Back in the days of yore — or, for those who measure time this way, pre-pandemic — resorts were something of a specialist interest, similar to learning one-handed backflips in your free time.

You could see how it was fun, but in the main, hotel investors did not understand it and couldn’t really see the point. Why not learn about something you could actually use, such as a business hotel? And with fewer complexities to boot.

The consumer also had mixed emotions about resorts.

To them, they were seen as one step along from package holidays. Was there any culture to be had? Were you even allowed off the compound?

The exception to this was the ultra-high-end realm of Aman Resorts, but that occupied a very specific niche where few mortals trod.

That all changed during the pandemic, where having a compound became a very good thing to have indeed. Even now, with travel volumes returning to normal, the thrill hasn’t worn off.

The evolution was well underway before 2020, led by groups such as NH Hotels, which in 2018 signed an agreement with Apple Leisure Group to bring AMResorts’ brands to Europe, including its all-inclusive Amigo flag.

All-inclusive came with the same wariness to many as did package holidays. But with strong branding and a move upscale — led by the expertise honed by properties in the Caribbean — the niche segment has been gaining traction. They now come with yachts, luxury experiences and high-end amenities, all backed by the reassurance that you pay once and then you’re done.

Marriott International’s President and CEO Anthony Capuano has even spoken of all-inclusive being part of the Ritz-Carlton brand.

Marriott is not alone. InterContinental Hotels announced a long-term agreement with Iberostar Hotels & Resorts, and Hyatt Hotels Corp. scooped up Apple Leisure Group in 2021 for $2.7 billion. The deal saw Hyatt double its global resort footprint through the addition of ALG’s 100-strong AMR Collection brand portfolio.

Unlike renting out rooms to housebound workers looking to get away from their noisy family and roommates for a few hours, this is a pandemic trend that has entered long-term strategies.

Even while it was announcing the return of corporate travel earlier this year, Hyatt completed the acquisition of Mr & Mrs Smith and reported that luxury, lifestyle and resort hotels now made up more than 40% of its portfolio.

In June, Accor announced plans to open more than 1,200 hotels in the next five years, increasing the number of its resorts by more than 20%.

That was followed by Marriott’s strategic licensing agreement with MGM Resorts, which encompasses 40,000 rooms in Las Vegas and five other key U.S. markets and would, the group said, bring us new customers and a host of new experiences.

At Marriott’s security analyst meeting at the end of September, Global Development Officer Carlton Ervin said: We are the undisputed leader in terms of open resorts around the world. Since this group last met, we’ve signed 15,000 additional rooms of all-inclusive, which shows you how important that is to us. And that’s a really intriguing segment for us for growth. We are the No. 2 upper-upscale and luxury all-inclusive operator in the world. And while we are not resting on our luxury laurels, we certainly don’t intend to rest on our leisure laurels.

Ervin also talked about Marriott's strategy in Europe, the Middle East and Africa, a region which is widely felt to be underrepresented by resorts.

Most recently, Singapore’s sovereign wealth fund GIC has invested in a 35% stake in Hotel Investment Partners, which owns resort hotels in Southern Europe. Blackstone will remain the majority shareholder.

HIP’s founder and CEO Alejandro Hernández-Puértolas said the partners’ cumulative size, scale and capital will bolster our ability to continue the transformation of the hotel landscape in Southern Europe.

In my experience of asset-managing many luxury beach resorts across the oceans, from Bali to Bora Bora to Ibiza, there are often common issues specific to high-end resorts that investors should be aware of and shouldn’t underestimate.

Let’s take two typical examples.

Firstly, apart from being very opaque, the loyalty programs of certain hotel brands can be very detrimental to the profit margin. By nature, the redeemed points are nearly always used at holiday destinations, and we have many examples of strong reward programs leading to lower average rates at resorts.

Furthermore, loyalty programs do not necessarily attract the right customers to your hotel. Often they will not have the same spending power as a client who is paying the full rate.

All this will negatively affect the profitability of the hotel. Therefore, this issue should be taken into consideration before selecting an operator. If your resort is already branded, the hotel asset managers should carefully monitor the production of the loyalty program and challenge the source of your customers to avoid paying high commission fees, especially during high seasons.

Secondly, due to the nature of most all-inclusive locations, the elements damage their buildings more rapidly, so additional capital-expenditure spending is often required versus your traditional city hotel.

Hotel owners need to keep a close eye on the preventive maintenance undertaken by the operator.

Just as we have seen in the traditional luxury segment, resorts are now in a race to offer evermore remarkable stays. Stays must be experience-driven, underpinned with the very best of what a hotel can offer, with moments of surprise and a constant anticipation of what the guest wants.

That is a far cry from the traditional image of a resort, with a pool, kid’s club and a performance by a local dance troupe in the evening.

Delivering a one-of-a-kind resort stay requires expert knowledge. Not delivering it risks disappointment from guests and owners alike.

*This article was originally publised on Hotel News Now.

Alex Sogno
CEO & Senior Hotel Asset Manager
Global Asset Solutions