All In And All-Inclusive
AMResorts Poised To Accelerate Growth Pace For Next Three Years
Thursday, June 22, 2017
We are on Twitter
As a resort company, AMResorts specializes in luxury all-inclusives in international locations. Part of Apple Leisure Group and based in Newtown Square, PA, the company’s portfolio of 52 resorts is spread across six brands in Mexico, the Caribbean, Costa Rica and Panama and more are on the way.
Contracts are signed for another 10 resorts and several properties in their existing pipeline are set to open in 2018, including the first resort on U.S. soil: Dreams Puerto Rico Resort & Spa. In fact, last October, the company announced an aggressive growth strategy to sign its 100th resort by 2020.
“Our strategy is to grow in places where we can add value, which is to say, go where we already have distribution or where we believe we can add it,” said Javier Coll, Apple Leisure Group’s executive vp and chief strategy officer. “We’re not just providing resort management, but also a form of insurance as far as having a solid base of our own passengers and that’s what sets us apart from other management companies.”
The “insurance” that Coll refers to is the packaged travel arm of Apple Leisure Group: Apple Vacations; Travel Impressions; and CheapCaribbean.com. All three operators include the full range of AMResorts’ product across all six brands—Zoëtry Wellness & Spa Resorts; Secrets Resorts & Spas; Breathless Resorts & Spas; Dreams Resorts & Spas; Now Resorts & Spas; and Sunscape Resorts & Spas—among their offerings. Of course, the resort group also works with outside operators as well as OTAs, but the relationship between AMResorts and Apple Leisure Group’s packaged travel companies allows the all-inclusive company to directly drive consumers to its resorts.
Coll described these internal alliances as “important to us,” not merely because they offer a more precise conduit to building the occupancy rates of resorts currently in its portfolio, but also because as the cycle changes—which Coll said is happening now—it provides properties that are floundering under other flags with an opportunity to come into the AMResorts fold.
Not that the current state of the market is reflective of the financial crisis of 2008, but Coll argued that after about seven years of new development, supply has outpaced demand causing rates to begin falling. “The market is still in good shape, but we definitely see the cycle changing and probably by the end of next year or the start of 2019, we’ll see more hoteliers struggling as profits continue dropping and that opens up opportunities to rebrand for companies like ours because we have the muscle of distribution,” said Coll.
Although he also pointed out that waiting until the bottom falls out is the wrong moment to reflag; rebranding is as much a time commitment as it is a financial investment. With a new brand come changes in operating standards and systems as well as a needed period to reposition the property before a steady clientele begins to flow. Coll estimated this to take a year-and-a-half to two years. “Hotels that wait unit they’re already in a crisis won’t have the money to rebrand and at that point, they get themselves into a vicious cycle that’s not good for business,” Coll explained. “Rebranding when the market is down will ensure they’re in good shape during a crisis.”
In the 16 years since AMResorts was founded in 2001, the company has developed multi-layered strategies for driving profitability for owners; along with the benefit of its in-house distribution channels. AMResorts’ six brands have also gained recognition among travelers who are willing to spend more in order to be guaranteed a certain level of quality. Working with developers who are willing to spend more on a cost-per-key basis translates into higher nightly rates and guests who are willing to pay more for a better experience also tend to spend more on property in terms of spa treatments and upgraded alcohol.
The company has also solidified its loyal guest base through its Unlimited Vacation Club by AMResorts, the timeshare division that provides members with discounts and perks for a multi-year commitment with an upfront fee. Coll commented, “these are loyal customers who want to spend the next 20 years of their vacation with us because they know we have a great product and we keep adding new product, so they’ve become the most loyal customers that we have.”
More new product is certainly on the way, with plans to sign another 38 contracts over the next two-and-a-half years and the company is anticipating that the bulk of those resorts will be in Mexico where 28 of its existing 52 resorts are currently located, comprising 58 percent of the company’s revenue. “We have a large presence in Mexico, but we can still grow there, especially in places north of Cancun and south of the Riviera Maya,” Coll said. “We don’t feel that we’ve saturated the market and eventually, we will create additional brands that will help put distance from our other existing brands there.”
Coll is bullish on the country for precisely the reasons that more than half of the established portfolio is located there. Average flight times of three to four hours from many major U.S. cities prompt many American travelers to spend their average 5.5-day vacation in Mexico. Moreover, Coll added that the cost of doing business—labor costs, energy costs, food costs—are reasonable enough to allow resorts to turn profits. Local labor unions and a pro-business government are also conducive to development. From the guest perspective, Mexicans embrace the service-oriented culture of the hospitality business and the country has a food culture and heritage for visitors to explore when they want a break from the beach. Next year, the company will debut a new resort in Playa del Carmen, in the Mexican Caribbean and another in Costalegre, in Pacific Mexico.
But beyond Mexico, the company is also working to open properties in other Caribbean locations, including St. Lucia, Antigua and Aruba. The company has also been looking further south to Colombia where Coll said AMResorts is eager to have a presence, but also wants to first find a distribution channel to partner with or purchase. He affirmed “Cartagena is somewhere we want to be.”