The outsize role leisure travel has been playing in the hotel industry recovery is just one of the reasons brands and investors are flocking to the all-inclusive resort sector, which has been one of the biggest talking points for the industry throughout the first half of 2022.
JLL's recent Americas All-Inclusive Resort Sector Trends & Outlook report points out that demand for all-inclusive resorts is surging, with occupancy for the segment reaching 77% of pre-pandemic levels over the trailing 12 months in the Dominican Republic and Mexico. Higher-end all-inclusives in particular are gaining steam, now making up 28% of overall supply in the Dominican Republic and 33% in Mexico.
A pair of deals in the latter half of 2021 set the tone that 2022 would be a year of all-inclusive expansion with Hyatt Hotels Corp. purchasing Apple Leisure Group for $2.7 billion and Wyndham Hotels & Resorts launching the midscale Alltra brand — its entry into the segment through a partnership with Playa Hotels & Resorts.
Both Hyatt and Apple Leisure executives have been effusive about the synergies of the deal and believe the combination of the companies gives them a uniquely powerful platform to grow the AMResorts portfolio.
Speaking with HNN at the International Hospitality Investment Forum in May, Javier Coll, group president of global business development for Apple Leisure, said he is confident there are opportunities to build and operate high-end luxury all-inclusive resorts in markets that many once considered off-limits for the more cost-intensive operating model. Those markets include Hawaii and Florida.
"It's just a question of can you charge the rates to overcome the additional expense with labor and all those things, and our conclusion is yes, you can," he said.
During his company's most recent earnings call, Hyatt President and CEO Mark Hoplamazian said he was having a hard time tempering his enthusiasm about Apple Leisure and the all-inclusive segment "because the data is quite clear."
"The embedded [average daily rate] for the AMResorts business is up 22% over 2019," he said. "And if you look at the Americas outside of ALG for Hyatt, our leisure-focused business is up 38% in rates for future bookings."
Speaking at the Hunter Hotel Investment Conference In March, Wyndham President and CEO Geoff Ballotti said leisure demand has been a big driver of development for his company.
“We have a very resilient group of owners and franchisees that are feeling very good about where we are today in the cycle,” he said.
But Hyatt and Wyndham are far from the only big-tent brand companies that have been making moves and looking to grow in the all-inclusive segment.
Speaking during an earnings call in February, Choice Hotels International President and CEO Pat Pacious also noted there is potential for his company to make a move in the space, especially after losing the Apple Leisure properties from its loyalty platform.
More concretely, Marriott has made all-inclusive resorts core to its growth strategy across the Caribbean and Latin America, with Laurent de Kousemaeker, the company's chief development officer for the region, pointing to the increasingly broad appeal of the segment as a reason for that approach.
“That [all-inclusive resorts are] restricted by a certain price point or a certain experience no longer is true,” he told Hotel News Now at the Hotel Opportunities Latin America conference. “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.”
Officials with the rapidly growing Sonesta family of brands are also banking on explosive growth for all-inclusive resorts with Chief Development Officer Brian Quinn saying it's up to the brand and operators to make sure the experience matches the rate, now that all-inclusives have traction across the spectrum of pricing.
“It’s making sure that you have a robust offering there and the [food and beverage] fits with the pricing,” he said. “That positioning is critical in all-inclusive because that’s one place where it can fall down if they’re not getting those additional experiences and opportunities at the right product and service level.”
While not a brand, third-party hotel operations giant Aimbridge Hospitality also sees opportunities to grow in the all-inclusive segment, fueled in large part through its recent purchase of Mexico-based operator Grupo Prismo.
Geographically, all-inclusives continue to be a major driver of development in Mexico and across Latin America.
Speaking at the 2022 MexHIC conference, Hilton's managing director of development for Mexico and Central America Mario Carbone said that the segment has "been an excellent hedge against inflation.”
While at the 2022 SAHIC Latin America & The Caribbean conference, Salo Smaletz, vice president of development in Latin America for IHG Hotels & Resorts, said all-inclusives represent the biggest growth opportunity for his company across Latin America.
Accor's CEO for South America Thomas Dubaere is similarly keying in on the segment in that region and sees opportunities to grow the company's Rixos brand, which is primarily focused on Europe for the time being.
And the segment is garnering increasing popularity in Europe, as well, as travelers look for ways to escape the wear and tear of their day to day, said Grégory Lanter, chief development and construction officer for Club Med.
"Now that [travel] is possible there are more people looking for 'I don't want to do it myself,' which gives an all-inclusive resort — when it's well-organized and well-done — a great field for action," he said.
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All-Inclusive Resorts Dominate Hotel Industry Discourse in 2022 - CoStar Group
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