MADRID — In certain regions of the world, such as the Caribbean, all-inclusive resorts are among the most popular form of accommodation.
Many of these all-inclusive properties in these island destinations are owned and operated by companies based in Europe. While these hospitality companies have found great success with all-inclusives abroad, the segment hasn't quite caught on with travelers throughout Europe.
During a panel at the Atlantic Ocean Hotel Investors’ Summit, hotel executives brainstormed how the all-inclusive resort could work in European markets and improve its standing with European residents.
Emerging European markets such as countries in the Balkans are susceptible to the model, said María Zarraluqui, vice president of global development at Meliá Hotels International, a hotel company based in Mallorca, Spain.
Meliá Hotels International has signed 100 hotel deals in the past three years and now has a portfolio of approximately 400 hotels, Zarraluqui said. Meliá has seen opportunities to bring large-scale, all-inclusive hotels to leisure markets throughout Europe. Chief among them is the Canary Islands, which Zarraluqui added is probably the European destination that is most similar to many of those in the Caribbean.
Other European markets such as Greece, Turkey, Albania and other countries in the Balkans are also candidates for all-inclusive resorts, she said.
“But in a different way. Not so large,” Zarraluqui said.
In the Caribbean, all-inclusive hotels have a clear budget and a connected experience, said Raúl González, CEO of Europe, Middle East and Africa at Mallorca-based Barceló Hotel Group. Barceló has 26 all-inclusive resorts in Europe, most of which are in Spain, including the 156-room Barceló Corralejo Sands on the Canary Islands’ destination of Fuerteventura.
“In Europe, it is more complicated as you have alternatives right outside the all-inclusive property. [In the Caribbean], hoteliers like it that the operational costs are controlled, but we do not see the same opportunities in mature markets,” he said.
It's also difficult to find sufficient parcels of land in Europe, especially beachside ones, González said.
Another challenge in Europe is the increasing amount of government regulation on accommodation unit numbers. Markets that might appear perfect for an all-inclusive resort — such as Ibiza and Mallorca — often have ordinances that require rooms to be taken out of the rental pool before new ones can be added.
Constructions costs are high in Europe, too, and conversions can rarely cater to all-inclusive properties, panelists said.
North American guests who book stays at all-inclusive properties in the Caribbean are willing to pay more, which is another obstacle for hotel firms trying to make the resort model work in Europe.
Daniel Diaz, executive vice president of Blue Diamond Resorts — which is part of Sunwing Vacations Group — said his firm has benefited from the huge demand that mostly comes from the U.S.
In 2021, Ontario-based Blue Diamond made a distribution agreement with Marriott International and has multiplied its market share seven times, Diaz said.
“You must have your own direct channels, but U.S. companies have helped us grow,” he said, adding one of his 2025 priorities is to launch a branded residential platform.
Zarraluqui agreed U.S. guests are very used to vacation packages, as well as the feel of large-scale resorts.
American travelers haven't shown to be price-sensitive when booking all-inclusive stays, González said, which is one reason Barceló has its own distribution agreements in the U.S.
In Europe, resort guests require higher-quality food options, while U.S. guests want longer stays as part of their packages, Zarraluqui added.
“That changes a lot of the operational equations,” she said.
Oriol Gimenez, managing partner at Mexico City-based investment firm Alójica and a partner at CPG Hospitality — which has 2,000 rooms in Mexico and Costa Rica — said there hasn't been a compelling reason to change the operating model of the all-inclusive resort. He added his portfolio achieves between 14% and 15% stabilized yield on costs.
“North American distribution with Spanish-style all-inclusive nature, that is the best of both worlds,” he said. “A lot of all-inclusive European firms have a policy of being asset-light in Europe and using their balance sheets in the Americas.”
All-inclusive resorts in the Caribbean have seen their guest demographics change over time, panelists said.
“It used to be for us to bring Europeans. Now most are not Europeans,” González said.
Despite fewer Europeans traveling to the Caribbean, Barceló isn't looking to rebrand any of its resorts there so they could be even more recognizable to American visitors, González said. Barceló has 300 managed or owned hotels and approximately 6,500 rooms.
“Barceló above the door, I do not think this will change in the next 10 years,” he said.
A varied distribution and marketing strategy is key to staying relevant in the all-inclusive resort space, Meliá’s Zarraluqui said.
“It has to be a distribution game … or do something you do well to show a difference,” she said.
Developing all-inclusive resorts in the Americas comes with a long road from planning to opening, Gimenez said.
“In Costa Rica, you have to be young to develop or will not live to see it,” he said.
But there are still opportunities for the segment to grow in Mexico, Diaz said.
“Mexico is a place where everyone still wants to continue growing, but institutionally and with contractors, it takes time to know the players,” he said. “We have also done a lot of conversions. Greenfield capital can be scared to enter.”
Investors and lenders that are interested in underwriting all-inclusive properties are looking for value-added opportunities, Diaz said.
Opportunities with “13% to 16% stabilized yield on cost; cycles of 18 months of renovation, or 24, well, we have struggled to find those [opportunities] with development deals, but it is a longer investment cycle,” he added. “The exception is whether you have destinations that have incentives to bridge that gap, to offset 20% to 30% of your development costs.”