Americas All-Inclusive Resort Sector Trends & Outlook

An Evolved Model Takes Center Stage

February 19, 2024
  • Carolina Lacerda
  • Zachariah Demuth
  • Ophelia Makis
  • Pedro Pereira
  • Edith Nava

The all-inclusive (AI) resort sector has undergone significant changes over the past 30 years. Historically perceived by consumers as relatively inexpensive vacation options with copious amounts of mediocre food and unlimited alcohol, the sector has transformed as of late. Driven by changes in consumer travel preferences, increased investments in infrastructure by local governments, and rising airlift to many tropical destinations, demand for all-inclusive resorts has skyrocketed. This has resulted in the traditional hotel brands (Marriott and Hyatt, among others) entering a space that was once dominated by independent and regional chains.

Perhaps most important though is that many new entrants are in the luxury and upper upscale segments, a substantial change from a sector that has long been comprised of midscale resorts.

Consistent occupancy levels combined with a longer advanced booking window have allowed AI resorts to generally outperform their EP counterparts. Further, AI resorts have recovered more quickly following the impact of Covid, underpinned by strength in leisure travel and consumers looking more for experiences and stress-free vacations. This has intensified the focus of traditional hotel brands entering the sector, which is likely to increase consumer choice, widen brand offerings, and create a much more robust industry segment in the years to come.

Key Takeaways :
  1. Demand for all-inclusive resorts is surging, with AI resorts in Mexico and the Dominican Republic averaging an occupancy recovery of 77% on a March 2022 TTM basis relative to 2019.

  2. Luxury and upper upscale all-inclusive resorts are here to stay driven by growing consumer demand for high-quality experiences and stress-free vacations.

  3. All-inclusive resorts have proven to be an opportunity for traditional EP hotel brands.

  4. Institutional hotel brands have aggressively entered the all-inclusive resort sector via M&A, strategic alliances, and brand extensions signaling investor optimism.

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