All Exclusive is the new All-Inclusive and it’s Coming to Asia
Artist impression of Rixos Nha Trang Beach Resort in Vietnam, opening in 2025. Photo: Accor
By Raini Hamdi, 25 July 2022
The all-inclusive resort market in Asia is skinny. Club Med is the dominant brand. Other than that, there’s a limited buffet of resorts in places such as Sri Lanka or Phuket, typically for Europeans exchanging winter for sun, fun and rum in the tropics. Others are in captive-audience locations such as the Maldives. Or, the lucky few with a truly unique hook, such as the Anantara Golden Triangle Elephant Camp & Resort.
None has the expansion that Club Med has enjoyed over decades.
But Club Med recognizes that soon, it will be sharing space with more competitors. Global chains are marching into the segment, with new expertise and brands gained through acquisitions or alliances with all-inclusive players in the US and Europe.
Those tie-ups, which started in 2019, include Marriott International’s acquisition of Elegant Hotels Group and Hyatt Hotels Corp’s purchase of Apple Leisure Group. As well, Wyndham Hotels & Resorts’ partnership with Playa Hotels & Resorts to launch a new all-inclusive brand, Wyndham Alltra. This week, Wyndham partnered with Palladium Hotel Group, adding 6,500 rooms to its all-inclusive portfolio. In turn, Palladium gains Wyndham’s global scale and loyalty program distribution.
Accor, which sealed a joint venture with Rixos Hotels in 2016, is expanding its all-inclusive offering to include its luxury and premium brands Fairmont, Sofitel, Pullman, Swissotel and Movenpick.
There could be some herd mentality in all this, but global chains said they are responding to rising demand for leisure travel in post-lockdown, and specifically for luxury and premium all-inclusive stays.
Hello Asia
Accor has already signed two Rixos resorts in Asia, in Nha Trang and Phen Theit, Vietnam. The new-build hotels have more than 500 rooms each and will open in 2025.
“Their owners had family holidays in all-inclusive resorts before, so they are familiar with the concept. They also want to develop something different to what exists in the destination,” said Andrew Langdon, Accor’s senior vice president development South-east Asia, Korea & Japan.
With the market being most developed in the Caribbean, Latin America, Mediterranean and Middle East, appetite to expand all-inclusive in Asia is insatiable.
“We see huge potential for all-inclusive in Asia. It has been slow in coming but once the first few resorts open and the concept is proven in Asia – watch out,” said Langdon, who is now eyeing opportunities in Phuket and Pattaya, Thailand.
Hyatt is “definitely” looking beyond Apple Leisure Group’s existing resorts in Europe and the Americas to Asia-Pacific, said its president, growth & operations, Asia-Pacific, Stephen Ho.
“The all-inclusive model has shifted from a mass market offering to luxury all-inclusive, which meets the expectations of affluent consumers through larger rooms, superior a-la-carte gastronomy, and extensive entertainment and activities,” said Ho.
Ho sees “significant” opportunities in markets with strong resort demand, such as Indonesia, Thailand, Maldives, Vietnam, Japan, China and South Asia.
“The luxury all-inclusive model, and our portfolio of resort brands, offer great flexibility. This enables us to adapt to evolving consumer demands and regional dynamics. We are exploring what works best in our region,” Ho said.
Tiptop Competition
Club Med is watching all this with great interest.
Said Sebastien Favre, Club Med’s director of development and asset management South-east Asia, “In the early 2000s, our competition was from lower-scale resorts offering all-inclusive F&B without sports or entertainment. It was a big issue at the time, which led us to move to the upscale segment. We downsized our portfolio by half, retaining only those properties that could match our upscale requirements.
“What we are facing today is competition from the top.”
That, however, doesn’t necessarily mean that all-inclusive resorts will finally mushroom in Asia. The model seems to run counter to changing customer trends, such as the desire for more local community engagement and sustainability, especially among millennials and Gen Zers. This group will form half of consumers in Asia-Pacific by 2025, according to a McKinsey report.
All-inclusive keeps guests in the resort, even if it brings in local touches or takes guests out to a few local partner restaurants or attractions. It’s clear that the tourist dollar won’t reach the community as much as it does with standard stays.
Besides, who wants to eat at the same place each night when one can eat at places with funny menus, Michelin street food vendors or fine-dining restaurants, which Asia has in super-abundance?
Counter Argument
Chains have a counter argument to this.
“Our understanding is that in the post-pandemic recovery phase, international hotel operators are betting on growing demand for all-inclusive resorts, on the general expectation that travelers will prefer this way of vacationing, primarily to recharge and avoid exposure to Covid-19,” said Koh Tien Gui, senior hotels and hospitality partner, Withers KhattarWong.
“Together with the increased emphasis on wellness travel, the all-inclusive resort is intended to provide all the F&B, entertainment and leisure options which travelers need, leaving them with lesser impetus to leave the resort.”
All-inclusive also introduces guests to amenities and experiences they wouldn’t otherwise consider, said Markland Blaiklock, deputy CEO of Centara Hotels & Resorts.
“If your all-inclusive includes diving, you may give diving a try,” he said.
Centara has introduced all-inclusive options at its resorts in the Maldives, Sri Lanka and, most recently, Dubai. Forty percent of guests in Dubai opt for all-inclusive, which Blaiklock said exceeds expectations given the plethora of attractions in the city.
What’s Amazing
Club Med has actually proven that all-inclusive can work in Asia, thanks to its focus on families and active programming of sports and entertainment. An innovation that came from Asia for Club Med, now owned by China’s Fosun Group, is the “Amazing Family” sub-brand. This enables parents and kids to spend time together in, say, a cooking class or a treasure hunt, instead of dropping the kids at the mini club. Asian millennial families prefer this, said Favre, and the idea has even been transported to some European properties.
Yet, even with a clear customer target, concept, design, offerings and programming, Club Med’s expansion in Asia has been modest. Since opening its first resort in Cherating, Malaysia in 1979, the group has nine properties in operation in Asia, excluding China, in the Maldives, Indonesia, Japan, Malaysia and Thailand. Under construction is a Club Med in Kota Kinabalu, Malaysia, which will open next year.
And in the four decades, no other brand has emerged as a serious contender to Club Med, not even Asian brands that have done all-inclusive-only, or offer it as an option, in captive locations such as the Maldives.
Why?
It’s not that lenders are wary of the model. Hailing Liu, special counsel, corporate at Withers KhattarWong, said, “There is no consensus among lenders on how they assess funding for all-inclusive resort projects, as it depends on fundamentals such as its location and amenities.
“A typical concern with funding investments into resorts is with seasonality, but we note that this concern could be location-specific and there are also ways to address it, such as through sale and leaseback of residential developments, and timeshare arrangements.”
One reason is a lack of knowledge to operate and sell the product, not a lack of demand, according to experts.
Firstly, it is a different business model that requires internal changes, which may put off operators, according to Chris Bailey, a former hotelier and tour operator who now runs his own consultancy, BTM Services.
Illustrating a simple example, Bailey said hotels could offer room with breakfast and, say, a spa treatment, calculate the rate, then credit the relevant department its share via internal transfer. But this can’t be done with all-inclusive as the overall consumption by the customer is unknown at check in.
“So it needs to move from a departmental profit centre structure, to operating budgets based on customer headcount, in other words F&B must deliver on the product at a set amount per customer per day,” said Bailey.
Bigger Issue
A bigger issue is distribution. Online travel agencies refuse to sell the product. This may cause resorts to think twice about going all-inclusive, especially since most are individual players or small independent groups that depend on OTAs for business.
Typically, all-inclusive resorts in Asia rely on wholesalers for traffic.
“OTAs don’t sell them because most hotel operators reject to apply the same commission level on rooms and F&B sales,” said Oliver Libutzki, who had long stints at both Agoda and TUI.
“Another reason is all-inclusive packages don’t convert [into bookings] as the perceived price is too high. Hotels on all-inclusive-only rates appear twice more expensive than their competitive set on ABF [room plus American breakfast] rates.
“For these reasons, OTAs do not invest any resources in content solutions to make all-inclusive products more appealing.”
Favre admits guests can’t book Club Med on an OTA. About 70 percent of business is direct sales.
“Our key asset is we have a clear value proposition and are able to promote it effectively to guests. The guest is making a purchase that costs much higher than a non all-inclusive product on Booking.com, therefore you must be able to explain what is the value and how it connects with their dream holiday. There is a real expertise in doing so. It’s something we do in-house and with agents and tour operators but not with OTAs.”
Favre believes the entry of newcomers into the market may change the distribution of all-inclusive resorts. He himself sees a great opportunity for OTAs to accompany Club Med in “commercializing and explaining the product better to clients.”
One possible outcome, cited by Withers KhattarWong’s Koh, is that owners of independent all-inclusive properties may see value in signing up with the major chains for wider distribution.
“What will be key to a successful penetration of the all-inclusive resort concept in Asia, we suggest, is the use of the hotel operators’ loyalty programs where members can use their points to book that all-inclusive experience without paying any cash,” he said.
New Chapter
A new chapter for all-inclusive is opening as global chains race to remake the modern all-inclusive product for discerning customers.
Accor, for instance, trumps Rixos’ 20 years of experience, and its Ennismore’s F&B Concept Lab, as keys to reimagine the luxury all-inclusive product.
In Asia, innovative all-inclusive resorts may appear with different themes. Perhaps a focus on traditional Asian wellness, or quintessential Asian service, or Asian culture — the possibilities are endless.
New brands to Asia such as Rixos are a novelty in themselves. At a Rixos hotel, guests end the day with a spectacular show and concert. AMR Collection, the all-inclusive brand of Hyatt’s Apple Leisure Group, is steep in wellness and pampering, with inclusions such as gourmet a-la-carte organic F&B choices, 24-hour private in-suite dining and thrice-daily maid service. Whether resorts can find the staff to deliver luxury all-inclusive is yet another question mark.
What’s certain is how the needle is swinging for all-inclusive resorts, from overstuffed, eat-all-you-want beginnings to a glamorous, experiential product.
Get ready to welcome the all exclusive all-inclusive model in Asia.
Note: Comments from Club Med’s Sebastien Favre and Centara Hotels & Resorts’ Markland Blaiklock were made during a panel on all-inclusive resorts at the South-east Asia Hotel Investment Summit 2022 moderated by the author