Hyatt Hotels has the opportunity to bring the all-inclusive resort model into the 21st century but it's going to require a lot of changes.
Hyatt Hotels is rebranding three all-inclusive resorts in Mexico and Jamaica in a partnership with Playa Hotels & Resorts. This could potentially shake up the all-inclusive sector due to Hyatt’s position in the upper mid-market segment.
The two new brands are Hyatt Ziva and the more upscale, adults-only Hyatt Zilara. The first three hotels include Hyatt Ziva Los Cabos and Hyatt Zilara Cancun, which just opened in November. Both are scheduled to undergo multi-million dollar renovations in 2014. Hyatt Ziva Rose Hall will open in Montego Bay, Jamaica late next year inside the previous Ritz-Carlton property.
Presently, three regions define the all-inclusive sector for the majority of US travelers: Punta Cana in the Dominican Republic, both coasts of Mexico and the north coast of Jamaica. The large Spanish brands such as Iberostar, RIU, Melia/Paradisus and Barcelo dominate all of them with enormous properties often exceeding 1,000 keys.
The design and business models among them are uncannily similar, with long rows of room blocks interspersed with numerous themed restaurants, multiple pools, giant theaters for evening entertainment, and busy tour desks selling the same packaged tours as every other hotel in the region.
Many of these are basically land-based cruise ships where you check-in and don’t really leave. Consumers have already paid for all of their food, drinks and entertainment upfront, so most are compelled to stay on-property to maximize the value, except to possibly explore outside the gates for a half-day tour or two.
The sector shifted around the turn of the century with AMResorts, when the Mexican chain came out of nowhere with a 100% focus on the US market. For the first time, guests from Baltimore paying $1,200 per person for a week on the beach, including air, enjoyed American TV channels, American food/beer brands, and other US traveler priorities like in-room coffee makers, irons, and English-speaking staff.
Business has since skyrocketed among all of the chains as they’ve shifted their focus more toward the US market. Today, the Carib/Mex all-inclusive market is a juggernaut.
However, with Millennial travel trends changing the industry landscape, the present model is increasingly lacking for the next generation of more adventurous, independent US consumers seeking nuanced food/beverage, authentic destination experiences and personalized service. Basically everything for which most all-inclusive resorts are not well known.
Some might cry foul at that statement, suggesting that their hotel product, F&B and services have improved dramatically over the last decade. This is true, but when you look at the quality of all-inclusive resorts pre-2000, that’s not saying much. There are outliers like Grand Velas, AMResort’s Zoetry brand and others, but more often than not, it’s a mid-range experience for a mid-market clientele with a pre-packaged, cruise ship herd mentality.
Here’s how Hyatt can make a dent.
Better Food & Beverage
Having stayed at or toured well over 100 all-inclusive resorts operated by every major brand in the region, I can’t remember how many times I’ve heard the following conversation during the flight home from nearby passengers:
Couple #1: “Where did you stay?”
Couple #2: “XYZ resort.”
Couple #1: “Oh, we looked at that one too. How was the food?”
The quality of dining at all-inclusive resorts has been the biggest whipping post since the model’s inception, discussed endlessly on thousands of TripAdvisor reviews. For Hyatt’s two new brands to thrive, they above all else need to deliver a dining experience that comes close to EP (European Plan) hotels in their regional competitive sets.
Often a great show is made with the overflowing quantity and variety of food offerings, especially in the main buffet restaurants. Less here is more, with added focus on interactive cooking stations and a marketplace mentality in terms of design and artisanal, organic ingredients.
Also, there’s always something disingenuous about dressing up staff in Cabo or Montego Bay in Parisian mime-style uniforms inside a French-themed restaurant, or ordering pasta in a Dominican restaurant decorated like a Venetian canal. Or hostesses in Geisha garb at the ubiquitous Japanese teppanyaki outlets. I’m not sure if those restaurant themes are prerequisites for all-inclusive resorts, because everyone has them, but they just seem weird. And it’s getting weirder.
Hyatt could tone that down, and lose the shopping mall decor and Carnival Cruise-like theming.
“We believe we can deliver an outstanding food and beverage experience in an all-inclusive environment that Hyatt would be proud to offer, so I think you will definitely see some changes in F&B offerings,” says Chris Walker, VP, brand experience of Hyatt Hotels. “Playa Resorts specifically sought out Hyatt for our F&B expertise to raise the game in the culinary space… Part of our four years researching the segment, and how to participate in it, we really didn’t want to enter the segment if we couldn’t do it in a way that was on brand for Hyatt.”
Then there’s the bar/lounge experience at many all-inclusives, which can often be a royal pain in the ass. Years ago, a GM at an all-inclusive resort in the USVI told me, “With an EP hotel, you want to sell as much F&B as you can. In an all-inclusive, you want to deliver as little as possible.”
Meaning, bartender staffing is often kept to a bare minimum.
Especially during peak times at all-inclusive bars, and this is really prevalent at pool bars, there’s one bartender serving a throng of guests. It can take forever to get a couple drinks, and this happens at the higher tier brands too. Understanding that ramping up staff to give away more liquor cuts into the bottom line, there’s a lot of daylight here for Hyatt to improve the overall experience.
Better Destination Experiences
It’s almost always the same. Representatives from the major local tour operators flip through old photos of their different tours, exactly like their colleagues at the phalanx of hotels extending down the beach.
Years ago, sitting with a GM in his office at the ex-Hyatt in Cayman, he told me, “People often say they want something ‘exotic’ to do in the Caribbean, but what they really want isn’t all that exotic.”
That’s changing, or at least there’s a shift. Today’s younger generation travelers are much more curious and adventurous, with a craving for insight into the local destination. Walker told me there’s going to be a heightened focus on unique things to explore both on- and off-property, which will be more spontaneous, more local and more specific to the Ziva/Zilara resorts.
It will be interesting to see how this plays out because organizing bespoke tours can be expensive, but it’s already typical for guests to pay out-of-pocket for offsite excursions. Many times, you’re picked up at the resort and then you have to stop at three or four more properties to pick up other participating guests. That sucks if you’re the first hotel on the route. The next generation of travelers is increasing against those one-size-fits-all tours, many aggressively so.
However, if Hyatt can create custom programs only available to Hyatt guests, that becomes an immediate differentiator. Cabo, Cancun and Jamaica offer endless opportunities for small, curated group excursions with an experiential, educational component to visit with local small businesses and area residents.
On-property, the Hyatt resorts have scheduled activities like other resorts, ranging from group salsa dance lessons to pool volleyball. Walker says there will be more attention to noise levels typically associated with all-inclusive resorts, because guests shouldn’t have to listen to a staff member with a megaphone shouting out numbers during pool bingo.
However, Walker explains that a primary brand differentiator is a new wherewithal among the onsite executive staff to create more unscheduled events. Somewhat light on specifics, he offers examples such as an impromptu bonfire on the beach, unexpected paddle-boarding contest, or unplanned resort tour if something special is happening around the property.
“You want some surprises, those are the things that create memorable experiences during any trip,” he says. “More and more people want to do things they can’t do at home like sitting by the pool or playing tennis. Those bits of discovery about the destination are important.”
Better Social Media/Websites
By far, without question, the large Spanish all-inclusive chains have the absolute worst websites in the corporate hospitality industry. They’re generally the most basic of online templates dreamed up in Mallorca or Madrid with bullet point facts replicated for all of the individual hotels.
For those brands, detailed websites are not much of an issue because they’re usually pushing product based primarily on price point and brand recognition, supported by beach photos bleached out in Photoshop.
With so much research today outlining the vast number of online platforms that potential customers engage with before making a purchase decision, Hyatt can come in with a much more layered, resort-specific online experience for Ziva/Zilara.
Walker says the first thing Hyatt did during its research phase was asking all-inclusive travelers questions about what works and what doesn’t at all-inclusive resorts.
“One thing we heard a lot was people saying, ‘I’m really excited when I’m planning my vacation; I’d love to learn more, know more at the start of the research phase,’” he recounts. “I wouldn’t be surprised if the websites become a lot more robust with more components, because everyone wants to be able to know what’s available in the destination during the booking process.”
It’s still early, but if Hyatt can deliver on the above operational and management systems, it will be a surprise. Because very few companies in this space are aligned as well as they can be with the future beachgoer.
Greg Oates covers hospitality trends and next generation hotels. He has participated in 1,000+ hotel site inspections in over 50 countries.