For decades after their introduction in the 1950s, all-inclusive resorts grew in popularity among budget-conscious vacationers seeking hassle-free getaways. While their popularity dropped during the 2008 recession, customer demand for all-inclusive vacations is booming again, and they have become a clear hospitality vertical. Robert Cole, Phocuswright's senior research analyst for Lodging and Leisure Travel, estimates overall annual sector growth to be between 5 and 7 percent.
But today’s all-inclusives aren’t your grandparents’ all-inclusives.
Today’s all-inclusive resorts include different features and offerings than their previous model was known for. And resorts are no longer restricted to beach-centric Mexico and Caribbean destinations. They’re now expanding to include properties in Europe, Central America, South America, Asia, and Africa. And they encompass more upscale and refined vacation experiences that better reflect the interests of their new target audiences.
The New All-Inclusive Customer
Back in the day, all-inclusive guests were comprised of thrifty travelers looking to make their dollar stretch as far as possible, and singles in search of hedonistic party scenes. The vast majority of today’s all-inclusive travelers are families. In fact, the NYU “U.S. Family Travel Survey 2017” results showed that 88 percent of families were likely to travel with their children, and that all-inclusive resort vacations were among those that held the greatest appeal. In addition, clientele of all-inclusive resorts has become more upscale; and instead of party-seeking singles, guests are more likely to be couples seeking a romantic escape.
Why Today’s Travelers Love Them
All-inclusive properties have morphed over the years, now presenting numerous amenity and entertainment options that satisfy the desires of these new customer segments. To make families happy, many resorts have renovated to include more spacious accommodations, and include kids and teens-only clubs, allowing parents to soak up some couple-time. They’ve also expanded entertainment offerings to match the diverse interests of the multigenerational family market.
Resorts also include more adults-only spaces that allow for privacy and romance, such as rooms with private terraces or balconies, and pools reserved for the 18-plus crowd. Other reasons that all-inclusive vacations are favorites among travelers are due to their convenience and transparent pricing. Vacationers are able to enjoy themselves to the fullest extent, knowing that everything – hotel, airfare, transportation, food, and beverages – is bundled together and paid for before they ever arrive at the resort.
Revenue Strategies for All-Inclusives
Gone are buffets filled with mediocre fare. Today’s all-inclusive resorts increase revenue by providing more upscale offerings, such as premium liquor and high-end restaurants emphasizing dishes made from locally sourced ingredients. These higher quality offerings have allowed all-inclusives to charge more, creating greater margins and mitigating one of the model’s biggest challenges: the ability to upsell guests to generate additional revenue. Revenue management systems are evolving as well, with the concept of per-room and per-guest analytics and pricing throughout the applications.
Beyond the traditional complimentary on-site activities, today’s travelers seek authentic, customized experiences they can enjoy outside the resort gates. Excursions like culturally immersive village visits, diving and hiking trips, and philanthropic opportunities allow guests and resorts give back to the communities in which they’re located. Often these excursions aren’t included in the all-inclusive price, but many people don’t mind paying to get more from their vacation experience.
It’s an exciting time as we witness the all-inclusive industry shift from their old-style cookie-cutter experience. The all-inclusive model is now offering enhanced amenities, diverse activity options, and personalized experiences to clearly delineated market segments that encompass multigenerational families, couples of all ages, and luxury buyers. Driven by trends and changes in consumer demand, the profitability gap between standard hotels and all-inclusives is rapidly closing.