Major hotel brands bet on all-inclusive resorts to counter the Covid-19 crisis

Big hotel companies are adding more all-inclusive resorts, betting the pandemic will spur a business model that encourages guests to stay in one place.

These resorts, where guests pay a package deal that covers their room, food, drinks and other services, have recovered from the shock of the pandemic faster than other types of hotels, analysts say. They generally cater to tourists, who are more eager to re-travel than business travelers. And they appeal to safety-conscious travelers who want to stay in one place to limit the risk of Covid-19 infection.

Wyndham Hotels & Resorts Inc.

announced this week that it is launching an alliance with Playa Hotels & Resorts, an operator, developer and owner of all-inclusive resorts. As part of the deal, Wyndham is launching its first all-inclusive resort brand, following in the footsteps of other major hotel brands.

Hyatt Hotels Corp.

in August agreed to buy all-inclusive resort manager Apple Leisure Group for $ 2.7 billion, and Marriott International Inc.

said on Tuesday it had added 20 new all-inclusive resorts to its portfolio under the Autograph Collection Hotels brand.

Big hotel brands have decided to add more leisure-focused hotels, said Scott Berman, director and hospitality industry leader at professional services firm PwC.

Industry interest in all-inclusive resorts started years ago, but the pandemic has given new impetus. All-inclusive resorts, an area that the bigger brands had mostly avoided in the past, offer an easy growth opportunity.

“The industry is confident that recreation will continue to drive the recovery,” said Mr. Berman.

Beach resorts in Mexico and the Caribbean had few visitors last year, but visits to properties have increased this year, with those newly vaccinated more willing to travel and countries easing border restrictions.

Wyndham chief executive Geoff Ballotti said he expects leisure travel to continue to grow after the pandemic, in part because the adoption of remote working means people have the option to extend a weekend or to do their work longer from a resort. He said Wyndham hotels are already seeing an increase in bookings for Sunday and Monday evenings, which are traditionally less busy.

The first two hotels in Wyndham’s new Alltra brand (short for All Inclusive Travel for All) will be located in Mexico’s Yucatán Peninsula, and the companies are looking to expand the model to other locations. Playa will manage the properties, while Wyndham will provide its brand and selling device for a fee.

All-inclusive resorts started in Europe in the 1950s, Berman said. In the 1970s and 1980s, the economic model spread to the Caribbean and Mexico. At the time, much of the call was about security, Berman said. Tourists could lie on the beach, eat in restaurants and play golf without ever having to leave their heavily guarded hotel or pull out their wallets. Until recently, the industry was dominated by local brands.

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Hyatt entered the all-inclusive business in 2013. Company CEO Mark Hoplamazian wrote in an email that the Apple acquisition will bring the share of leisure hotel rooms into the portfolio. of the company to more than 50%, compared to about 45%.

“The human experience of taking the time to rejuvenate and connect with family, friends and loved ones is in high demand given the challenges we have all faced over the past 20 months,” he said. -he writes. This, he added, will boost leisure travel for years to come.

All-inclusive resorts always face headwinds. The recent travel boom could be short-lived, especially if dangerous new variants of Covid-19 spread. As more cruise ships leave the coast, competition for tourists could increase and lower fares.

Still, a growing global middle class is expected to drive increased demand in the long run, especially in Asia, said Gregory Miller, hotel analyst at Truist Securities Inc. “I think beyond the Caribbean there is probably a very healthy all-inclusive. for decades to come, ”he said.

Write to Konrad Putzier at [email protected]

Corrections and amplifications
An earlier version of this article incorrectly stated that Wyndham was making its first foray into the all-inclusive business. While Alltra is Wyndham’s first brand dedicated to all-inclusive resorts, the company has had all-inclusive resorts under different brands. (Corrected October 5)

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