Image source: Club Med official website
The Club Med Playa Esmeralda all-inclusive resort in Dominica presents a casual and elegant eco-retreat. Set in 93 acres of lush beachfront palm groves, visitors can immerse themselves in the resort's crystal clear beaches. For those seeking a signature luxury experience, there are four unique towns where they can indulge in a variety of entertainment, wellness activities, water and land sports. Those who wish to get closer to nature can opt for a series of exciting nature adventures to immerse themselves in nature.
Explore the feasibility and potential of all-inclusive vacations in China
In recent years, all-inclusive vacations have become increasingly popular in Europe and the United States. Its one-stop service model, which covers accommodation, entertainment, travel and various other activities, attracts a large number of travelers, and many large international hotel groups have stepped up to enter this market. In the face of such a trend, we can't help but wonder whether this popular vacation model in Europe and the United States is also suitable for China's tourism market, and how to integrate it into China's unique tourism culture and consumption habits. This article will discuss the development status, challenges and opportunities of all-inclusive vacation in China from multiple perspectives, analyze its potential value to China's tourism industry, and provide reference suggestions for relevant enterprises and policymakers.
1. Definition of all-inclusive vacation
All-inclusive vacations, often referred to as "all-inclusive", are a special mode of tourism in which a fixed price includes almost all the services that tourists need at the resort. This price usually includes accommodation, meals, drinks, daily entertainment and activities, etc. All-inclusive vacations offer visitors a more relaxed, hassle-free experience than traditional vacation methods. Visitors don't have to pay separately for each service, and they don't have to worry about the choice of each meal or the extra cost of entertainment. When choosing an all-inclusive vacation, visitors can know in advance the total cost of the entire trip, which helps them plan and budget better. In addition, all-inclusive resorts or hotels are often located in scenic areas such as tropical beaches or islands, offering visitors a chance to fully immerse themselves in the resort atmosphere.
Second, the development history of all-inclusive vacations
The all-inclusive resort model was first introduced by Club Med in the 50s of the 20th century, when the goal was to provide a cottage vacation experience for adult visitors on a limited budget. Since then, this model has undergone rapid development. Today, the number of all-inclusive resorts worldwide has grown to about 1,500, with Mexico and the Caribbean Islands as the main hubs.
The customer base of all-inclusive resorts is also evolving, initially focusing on affordable travelers and families, later encompassing multi-generational families and millennials, and the number of high-end and luxury all-inclusive resorts is also increasing.
In the last decade, many traditional hotel groups have also entered this market, especially those brands that previously mainly operated mid-range independent hotels, and they have broken through in the high-end and luxury markets. But large hotel groups are accelerating their expansion in this area, gradually eroding the market share of independent and regional brands.
As market share changes, large hotel groups are also more active in the all-inclusive resort market. As the first major hotel group to launch a dedicated all-inclusive brand, Hyatt continued to expand this market after launching the Hyatt Ziva and Hyatt Zilara brands in 2013, and the group successfully acquired Apple Leisure Group in November 2021 for $2.7 billion, making it one of the world's largest owners of luxury all-inclusive resorts.
Image source: Hyatt official website
Hyatt is the first major hotel group to launch a niche brand specifically for the all-inclusive vacation market. In 2013, Hyatt launched the Hyatt Ziva and Hyatt Zilara brands. Hyatt Ziva focuses on family vacations and Hyatt Zilara is designed for adults, and the two brands officially opened in Mexico in 2013. Hyatt Zilara Cancun pictured
Marriott International announced the launch of its all-inclusive vacation service platform in 2019 and signed management contracts with hotel developers who will invest a total of $800 million to build five all-inclusive resorts. Located in the Caribbean and Latin America, the resorts include The Ritz-Carlton, a 240-room NIA resort in Nayarit, Rivilane, Mexico, scheduled to open in 2023. The Cancun Marriott Resort will reopen in Cancun as an all-inclusive format in early 2024.
In 2022, InterContinental Hotels signed a long-term partnership agreement with Spain's Iberostar Hotels & Resorts that includes the integration of approximately 70 of Iberostar's all-inclusive hotels into IHG's system while maintaining ownership and value.
At the same time, Accor has announced ambitious expansion plans to quadruple the number of Rixos hotels that offer premium traditional Turkish hospitality by 2027.
Wyndham Hotels & Resorts also has a partnership with Playa Hotels & Resorts, which owns, operates and develops all-inclusive resorts in Mexico and the Caribbean.
In order to meet the needs of different consumers, all-inclusive resorts are also developing new formats, such as adults-only resorts, family-friendly resorts, eco-resorts, adventure resorts, etc. For example, in July 2023, Hyatt launched the Impression by Secrets collection, an adults-only resort, and plans to open Impression by Secrets Isla Mujeres in Mexico's resort island district, bringing Hyatt's all-inclusive resort brands to 10 as well.
The entry of large traditional hotel groups into the all-inclusive resort market shows the commercial potential and attractiveness of this model. From Hyatt to Marriott to InterContinental and Accor, the strategies of these industry giants illustrate that all-inclusive resorts have grown from a fringe market to a mainstream and attractive travel industry.
Third, the logic behind the prevalence of all-inclusive resorts: common interests
Image from the web
After understanding the business development and trends of the all-inclusive vacation model, we now turn to the successful logic behind this model, what exactly makes all-inclusive vacation so popular with consumers and investors?
The appeal of this model lies in the many common benefits brought by both consumers and investors, which is the internal logic of the popularity of all-inclusive resorts in Europe and the United States.
First of all, from a consumer perspective, their benefits include:
Consumers experience better value for money through an all-inclusive price, as the overall cost is more cost-effective than buying each service separately, and they can also get more benefits and exclusive experiences through loyalty points and vacation clubs while on vacation.
The all-inclusive vacation model makes the entire trip more convenient and predictable by allowing consumers to budget for their entire trip in advance through long booking windows, and paying in advance provides them with a "wallet-free" experience.
For consumers who prefer a variety of options, all-inclusive vacations offer a variety of product options, such as family trips, couples, weddings and group trips. Characterized by closure and control, this property ensures consumer safety and offers a range of high-quality entertainment and dining options. In resorts with high occupancy rates, consumers can enjoy stable and abundant activities.
The all-inclusive resort adopts a unique service model such as the G.O. team model in Club Med. These staff are not only multilingual, but also build deep relationships with guests, organising a variety of activities, from water sports, yoga, golf, to food tastings, themed evenings and nature adventures, allowing guests to fully immerse themselves in this all-round resort experience. This in-depth, all-encompassing experience is not available in traditional resorts.
From the perspective of investors and operators, the all-inclusive vacation model is also very beneficial to them, including:
By providing a full range of services, attracting additional consumption, increasing facility utilization, reducing external competition and optimizing operational efficiency, it effectively increases the revenue share of operators and brings the benefits of economies of scale.
Long booking windows provide operators with accurate planning and operational data, facilitating more accurate market forecasting and resource allocation, and ensuring more accurate financial forecasting.
The diversification of products offered opens up opportunities for operators in market segmentation and the seasonal impact between the holiday season and the low season is reduced.
The closed and controlled nature of the resort helps reduce operational risk. High occupancy not only brings the benefits of economies of scale, but also ensures stable cash flow and strengthens customer loyalty. By promoting loyalty points and vacation clubs, investors and operators can further increase resort occupancy.
By controlling the supply chain and vertically integrating them, all-inclusive resorts can ensure consistent service quality and a range of other operational benefits. For example, all-inclusive resorts not only provide accommodation, but also provide dining, entertainment, activities and other services. All services are under the control of the resort and do not need to rely on external suppliers. This ensures continuity and consistency of the service.
Overall, the all-inclusive vacation model not only delivers the exceptional experience consumers seek, but also delivers strong returns for investors and operators. This is the logic inherent in the rapid growth of all-inclusive resorts.
Image source: Club Med official website
Club Med's G.O. team, full name "Gentil Organisateur" (friendly organizers), is the resort's signature and pride. Unlike regular resort staff, G.O. acts as tour guides, instructors, and even dance partners and event partners for guests. Their mission is not only to serve their guests, but also to build deep connections with them and create a relaxed and friendly atmosphere. This group of young people from all over the world, trained to represent Club Med's core values, ensures that every guest can experience an unforgettable holiday here. Club Med Val d'Isère in the French Alps.
4. The current situation of all-inclusive holidays in China
All-inclusive resorts are still a relatively new concept in China. However, its popularity and popularity in China is steadily rising over time, especially in popular coastal cities and tourist destinations such as Hainan and Lijiang.
A central driver behind this development is the rapid rise of China's middle class. As the country's economy continues to grow, more and more families are entering the middle class. For this growing consumer group, they are looking for higher quality and convenient life experience. All-inclusive resorts, which offer a one-stop shop from accommodation, dining to entertainment, cater to the needs of these consumers, especially those willing to pay extra for a more premium holiday experience.
On the other hand, globally renowned all-inclusive vacation brands, such as Club Med, are also driving the popularity of this model in China. Club Med has opened all-inclusive resorts in several popular tourist destinations in China, including Club Med Guilin Resort, Club Med Yabuli Resort, Club Med Lijiang Resort and Club Med Beidaju Resort.
All-inclusive resorts have been widely successful in places like Europe and the United States, and international giants are increasingly investing in this market. However, its development in China has not been so smooth, and it has encountered many challenges and twists and turns. With the exception of Club Med's active entry into the Chinese market, other international hotel groups have been relatively conservative in this field, and some have even quickly withdrawn from this model after a short attempt.
Specific examples include that Fuhua Holdings' Huangshan and Lijiang Lilang resorts were built according to the all-inclusive model, but quickly abandoned this model after opening as Fuhua Holdings fell into trouble; Atlantis Sanya offers an all-inclusive package, but only as an add-on option. It is worth noting that Club Med Sanya has not reopened since it closed during the pandemic in 2022. In contrast, Club Med launched Club Med Joyview, a short-distance boutique tour product called "Mediterranean Neighborhood" in China, and has successfully opened three hotels in Anji, Qinhuangdao and Beijing Yanqing, but its focus is not the traditional all-inclusive, but a selective package for tourists.
These phenomena have undoubtedly cast a shadow over the prospects of all-inclusive resorts in China, causing industry insiders to think deeply about their true potential in China and try to find the best landing strategy for their development in China. In the following sections, we'll dive into the challenges and opportunities of all-inclusive resorts in China.
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5. Challenges for the development of all-inclusive vacations in China
Cultural factors
While the main attraction of all-inclusive resorts is that they offer a hassle-free leisure environment, this may not be of interest to some Chinese tourists, many of whom may prefer to explore the local food and culture, while China's geographical and cultural diversity offers travelers a wide range of options. Therefore, staying at one resort may not be as attractive as traveling everywhere.
Dining habits
China's diverse food culture is a proud part of it, and all-inclusive resorts often offer international menus or buffets. For travelers looking for authentic cuisine, they may prefer to explore the local social dining and specialty meals, snacks and more.
Experience of the operator
For operators, operating an all-inclusive vacation model is a daunting test in China. Just using service teams as an example, really finding and training versatile people like Club Med's G.O. remains a big challenge. Operators must not only deeply understand how this model works, but also ensure that they can provide thoughtful services tailored to the real needs of their customers. This also means that operators need to have strong resource support, especially a group of management teams including experienced professional service personnel.
Price sensitivity
Some Chinese consumers may consider all-inclusive resorts too expensive compared to the services they can receive. And for those consumers who are willing to pay more, they may opt for more luxurious customized travel experiences.
Benefits of travel distributors
The core target market for all-inclusive resorts is individual travelers rather than tour groups. The specific benefit distribution model between hotels and distributors leads to a lack of incentive for distributors to promote and sell such resort products.
Opportunities for all-inclusive vacations in China
Continued development of tourism
With the development of China's economy and the improvement of residents' income, people's tourism demand is continuing to grow, and China has become the world's largest outbound tourism market, and its tourism industry continues to develop. As a new form of tourism, all-inclusive vacations are likely to be welcomed by more consumers.
Consumer demand for new vacation experiences
Today's consumers are increasingly looking for personalized and experiential services. All-inclusive vacations can provide a full range of personalized services to meet consumers' demand for new vacation experiences. For example, all-inclusive resorts often offer a variety of experiential activities such as yoga classes, water sports, cooking classes, etc., to enrich the holiday experience for consumers.
State policy support for tourism development
The Chinese government has been promoting the development of tourism, such as proposing the development strategy of "all-region tourism" and encouraging the development of rural tourism. These policies provide a favorable environment for the development of all-inclusive vacations.
The potential of the Chinese market
China is one of the world's largest consumer markets and has great potential. With the upgrading of consumption, Chinese consumers' demand for tourism products is becoming more and more diversified, and the demand for all-inclusive vacations is expected to further increase.
The need for health and leisure
With the acceleration of the pace of life, consumers' demand for health and leisure is increasing. All-inclusive vacations can meet this demand by providing a relaxing environment.
Photo credit: Hyatt Zilara Riviera Mayat official website
The all-inclusive dining experience at the all-inclusive resort is not only about everyday dining, but also about the fusion of culture and senses. Take Hyatt Zilara Riviera Maya, for example, the resort offers a variety of dining options, from beachfront restaurants to vibrant beach clubs to professional blending bars to ensure guests can enjoy themselves. Four unique restaurants and five bars offer guests a wide range of food and drinks. Whether it's pasta at sunset, fresh sushi from Tempest, or simple ice cream, it's a reflection of the resort's meticulous approach to dining. Pictured here is a beach bar in Hyatt Zilara Riviera Maya.
7. The value of all-inclusive vacation development to China's tourism industry
Promote tourism consumption
The all-inclusive vacation model packs consumers' accommodation, play, entertainment and other travel activities, and all services are included in the one-time price. Such a model can facilitate consumers' budgets and control travel spending, stimulate more consumers' willingness to travel, and thus promote tourism consumption.
Promote innovation in tourism products
The all-inclusive vacation model puts forward higher requirements for the personalization and differentiation of tourism products, and hotels and resorts need to provide more abundant and distinctive activities and services to attract consumers. This will drive innovation in tourism products and enrich the tourism industry's product line.
Improve the level of tourism services
The all-inclusive vacation model requires a full range of high-quality services, which not only requires perfect hardware facilities, but also a professional and refined service system. This will help to improve the quality and level of services provided by the entire tourism industry.
Improving tourism
The all-inclusive vacation model can improve the traditional tourism format, especially in terms of destination selection, tourism activity organization and service methods.
Promote regional economic development
Often, all-inclusive resorts are located in scenic suburbs or waterfronts, attracting large numbers of tourists, boosting local tourism and boosting the local economy.
8. China's all-inclusive vacation future development strategy
Talent training and team development
Good people are key to ensuring that all-inclusive vacations deliver high-quality service. It is essential for the training and development of employees. From catering to entertainment, from accommodation to events, ensuring the professionalism and enthusiasm of our staff is key. A well-trained and experienced team can not only attract more consumers, but also build consumer loyalty, thereby increasing market share for all-inclusive vacations.
Enhancement of dining and cultural experiences
Modern consumers are increasingly focused on experiences, and all-inclusive vacations require constant innovation to deliver unique and fun experiences. In addition to providing a variety of activities, consumers should also be able to immerse themselves in the local dining and culture.
Personalized service
Every consumer's needs are unique, and all-inclusive vacations require personalized service to meet the individual needs of consumers. For example, itineraries and services can be tailored to consumer preferences and needs. In addition, data analysis can be used to predict consumer behavior and needs and provide more personalized services.
Technology and vacation convergence
With the development of technology, all-inclusive vacations also need to integrate technology to provide more intelligent services. For example, AI can be used to improve service efficiency and provide more personalized services. In addition, technologies such as VR and AR can be used to provide novel experiences.
Green and sustainable
With the improvement of consumers' awareness of environmental protection, all-inclusive vacations need to pay attention to environmental protection and achieve green and sustainable development. For example, renewable energy can be used, waste can be reduced, and local natural environment and biodiversity can be protected.
The perfect blend of wellness and leisure
In the fast-paced life, consumers are increasingly focusing on health and leisure. All-inclusive vacations should focus more on providing a relaxing environment with a variety of wellness and leisure activities to meet the needs of consumers.
Flexible pricing
Given the price sensitivity of Chinese consumers, businesses can appeal to different consumers through flexible pricing strategies. For example, different grades of all-inclusive vacation products can be offered to satisfy consumers with different spending powers.
9. Recommendations for relevant enterprises and policy makers
Mainstream international hotel groups
Faced with China's vast and complex market, mainstream international hotel groups need to explore potential opportunities deeply and precisely when seeking entry. First of all, comprehensive market research is key. This involves not only understanding consumer preferences and habits, but also exploring regional cultures and local tourism resources to ensure that the hotel's positioning matches the target market. Then, based on the findings, developing products and services adapted to Chinese consumers may mean fine-tuning certain features or services of the brand to meet local tastes and expectations. Finally, hotel groups should invest more in talent training and cultivate a considerable number of employees with comprehensive capabilities and qualities to ensure that they can understand and meet the needs of Chinese guests and provide guests with a quality experience that is both international and local.
Travel distributors
For the characteristics of all-inclusive resorts, distributors should consider the FIT market as their main battleground. Strengthening the partnership with the resort is not only about selling packages, but also involves real-time market information sharing, joint marketing and personalized services for individual guests. True service is not just about closing the transaction, but actively collecting customer feedback, solving problems encountered during travel in a timely manner, and providing value-added services according to the specific needs of individual customers. In order to create the perfect travel experience, distributors should deepen their cooperation with airlines, ground services and tourist attractions to ensure that every detail meets the expectations of tourists from departure to return.
Existing and potential operators
Existing and potential operators should further educate the market, and although awareness of all-inclusive holidays in the Chinese market is increasing, there are still many consumers who do not know enough about it. Businesses can educate the market through various channels to increase consumer awareness and acceptance of all-inclusive vacations.
Policymakers
The government could consider implementing incentives and tax breaks to directly stimulate the rise of such holiday models and help the tourism industry prosper further. At the same time, the development of necessary regulations and standards is the key to ensuring its orderly development, which not only ensures that the rights and interests of consumers are fully protected, but also provides a clear and stable operating environment for enterprises. Finally, the government should strengthen market supervision, timely intervention and rectification of possible problems such as fraud and price opacity, so as to encourage enterprises to continuously improve the quality of services, and then improve the quality and reputation of all-inclusive vacations as a whole.
Image source: XCaret Hotels
XCaret Hotels, Mexico's homegrown all-inclusive resort brand, features its "Entertainment All-Inclusive" concept, which allows guests unlimited access to Xcaret Group's theme parks and activities such as underground caving, bungee jumping and snorkeling. In addition, the hotel offers high-end dining experiences, spa services and other leisure activities. More than just a place to stay, XCaret Hotels offers visitors a comprehensive, immersive experience of Mexican culture and nature. Pictured is Hotel Xcaret Mexico, Playa del Carmen.
Conclusion
All-inclusive vacations bring new opportunities and challenges to the Chinese tourism market. The key to its success lies in cultivating a professional management team, integrating Chinese culture and consumption habits, and deeply understanding and meeting the needs of consumers to provide them with real value. China's tourism market has huge potential, and all-inclusive vacations can be a promising business direction for businesses willing to invest, innovate and gain a deep understanding of the Chinese market. At the same time, the government and relevant policy makers should also actively support and guide the healthy development of this emerging format, promote the overall improvement of tourism, promote the development of regional economy, and create a better holiday experience for consumers.
Club Med is already building a strong brand image for all-inclusive resorts, which will make the expansion of other international hotel groups in the Chinese market smoother. If more international hotel groups join forces and join hands with their all-inclusive resort brands to enter China, just as the flame of firewood is high, it may ignite the trend of competition and harmonious competition in the market. Given the deep potential of China's travel market, all-inclusive resorts are poised to echo Europe and the United States as they move towards a prosperous future.
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