Interview: How Sandals CEO Built His Version of the All-Inclusive Experience

According to Sandals Resorts’ CEO Adam Stewart, the all-inclusive hotel group is the largest private employer in the Caribbean with over 13,000 staff members.

We interviewed Stewart last month for The Evolution of the All-Inclusive Resort Skift Report launched last week.

Presently, there are 15 couples-only Sandals properties and three members of the sister Beaches Resorts flag operating in seven islands. Along with the economic impact derived from its role as a major employer, Sandals also has a significant impact on attracting much needed airlift into the region. For example, Delta launched its first ever non-stop flight from JFK to Bridgetown this winter, coinciding with the opening of Sandals Barbados.

Founded in 1981 by Adam Stewart’s father, Gordon “Butch” Stewart, Sandals has long been considered an innovator in the Caribbean all-inclusive industry, which to a degree is still fighting perception issues revolving around product and service quality. Regarding product, Sandals has steadily expanded into the luxury arena over the last dozen years. The company purchased a newly built Hyatt resort in St. Lucia in 2002 following its immediate failure due to opening around 9/11. Sandals also acquired a Four Seasons property on Great Exuma in the Bahamas in 2009 during the early months of the global recession.

In terms of service, Sandals has partnered with numerous Canadian and U.S.-based university hospitality schools to develop executives and train staff on-property. The company also works with the English Guild of Butlers to train the teams of butlers working at the more upscale properties.

In addition, Sandals’ marketing machine is the most robust in the Caribbean tourism industry, spending millions on TV spots, billboards and print/digital advertising, directed at both consumers and travel agents. And according to Stewart, the company was an early adopter of social media, which management teams at all of the resorts use to gauge guest satisfaction and engagement.

Due to the business model inherent in the all-inclusive segment, guests tend to stay on-property much more at all-inclusive resorts than EP (European Plan) hotels because they’ve paid for all food and beverage upfront. That has proved challenging for the segment that has come to be viewed as a somewhat contrived travel product, not unlike the cruise industry, with the rise in global demand for more local, immersive, experiential and authentic travel options.

However, Sandals is somewhat unique in the market because it developed its own destination management and tour operator company, Island Routes. That integration has helped Sandals deliver a more customizable and profitable booking experience, because there are island-specific, off-property tour itineraries with pricing details bookable on each resort’s webpage.

Lastly, Stewart drove the launch of the Sandals Foundation in 2009 when the voluntourism trend began hitting its stride. Sandals reports that roughly 2,000 guests paid specifically for volunteer opportunities during the first three years of the foundation’s existence, but that number has since jumped to over 4,000 in 2014, impacting 200,000 Caribbean nationals. Stewart says 100% of all funds raised are directed into the local communities.

Following is our slightly edited interview with Mr. Stewart:

Skift: How have guest expectations evolved in terms of the all-inclusive product model?

Adam Stewart: The internet has changed the whole curiosity factor. During the first 20 odd years we’ve been in business, expectations changed incrementally. Where we are now today, especially within the last three years, we’re pushing the all-inclusive envelope to higher levels of service because the expectations are wildly ahead of where they were before. Some of this is created by us and out of the drive and belief that an all-inclusive can very much be a 5-star experience.

People are now sensitive from an educational standpoint about what they can expect from a Sandals or Beaches all-inclusive experience, whereas ten years ago there was a particular apex where people just expected a certain amount and not a whole lot more. But I think the expectations are just off the charts today.

Skift: How have you leveraged social media to market your properties, and how has that impacted this exponential rise in guest expectations?

Stewart: Sandals is a very visual company. Probably the reason we believe in social media is because, while we’re a huge marketing company, we recognized years ago the philosophy that you’re only as good as your customers say you are. So even though we’re a big marketing company and we want to promote to people to see our hotels from all over the world, we literally believe it’s far more important that our customers speak on our behalf as to what they’re seeing.

For Sandals, and this is a hugely important point, our differentiator is that we have the best real estate that money can buy in the Caribbean. So wherever we build a hotel, we’ve never compromised on the quality of the real estate. It’s always the best in every country. And for that, you get these beautiful teal and azure waters and what not, so the company becomes incredibly visual. So we’re very proud, we want to put it out there, and what we’re putting out there is the dream of what people want to buy. Some of the other people who are in our category, they just don’t have the locations and assets to brag about.

Skift: How has social media impacted your bottom line?

Stewart: Social media has been a game changer for the company in the most positive way. It’s taught us to be better. It’s taught us what the customers want. We use it all the time when doing new launches, new products within the company, and it’s become the guiding tool for our management. By 7 o’clock in all of our hotels, our executive team will have read all the commentary on TripAdvisor and the major social media sites from the previous day. We manage that very, very closely, so we’re really using social media as a management tool.

Before social media, companies could take what I call the “big company approach.” The information that you put out there was all that was out there, and nobody could talk back to you, and so there you go. It’s no longer okay for a company to not tell the truth, the whole truth and nothing but the truth. Today, as long as you tell customers what’s going on fully, they are very, very empathetic. Sandals has a huge amount of followers and social media has been the solution for us to talk live with them.

Skift: How has definition of luxury evolved in the all-inclusive segment over the last few years?

Stewart: We’ve never heard a customer ask for less luxury. We’ve never had anyone come to the front desk and say their room was far too nice and there’s too many options around me, so could you downgrade me. So we at Sandals exist in what we refer to as a category of one, where we’re in competition with our last project. We benchmark ourselves based on the last resort that we opened, or the last expansion.

Luxury has evolved because of the Millennial customer, which is a major part of our customer base in excess of 30%. We basically break out evenly between Millennial, Generation X and the Boomer generation. For the Millennial generation particularly, growing up with the internet, they’re very demanding, and a lot of our relationship comes out of the fact that we’re doing in excess of 10,000 weddings per year at our resorts, and of course the Millennials fall right into that.

But they’re very demanding and they’re very used to getting what they want when they want, and what we’ve found is that the all-inclusive segment is really in its infancy in many ways in terms of luxury. The old belief is that all-inclusive can’t be 5-star service and you can’t have more than a bit of entertainment and one or two restaurants. And where we are today, our latest hotel is 280 rooms in Barbados and it has 11 restaurants and food outlets, all included in the rate.

For the next generation of resorts with regard to the ratio of rooms per restaurants, there’s no limit to that. You’re only bound by your creativity in this segment. That includes everything from free Rolls Royce transfers to a Greg Norman championship golf course in the Bahamas. At our Beaches product in Turks and Caicos, we have 22 restaurants with every cuisine you can imagine, and only two of them are buffets.

Skift: There is still a perception however that all-inclusive can’t compete for the luxury guest compared to true luxury EP (European Plan) resorts. How do you address that?

Stewart: Luxury is also about service, and yes, there is that perception that all-inclusive can’t compete with EP, but that’s simply not true. At Sandals, the staff ratio is two staff to every occupied room so that’s a one-to-one ratio, and Beaches goes as high as three. We were also the first to introduce butlers trained by The English Guild of Butlers in the all-inclusive segment. Training has been at the center of everything that we’ve done, and we always hire attitude but we train for skill. Nine times out of ten we don’t want someone out of the hospitality field. We want for our people, when you smile at them, they smile back at you. It’s all about the attitude.

Some years ago we founded what we call the Sandals Corporate University, which is the training programs we run with universities like Ryerson and Florida International. So we’re working with international accredited universities that have a focus on hospitality, and it’s all about practical training at the resorts. We train our staff day in and day out because luxury in our mind is about getting it right.

Skift: There’s also the perception that all-inclusive resort product is beginning to feel more contrived, almost like an adult theme park, because there’s so much consumer demand for more local, authentic travel experiences. Yet most all-inclusive guests stay primarily on-property, so how has Sandals adapted to that?

Stewart: I’m so happy you asked that question. It’s about understanding, right? We always say, “To know is to know.” That is a perception that very much exists out there, and that may be factual with other organizations. With our organization, we interact with the community on many levels, and we founded our own tour excursion company, Island Routes.

Sandals has around a million customers a year, and last year we took over 600,000 guests outside of our resorts on local tours and excursions. All of the hotels work closely with the local restaurants and other businesses because we want people to get out there and see and feel it. People are very inquisitive, they want to know what’s out there on their own accord, not by osmosis. They’ll be checking out Island Routes before their trip to see what there is to do in Montego Bay, what there is to do in St. Lucia.

So the community is woven into who we are. Our staff members come from these communities and we’re super cognizant of embracing the community and working with them, and it is no secret that when a customer goes off an all-inclusive property, that saves the company money. They’re not eating our food, they’re not drinking our drinks. Our guests want to go out and eat jerk pork and jerk chicken in Jamaica and go ziplining and swim in our beautiful rivers. We just opened our first hotel In Barbados. It is 280 rooms, and every day at least 100 guests leave the resort to go to the craft market and other places. Or on Friday, there’s Oisten’s Fish Fry. That’s very popular with the community, and we had six 30-seat buses full of people leave our hotel last Friday to join them.

That’s a significant portion of our guests leaving the hotel to go experience a local activity, which has everything to do with our belief in getting guests off the premises and getting them into the community. That comes from the top of the company, and we see how our guests then go back to the hotel or go back home, post what they experienced on social media, talk about it, and confirm how they experienced our way of life.

Skift: With regard to the Sandals Foundation, how significant is guest volunteerism at Sandals Resorts?

Stewart: We have a voluntourism program called Reading Road Trip where you stay with us and you pay to go on a tour and spend a day at a local school and the community. You can never get closer to the community than that, and proceeds go to develop the schools. We have another program where we partner with a foundation called Pack for a Purpose, and how that works is we tell you what the purpose is and you pack a few things that are needed in the Caribbean.

About 40% of our customers are repeat customers, they come back year after year. They know the staff, they know the challenges that we have in the Caribbean, and they go into the communities and they see the difference that they are making. It’s amazing how generous people become at that point. It’s very real.

Greg Oates covers hospitality and tourism development. Email him at [email protected].