Include Me In: All-Inclusives Are Hotter Than Ever

Travel agency owner Dave Cook couldn’t be happier about what he sees happening with all-inclusive resorts. The product just keeps getting better; the market continues to expand, and now a growing number of companies are investing in the sector.

“We’re very excited about where we see all-inclusives headed,” said Cook, who with his wife Kim Cook co-owns Love to Travel, a storefront agency in Overland Park, KS.

What’s not to like? At Love to Travel, where all-inclusive resort vacations account for nearly 90% of business, sales volume was up by high double digits last year. And this year sales are already outpacing 2016, Cook said.

The Cooks aren’t the only ones placing their bets on all-inclusive resorts.

Getting in on the action
In December, two private equity firms inked agreements to invest in all-inclusives. In deals expected to close this quarter, TPG’s Pace Holding Corp. will combine with Playa Hotels & Resorts, a move that will inject $500 million in fresh capital into the all-inclusive brand, and KLS Capital Partners and KKR are acquiring AMResorts’ parent company, Apple Leisure Group.

Traditional hotel companies are seeing the promise of all-inclusive resorts as well. In 2013, Hyatt teamed up with Playa Hotels & Resorts in a $325 million deal that included Playa re-launching six of its all-inclusives as Hyatt Zilara and Hyatt Ziva properties.

Now Marriott is dipping its toes in the waters with its new Marriott Inclusive Vacation packages, available at selected properties in Mexico, the Caribbean and Costa Rica. And just this month Margaritaville Holdings and all-inclusive resort company Karisma Hotels & Resorts announced a plan to develop and operate a co-branded product called Margaritaville, an All-Inclusive Experience by Karisma.

Suppliers and agents said they expect more new players to jump onboard in coming years, leading to continued enhancements of a travel product that has long since outgrown its clichéd Club Med roots.

“I think you’ll see new investors––some major players, [including] traditional resort chains. From a consumer standpoint, it’s going to raise the bar,” said Kevin Froemming, executive vice president and chief marketing officer of Playa Hotels & Resorts.

Sandals Resorts chairman and founder Gordon “Butch” Stewart likewise predicted “more entrants, which means more competition and therefore better opportunities for travelers.”

Expanding fast
The all-inclusive sector has already been expanding at a rapid clip. “The growth of the all-inclusive sector has been truly impressive, especially over the past few years,” said Alez Zozaya, CEO of Apple Leisure Group. Zozaya noted that within the Caribbean alone there are now more than 250 all-inclusive resorts spread over 20-plus islands.

AMResorts was on an aggressive expansion trajectory even before the announcement that its parent, Apple Leisure Group, was being purchased. Fourteen AMResorts properties are currently under development, and by 2019, the company will have 68 resorts in Mexico, the Caribbean, the Bahamas and Central America, Zozaya said.

At Playa Hotels & Resorts, an infusion of cash from new owner TPG will allow the company to continue to grow, only faster, Froemming said. “It gives us the ability to do projects and continue to move forward.”

Branding for adventure
For the immediate future, Playa Hotels & Resorts is focused on a new partnership with lifestyle brand Panama Jack, announced in early January. The move, which begins with the re-branding of Playa’s Gran Caribe Resort in Cancun and Gran Porto Resort in Playa del Carmen, is a bid to differentiate the company in the “four-star lifestyle, escape, adventure area,” Froemming said.

Playa plans to expand its new Panama Jack brand via new-builds, conversions and new management agreements in Caribbean destinations such as Punta Cana, Jamaica, St. Lucia and Antigua and in Mexican destinations such as Los Cabos, Puerto Vallarta and the Mayan Riviera, Froemming said.

Back at Love to Travel, Dave Cook said he was pleased about private equity acquisitions in the all-inclusive sector, because they will allow companies like Playa and AMResorts to invest more in the product––“whether it’s dining options, top-level service, top-shelf alcohol, amazing rooms, more elaborate spas or the activities you have to choose from.”

At Sandals, Stewart expressed unbridled confidence in the outlook for all-inclusives. “The future of all-inclusive resorts this year and forward is assured. Demand across all market segments for the concept shows no signs of slowing down.”

Next time: As all-inclusives evolve, so does their clientele.