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The Changing Face of All-InclusivesJune 11, 2012 By: Joe Pike Travel Agent
|Balmoral Tower at Sandals Royal Bahamian Spa Resort recently completed a $17 million facelift.|
Wave goodbye to your grandmother’s all-inclusives. The concept that once just meant a buffet along with a bed now encompasses just about anything a client desires on a vacation.
Travel Agent spoke with hoteliers from some of the world’s most famous all-inclusives to get their take on the changing face of the product, the evolution of their clients and, most importantly, how you, the agent, can further capitalize on this lucrative, ever-growing market.
Then and Now
Xavier Mufraggi, CEO of Club Med North America, told us that his clientele has evolved in the past 10 to15 years to include more families with one or two children and a household income of more than $125,000. Mufraggi attributes the evolution to a successful change in business model that aligns with a family-focused marketing strategy in place since 2004. “Lounging on the beach is not a must anymore,” he says. “People want to enjoy lots of different activities. Our clientele also includes multigenerational families now. Baby boomers are inviting the whole family on vacation, and an all-inclusive resort is the perfect escape where everyone can enjoy a personalized vacation with no compromise.”
|Premier Suite at Azul Beach by Karisma is designed to appeal to an upscale clientele.|
“There is definitely a wider demographic of travelers as opposed to 15 years ago,” says John Long, vice president of sales and marketing for Iberostar Hotels & Resorts. “All-inclusive resorts have grown and adapted to travelers’ interests; therefore, it’s no longer the old perception of having long buffet lines and watered-down beverages. Our properties offer a range of amenities and features, allowing clients to book within any budget range and vacation interests.”
Mandy Chomat, vice president of marketing and sales for Karisma Hotels & Resorts, however, believes the main difference between the all-inclusive client then as opposed to now can be boiled down to one word: sophistication.
“The resorts are attracting a savvier consumer who no longer avoids going to such properties because they realize you can truly get a five-star experience at an all-inclusive,” says Chomat.
“Catering to today’s upscale clientele, El Dorado Spa Resorts & Hotels and Azul Hotels focus on cuisine with world-class experiential dining...chef’s tables, and wine lists acknowledged for their excellence by Wine Spectator.”
Gordon “Butch” Stewart, chairman of Sandals Resorts International, says that value hunting is mainly responsible for the newer, pickier all-inclusive client.
|Islander Room at Hard Rock Punta Cana in the Dominican Republic.|
“While price is still top of mind for everyone, this notion of value has become even more important,” says Stewart. “Over the years, our consumers have sought more from their vacation experiences—from gourmet dining and exclusive suites to over-the-top luxury features and exceptional service from our butlers. Providing more amenities for our consumers is a personal benchmark we set for ourselves each year.”
But Mitch Toren, CEO of TripGuy.com, contends that you can’t have value-hunters if the playing field hadn’t expanded as much as it has in recent years. Thus, the expanded all-inclusive market should receive just as much credit for the evolution of the all-inclusive guest as anything else.
“The sheer number of AI resorts in Mexico, Jamaica, and the Dominican Republic provides ‘consultative’ travel sellers with the opportunity to become matchmakers—pairing the best resort that fits the client’s needs,” Toren says. “There are just as many differences between a five-star and three-star resort as there are differences between different five-star properties in the same region going after different clientele. Azul Beach and Iberostar Paraiso Maya are both great family all-inclusive resorts in Riviera Maya, generally at a similar price point—but only a true consultative seller is going to be able to advise his or her client on which is the best fit for what they are looking for.”
The Truth Behind the Stigma
Frank Maduro, vice president of marketing for Palace Resorts, with all-inclusives in Mexico and the Caribbean, says AI resorts are sometimes perceived as cheap getaways where clients will save a buck or two at the expense of quality. But that stigma is slowly fading, he says.
|Breezes Grand Resort & Spa in Negril, Jamaica, is the flagship of SuperClubs’ Breezes collection.|
“The perception of the standard all-inclusive hotel is quantity versus quality, including cheap food and beverage, long buffet lines and a vacation that isn’t personalized,” says Maduro. “This is starting to change. We have designed each level of rooms to be completely unique and have ensured that the entry level accommodations are just as luxurious as the upgraded levels.”
“There was a perception years ago that all-inclusives were ‘down-market’ resorts [that] could not be elegant or luxurious,” says Issa. “I think we helped to break that perception when we introduced hotels that had inclusions such as 24-hour room service, manicures and pedicures, multiple dining options and more.” And as resorts continued to upgrade their offerings, clients who were previously looking for a cheap vacation are now willing to spend a little more on quality.
“Little by little, resorts have evolved and invested in rooms, amenities, services and cuisine,” says Chomat. “Simultaneously, there was an education process taking place and the public began to learn more about the value of all-inclusives versus EPs. Now, travelers are starting to realize the true value of all-inclusives, which is a carefree vacation that doesn’t include your wallet [once] you arrive at the resort.”
But Stewart says the stigma that all-inclusive stays are “cookie cutter” experiences hasn’t always been there.
“The all-inclusive industry has really gone through its own ebbs and flows,” says Stewart. “At its start, all-inclusive resorts were the epitome of luxury, but as time passed this perception diminished, generated by those expecting buffet lines, beads and a cookie cutter experience. This doesn’t reflect the Sandals experience and our consumers have long moved past those stereotypes.”
The Name Game
Because of the pre-existing stigma attached to the name or perhaps because “all-inclusive” simply doesn’t elaborate on exactly what the clients were getting, many of these resorts have begun to describe themselves in a more concise way, such as “Luxury Included” or “Gourmet Included.”
“The customer wants to be as comfortable at an all-inclusive resort as they are in their own home,” says Colette Baruth, VP-sales for AMResorts, which has AI hotels throughout Mexico and the Caribbean. “It used to just mean food included, but now there are different levels. Some include alcohol and some don’t; some do or don’t include premium alcohol. With AMResorts’ Endless Privileges a client can ask for anything they want and we can get it. So, basically, the changes in the names have a lot to do with explaining what you can offer.”
So does an alternative to calling a resort an all-inclusive really make a difference? Karisma's Chomat and Sandals' Stewart both say it does.
|Club Med Sandpiper Bay in Florida proves the all-inclusive concept is viable in the U.S.|
“Since we launched Gourmet Inclusive, not only have we seen a spike in business, we’ve also been able to maintain rate integrity,” says Chomat. “Guests understand the value associated with Gourmet Inclusive vacations.”
“When Sandals introduced the Luxury Included vacation in 2006, it was a defining moment for us and an immediate success with our consumers,” says Stewart. Sandals has moved beyond the all-inclusive category and often-maligned connotation “to a resort company dedicated to choice, style, service and uncompromising standards,” he adds. “It all comes down to exceeding expectations. It’s been the hallmark of our company since the very beginning.”
But Mufraggi says a new name doesn’t necessarily equate to a spike in business. “We do still refer to Club Med as an all-inclusive resort company,” he says. “We prefer to keep this term as we are the original all-inclusive company and pioneered the concept. We saw record profits in 2011 with Club Med North America showing its best performance since before 9/11. The success of the newly renovated Sandpiper Bay resort in Florida [shows] the high demand for a premium all-inclusive resort in North America.”
The International Trend
So if all-inclusives are such big draws, why don’t we see more of them in the U.S.? All the industry pros we interviewed point to one reason: labor costs.
“The largest expense throughout all of our properties is labor. For example, the Hard Rock Hotel & Casino Punta Cana has 3,000 employees,” says Maduro. “The quality of service throughout Mexico and the Caribbean has risen to a standard now that is tough to compete with in the U.S.”
“With the U.S. worker, there is a minimum wage and in-service positions that depend heavily on tips, neither of which happen in a non-U.S. all-inclusive,” says agent Steve Umstead, owner of Berwick Travel.
The Club Med Sandpiper Bay— which has international elite tennis, golf and fitness academies that yield additional net revenue and product advantage—seems to have found a way around the costs, but Mufraggi is keeping his lips sealed.
For other companies like Barceló Hotels & Resorts, the product just wouldn't be the same if it was located in the U.S. “One of the hallmarks of the Barceló all-inclusive experience is that each property blends unique characteristics of its surroundings,” says John Schultz, Barceló's U.S. marketing/advertising manager. “Many of the activities our guests encounter on-property become the primary interaction they have with the destination; therefore Barceló wants to incorporate new cultural experiences and unique offerings reflective of the destination that has been selected.
“Guests opting for the Barceló Maya Beach Resort will find a distinctly themed resort with a spa that offers ancient Mayan spa rituals,” Schultz says. Bright colors and flavorful cooking are hallmarks of Barceló’s Caribbean resorts, he adds, and in Los Cabos, “You will find a Barceló resort indicative of the destination: upscale, trendy, and hip. This infusion of destination characteristics has been met with glowing reviews from travelers seeking a distinctly international travel experience.”
Why Book All-Inclusives?
According to Mufraggi, all-inclusives are definitely money-makers for agents. Because people spend more, there is a bigger commission versus cruises; there are commissions on the whole package (flight, transfer, stay, drinks, activities and pre-booking services such as a golf or tennis academy); they are easy to book for the agent and there is a high level of loyalty among all-inclusive clients.
“All-inclusives are still the best deal for the travel agent because they get commission on the total package,” says Issa. “For non-all-inclusives, they just get commission on the room, which is normally less than the entire all-inclusive package since food, drinks and entertainment are also included [in the AI package].”
Chomat points to the higher level of accommodations now available at all-inclusives as one of the main factors agents can cash in on.
“All-inclusive resorts are effective revenue generators and what clients are asking for,” says agent Robert Whorrall of BeachBum Vacations. “Many of our clients in the 21st century want adults-only, all-inclusive brands that offer larger suites, great food (little to no buffet), personalized service, swim-up rooms, hammocks, beachfront locations, oceanfront view and premium brand beverages. Ninety percent of our clients ask for all-inclusives compared to a much lower percentage in years past. Knowing their budget upfront, and getting quality [over quantity], is key.
“The increase of opportunities for travel consultants to sell products that offer fixed retail pricing/price parody has protected commissions, protected the devaluation of the resort’s product, and has given the consumer confidence that they are paying the fair market value,” Whorrall adds.
The Future of All-Inclusives
To put it quite simply, the future of the all-inclusive will depend on the future of the client. And if you ask the world’s best AI representatives, they will tell you the client will be value hunting for a very long time, putting more and more pressure on current and new all-inclusives to constantly up their games.
“Now more than ever, people are looking for value when spending money—and all-inclusive resorts can provide that with convenience and personalization,” says Mufraggi. “Finally, luxurious and expensive is not the only trend. Consumers want exceptional kids’ programs and sports activities with outstanding infrastructure and coaching. Coming back from a vacation in shape is now more important than coming back bored of inactivity, over-tanned and heavier because of too much food.”
But the one attribute that will always remain the same between all-inclusive hotels and hotels in general is the need to please, says Stewart.
“Like it has for the past 50 years, I expect that the all-inclusive resort will continue to evolve, mirroring the ever-changing wants and needs of consumers,” he says. “We are in the service industry and we believe that the client is always right. If a client demands luxury, that’s what they’ll receive. Our goal is always to exceed their expectations; not only to provide the best vacation possible, but to ensure that they continue to come back.”
However, for as much as they have changed, the foundation on which all-inclusive resorts were built remains the same, Chomat says.
“As we move forward, I see all-inclusive resorts continuing to segment themselves by demographics from singles to couples to eco-conscious travelers,” he says. “Regardless of how all-inclusives evolve, one thing remains the same: they will always offer the best value. Whether clients are families traveling on a budget or couples looking for a luxurious romance getaway, travelers will get more for their money when booking an all-inclusive.”