment in the last few years, but owners and operators must be cautious to avoid brand degradation for the most exclusive luxury hotel brands. Those operators must remember achieving high rates is key.
Operating costs are typically higher in the Caribbean than in the mainland U.S., and Fungairino said it’s all about rate and margin when getting any all-inclusive project to pencil.
“If you can get the rates, you’re set. It’s hard to improve on fixed costs like energy and insurance, so the hotel must be rate-driven, and you must have a decent labor cost and that can be difficult,” he said. “You are seeing more [high-end] all-inclusive and the rates are there right now.”
Upselling at all-inclusives is another way operators are boosting revenue at more high-end resorts. If approached carefully, it can be a win-win for leisure-minded travelers who have embraced experiential travel since the pandemic, said Mauricio Elizondo, director of development for Grupo Posadas. The Mexico-based company is a veteran all-inclusive operator with more than 180 hotels across nine brands in the Caribbean and Mexico.
Yes, all-inclusive guests have pre-paid for meals at resort restaurants included in the package, which is priced to give hotel owners margin, Elizondo said. But if resorts can offer restaurants and experiences outside of the prepaid package that appeal to guests, that is even better for margin.
“Guests will be happy because they have an experience outside of the traditional, and the hotel will have additional revenue,” he said. “The same goes for spa and other experiences. At the end of the day, the hotel is happy with revenue and the guest is happy with experiences. It’s a good combination.”
While many travelers are seeking non-traditional travel experiences, all-inclusive operators must remember that there’s a fine line between appealing to the core reasons why guests choose all-inclusive resorts and seeking extra revenue.
“We never want someone to show up and feel like they’re being nickel-and-dimed,” Tilzer said. “it’s about how are you making sure they get this great experience and then add on top of that.”
Overall, speakers agreed that the enduring appeal of all-inclusive resorts across any chain-scale segment is the ease of prepaying a vacation and not worrying about additional costs or hassle on-property.
That appeal is what’s growing the segment’s popularity among younger, more high-end travelers as well, speakers said.
“This is what consumers are looking for. There’s a lot of Gen Z interest in experiences and the ease of frictionless travel,” Tilzer said.