All-Inclusive Industry is an Attractive Investment Option

The all-inclusive industry continues to grow, making it an attractive investment option for U.S.-based owners. As more travelers seek convenience and added value, all-inclusive resorts have been attracting approximately 12 to 12.5 million Americans per year, says Alex Zozaya, CEO of Apple Leisure. The Philadelphia-based hospitality company includes AMResorts, an all-inclusive collection that has grown to nearly 40 luxury resorts across six brands, with new properties on the way in St. Thomas, Costa Rica, and Panama.

“The product has evolved tremendously,” Zozaya says of all-inclusive resorts. “Now, you have a lot more options and luxury products we didn’t have before. We also have consumers experiencing all inclusive for the first time, strongly recommending it to other parties and coming back themselves.”

Leading destinations for West Coast travelers include Los Cabos and Puerto Vallarta, while Caribbean hotspots like Jamaica and the Dominican Republic remain strong with East Coasters. Cancún and Riviera Maya also have more capacity and connectivity. “Supply is growing but so is demand, so a lot of destinations are having a very good time right now,” Zozaya says.

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All-inclusive inventory is currently expanding in Los Cabos, the Bahamas, and the Dominican Republic, and Panama and Costa Rica have aggressive plans for leisure growth. Emerging tourist destinations with potential include Haiti and Nicaragua, Zozaya adds. But he also sees an opportunity for the market to flourish in the United States, in places such as Florida and Hawaii. There are high barriers to entry in Hawaii, however, and investors need to determine whether consumers are willing to pay a premium to offset high payroll costs.

U.S. investors have been rather passive on growth of tourism in Mexico and the Caribbean compared to investors in Europe, Canada, and Latin America, but they’re gradually becoming more active, Zozaya says. Private equity funds have shown greater interest in acquiring existing properties to rebuild and reflag as all-inclusive resorts, and some family offices are seeking the higher returns this model can provide. “In general, the return on investment is a lot greater and the payback is a lot faster,” he notes.