Last fall, Hyatt Hotels entered the fast-growing all-inclusive resort segment in partnership with Playa Hotels & Resorts under two new brands, Ziva and Zilara. The first two resorts, Hyatt Ziva Los Cabos and Hyatt Zilara Cancun, debuted in November following the renovation and conversion of existing Playa properties. Playa also scooped up the former Ritz-Carlton Rose Hall in Montego Bay, Jamaica, which will reopen as a Ziva and a Zilara this November after wrapping up an $83 million renovation and expansion project. Playa CEO Bruce Wardinski says the all-inclusive market is ripe for opportunity, which is why his company intends to grow quickly before Hyatt’s competitors get their skin in the game.
Why is the all-inclusive segment growing so fast?
The last three years, it’s just improved and improved and improved. Some of that is due to macro forces. I like to call it the Southwest or Walmart effect, which is people are looking for good price value, and the all-inclusive vacation delivers on that. As people are being more selective with their leisure spending, this is a great alternative.
Has the quality of all-inclusives improved recently?
From ’07 on, the quality level of all-inclusives has been going up. It used to be perceived as a low-quality lodging or vacation experience, and today it’s a very high-quality, much more luxurious offering on the product, the service, and the food. We’re trying to continue that trend, and that’s what we did with our deal with Hyatt.
Speaking of the Hyatt deal, how did it come about?
We felt that the connection with them would give great credibility to the product and gain access to a much larger U.S. and global customer base, and we’re definitely seeing that is already occurring. From Hyatt’s standpoint, they wanted to enter the segment, but they wanted to partner with somebody who was experienced and already had the expertise and locations in key markets.
How are the first two properties, Ziva Los Cabos and Zilara Cancun, performing so far?
Cancun is the strongest all-inclusive market, and that hotel performed very well before, so that was an easier transition. That’s come out of the block very well. Los Cabos had a little bit of a hiccup with transitioning from the Barceló brand, where they shut down sales, so we were a little behind the eight ball in November going into the high season. But we’re starting to see significant pick up as the Hyatt sales have kicked in. The brand is becoming more recognized.
Will most of Playa’s growth be with Hyatt brands?
We’ll grow with our existing brands and create new brands, but with Hyatt, we want to be in every market we’re in with a Ziva and Zilara. We think Hyatt adds so much to the equation. So in any given location, as long as we can have the quality product we’re looking for, we would do a Ziva and Zilara first.
Are you looking to explore new markets?
Absolutely. We’re in Mexico and the Caribbean, but a natural expansion is more in the Caribbean and Latin America. For example, Aruba, Costa Rica, and Panama would all be logical places, and more expansion in Mexico because it’s the biggest market. Our plan in the short-to-medium term is to take a global approach. I really believe the all-inclusive product is attractive, and we know this because we get customers from all over the world. With Hyatt’s brand recognition and their reach, particularly in Asia Pacific, we think we can piggyback on that and really benefit from the Hyatt relationship.
