Debunking the Myths about All-Inclusive Resorts – What you need to know

All-inclusive resorts have become the ‘step child’ of the Caribbean tourism industry.  In some quarters, they are seen as ‘hoarding’ cash and customers; keeping visitors within their confines; not letting them out to experience the wider destination; and not facilitating the purchase goods and services from small entrepreneurs in the community.  Therefore, fewer ‘linkages’ and ‘trickle-down’ effects with the rest of the economy. 

 

In addition, it is claimed that since most of the money for the holiday is paid abroad, the cash says there and the destination does not benefit.

all inclusive resorts

What is the Truth of the Matter?

Contrary to the belief in some quarters, all-inclusive hotels are an amazingly successful formular that brings more benefits to economies, far more that one might initially think.  Consider the following:

Pure innovation – A Caribbean Invention

It is worth remembering that all-inclusive resorts, although started by Club Mediterranean (now a shadow of what it used to be), has been perfected and mastered by Caribbean entrepreneurs, specifically Gordon ‘Butch’ Stewart of Sandals and John Issa of Superclubs of Jamaica (Poon, 1988, Innovation and the Future of Caribbean Tourism, Tourism Management.  It is one of the most significant innovations in the Caribbean Tourism Industry.  All-inclusives continue to be one of the fastest growing and successful resorts in the Caribbean.

Deep Market Segmentation

The innovation of All-inclusives was not just in its organization (i.e. one up-front price for food, beverage, land and water sports, airport transfers, government taxes, and tips), but also in its product segmentation.  In the meantime, there is an all-inclusive resort for all life-stages from singles, couples, empty nesters, and families, including inter-generational travel.  In addition, from weddings, honeymoons, sports enthusiasts, golfers, tennis players, and soft, medium and hard adventurers, virtually all interests could be catered to.

Sandals – A Household Name

One is the marketing innovations of the Sandals chain is to make the brands a ‘household’ name.  From bill-boards throughout the USA; creating travel agency and media partners and full-page ads, the company has succeeded in making Sandals, a household name in the USA.

Customer-Driven

Success in business is not just dependent on what you have to sell, but what customers want, and are willing to pay for.  This, Gordon ‘Butch’ Stewart understood only too well.  This is where the ‘one price covers all’, all-inclusive resort concept has enormous traction. 

 

The problem was that a customer would buy a holiday in the Caribbean consisting of a flight and hotel, and yet, it would be near-impossible to estimate what the total holiday would cost – especially when you add the costs of meals, tips, taxis, government taxes, car rental, tours, attractions, restaurants, sports and shopping, not to mention the ‘hassle’ of signing checks at every point of sales as well as calculating exchange rates.  Such would make it near-impossible to ‘budget’ for your holiday. 

 

All-inclusive resorts have made it possible to increase holiday transparency and certainty and remove associated stresses for customers.  The rapid growth and success of these resorts (and cruise lines that operate on a similar basis) clearly demonstrate that this is what customers what and are willing to pay for.

Operational Certainty and Profitability

All-inclusive resorts have also increased operational certainty and profitability. The fact is that: if you have a 100-room couples-only all-inclusive hotel operating at 100% rate of occupancy, you know for certain that you need to provide meals for 100 couples three times per day. It makes it easier to purchase and plan meals.  This is different from a non-all-inclusive-hotel that always has to second-guess guests as to whether they will patronise your restaurant for lunch and dinner.

Who Benefits?

It is clear that all-inclusive hotels benefit and are super-profitable. But since all-inclusives tend to operate at near-full occupancy year-round, they are able to guarantee full-employment for staff; they provide certainly to suppliers and farmers.

Paying for the Holiday Abroad – Money does NOT stay there!

Another argument among the uninitiated is that holidays are paid for abroad, therefore the cash stays there. Nothing can be further from the truth. The logic simply does not work. What influences how much of this cash will return to the Caribbean is the number of inputs from the Caribbean that goes into the ‘production’ of the holiday.  And this is the thing – we know that 30-40% of all costs are labour and top management talent, so this cash must return to pay wages, salaries, etc. as well as light manufacturing and agricultural inputs. 

 

Advertising and marketing activities all take place abroad; and much of the other INPUTS into creating these amazing resorts – from air conditioning units, vehicles, elevators, linens, etc. are all imported.  A detailed examination of all-inclusives and the cash returned to the Caribbean will reflect the extent to which the local economy is capable of supplying quality inputs to its hotel sector.

Hoarding Guests – Also Not True!

If you understand how all-inclusives work, it becomes clear that every meal taken outside the hotel, adds to the bottom line of the resort. Nothing adds more to the bottom line that not having to provide a service that is already paid for. 

 

This explains why all-inclusives are so keen to get guests off their property rather than to ‘hoard them’.  This is why we advised Sandals in the early 1990s to bring their tour operation in-house and Island Routes was born.  The logic was simple: European tour operators and Cruise lines never made money from the TRANSPORT or ACCOMMODATION of guests, but what they DID when they got there.

What is to be Done?

Despite these positive elements and debunking these myths about all-inclusives, there are opportunities to increase the ‘linkages’ with other sectors of the economy.  At times, it is useful not to point a finger, but to look within for solutions.  Here are Nine suggestions.

 

  1. Invest in Talent. First and foremost is talent. While most of Sandals’ top management are Caribbean and they have their own University, it is clear that more investment in industry education and training of top managers are needed (locally-sourced general managers, human resources and financial management could easily add 10% local content);
  2. Facilitate more links between farmers and the hotel industry needs to be developed to encourage/allow farmers to produce what hotel needs rather than mono-crops such as bananas for export. The Grenada Silver Sands Resort and and the ….  Women’s cooperative is a brilliant example of this.
  3. Deliver more efficient transport links among Caribbean islands to allow specialisation, division of labour and exports;
  4. Look for linkages in the non-polluting services sector – insurance, banking and financial services, education and training, IT, marketing and social media, health and wellness, etc.
  5. INNOVATE! Non-all-inclusive tourist accommodation establishments need more innovation – they need to forget about offering a hotel, villa or guest house, and focus on delivering an unforgettable experience, creating, orchestrating and delivering memorable experiences.
  6. Beyond Accommodation to Experiences. Hotels and Resorts, on the whole, need to see beyond their 4 walls; they need to re-imagine their offering and forge exceptional linkages with local suppliers and entrepreneurs and their local environment – the ultimate key components of exceptional experiences. Ti Kaye in St. Lucia closes its restaurant on a Friday and encourages its guests to eat at the local Fish Festival at Anse La Raye
  7. Go Beyond traditional standards – we need to move beyond traditional star categories (fighting for 4- and 5- star recognitions) and go beyond with regard to unique environmental standards; standards for women, workers and communities that are ‘go beyond the ordinary’.
  8. Develop more creative cuisine, using locally-sourced and organic ingredients. This will go a long way in adding value and growing local linkages.  The Caribbean Hotel and Tourism Association has initiatives in this regard.  But we need more.  The Menu at Secret Bay, Dominica celebrates local cuisine in style and with a story!
  9. Focus on the naturally creative exceptional Caribbean Economy – fashion, fine foods, fine art, culture, entertainment, and more! This is exactly what Leve-Global started at Leve-the Live the Caribbean even in Tobago.
 
Read more here.

Author:

Dr. Auliana Poon

aulianapoonleveimage

Dr. Auliana Poon is the founder and Managing Director of Leve Global and Exceptional Caribbean.

 

Auliana loves the Caribbean and believes in its people. Her personal mission is to change the world; to transform our societies. And this is precisely why she has spearheaded Exceptional Caribbean – a continuing mission to elevate tourism, trade and lives.

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